<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Hydro Maid International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(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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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
HYDROMAID INTERNATIONAL, INC.
12222 South 1000 East, Suite 1
Draper, Utah 84020
PROXY STATEMENT
October 20, 1999
SOLICITATION OF PROXIES
DATE, TIME, AND PLACE
This Proxy Statement and the accompanying proxy/voting instruction
form ("Proxy Form") are being mailed beginning on or about the date shown
above, to holders of common shares (the "Stockholders") in connection with
the solicitation of proxies by the Board of Directors (the "Board of
Directors" or "Board") of HYDROMAID INTERNATIONAL, INC., a Nevada corporation
(the "Company"), to be used at the Annual Meeting of Stockholders (the
"Meeting"), to be held November 20, 1999 at the Salt Palace Convention
Center, 90 South West Temple, Salt Lake City, Utah 84101,telephone number
(801) 521-2822, at 7:00 p.m. local time, or any adjournment thereof.
QUORUM AND VOTING
Proxies are solicited to give all Stockholders of record at the
close of business on October 1, 1999 (the "Record Date"), an opportunity to
vote on matters that come before the Meeting. This procedure is necessary
because Stockholders live in various states and many may not be able to
attend the Meeting. Shares of Common Stock (the "Shares") can be voted only
if the Stockholder is present in person or is represented by proxy. The
presence in person or by proxy of the holders of a majority of the total
outstanding voting Shares is necessary to constitute a quorum at the Meeting.
When your Proxy Form is returned properly signed, the Shares
represented will be voted in accordance with your directions. You can specify
your choices by marking the appropriate boxes on the enclosed Proxy Form. If
your Proxy Form is signed and returned without specifying choices, the Shares
will be voted as recommended by the Board of Directors. Abstentions marked on
the Proxy Form and broker non-votes are voted neither "for" nor "against"
items being voted upon, but are counted in the determination of a quorum.
As of the Record Date, there were 23,990,559 Shares outstanding.
Each outstanding Share is entitled to one vote on each matter properly
brought before the Meeting other than the election of Directors which is by
cumulative voting.
SOLICITATION AND COST
The Company will bear all costs and expenses related to this
solicitation of proxies by the Board of Directors, including the costs of
preparing, printing, and mailing to the Stockholders this Proxy Statement and
accompanying materials. In addition to the solicitation of proxies by use of
the mails, the Directors, Officers, and employees of the Company, without
receiving additional compensation, may solicit proxies personally, by
telephone, or by any other means of communication.
<PAGE>
REVOCABILITY OF PROXY
If you wish to give your proxy to someone other than the persons
designated by the Board of Directors, all names appearing on the enclosed
Proxy Form must be crossed out and the name of another person or persons
inserted. The signed card must be presented at the Meeting by the person or
persons representing you. You may revoke your proxy at any time before it is
voted at the Meeting by executing a later-dated proxy, by voting by ballot at
the Meeting, or by filing a written revocation of your proxy with the Company
before the Meeting.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND
RETURN THE ACCOMPANYING PROXY FORM WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. If you do attend, you may vote by ballot at the Meeting, thereby
canceling any proxy previously given.
As a matter of policy, proxies, ballots, and voting tabulations that
identify individual Stockholders are kept private by the Company. Such
documents are available for examination only by the inspectors of election
and certain personnel associated with processing Proxy Forms and tabulating
the vote. The vote of any Stockholder is not disclosed except as may be
necessary to meet legal requirements.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for
the year ended December 31, 1998, filed as part of the 1998 Annual Report on
Form 10-KSB in response to Item 13 of the 10-KSB. The Annual Report and
accompanying Financial Statements should have been enclosed in the mailing
containing this Proxy Statement. If you did not receive a copy of the Annual
Report and Financial Statements, please contact the Company and request that
the information be sent to you. A copy of the 1998 Annual Report may be
obtained from the Company without cost to the requesting Stockholder by
contacting the Company.
INTERESTS OF PERSONS IN MATTERS TO BE ACTED UPON
The Board of Directors is recommending the Stockholders ratify the
1999 Stock Option and Incentive Plan adopted by the Board on September 20,
1999 (the "1999 Plan") which provides for 1,200,000 shares of the Company's
Common Stock to be set aside for grant in accordance with the directions of
the Compensation Committee as approved by the Board of Directors. The options
to be granted pursuant to the 1999 Stock Option and Incentive Plan are
intended primarily for grant to Officers, Directors, and key employees of and
key service providers to the Company.
If the 1999 Plan is ratified by the Stockholders at the Meeting,
Culley W. Davis, Ronald L. LaFord, Mark S. Brewer, John W. Nagel, Bruce H.
