Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss.
240.14a-12
DRUCKER INDUSTRIES, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)Title of each class of securities to which transaction applies:
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2)Aggregate number of securities to which transaction applies:
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3)Per unit price or other underlying value of transaction computed pursuant to
Exchange Act rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4)Proposed maximum aggregate value of transaction:
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<PAGE>
DRUCKER INDUSTRIES, INC.
#1-1035 Richards Street
Vancouver, B.C. CanadaV6B 3E4
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ____________, 2000
Notice is hereby given that the Annual Meeting of Shareholders of Drucker
Industries, Inc., (hereinafter referred to as "the Company") will be held at
Vancouver, B.C., at 9:00 a.m., local time, for the following purposes:
1. To elect four directors to hold office until the next
annual meting of shareholders and qualification of
their respective successors.
2. To change the name of the Company to Drucker, Inc.
3. To approve an Employee Stock Award Plan for the
Company.
4. To ratify the designation of Amisano & Hansen as
Independent Accountants for the annual period ending
December 31, 2000.
5. To transact such other business as may properly come
before the annual Meeting or any postponement of or
adjournment thereof.
The Board of Directors has fixed the closing of business on
_________________, as the record date for the determination of shareholders
entitled to notice of and to vote at this meeting or any adjournment thereof.
The stock transfer books will not be closed.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1999 accompanies this Notice of Annual Meeting and Proxy Statement.
All stockholders, whether or not they expect to attend the Meeting in
person, are requested to complete, date, sign, and return the enclosed form of
proxy in the accompanying postage-paid envelope. The proxy may be revoked by the
person executing the proxy by filing with the Secretary of the Company an
instrument of revocation or duly executed proxy bearing a later date, or by
electing to vote in person at the Meeting.
----------------------------------
Drucker Industries, Inc.
Gerald W. Runolfson, President
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<PAGE>
PROXY STATEMENT
DRUCKER INDUSTRIES, INC.
#1-1035 Richards Street
Vancouver, BC Canada V6B 3E4
ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
_________________, 2000
This Proxy Statement is being furnished to the shareholders of DRUCKER
INDUSTRIES, INC., a Delaware corporation, in connection with the solicitation by
the Board of Directors of proxies to be used at the Annual Meeting of
Shareholders to be held at 9:00 a.m., local time, _____________, 2000 at
#830-789 W. Pender Street, Vancouver, BC Canada. The Proxy Statement is first
being sent or given to shareholders on or about _______________, 2000.
PROXIES ARE BEING SOLICITED BY THE BOARD OF DIRECTORS.
WE ARE ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED TO SEND US A
PROXY.
VOTING RIGHTS
Stockholders of record of the Company as of the close of business on
___________, 2000 have the right to receive notice of and to vote at the Annual
Meeting. On ____________, 2000, the Company had issued and outstanding
____________ shares of Common Stock (the "Common Stock"), the only class of
voting securities outstanding. Each share of Common Stock is entitled to one (1)
vote for as many separate nominees as there are directors to be elected and for
or against all other matters presented. For action to be taken at the Annual
Meeting, a majority of the shares entitled to vote must be represented at the
Annual Meeting in person or by proxy. Shares of stock may not be voted
cumulatively. Abstentions and broker non-votes each will be included in
determining the number of shares present and voting at the Annual Meeting.
Abstentions will be counted in tabulations of the votes cast on proposals,
whereas broker non-votes will not be counted for purposes of determining whether
a proposal has been approved.
EXPENSE OF MAILING
The expense of preparing and mailing of this Proxy Statement to
shareholders of the Company is being paid for by the Company. The Company is
also requesting brokers, custodians, nominees and fiduciaries to forward this
Proxy Statement to the beneficial owners of the shares of common stock of the
Company held of record by such persons. The Company will not reimburse such
persons for the cost of forwarding.
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<PAGE>
PROXIES
In voting their Common Stock, stockholders may vote in favor of or
against the proposal to approve the proposals on the agenda or may abstain from
voting. Stockholders should specify their choice on the accompanying proxy card.
All properly executed proxy cards delivered pursuant to this solicitation and
not revoked will be voted at the Meeting in accordance with the directions
given. If no specific instruction are given with regard to the matter to be
voted upon, then the shares represented by a signed proxy card will be voted
"FOR" the approval of the Amendment and in the discretion of such proxies to any
other procedural matters which may properly come before the Meeting or any
adjournments thereof. All proxies delivered pursuant to this solicitation are
revocable at any time before they are voted at the option of the persons
executing them by (i) giving written notice to the Secretary of the Company,
(ii) by delivering a later dated proxy card, or (iii) by voting in person at the
Meeting. All written notices of revocation and other communications with respect
to revocations of proxies should be addressed to Ernest Cheung, Secretary,
Drucker Industries, Inc., #1-1035 Richards Street, Vancouver BC Canada V6B 3E4.
HOLDERS OF COMMON STOCK ARE REQUIRED TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO THE COMPANY IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE.
The person named as proxy is Gerald Runolfson, a director of the Company.
In addition to the solicitation of proxies by mail, the Company,
through its directors, officers, and employees, may solicit proxies from
stockholders personally or by telephone or other forms of communication. The
Company will not reimburse anyone for reasonable out-of-pocket costs and
expenses incurred in the solicitation of proxies. The Company also will request
brokerage houses, nominees, fiduciaries, and other custodians to forward
soliciting materials to beneficial owners, and the Company will reimburse such
persons for their reasonable expenses incurred in doing so. All expenses
incurred in connection with the solicitation of proxies will be borne by the
Company.
INTEREST OF PERSONS IN MATTERS TO BE ACTED UPON
None. No director or shareholder owning 10% or more of the outstanding
shares has indicated her or his intent to oppose any action to be taken at the
meeting. No officer or director or shareholder has any interest in any matter to
be voted upon, except that all officers and directors may be deemed
beneficiaries under the Employee Stock Award Program proposed for adoption.
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<PAGE>
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
As of the call date of the meeting, _____________, 2000, the total
number of common shares outstanding and entitled to vote was 5,542,065.
The holders of such shares are entitled to one vote for each share held
on the record date. There is no cumulative voting on any matter on the agenda of
this meeting. No additional shares will be issued subsequent to call date and
prior to meeting.
RECORD DATE
Stock transfer records will remain open. Five days prior to mailing of
the Proxy Statement shall be the record date for determining shareholders
entitled to vote and receive notice of the meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of May 31, 2000, with
respect to the shares of common stock of the Company owned by (i) owners of more
than 5% of the outstanding shares of common stock, (ii) each director of the
Company, and (iii) all directors and officers of the Company as a group. Unless
otherwise indicated, all shares are held by the person named and are subject to
sole voting and investment are by such person.
<TABLE>
<CAPTION>
Title Name and Amount and Percent
of Address of Nature of of
Class Beneficial Owner Beneficial Interest Class
----- ---------------- ------------------- -----
<S> <C> <C> <C>
Common Richco Investors, Inc. 9,225,000 28.4%
789 W. Pender St., #830
Vancouver, BC Canada V6C 1H2
Common Gerald Runolfson 512,500 1.5%
President and Director
4151 Rose Crescent
West Vancouver, BC Canada
a) Porta-Pave Industries, Inc. 380,000
(owned by Runolfson family)
b) Gerald Runolfson, 132,499
Individually
Common Ernest Cheung (1) 9,225,000 28.4%
Secretary and Director
904-183 Keefer Place
Vancouver, BC Canada V6B 6B9
Common Patrick Chan 0 0%
Director and Chairman
#7 Conduit Road, Flat 6E
Hong Kong
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<PAGE>
Common Joseph Tong 0 0%
Director
53 Allview Crescent
North York, Ont., Canada
M2J 2R4
(1) Through Richco Investors, Inc.
</TABLE>
VOTING REQUIRED FOR APPROVAL
I. A majority of the shares of common stock outstanding at the record
date must be represented at the Annual Meeting in person or by proxy in order
for a quorum to be present, but if a quorum should not be present, the meeting
may be adjourned without further notice to shareholders, until a quorum is
assembled. Each shareholder will be entitled to cast one vote at the Annual
Meeting for each share of common stock registered in such shareholder's name at
the record date.
II. The Delaware General Corporation Law requires that 51% of the out-
standing shares present vote in favor of the proposed Amendment to the Articles
of Incorporation to change the name.
III. Abstensions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Each share of Common Stock entitles the holder thereof to one vote on all
matters to come before the Annual Meeting. Holders of shares of Common Stock are
not entitled to cumulative voting rights.
IV. The favorable vote of a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting is
necessary to elect the nominees for directors of the Company and to approve the
Employee Stock Award Plan.
REMUNERATION AND OTHER TRANSACTIONS WITH MANAGEMENT
(a) Cash Compensation.
Compensation paid by the Company for all services provided during the
fiscal year ended December 31, 1999, (1) to each of the Company's two most
highly compensated executive officers whose cash compensation exceeded
$60,000.00 and (2) to all officers as a group is set forth below under
directors. None.
(b)Compensation Pursuant to Plans. None.
(c)Other Compensation. None.
(d)Compensation of Directors. None.
Compensation paid by the Company for all services provided during the
period ended December 31, 1999, (1) to each of the Company's directors whose
cash compensation exceeded $60,000.00
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<PAGE>
and (2) to all directors as a group is set forth on the next page:
<TABLE>
<CAPTION>
Name of Individual Capacities
Number of Persons in Cash Stock
in Group Which Served Compensation Compensation
------------------ ------------ ------------ ------------
<S> <C> <C> <C>
Gerald W. Runolfson President 0 0
Ernest Cheung Secretary/Director 0 0
Patrick Pak Ling Chan Director/Chairman 0 0
Joseph S. Tong Director 0 0
All directors as a group 0 0
</TABLE>
Committees and Meetings
The Board held four meetings during the fiscal year ended December 31,
2000.The Board has standing Audit and Compensation Committees. The Audit
Committee conducted its business during the regular meetings of the Board of
Directors during the last fiscal year and in addition, conferred from time to
time as necessary. The Compensation Committee, in addition to meetings as part
of the regular meetings of the Board, also conferred from time to time as
necessary. The Board has no standing nominating committee. All directors
attended more than 75% of the Board meetings and the meetings of the Board
committees on which such directors served.
The Audit Committee of the Board presently consists of Mr. Cheung and
Mr. Chan. The Audit Committee has the responsibility to review the scope of the
annual audit, recommend to the Board the appointment of the independent
auditors, and meet with the independent auditors for review and analysis of the
Company's systems, the adequacy of controls and the sufficiency of financial
reporting and accounting compliance.
Messrs. Cheung and Chan currently serve on the Compensation Committee.
The Compensation Committee will administers the Company's Employee Stock Award
Plan (the "Plan") and determines the compensation to be paid to each of the
Company's executive officers, employees, and Directors.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Securities and Exchange Commission requires disclosure where an
executive officer of a company served or serves as a director or on the
compensation committee of an entity other than the Company and an executive
officer of such other entity served or serves as a director or on the
compensation committee of the Company. The Company does not have any such
interlocks. Decisions as to executive compensation are made by the Compensation
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<PAGE>
Committee. Messrs. Cheung and Chan are members of the Compensation Committee.
Indemnification of Directors and Officers
As permitted by Section 145 of the Delaware General Corporation Law,
the Company's Certificate of Incorporation includes a provision that eliminates
the personal liability of its directors for monetary damages for breach or
alleged breach of their duty of care. In addition, as permitted by Section 145
of the Delaware General Corporation Law, the Bylaws of the Company provide
generally that the Company shall indemnify its directors and officers to the
fullest extent permitted by Delaware law, including those circumstances in which
indemnification would otherwise be discretionary.
The Company has entered into indemnification agreements with each of
its directors and executive officers that provide the maximum indemnity allowed
to directors and executive officers by Section 145 of the Delaware General
Corporation Law and the Bylaws, as well as certain additional procedural
protections. In addition, the indemnification agreements provide generally that
the Company will advance expenses incurred by directors and executive officers
in any action or proceeding as to which they may be indemnified.
The indemnification provision in the Bylaws, and the indemnification
agreements entered into between the Company and its directors and executive
officers, may be sufficiently broad to permit indemnification of the officers
and directors for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act").
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the year ended December
31, 1999 (the "Form 10-KSB") is being furnished simultaneously herewith. The
Form 10-KSB is not considered a part of this Proxy Statement.
The Company will also furnish to any stockholder of the Company a copy
of any exhibit to the Form 10-KSB as listed thereon, upon request and upon
payment of the Company's reasonable expenses of furnishing such exhibit.
Requests should be directed to Ernest Cheung, Secretary, at #1-1035 Richards
Street, Vancouver, BC Canada V6B 3E4.
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<PAGE>
BOARD OF DIRECTORS AND OFFICERS
The persons listed below are Officers and the members of the Board of
Directors. All are nominees for Director for the following term.