Haglund, and Bradley E. Zarbock will each receive an option to purchase
50,000 shares of the Company's Common Stock at a price of $5.00 per share,
the fair market value upon the date of grant. One quarter of the options
granted to each named Director shall become subject to exercise upon the
successful completion of each calendar quarter of service as a Director. If a
named Director is unable to complete his term as a Director, he will forfeit
any options not exercisable at the time of his resignation or dismissal as a
Director.
Culley W. Davis will receive an option to purchase an additional
250,000 shares of the Company's Common Stock at $5.00 per shares if the 1999
Plan is ratified for his services as an Officer and Chairman of the Board.
2
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
As of the Record Date for the Annual Meeting of Stockholders, the
number of issued and outstanding shares of Common Stock totaled 23,990,559.
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Shares as of October 1, 1999 for (i) each current
Director and each nominee for Director (ii) each named executive officer of
the Company as defined in 402(a)(2) of Regulation S-B of the Securities Act
of 1933, (iii) all persons known by the Company to beneficially own more than
5% of the Company's voting Shares, and (iv) all officers and Directors of the
Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage of
Name Title Ownership(1)(2) Class(3)
- ----------------------------- -------------------------------- --------------- --------------
<S> <C> <C> <C>
Culley W. Davis CEO and Chairman 40,923 *
Pinnacle Enterprises, Inc. (4) Beneficial Owner 3,013,424 12.56%
Ronald L. LaFord President and Director -0- -0-
Mark S. Brewer Vice President and Director 36,000 *
Paul A. Kujanpaa Vice President of Manufacturing 76,000 *
John W. Nagel CFO and Director -0- -0-
Bruce H. Haglund Secretary and Director 72,000 *
Bradley E. Zarbock Director 8,000 *
J. Steven Young (5) Director Nominee -0- *
All Directors and Executive Officers as a Group 3,246,347 13.5%
</TABLE>
- -------------------
* Less than one percent.
(1) Unless otherwise noted, the Company believes that all Shares are
beneficially owned and that all persons named in the table or family
members have sole voting and investment power with respect to all Shares
owned by them. Unless otherwise indicated, the contact address of each
individual is 12222 South 1000 East, #1, Draper, Utah 84020.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options.
(3) Assumes 23,990,559 Shares outstanding plus, for each individual, any
securities that specific person has the right to acquire upon exercise of
presently exercisable stock options. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised. An
additional 354,441 Shares issuable upon conversion by ESSI (defined below)
stockholders who have not yet converted their stock is not included in the
percentage of class calculation. Inclusion of such shares would reduce the
ownership percentages shown.
(4) Culley W. Davis owns 100% of the issued and outstanding shares of Pinnacle
Enterprises Group, Inc.
(5) Mr. Young was appointed to the Board on October 20, 1999. For his services
as a Director, he will receive a total of 300,000 shares of the Company's
Common Stock, 200,000 shares for the first year of service and 100,000
shares for the second year of service.
3
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS DURING 1999
On October 20, 1999, J. Steven Young was appointed as a Director of
the Company. For his service as a Director for a two-year period, Mr. Young
will receive a total of 300,000 shares of the Company's Common Stock, 200,000
shares for the first year of service and 100,000 shares for the second year
of service.
During 1999, Culley W. Davis has made working capital advances to
the Company, such that as of August 31, 1999, the balance of this liability
totals $291,134.22. This may be settled with a cash payment to Mr. Davis out
of private placement proceeds or it may be settled by an issuance of common
stock shares at the same price that is realized in a private placement to
third parties.
TRANSACTIONS DURING 1998
On December 11, 1998, the Company entered into an Agreement and Plan
of Reorganization (the "Reorganization") which resulted in the acquisition by
the Company of no less than 80% of the issued and outstanding shares of
restricted Common Stock of Environmental Systems & Solutions, Inc. ("ESSI"),
a Nevada corporation. The Reorganization qualified as a tax-free
reorganization under Section 368 (a) (1) (B) of the 1986 Internal Revenue
Code. Effective with the closing of the Reorganization, certain of the
Company's stockholders agreed to cancel approximately 2,555,000 of their
common shares. Under the terms of the Reorganization, the former stockholders
of ESSI received four shares of the Company for each one share of ESSI and in
the aggregate acquired approximately 92% of the issued and outstanding Common
Stock of the Company. ESSI was previously a privately held company with no
public market for its stock. As of October 1, 1999, the former stockholders
of ESSI owned about 90% of the 24,000,000 post-Reorganization shares of the
Company's issued and outstanding Common Stock. Such shares are currently
restricted under Federal law.