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
The directors and executive officers of the Company as of 2000 are as
follows:
Period of
Service As
An Officer Or
Name Age Position(s) Director
----------------------- -------- ------------------------ -------------------
Gerald W. Runolfson 58 President & Director Annual
Ernest Cheung 49 Secretary & Director Annual
Patrick Pak Ling Chan 45 Director & Chairman Annual
Joseph S. Tong 49 Director Annual
The directors of the Company hold office until the next annual meeting
of the shareholders and until their successors have been duly elected and
qualified. The officers of the Company are elected at the annual meeting of the
Board of Directors and hold office until their successors are chosen and
qualified or until their death, resignation, or removal. The Company presently
has no executive committee or audit committee.
The principle occupations of each director and officer of the Company
for at least the past five years are as follows:
MANAGEMENT EXPERIENCE
Gerald William Runolfson, President and Director, age 59, has been
President and Director of the Company since 1991. He received a Bachelor of
Science in Civil Engineering in 1963 from the University of Saskatchewan,
Canada. He studied Business Administration from 1970 - 1971 at the University of
Alberta, Canada. From 1988 to date, he has been President of International Butec
Industries Corp., Vancouver, BC. From 1994 to present he has been President of
Elkon Products, Inc. of Vancouver, BC. He has been a Director of Horseshoe Gold
Mines since 1991.
Ernest Cheung, Secretary and Director, age 49, received an MBA in Finance
and Marketing from Queen's University, in Kingston, Ontario in 1975 and obtained
a Bachelors Degree in Math in 1973 from University of Waterloo, Ontario. From
1984 to 1991, he was Vice President and Director, Capital Group Securities, Ltd.
in Toronto, Canada. From 1991 to 1993, he was Vice President of Midland Walwyn
Capital, Inc. of Toronto, Canada. From 1993, to 1994, he was Vice Chairman of
Tele Pacific International Communications Corp. of Vancouver, BC. From 1994 -
1996, he was Vice President of Finance of BIT Integration Technology, Inc. of
- 9 -
<PAGE>
Toronto, Canada. From May 1995 to present, he has served as President of Richco
Investors, Inc. of Vancouver, BC.
From 1992 - 1995, he served as a Director of Tele Pacific International
Communications Corp. (VSE).He has also served as a Director of Richco Investors,
Inc. (CDN) since 1995.From 1995 - 1996, he was a Director of BIT Integration
Technology, Inc. (ASE).Since 1997, he has served and is still serving as
Director of the following companies: Argo International Holdings, Inc. (VSE);
Spur Ventures, Inc. (VSE); Drucker Industries, Inc. (NASD Bulletin Board); Xin
Net Corp. (NASD Bulletin Board); Speechlink Communications Corp. (NASD);
Global-Pacific Minerals, Inc. (TSE); and Pacific E-Link Corp. (VSE); NetNation
Communications, Inc. (Nasdaq small cap.).
He has held a Canadian Securities license but is currently inactive. He
has been a Director of Registrant since January 1997.
Patrick Pak Ling Chan, age 45, has ben a Director of Registrant since
January 1997 and is now Chairman. He graduated from McGill University in
Montreal, Quebec with a Bachelor of Commerce in Accounting in 1977. He is a
Chartered Accountant in British Columbia (since 1980).From 1992 to 1993, he was
executive assistant to the Chairman, Solid Pacific Enterprises, a company
engaged in manufacturing and distribution of confectionery products in Hong Kong
and China. From 1985 to 1992, he was employed at Coopers & Lybrand, Toronto,
Canada, and focused on mergers and acquisitions. From 199 to 1995, he was a
registered Securities Representative with Bache Securities.
Joseph S. Tong, age 49, has been a Director of Registrant since January
1997. Mr. Tong matriculated from La Salle College, Kowloon, Hong Kong in 1968.
From 1986 to 1990, he was a Branch Manager for Canadian Imperial Bank of
Commerce. From 1990 to 1994, he was Regional Manager, Asian Banking, Canadian
Imperial Bank of Commerce. From 1994 to 1995, he was President of China Growth
Enterprises Corporation. From 1995 to present, he has been a Director, Corporate
Finance, of Corporate Capital Group in Ontario, Canada. He is currently a
Director of Agro International Holdings, Inc. of Vancouver, BC since January
1997 and Global Pacific Minerals, Inc. of Vancouver, BC since January 1997.
Proposal #1
NOMINATION AND ELECTION OF DIRECTORS
The Company's Bylaws currently provide for the number of directors of
the Company to be established by resolution of the Board of Directors and that
number is four. The Board has nominated four (4) persons. At this Annual
Meeting, a Board of four (4) directors will be elected. Except as set forth
below, unless otherwise instructed, the proxy holders will vote the proxies
received by them for Management's nominees named below.
- 10 -
<PAGE>
All the nominees are presently directors of the Company. In the event that any
Management nominee shall become available, or if other persons are nominated,
the proxy holders will vote in their discretion for a substitute nominee. It is
not expected that any nominee will be unavailable. The term of office of each
person elected as a director will continue until the next Annual Meeting of
Stockholders or until a successor has been elected and qualified.
The proxies solicited hereby cannot be voted for a number of persons
greater than the number of nominees named below. The Certificate of
Incorporation of the Company does not permit cumulative voting. A plurality of
the votes of the holders of the outstanding shares of Common Stock represented
at a meeting at which a quorum is presented may elect directors.
The business experience of each director nominee is discussed on pages
9 and 10 of this Proxy Statement.
THE DIRECTORS NOMINATED BY MANAGEMENT ARE:
Gerald W. Runolfson
Ernest Cheung
Patrick Pak Ling Chan
Joseph S. Tong
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" MANAGEMENT'S NOMINEES.
Proposal #2
PROPOSED AMENDMENTS TO ARTICLES OF INCORPORATION
FOR NAME CHANGE ONLY
CHANGE IN CORPORATE NAME
The Board is asking shareholders to authorize a name change of the
Corporation to Drucker, Inc. and to approve an amendment to the Articles of
Incorporation for the new name, Drucker, Inc. Management recommends the
amendment to the Articles of Incorporation, to change the name to Drucker, Inc.,
be approved and recommends a vote "for" Proposals #2.
Proposal #3
EMPLOYEE STOCK AWARD PLAN
On May 15, 2000, the Board unanimously approved an Employee Stock Award
Plan, subject to stockholder approval, for three million shares, all of which
shares will be available for grant to directors and selected employees, advisors
and consultants of the Company. The Board believes that the Plan is necessary
- 11 -
<PAGE>
for the Company to compete effectively in its market by attracting and retaining
key talent with stock options.
The following summary does not purport to be a complete statement of
the Plan's terms and is subject to and qualified in its entirety by reference to
Exhibit A.