In 1998 Culley W. Davis made unsecured advances to the Company
totaling $1,478,467, which included $1,427,000 of proceeds from sales of the
Company's stock to investors at $8.00 per share. The stock sold by Mr. Davis
was personally owned by him or Pinnacle Enterprises Group, Inc., which he
owns, and the proceeds were advanced to the Company according to an agreement
between the parties. During December 1998, the Company issued 178,375 shares
of Common Stock to Culley W. Davis, or his assigns, valued at $8.00 per share
as reimbursement stock for his personal shares sold. The stock sale proceeds
received by the Company have been reported as an original stock issuance in
the accompanying financial statements.
The Company is indebted to Culley W. Davis, who financed the
purchase of a 1999 Ford truck used by the Company for product demonstrations
at remote locations. The note is payable in monthly installments of $770
including principal and interest, is secured by the truck, and bears interest
at a fixed rate of 7.9%.
John W. Nagel, the Company's CFO and a Director is the
brother-in-law of the Company's legal counsel Bruce H. Haglund who also
serves as a Director and is a stockholder.
Gibson, Haglund & Johnson, ESSI's attorneys, were paid approximately
$162,000 in legal fees for services rendered during 1998. Bruce H. Haglund,
an Officer and Director of the Company, is a member of the law firm.
4
<PAGE>
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act requires the Company's
officers, Directors, and persons who own more than 10% of a registered class
of the Company's equity securities to file reports of ownership and changes
in ownership with the SEC and NASDA. Officers, Directors, and greater than
10% beneficial owners are required by SEC regulation to furnish the Company
with copies of all Section 16 (a) forms they file. The Company believes that
all filing requirements applicable to its Officers, Directors, and greater
than 10% beneficial owners were complied with.
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate governance principles, the Board is not
involved in day-to-day operating details. Members of the Board of Directors
are kept informed of the Company's business through discussions with the
Chairman and other officers, by reviewing analyses and reports sent to them,
and by participating in Board and committee meetings.
The Board held four meetings during 1998. All Directors attended
more than 75% of the Meetings held.
COMMITTEES OF THE BOARD
During the third quarter of 1999, the Board of Directors established
a number of committees, including a Finance Committee, an Audit Committee,
and a Compensation Committee, each of which is briefly described below.
The Finance Committee was established to oversee Company
expenditures and approve contracts entered into by the Company requiring the
payment of $50,000 or more. The Committee consists of Culley W. Davis, Ronald
L. LaFord, and Mark S. Brewer.
The Audit Committee was established to meet with management to
consider the adequacy of the internal controls and the objectivity of
financial reporting; the committee meets with the independent auditors and
with appropriate Company financial personnel about these matters. The
committee recommends to the Board of Directors the appointment of the
independent auditors, subject to ratification by the Stockholders at the
Annual Meeting. Both the internal auditors and the independent auditors
periodically meet alone with the committee and always have unrestricted
access to the committee. The committee consists of John W. Nagel, Mark S.
Brewer, and Bruce H. Haglund.
The Compensation Committee negotiates employment contracts,
recommends to the Board of Directors compensation for officers, Directors,
and employees, and administers management incentive compensation plans,
including stock option plans. The committee consists of Culley W. Davis,
Ronald L. LaFord, and Bruce H. Haglund.
Upon the election of Directors at the Meeting, the Committees will
be reconstituted.
COMPENSATION OF DIRECTORS
The Company's policy is not to pay cash compensation to directors
who are employees or consultants of the Company for their services as
directors, but reimburses reasonable out-of-pocket expenses of directors for
attendance at meetings. The Company has agreed to issue Mr. Young a total of
300,000 shares of the Company's Common Stock, 200,000 shares the first year
of service and 100,000
5
<PAGE>
shares the second year of service. All other Directors will receive options
to purchase shares of Common Stock if the 1999 Plan is approved as outlined
above.
LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Nevada law. Such limitation of
liability does not apply to liabilities arising under the federal securities
laws and does not affect the availability of equitable remedies such as
injunctive relief or rescission.
The Company's Bylaws provide that the Company shall indemnify its
directors and executive officers and may indemnify its other officers and
employees and other agents to the fullest extent permitted by law. The
Company believes that indemnification under its Bylaws covers at least
negligence and gross negligence on the part of indemnified parties. The
Company's Bylaws also permit it to secure insurance on behalf of any officer,
director, employee, or other agent for any liability arising out of his or
her actions in such capacity, regardless of whether the Bylaws permit such
indemnification.
At present, there is no pending litigation or proceeding involving
any director, officer, employee, or agent of the Company where
indemnification will be required or permitted. The Company is not aware of
any threatened litigation or proceeding that might result in a claim for such
indemnification.
PRICE RANGE OF COMMON STOCK
The following table sets forth, for the period from October 1998
through September 1999, the high and low bid quotations each quarter for the
Common Stock during the most recent fiscal year as reported by the OTC
Bulletin Board. The Company's stock began trading on October 12, 1998. The
prices represent quotations between dealers, without adjustment for retail
markup, mark down or commission, and do not necessarily represent actual
transactions.
COMMON STOCK PRICE ACTUAL
<TABLE>
<CAPTION>
High Low
---- ---
1999
----
<S> <C> <C>
1st Quarter 4.50 2.25
2nd Quarter 5.875 2.5625
3rd Quarter 7.125 4.625
1998
----
4th Quarter 4.0 0.437
</TABLE>
The Company has not paid any cash dividends on its Common Stock
since its incorporation and anticipates that, for the foreseeable future,
earnings, if any, will continue to be retained for use in its business. As of
October 1, 1999, the approximate number of record holders of the Company's
Common Stock was 1,154.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY FORM)
The Bylaws of the Company provide for the Directors to number at
least three and no more than seven. Seven members of the Board of Directors
are to be elected at the Meeting. The nominees selected
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<PAGE>
by the Board of Directors are listed on the following pages. Stockholders
have cumulative voting rights when voting for Directors; accordingly, any
Stockholder may multiply the number of Shares he or she is entitled to vote
by the number of Directors to be elected and allocate votes among the
candidates in any manner. There are no conditions precedent to the exercise
of the right to cumulate votes in the election of Directors of the Company:
Stockholders may exercise such cumulative voting rights, either in person or
by proxy, with or without advance notice to the Company. The seven Director
nominees receiving the highest number of votes will be elected. Any Shares
not voted, whether by abstention, broker non-vote, or otherwise, have no
impact on the vote.
The Board of Directors intends to vote proxies equally for the
nominees unless otherwise instructed on the Proxy Form. If you do not wish
your Shares to be voted for particular nominees, please identify the
exceptions in the designated space provided on the Proxy Form.
If at the time of the Meeting one or more of the nominees have
become unavailable to serve, Shares represented by proxies will be voted for
the remaining nominees and for any substitute nominee or nominees designated
by the Board of Directors.
Directors elected at the Meeting will hold office until the next
Annual Meeting or until their successors have been elected and qualified. For
each nominee there follows a brief listing of principal occupation for at
least the past five years, other major affiliations, and age as of October 1,
1999.
NOMINEES FOR ELECTION AS DIRECTORS
The names, ages, and positions of the nominees for election as
Directors are as follows:
<TABLE>
<CAPTION>
Name Age Position with the Company First Elected
---- --- ------------------------- -------------
<S> <C> <C> <C>
Culley W. Davis 43 CEO, Chairman, Director 1998
Ronald L. LaFord 52 President, Director 1998
Mark S. Brewer 41 Vice President, Director 1998
John W. Nagel 58 CFO, Director 1998
Bruce H. Haglund 47 Secretary, Director 1998
Bradley E. Zarbock 40 Director 1999
J. Steven Young 37 Director 1999
</TABLE>
CULLEY W. DAVIS, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD, DIRECTOR
Mr. Davis was the founder of ESSI and since its inception in 1992
has held various positions including, President, Secretary, Chief Financial
Officer, Treasurer, and Director. Mr. Davis currently holds the positions of
Chief Executive Officer and Chairman of the Board of the Company. Since 1992,
Mr. Davis has also served as Chief Executive Officer and Chairman of the
Board of Dancor, Inc., which became VitriSeal, Inc. through a reorganization
on March 18, 1999 (OTC/BB: "VTSL"), the developer of Vitroseal -TM-, a
patented coating technology for the metal coating market. From 1989 until
1992, Mr. Davis was President and Chief Executive Officer of Lubrication
Research, Inc., a company engaged in the development and marketing of
technology used in the automobile industry. During the period of 1984 until
1990, Mr. Davis founded and served as President of Vencor International,
Inc., a developer of form-fitted, reusable, cloth diapers for medical and
non-medical applications. From 1979 until 1984, Mr. Davis founded and
operated Capital Diamond Corporation, a diamond and jewelry wholesaling
company.
In May 1996, Mr. Davis entered into a stipulation for judgment and
permanent injunction (the "Injunction") with the Department of Finance of the
State of Idaho (the "State") in connection with a complaint (the "Complaint")
filed by the State alleging that Mr. Davis violated provisions of the Idaho
Securities Act. In accordance with the Injunction, Mr. Davis paid a $50,000
fine to the state and was permanently enjoined from violating the Idaho
Securities Act, from offering or selling unregistered
7
<PAGE>
securities in Idaho, and from transacting securities business in Idaho
without applicable securities licenses.