Under the Plan, only employees of the Company or any subsidiary
(including, without limitation, independent contractors who are not members of
the Board) are eligible to receive grants of NSOs by the Compensation Committee.
In addition, only employees who are common-law employees of the Company or any
subsidiary are eligible for the grant of Incentive Stock Options ("ISOs").
Nonemployee directors are only eligible for fixed grants of NSOs, as set forth
in the Plan and as described herein. The Plan is administered by the
Compensation Committee of the Board, which selects the employees to whom options
will be granted, determines the number of shares to be made subject to each
grant, and prescribes other terms and conditions, including the type of
consideration to be paid to the Company for the grant of each option and vesting
schedules in connection with each grant.
Under the Plan, each nonemployee director would be granted an NSO to
purchase 30,000 shares of Common Stock on the date such nonemployee director
first joins the Board (the "Initial NSO"). The Initial NSO would vest ratably
over a two (2) year period and have an exercise price equivalent to the market
closing price on the date of grant. In addition, upon the conclusion of each
regular annual meeting of stockholders, each nonemployee director who will
continue to serve on the Board would receive an NSO to purchase 10,000 shares
(the "Annual NSO").The Annual NSO would vest ratably over a two (2) year period
and have an exercise price equivalent to the market closing price on the date of
grant. The Board believes that such increases to the automatic grants to
nonemployee directors are necessary to attract and retain the director talent
needed by the Company to compete effectively in its market.
Set forth below is an explanation of the Plan and a summary of its
principal terms. The text of the Plan is set forth in Exhibit A to this Proxy
Statement.
Shares Subject to the Employee Stock Award Plan
There are 3,000,000 shares of Common Stock authorized for option
grants. The authorized shares issuable in connection with the Plan are subject
to adjustment in the event of stock dividends, mergers or other reorganizations
and other situations.
If the Plan is adopted, a total of 3,000,000 shares of Common Stock
will be available for future issuance. If any option granted under the Plan
expires or is canceled or otherwise terminated, the shares allocable to the
unexercised portion of
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<PAGE>
such option shall again be available for additional option grants.
Participants
All directors, employees, advisors, and consultants of the Company are
eligible to receive options under the Plan either by automatic grant for the
Board made pursuant to the Plan or if selected by the Compensation Committee.
Currently, 6 persons are eligible to participate in the Plan.
In addition, the Plan provides that no person may be granted in any
single calendar year options to purchase in excess of 300,000 shares of Common
Stock, subject to certain specified adjustments.
Terms of Stock Options
The exercise price of NSOs under the Plan shall not be less than 85% of
the fair market value of a share of the Company's Common Stock on the date of
grant. The exercise price of all NSOs granted to a nonemployee director shall be
equal to 100% of the fair market value of a share of the Company's Common Stock
on the date of grant.
The exercise price of ISOs granted to the Company's employees shall not
be less than 100% of the fair market value of a share of the Company's Common
Stock on the date of grant, except that ISOs granted to ten percent (10%)
stockholders shall have an exercise price equal to 110% of the fair market value
of a share of the Company's Common Stock on the date of grant.
The term of any Option granted under the Plan shall not exceed ten (10)
years from the date of grant, except that ISOs granted to ten percent (10%)
stockholders are not exercisable after the expiration of five (5) years from the
date of grant.
In the Plan, each nonemployee director would receive an Initial NSO to
purchase 30,000 shares of Common Stock, vesting ratably over a two (2) year
period. If the Plan is adopted, each nonemployee director would receive an
Annual NSO to purchase 10,000 shares, vesting ratably over a two (2) year
period.
The Compensation Committee: (1) administers the Plan, and except for
automatic grants for the Board made pursuant to the Plan (2) determines the
number of shares and options to be granted under the Plan, and the timing,
vesting, and other terms of such grants, including, without limitation, the
purchase price for each award or sale of shares and the exercise price of each
option.
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<PAGE>
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of the
Plan is intended to be a summary of applicable federal law. State and local tax
consequences may differ.Because the federal income tax rules governing options
and related payments are complex and subject to frequent change, optionees are
advised to consult their tax advisors prior to exercise of options or
dispositions of stock acquired pursuant to option exercise.
ISOs and NSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the Internal
Revenue Code. NSOs need not comply with such requirements.
An employee is not taxed on the grant or exercise of an ISO. The
difference between the exercise price and the fair market value on the exercise
date of the shares acquired under an ISO will, however, be a preference item for
purposes of the alternative minimum tax. If an optionee holds the shares
acquired upon exercise of an ISO for at least two (2) years following grant and
at least one (1) year following exercise, theoptionee's gain, if any, upon a
subsequent disposition of such shares is long-term capital gain. If such shares
are held longer than 18 months, the long-term capital gains rate is generally
20%. The measure of the gain is the difference between the proceeds received on
disposition and the optionee's basis in the shares (which generally equals the
exercise price).If an optionee disposes of stock acquired pursuant to exercise
of an ISO before satisfying the one (1)- and two (2)-year holding periods
described above, the optionee may recognize both ordinary income and capital
gain in the year of disposition. The amount of the ordinary income will be
limited to the difference between the fair market value of the stock on the
exercise date and the option exercise price. Any remaining gain on the
disposition will be capital gain and will be long-term capital gain if the stock
had been held for at least one (1) year following the date of exercise. The
Company is not entitled to an income tax deduction on the grant or exercise of
an ISO if there is no disposition of the shares prior to the satisfaction of the
holding period requirements described above. If the holding periods are not
satisfied, the Company will be entitled to a deduction in the year the optionee
disposes of the shares, in an amount equal to the ordinary income recognized by
the optionee.
An employee is not taxed on the grant of an NSO. On exercise, however,
the optionee recognizes ordinary income equal to the difference between the
option price and the fair market value of the shares on the date of exercise.
The Company is entitled to an income tax deduction in the year of exercise in
the amount recognized by the optionee as ordinary income. Any gain on subsequent
disposition of the shares is long-term capital gain if the shares are held for
at least one (1) year following exercise. The Company does not receive a
deduction for this gain.
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<PAGE>
New Plan Benefits
The Compensation Committee has full discretion to determine the number
and amount of options to be granted to employees under the Plan. Therefore, the
benefits and amounts that will be received by each of the officers named in the
Summary Compensation Table above, the executive officers as a group, the
directors who are not executive officers as a group, and all other employees
under the Plan are not presently determinable.
The number of options to be received by each nonemployee director
pursuant to the terms of the Plan, subject to stockholder approval, are fixed,
as discussed above.
Required Approval
For action to be taken at the Annual Meeting, a quorum must be present.