RONALD L. LAFORD, PRESIDENT, DIRECTOR
Mr. LaFord served as President and a member of the Board of
Directors of ESSI from September 1997 until the Reorganization and currently
serves in the same positions with the Company. From March 1994 until
September 1997, Mr. LaFord served as Director of National Marketing and
Advertising for Flying J Corporation, a Utah-based company engaged in the
development and operation of truck stops and service stations. From 1986 to
1994, he served in various capacities for Citizens Utilities Company
including, Director of Administration and Supply, Managing Coordinator of
Marketing and Sales and Coordinator of Vehicle Procurement and Maintenance.
From 1980 until 1985, Mr. LaFord was a Senior Manager for Union Carbide
Corporation. From 1974 until 1979, he was a Senior Consultant for General
Telephone and Electronics (GTE). Mr. LaFord received his A.A. degree in Civil
Engineering and B.A. degree in Marketing and Business Administration from
Central Washington University. He is a graduate of the General Telephone and
Electronics School of Management.
MARK S. BREWER, VICE PRESIDENT, DIRECTOR
Mr. Brewer served as Vice President and a member of the Board of
Directors of ESSI from September 1997 to the Reorganization and currently
serves in the same positions with the Company. He also serves as President of
Search International and Onkli Incorporated. Search International was founded
by Mr. Brewer in 1990 for the purpose of developing and marketing new
products. He founded Onkli Incorporated in 1991 for the purpose of creating
and packaging consumer houseware products. In 1979, Mr. Brewer joined
Advertising Professionals, a full service advertising agency which he
acquired in 1989 and operated until 1996.
JOHN W. NAGEL, CHIEF FINANCIAL OFFICER, DIRECTOR
Mr. Nagel joined ESSI as Chief Financial Officer and a member of the
Board of Directors in September 1998 and served until the Reorganization and
currently serves in the same positions with the Company. From 1988 to August
1998, Mr. Nagel served as Director of Finance for WVUE Television of New
Orleans, Louisiana. During the period of 1983 to 1988, he was operator and
part owner of several franchised ice cream parlors. From 1980 to 1983, Mr.
Nagel held positions in administration and management for The Nautilus Group,
Inc., a poultry incubation equipment manufacturer and portable electronic
stage lighting system manufacturer. From 1968 to 1980, Mr. Nagel worked for
Arthur Anderson & Co. in numerous capacities relating to consulting for the
design and implementation of computer-based management information systems.
He served as an officer in the U.S. Navy Supply Corps from 1962 to 1966. Mr.
Nagel was awarded his M.B.A. degree from Harvard University and his B.S.
degree in accounting from Ohio State University.
BRUCE H. HAGLUND, SECRETARY, DIRECTOR
Mr. Haglund served as a Director and Secretary of ESSI from
September 1998 until the Reorganization and currently serves in the same
positions with the Company. Mr. Haglund is a principal in the law firm of
Gibson, Haglund & Paulsen in Orange County, California where he has been
engaged in the private practice of law since 1980. Mr. Haglund is also the
Secretary and a member of the Board of Directors of Metalclad Corporation
(Nasdaq SmallCap: MTLC), Aviation Distributors, Inc. (OTC/BB: ADIN),
Renaissance Golf Products, Inc. (OTC/BB: FGLF), and VitriSeal, Inc. (OTC/BB:
VTSL). He is a graduate of the University of Utah College of Law.
8
<PAGE>
BRADLEY E. ZARBOCK, DIRECTOR
Mr. Zarbock has served as a Director of the Company since April
1999. Since 1980, Mr. Zarbock has been employed by and is currently Vice
President of Plumbers Supply Co., a Utah-based company which has been
nationally ranked among the top 100 plumbing, heating, ventilation, and air
conditioning companies according to sales volume for the past 10 years. Since
1996, Mr. Zarbock has served as a director of the American Supply
Association's ("ASA") Education Foundation and, concurrently since 1998, he
has served as President of the Young Executive's Division of the ASA and a
member of the ASA's political action committee. The ASA is a federation of
regional and national organizations serving the
plumbing-heating-cooling-piping industry. During 1998, he served as the Young
Executives Chairman of the Board of the ASA. Mr. Zarbock graduated from
Westminster College with a B.S. degree in International Business Management
in 1985.
J. STEVEN YOUNG, DIRECTOR
Mr. Young has served as a Director of the Company since October
1999. Mr. Young holds the honor of the highest quarterback rating in National
Football League ("NFL") history. Mr. Young has been a member of the NFL since
1985 and has received numerous NFL and collegiate awards, including, but not
limited to, Most Valuable Player of Super Bowl XXIX, SPORTS ILLUSTRATED AND
SPORTING NEWS' 1994, 1993 and 1992 Player of the Year, NFL's Most Valuable
Player 1994 and 1992, a Consensus 1983 All-American and Heisman Trophy Winner
Runner-up. Throughout his NFL history, Mr. Young has provided marketing
endorsements at various times for Nike, Sprint, VISA, Sun Microsystems, Power
Bar, Pert Plus, National Dairy Association, Wheaties, and Advil. In 1993, Mr.
Young established the Forever Young Foundation, an international, non-profit
public charity, based in Los Altos, California, that provides funding for
charitable organizations which encourage the development, security, strength,
and spiritual vitality of the family. Mr. Young is currently a spokesperson
for The Children's Miracle Network, NFL F.A.C.T., a national program
promoting education for youth, and NFL P.L.A.Y. Football. In 1994, Mr. Young
received his Juris Doctorate degree from Brigham Young University College of
Law.
Management intends to vote for the directors as nominated.
EXECUTIVE OFFICERS
The name and position of the Company's executive officer who is not
also a nominee for Directors are as follows:
PAUL A. KUJANPAA, VICE PRESIDENT OF MANUFACTURING
Mr. Kujanpaa served as Vice President of Manufacturing of ESSI from
July 1998 until the Reorganization and currently serves in the same positions
with the Company. From 1997 to 1998, he served as Senior Manager of Order
Fulfillment and Logistics for Haworth Inc. From 1994 until 1997, Mr. Kujanpaa
was a Management Consulting Manager for Grant Thornton LLP, the country's
seventh largest accounting and management consulting firm. During the period
of 1991 to 1993, he held the position of Senior Management Consultant for
Booz, Allen & Hamilton, an international management consulting firm ranked
among the top five in the world. From 1989 until 1991, Mr. Kujanpaa worked as
Management Consultant for A.T. Kearney Incorporated, an international
management consulting firm based in Chicago, Illinois. During the period of
1988 to 1989, Mr. Kujanpaa was a partner of and Engineer Consultant for Metz
and Associates Incorporated, a manufacturing engineering consulting firm
which was sold to A.T. Kearney Incorporated in 1989. From 1986 to 1988, he
held the position of Manufacturing Engineering Consultant for Ingersoll
Engineers Incorporated of Rockford, Illinois. Mr. Kujanpaa received his B.S.
in Manufacturing Engineering from Brigham Young University.
9
<PAGE>
APPROVAL OF HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
(ITEM 2 ON THE PROXY FORM)
On September 20, 1999, the Board of Directors of the Company,
subject to stockholder approval, adopted the 1999 Stock Option and Incentive
Plan (the "Plan"), a copy of which is attached hereto as Exhibit "A." The
Plan is intended to provide incentive to key employees and Directors of, and
key consultants, vendors, customers, and others expected to provide
significant services to, the Company, to encourage proprietary interest in
the Company, to encourage such key employees to remain in the employ of the
Company and its subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants, vendors,
customers, and others to increase their efforts in providing significant
services to the Company. The Company has reserved 1,200,000 shares of Common
Stock for issuance under the Plan. The Plan provides that incentive stock
options ("Incentive Stock Options") may be granted to full-time employees
(who may also be Directors) and non-statutory stock options ("Non-statutory
Stock Options") may be granted to non-employee Directors and consultants from
time to time on a discretionary basis by the Board or the Committee. The Plan
also provides for the grant of Non-statutory Stock Options to outside members
of the Board of Directors on a "formula award" basis as provided in Rule
16b-3 of the Securities Exchange Act of 1934 ("Rule 16b-3").
The Plan provides for administration by the Board in compliance with
Rule 16b-3, or by a Committee (the "Committee") appointed by the Board, which
Committee shall be constituted to permit the Plan to comply with Rule 16b-3,
and which shall consist of not less than two members, each of whom has not
participated in the Plan by way of receipt of any discretionary grant of an
option (Incentive Stock Options and Non-statutory Stock Options are together
hereinafter referred to as "Option" or "Options", unless the context
otherwise requires), and who will not so participate while serving as a
member of the Committee, and each of whom has not participated under any
other plan or have received options of the Company during the year preceding
adoption of the Plan by the stockholders (other than pursuant to a formula
award grant under the Plan). A member of the Board or a Committee member
shall in no event participate in any determination related to Options held by
or to be granted on a discretionary basis to such Board or Committee member.