To be considered approved, the amendment and restatement of the Plan must
receive the affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting.
Unless marked to the contrary, proxies received will be voted "FOR" the
amendment and restatement of the Second Amended and Restated Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT AND
RESTATEMENT OF THE COMPANY'S EMPLOYEE STOCK AWARD PLAN.
Proposal #4
INDEPENDENT PUBLIC ACCOUNTANTS
Amisano & Hanson, Independent Public Accountants, of Vancouver, BC,
have been engaged as the Certifying accountants for the period through fiscal
year 2000 and shareholders are asked to ratify such engagement. Ratification of
the appointment of Amisano & Hansen, as the Company's independent public
accountants for the fiscal year ending December 31, 2000 will require the
affirmative vote of a majority of the shares of Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting. In the event the
stockholders do not ratify the appointment of Amisano & Hansen for the
forthcoming fiscal year, such appointment will be reconsidered by the Board.
Representatives of Amisano & Hansen are expected to be present at the Annual
Meeting to make statements if they desires to do so, and such representatives
are expected to be available to respond to appropriate questions.
Unless marked to the contrary, proxies received will be voted "FOR"
ratification of the designation of Amisano & Hansen as independent accountants
for the Company's fiscal year ending December 31, 2000.
- 15 -
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATIONOF THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matter appropriate for
shareholder action consistent with regulations of the Securities and Exchange
Commission. Should a shareholder intend to present a proposal at next year's
annual meeting, it must be received by the secretary of the Company at #1-1035
Richards Street, Vancouver, BC Canada V6B 3E4, not later than 30 days prior to
fiscal year end, in order to be included in the Company's proxy statement and
form of proxy relating to that meeting. It is anticipated that the next annual
meeting will be held in June, 2001.
Other Matters. Management knows of no business that will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting. If, however, other matters are properly brought before the
Annual Meeting, it is the intention of the persons named in the accompanying
form of proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: ______________
By Order of the Board of Directors
By: ----------------------------------
Gerald W. Runolfson, President
- 16 -
<PAGE>
EXHIBIT A
EMPLOYEE STOCK AWARD PLAN
OF
DRUCKER INDUSTRIES, INC.
SECTION 1. ESTABLISHMENT AND PURPOSE.
The Plan is established on ______________________, 2000 subject to
shareholder approval, to offer directors and selected employees, advisors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, by purchasing Shares of the Company's
Common Stock. The Plan provides both for the direct award or sale of Shares and
for the grant of Options to purchase Shares. Options granted under the Plan may
include Nonstatutory Options as well as ISOs intended to qualify under section
422 of the Code.
The Plan is intended to comply in all respects with Rule 16b-3 (or its
successor) under the Exchange Act and shall be construed accordingly.
SECTION 2. DEFINITIONS.
(a) "Board of Directors" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean a committee of the Board of Directors, as
described in Section 3(a).
(d) "Company" shall mean Drucker Industries, Inc. (or Drucker, Inc.),
a Delaware corporation.
(e) "Employee" shall mean (i) any individual who is a common-law
employee of the Company or of a Subsidiary, (ii) an Outside Director and (iii)
an independent contractor who performs services for the Company or a Subsidiary
and who is not a member of the Board of Directors. Service as an Outside
Director or independent contractor shall be considered employment for all
purposes of the Plan, except as provided in Subsections (a) and (b) of Section
4.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "Exercise Price" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(h) "Fair Market Value" shall mean the market price of Stock,
determined by the Committee as follows:
(i) If Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the
closing price reported for such date by the applicable
composite- transactions report;
(ii) If Stock was traded over-the-counter on the date in
question and was traded on the Nasdaq system or the Nasdaq
National Market, then the Fair Market Value shall be equal to
the last-transaction price quoted for such date by the Nasdaq
system or the Nasdaq National Market;
<PAGE>
(iii) If Stock was traded over-the-counter on the date in
question but was not traded on the Nasdaq system or the Nasdaq
National Market, then the Fair Market Value shall be equal to
the mean between the last reported representative bid and
asked prices quoted for such date by the principal automated
inter-dealer quotation system on which Stock is quoted or, if
the Stock is not quoted on any such system, by the "Pink
Sheets" published by the National Quotation Bureau, Inc.; and
(iv) If none of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by the Committee in
good faith on such basis as it deems appropriate.
In all cases, the determination of Fair Market Value by the
Committee shall be conclusive and binding on all persons.
(i) "ISO" shall mean an employee incentive stock option described
insection 422(b) of the Code.
(j) "Nonstatutory Option" shall mean an employee stock option not
describedin sections 422(b) or 423(b) of the Code.
(k) "Offeree" shall mean an individual to whom the Committee has
offered the right to acquire Shares under the Plan (other than upon exercise of
an Option).
(l) "Option" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.
(m) "Optionee" shall mean an individual who holds an Option.
(n) "Outside Director" shall mean a member of the Board of Directors
who is not a common-law employee of the Company or of a Subsidiary.
(o) "Plan" shall mean this Employee Stock Award Plan.
(p) "Purchase Price" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Committee.
(q) "Service" shall mean service as an Employee.
(r) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 9 (if applicable).
(s) "Stock" shall mean the Common Stock of the Company.
(t) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(u) "Stock Purchase Agreement" shall mean the agreement between the
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(v) "Subsidiary" shall mean any corporation, if the Company and/or one
or more other Subsidiaries own not less than 50 percent of the total combined
voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on a date after the adoption
of the Plan shall be considered a Subsidiary commencing as of such date.
<PAGE>
(w) "Total and Permanent Disability" shall mean that the Optionee is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted, or can be expected to last, for a continuous period
of not less than one year.
SECTION 3. ADMINISTRATION.
(a) Committee Membership. The Plan shall be administered by the
Committee. The "Committee" shall mean the full Board of Directors and/or a
committee designated by the Board of Directors, which is authorized to
administer the Plan under this Section. The Committee's membership shall enable
the Plan to qualify under Rule 16b-3 with regard to the grant of Shares and
Options under the Plan to persons who are subject to Section 16 of the Exchange
Act. Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Shares or Options under the
Plan to persons subject to Section 16 of the Exchange Act.