The aggregate number of shares of the Company's authorized but
unissued Common Stock which may be issued upon exercise of Options under the
Plan may not exceed the Shares reserved under the Plan. If any unexercised
option, or any portion thereof, for any reason expires or is terminated, does
not vest or is not delivered, the unexercised or unvested shares allocable to
such Option may again be made subject to any Award.
Options must be evidenced by written stock option agreements in such
form as the Committee may from time to time determine. Each Option must state
the number of shares to which it pertains and must provide for the adjustment
thereof if the outstanding shares of Common Stock are exchanged for cash or a
different number or kind of shares or securities of the Company, or if the
outstanding shares of the Common Stock are increased, decreased, exchanged
for, or otherwise changed, or if additional shares or new or different shares
or securities are distributed with respect to the outstanding shares of the
Common Stock, through a reorganization or merger in which the Company is the
surviving entity or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation, or other capital change or adjustment. In addition, the Board
or the Committee may grant such additional rights in the foregoing
circumstances as the Board or the Committee deems to be in the best interests
of any participant and the Company in order to preserve for the participant
the benefits of the Award.
The exercise price in the case of any Incentive Stock Option must
not be less than the fair market value on the date of grant and, in the case
of any Option granted to an optionee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company,
must
10
<PAGE>
not be less than 110% of the fair market value on the date of grant. The
exercise price, in the case of any Non-statutory Stock Option, must not be
less than 85% of the fair market value on the date of grant.
The purchase price is payable in full in United States dollars upon
the exercise of the Option; provided, however, that if the applicable Option
agreement so provides, the purchase price may be paid (i) by the surrender of
shares in good form for transfer, owned by the participant and having a fair
market value on the date of exercise equal to the purchase price, or in any
combination of cash and shares, as long as the sum of the cash so paid and
the fair market value of the shares so surrendered equals the purchase price;
(ii) by cancellation of indebtedness owed by the Company to the participant;
(iii) with a full recourse promissory note executed by the participant; or
(iv) any combination of the foregoing. The interest rate and other terms and
conditions of such note must be determined by the Board or the Committee. The
Board or Committee may require that the participant pledge his or her shares
of Common Stock to the Company for the purpose of securing the payment of
such note, in which event the stock certificate(s) representing such shares
may not be released to the participant until such note has been paid in full.
Each Option must state the time or times which all or part thereof
becomes exercisable. No Option may be exercised after the expiration of 10
years from the date it was granted, and no Option granted to an optionee who
owns more than 10% of the total combined voting power of all classes of
outstanding stock of the Company may be exercised after the expiration of
five years from the date it was granted. During the lifetime of a participant
in the Plan, such Options may be exercisable only by the participant and
shall not be assignable or transferable. If a participant dies while Options
are exercisable, they may be exercised, subject to the condition that no
option shall be exercisable after the expiration of 10 years from the date
granted and to the extent the right to exercise the Option accrued at any
time within 12 months after the death of the participant, by the executors or
administrators of the deceased participant or by persons who acquired the
option directly from the deceased option holder by bequest or inheritance.
Within the limitations of the Plan, the Board or Committee may
modify, extend, or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting
of new Options in substitution therefor. No modification of an Option may,
without the consent of the participant, alter or impair any rights or
obligations under any Option previously granted.
In the case of Incentive Stock Options granted under the Plan, the
aggregate fair market value (determined as of the date of the grant thereof)
of the shares with respect to which Incentive Stock Options become
exercisable by any participant for the first time during any calendar year
(under the Plan and all other plans maintained by the Company) may not exceed
$100,000. The Board or Committee may, however, with the participant's
consent, authorize an amendment to the Incentive Stock Option which renders
it a Nonstatutory Stock Option.
The stock option agreements authorized under the Plan may contain
such other provisions not inconsistent with the terms of the Plan (including,
without limitation, restrictions upon the exercise of the Options) as the
Board or the Committee deems advisable.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is
required to approve this proposal. Management intends to vote "FOR" the
proposal to approve the 1999 Stock Option and Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE 1999 STOCK OPTION AND
INCENTIVE PLAN, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
11
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITORS
(ITEM 3 ON PROXY FORM)
The Board of Directors has selected Squar, Milner & Reehl, LLP as
independent public accountants for the Company for the fiscal year ending
December 31, 1999, subject to the approval of the Stockholders. To the
knowledge of the Company, at no time has Squar, Milner & Reehl, LLP had any
direct or indirect financial interest in or any connection with the Company
other than as independent public accountants. A representative of Squar,
Milner & Reehl, LLP will be available at the Meeting to make a statement if
the representative so desires and to respond to appropriate questions.