(b) Committee Procedures. The Committee shall designate one of its
members as chairman. The Committee may hold meetings at such times and places as
it shall determine. The acts of a majority of the Committee members present at
meetings at which a quorum exists, or acts reduced to or approved in writing by
all Committee members, shall be valid acts of the Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of
the Plan;
(iv) To determine when Shares are to be awarded or offered
for sale and when Options are to be granted under the Plan;
(v) To select the Offerees and Optionees;
(vi) To determine the number of Shares to be offered to each
Offeree or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or
sale of Shares, including (without limitation) the Purchase
Price, and to specify the provisions of the Stock Purchase
Agreement relating to such award or sale;
(viii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to
determine whether such Option is to be classified as an ISO or
as a Nonstatutory Option, and to specify the provisions of the
Stock Option Agreement relating to such Option;
(ix) To amend any outstanding Stock Purchase Agreement or
Stock Option Agreement, subject to applicable legal
restrictions and, to the extent such amendments adverse to the
Offeree's or Optionee's interest, to the consent of the
Offeree or Optionee who entered into such agreement;
<PAGE>
(x) To prescribe the consideration for the grant of each
Option or other right under the Plan and to determine the
sufficiency of such consideration; and
(xi) To take any other actions deemed necessary or advisable
for the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall
be final and binding on all Offerees, all Optionees, and all persons deriving
their rights from an Offeree or Optionee. No member of the Committee shall be
liable for any action that he or she has taken or has failed to take in good
faith with respect to the Plan, any Option, or any right to acquire Shares under
the Plan.
SECTION 4. ELIGIBILITY.
(a) General Rules. Only Employees (including, without limitation,
independent contractors who are not members of the Board of Directors) shall be
eligible for designation as Optionees or Offerees by the Committee. In addition,
only Employees who are common-law employees of the Company or a Subsidiary shall
be eligible for the grant of ISOs. Employees who are Outside Directors shall
only be eligible for the grant of the Nonstatutory Options described in
Subsection (b) below.
(b) Outside Directors. Any other provision of the Plan notwith-
standing, the participation of Outside Directors in the Plan shall be subject to
the following restrictions:
(i) Outside Directors shall receive no grants other than the
Nonstatutory Options described in this Subsection (b).
(ii) Each Outside Director who first becomes a member of the
Board of Directors after the effective date of the Company's
registration statement on Form 8-A under the Exchange Act
shall receive a one-time grant of a Nonstatutory Option
covering 30,000 Shares (subject to adjustment under Article
9). Such Nonstatutory Option shall be granted on the date when
such Outside Director first joins the Board of Directors,
shall become exercisable ratably over a two-year period and
expire on the fifth anniversary of the date of grant.
(iii) Upon the conclusion of each regular annual meeting of
the Company's stockholders, each Outside Director who will
continue serving as a member of the Board of Directors
thereafter shall receive a Nonstatutory Option covering 10,000
Shares (subject to adjustment under Article 9), except that
such Nonstatutory Option shall not be granted in the calendar
year in which the same Outside Director received the
Nonstatutory Option described in Paragraph (ii) above.
Nonstatutory Options granted under this Paragraph (iii) shall
ratably over a two year period and expire on the fifth
anniversary of date of grant.
(iv) All Nonstatutory Options granted to an Outside Director
under this Subsection (b) shall also become exercisable in
full in the event of the termination of such Outside
Director's service because of death, Total and Permanent
Disability or voluntary retirement at or after age 65.
(v) The Exercise Price under all Nonstatutory Options granted
to an Outside Director under this Subsection (b) shall be
equal to 100 percent of the Fair Market Value of a Share on
the date of grant, payable in one of the forms described in
Subsection (a), (b), (c) or (d) of Section 8.
(vi) All Nonstatutory Options granted to an Outside Director
under this Subsection (b) shall terminate on the earliest of
(A) the 10th anniversary of the date of grant, (B) the date
three months after the termination of such Outside
<PAGE>
Director's service for any reason other than death or Total
and Permanent Disability or (C) the date 12 months after the
termination of such Outside Director's service because of
death or Total and Permanent Disability.
The Committee may provide that the Nonstatutory Options that otherwise
would be granted to an Outside Director under this Subsection (b) shall instead
be granted to an affiliate of such Outside Director. Such affiliate shall then
be deemed to be an Outside Director for purposes of the Plan, provided that the
service-related vesting and termination provisions pertaining to the
Nonstatutory Options shall be applied with regard to the service of the Outside
Director.
(c) Ten-Percent Stockholders. An Employee who owns more than 10 percent
of the total combined voting power of all classes of outstanding stock of the
Company or any of its Subsidiaries shall not be eligible for the grant of an ISO
unless (i) the Exercise Price is at least 110 percent of the Fair Market Value
of a Share on the date of grant and (ii) such ISO by its terms is not
exercisable after the expiration of five years from the date of grant.
(d) Attribution Rules. For purposes of Subsection (c) above, in
determining stock ownership, an Employee shall be deemed to own the stock owned,
directly or indirectly, by or for such Employee's brothers, sisters, spouse,
ancestors and lineal descendants. Stock owned, directly or indirectly, by or for
a corporation, partnership, estate or trust shall be deemed to be owned
proportionately by or for its stockholders, partners or beneficiaries. Stock
with respect to which such Employee holds an option shall not be counted.
(e) Outstanding Stock. For purposes of Subsection (c) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant. "Outstanding stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
SECTION 5. STOCK SUBJECT TO PLAN.
(a) Basic Limitation. Shares offered under the Plan shall be authorized
but unissued Shares or treasury Shares. The aggregate number of Shares which may
be issued under the Plan (upon exercise of Options or other rights to acquire
Shares) shall not exceed 500,000 Shares, subject to adjustment pursuant to
Section 9. The number of Shares which are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
which then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or
other right for any reason expires or is canceled or otherwise terminated, the
Shares allocable to the unexercised portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that Shares issued
under the Plan are reacquired by the Company pursuant to a forfeiture provision,
a right of repurchase or a right of first refusal, such Shares shall again be
available for the purposes of the Plan.
<PAGE>
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
(a) Stock Purchase Agreement. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such award or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Offeree within 30 days after the grant of such right was
communicated to the Offeree by the Committee. Such right shall not be
transferable and shall be exercisable only by the Offeree to whom such right was
granted.
(c) Purchase Price. The Purchase Price of Shares to be offered under
the Plan shall not be less than 85 percent of the Fair Market Value of such
Shares. Subject to the preceding sentence, the Purchase Price shall be
determined by the Committee at its sole discretion. The Purchase Price shall be
payable in a form described in Section 8.
(d) Withholding Taxes. As a condition to the award, sale or vesting of
Shares, the Offeree shall make such arrangements as the Committee may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that arise in connection with such Shares. The Committee may permit
the Offeree to satisfy all or part of his or her tax obligations related to such
Shares by having the Company withhold a portion of any Shares that otherwise
would be issued to him or her or by surrendering any Shares that previously were
acquired by him or her. The Shares withheld or surrendered shall be valued at
their Fair Market Value on the date when taxes otherwise would be withheld in
cash. The payment of taxes by assigning Shares to the Company, if permitted by
the Committee, shall be subject to such restrictions as the Committee may
impose, including any restrictions required by rules of the Securities and
Exchange Commission.
(e) Restrictions on Transfer of Shares. Any Shares awarded or sold
under the Plan shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreement. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 9. Options granted to any
Optionee in a single calendar year shall in no event cover more than 15,000
Shares, subject to adjustment in accordance with Section 9. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price. The Exercise Price of an ISO shall not be less than 100 percent of the
Fair Market Value of a Share on the date of grant, except as otherwise provided
in Section 4(c). The Exercise Price of a
<PAGE>
Nonstatutory Option shall not be less than 85 percent of the Fair Market Value
of a Share on the date of grant. Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Committee at its sole
discretion. The Exercise Price shall be payable in a form described in Section
8.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal,
state, local or foreign withholding tax obligations that may arise in connection
with the disposition of Shares acquired by exercising an Option. The Committee
may permit the Optionee to satisfy all or part of his or her tax obligations
related to the Option by having the Company withhold a portion of any Shares
that otherwise would be issued to him or her or by surrendering any Shares that
previously were acquired by him or her. Such Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.
The payment of taxes by assigning Shares to the Company, if permitted by the
Committee, shall be subject to such restrictions as the Committee may impose,
including any restrictions required by rules of the Securities and Exchange
Commission.
(e) Exercisability and Term. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
vesting of any Option shall be determined by the Committee at its sole
discretion. A Stock Option Agreement may provide for accelerated exercisability
in the event of the Optionee's death, Total and Permanent Disability or
retirement or other events. The Stock Option Agreement shall also specify the
term of the Option. The term shall not exceed 10 years from the date of grant,
except as otherwise provided in Section 4(c). Subject to the preceding sentence,
the Committee at its sole discretion shall determine when an Option is to
expire.
(f) Nontransferability. During an Optionee's lifetime, such Optionee's
Option(s) shall be exercisable only by him or her and shall not be transferable,
unless permitted by the Stock Option Agreement. In the event of an Optionee's
death, such Optionee's Option(s) shall not be transferable other than by will,
by a beneficiary designation executed by the Optionee and delivered to the
Company, or by the laws of descent and distribution.
(g) Termination of Service (Except by Death). If an Optionee's Service
terminates for any reason other than the Optionee's death, then such Optionee's
Option(s) shall expire on the earliest of the following occasions:
(i) The expiration date determined pursuant to Subsection (e) above;
(ii) The date 90 days after the termination of the Optionee's Service
for any reason other than Total and Permanent Disability; or
(iii) The date six months after the termination of the Optionee's
Service by reason of Total and Permanent Disability.
The Optionee may exercise all or part of his or her Option(s) at any
time before the expiration of such Option(s) under the preceding sentence, but
only to the extent that such Option(s) had become exercisable before the
Optionee's Service terminated or became exercisable as a result of the
termination. The balance of such Option(s) shall lapse when the Optionee's
Service terminates. In the event that the Optionee dies after the termination of
the Optionee's Service but before the expiration of the Optionee's Option(s),
all or part of such Option(s) may be exercised (prior to expiration) by his or
her designated beneficiary (if applicable), by the executors or administrators
of the Optionee's estate or by any person who has acquired such Option(s)
directly from the Optionee by bequest or inheritance, but only to the extent
that such Option(s) had become exercisable before the Optionee's Service
terminated or became exercisable as a result of the termination.
<PAGE>
(h) Leaves of Absence. For purposes of Subsection (g) above, Service
shall be deemed to continue while the Optionee is on military leave, sick leave
or other bona fide leave of absence (as determined by the Committee). The
foregoing notwithstanding, in the case of an ISO granted under the Plan, Service
shall not be deemed to continue beyond the first 90 days of such leave, unless
the Optionee's reemployment rights are guaranteed by statute or by contract.
(i) Death of Optionee. If an Optionee dies while he or she is in
Service, then such Optionee's Option(s) shall expire on the earlier of the
following dates:
(i) The expiration date determined pursuant to Subsection (e) above;
or
(ii) The date six months after the Optionee's death.
All or part of the Optionee's Option(s) may be exercised at any time
before the expiration of such Option(s) under the preceding sentence by his or
her designated beneficiary (if applicable), by the executors or administrators
of the Optionee's estate or by any person who has acquired such Option(s)
directly from the Optionee by bequest or inheritance, but only to the extent
that such Option(s) had become exercisable before the Optionee's death or became
exercisable as a result of the Optionee's death. The balance of such Option(s)
shall lapse when the Optionee dies.
(j) No Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustments shall be made, except as provided in
Section 9.
(k) Modification, Extension and Renewal of Options. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options or may accept the cancellation of outstanding Options (to the extent not
previously exercised) in return for the grant of new Options at the same or a
different price. The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, impair such Optionee's rights or
increase his or her obligations under such Option.
(l) Restrictions on Transfer of Shares. Any Shares issued upon exercise
of an Option shall be subject to such special forfeiture conditions, rights of
repurchase, rights of first refusal and other transfer restrictions as the
Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any general restrictions
that may apply to all holders of Shares.
SECTION 8. PAYMENT FOR SHARES.
(a) General Rule. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in lawful money of the United States of
America at the time when such Shares are purchased, except as follows:
(i) In the case of Shares sold under the terms of a Stock
Purchase Agreement subject to the Plan, payment shall be made
only pursuant to the express provisions of such Stock Purchase
Agreement. However, the Committee (at its sole discretion) may
specify in the Stock Purchase Agreement that payment may be
made in one or all of the forms described in Subsections (e),
(f) and (g) below.
(ii) In the case of an ISO granted under the Plan, payment
shall be made only pursuant to the express provisions of the
applicable Stock Option Agreement. However, the Committee (at
its sole discretion) may specify in the Stock Option Agreement
that payment may be made pursuant to Subsections (b), (c),
(d), (f) or (g) below.
<PAGE>
(iii) In the case of a Nonstatutory Option granted under the
Plan, the Committee (at its sole discretion) may accept
payment pursuant to Subsections (b), (c), (d), (f) or (g)
below.
(b) Surrender of Stock. To the extent that this Subsection (b) is
applicable, payment may be made all or in part with Shares which have already
been owned by the Optionee or his or her representative for more than 12 months
and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are
purchased under the Plan.
(c) Exercise/Sale. To the extent that this Subsection (c) is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the
Company to sell Shares and to deliver all or part of the sales proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.
(d) Exercise/Pledge. To the extent that this Subsection (d) is
applicable, payment may be made by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Shares to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.
(e) Services Rendered. To the extent that this Subsection (e) is
applicable, Shares may be awarded under the Plan in consideration of services
rendered to the Company or a Subsidiary prior to the award. If Shares are
awarded without the payment of a Purchase Price in cash, the Committee shall
make a determination (at the time of the award) of the value of the services
rendered by the Offeree and the sufficiency of the consideration to meet the
requirements of Section 6(c).
(f) Promissory Note. To the extent that this Subsection (f) is
applicable, a portion of the Purchase Price or Exercise Price, as the case may
be, of Shares issued under the Plan may be payable by a full-recourse promissory
note, provided that (i) the par value of such Shares must be paid in lawful
money of the United States of America at the time when such Shares are
purchased, (ii) the Shares are security for payment of the principal amount of
the promissory note and interest thereon and (iii) the interest rate payable
under the terms of the promissory note shall be no less than the minimum rate
(if any) required to avoid the imputation of additional interest under the Code.
Subject to the foregoing, the Committee (at its sole discretion) shall specify
the term, interest rate, amortization requirements (if any) and other provisions
of such note.
(g) Other Forms of Payment. To the extent that this Subsection (g) is
applicable, payment may be made in any other form approved by the Committee,
consistent with applicable laws, regulations and rules.
SECTION 9. ADJUSTMENT OF SHARES.
(a) General. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock (by
reclassification or otherwise) into a lesser number of Shares, a
recapitalization, a spinoff or a similar occurrence, the Committee shall make
appropriate adjustments in one or more of (i) the number of Shares available for
future grants under Section 5, (ii) the number of Nonstatutory Options to be
granted to Outside Directors under Section 4(b), (iii) the number of Shares
covered by each outstanding Option or (iv) the Exercise Price under each
outstanding Option.
(b) Reorganizations. In the event that the Company is a party to a merger
or other reorganization, outstanding Options shall be subject to the agreement
of merger or
<PAGE>
reorganization. Such agreement may provide, without limitation, for the
assumption of outstanding Options by the surviving corporation or its parent,
for their continuation by the Company (if the Company is a surviving
corporation), for payment of a cash settlement equal to the difference between
the amount to be paid for one Share under such agreement and the Exercise Price,
or for the acceleration of their exercisability followed by the cancellation of
Options not exercised, in all cases without the Optionees' consent. Any
cancellation shall not occur until after such acceleration is effective and
Optionees have been notified of such acceleration. In the case of Options that
have been outstanding for less than 12 months, a cancellation need not be
preceded by an acceleration.
(c) Reservation of Rights. Except as provided in this Section 9, an
Optionee or Offeree shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any dividend or
any other increase or decrease in the number of shares of stock of any class.
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
SECTION 10. SECURITIES LAWS.
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 11. NO RETENTION RIGHTS.
Neither the Plan nor any Option shall be deemed to give any individual
a right to remain an employee, consultant or director of the Company or a
Subsidiary. The Company and its Subsidiaries reserve the right to terminate the
service of any employee, consultant or director at any time, with or without
cause, subject to applicable laws, the Company's certificate of incorporation
and by-laws and a written employment agreement (if any).
SECTION 12. DURATION AND AMENDMENTS.
(a) Term of the Plan. The Plan, as set forth herein, shall become
effective as of August 1, 2000. The Plan shall terminate automatically 10 years
after its initial adoption by the Board of Directors on May 15, 2000, and may be
terminated on any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may,
subject to applicable law, amend, suspend or terminate the Plan at any time and
for any reason. An amendment to the Plan shall require stockholder approval only
to the extent required by applicable law.
(c) Effect of Amendment or Termination. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.
<PAGE>
SECTION 13. EXECUTION.
To record the adoption of the Plan by the Board of Directors on May 15,
2000 and by the Company's stockholders on _____________, 2000, the Company has
caused its authorized officer to execute the same.
DRUCKER INDUSTRIES, INC.
By _________________________
Its ________________________
FOLD AND DETACH HERE
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DRUCKER INDUSTRIES, INC.
#1-1035 Richards Street, Vancouver, BC, Canada V6B 3E4
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS, ____________________, 2000
The undersigned hereby appoints Gerald Runolfson proxy, with full power of
substitution, for and in the name or names of the undersigned, to vote all
shares of Common Stock of Drucker Industries, Inc. held of record by the
undersigned at the Annual Meeting of Stockholders to be held on
_________________, 2000, at 9:00 a.m., at the offices of the Company, #1-1035
Richards Street, Vancouver, BC, Canada V6B 3E4, and at any adjournment thereof,
upon the matters described in the accompanying Notice of Annual Meeting and
Proxy Statement, receipt of which is hereby acknowledged, and upon any other
business that may properly come before, and matters incident to the conduct of,
the meeting or any adjournment thereof. Said person is directed to vote on the
matters described in the Notice of Annual Meeting and Proxy Statement as
follows, and otherwise in their discretion upon such other business as may
properly come before, and matters incident to the conduct of, the meeting and
any adjournment thereof.
1. To elect a Board of four (4) directors to hold office until the next
annual meeting of stockholders or until their respective successors
have been elected and qualified:
Nominees: Ernest Cheung, Patrick Chan, Joseph S. Tong, and Gerald W.
Runolfson
[_] FOR: nominees listed above (except as marked to the con-
trary below).
[_] WITHHOLD authority to vote for nominee(s) specified below
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), write
the applicable name(s) in the space provided below.
--------------------------------------------------------------------------------
2. To change the name of the Company to Drucker, Inc.
[_] FOR [_] AGAINST [_] ABSTAIN
<PAGE>
3. To approve the adoption of the Employee Stock Award Plan of Drucker
Industries, Inc.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To ratify the designation of Amisano & Hansen as independent
accountants for the period ending December 31, 2000:
[_] FOR [_] AGAINST [_] ABSTAIN
5. To transact such other business as may properly come before the Annual
Meeting.
[_] FOR [_] AGAINST [_] ABSTAIN
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND RETURN THIS PROXY
CARD IN THE ENCLOSED ENVELOPE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE STATED PROPOSALS.
----------------------------------------
Signature of Stockholder
----------------------------------------
Signature if held jointly
Dated: __________________________ , 2000
IMPORTANT: If shares are
jointly owned, both owners
should sign. If signing as
attorney, executor,
administrator, trustee,
guardian or other person
signing in a representative
capacity, please give your
full title as such. If a
corporation, please sign in
full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person.