In conjunction with a merger and reorganization of ESSI and the
Company, the Company changed auditors in January 1999. The Company's former
accountants Jones, Jensen & Co. were dismissed effective January 26, 1999,
and Squar, Milner & Reehl, LLP, was appointed as the Company's principal
accountants. There were no disagreements with the former accountant and are
no disagreements with the current Accountant on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
Ratification of the appointment of auditors requires a majority of
the votes cast thereon. Any Shares not voted, whether by abstention, broker
non-vote, or otherwise, have no impact on the vote. If the Stockholders do
not ratify this appointment, other independent auditors will be considered by
the Board or Directors upon recommendation of the Audit Committee.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is
required to approve this proposal. Management intends to vote "FOR" the
proposal to ratify the auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE AUDITORS, AND YOUR PROXY WILL
BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation programs are designed to link executives'
compensation to the performance of the Company. The annual salary paid to
executives over the past three years reflect fixed amounts that are deemed
competitive for executives with comparable ability and experience in the
industry.
COMPENSATION OF OFFICERS
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated. Management of
the Company was completely replaced in conjunction with the Reorganization
between the Company and ESSI.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------------------------------------------
Other Annual
Salary Bonus Compensation
Name and Principal Position Year ($) ($) ($)
-------------------------------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Culley W. Davis, 1998 95,000 -- -0-
Chairman, CEO 1997 -0- -- -0-
Ronald L. LaFord, 1998 88,000 -- -0-
President 1997 18,750 -- -0-
Mark S. Brewer, 1998 78,550 -- -0-
Vice President 1997 72,685 -0-
Joe K. Johnson, 1998 -0- -0-
Former President 1997 -0- -0-
</TABLE>
-------------------
(1) The remuneration described in the table does not include the cost
to the Company of benefits furnished to the named executive
officers, including premiums for health insurance and other
personal benefits provided to such individual that are extended to
all employees of the Company in connection with their employment.
The value of such benefits cannot be precisely determined;
however, the executive Officers named above did not receive other
compensation in excess of the lesser of $50,000 or 10% of such
Officers' cash compensation.
SUBMISSION OF STOCKHOLDER PROPOSALS
Stockholders proposals intended for inclusion in next year's proxy
statement should be sent via certified mail-return receipt requested to Bruce
H. Haglund, Secretary, 12226 South 1000 East, Suite 11, Draper, Utah 84020,
and must be received by February 28, 2000.
MISCELLANEOUS AND OTHER MATTERS
Management knows of no matters to come before the Meeting other than
those specified herein. If any other matter should come before the Meeting,
then the persons named in the enclosed form of proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for
the year ended December 31, 1998, filed as part of the 1998 Annual Report on
Form 10-KSB in response to Item 13 of the 10-KSB. The Annual Report and
attached Financial Statements should have been enclosed in the mailing
containing this Proxy Statement. If you did not receive a copy of the Annual
Report and attached Financial Statement, please contact the Company and
request that the information be sent to you. A copy of the 1998 Annual Report
may be obtained from the Company without cost to the requesting stockholder
by contacting the Company.
A COPY OF THE COMPANY'S CURRENT ANNUAL REPORT ON FORM 10-KSB AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, IS BEING MAILED TO EACH STOCKHOLDER
TOGETHER WITH THIS PROXY STATEMENT. ADDITIONAL COPIES MAY BE OBTAINED BY
STOCKHOLDERS WITHOUT CHARGE BY WRITING TO: HYDROMAID INTERNATIONAL, INC.,
12222 SOUTH 1000 EAST, SUITE 1, DRAPER, UTAH 84020. COPIES OF ANY EXHIBITS TO
THE ANNUAL REPORT, SPECIFICALLY LISTED IN THE ANNUAL REPORT, MAY BE OBTAINED
BY STOCKHOLDERS WITH A CHARGE EQUAL TO THE COMPANY'S COST TO COPY AND SEND
ANY REQUESTED EXHIBIT.
13
<PAGE>
HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
<PAGE>
HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
<TABLE>
<CAPTION>
Page
<S> <C>
I. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
V. PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Ten Percent Stockholders . . . . . . . . . . . . . . . . . . . 4
5.3 Stock Ownership. . . . . . . . . . . . . . . . . . . . . . . . 4
5.4 Outstanding Stock. . . . . . . . . . . . . . . . . . . . . . . 4
VI. STOCK SUBJECT TO THE PLAN. . . . . . . . . . . . . . . . . . . . . . 5
VII. OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1 Stock Option Agreements. . . . . . . . . . . . . . . . . . . . 5
7.2 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . 5
7.3 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . 5
7.4 Medium and Time of Payment . . . . . . . . . . . . . . . . . . 5
7.5 Term and Transferability of Options. . . . . . . . . . . . . . 5
7.6 Modification, Extension, and Renewal of Options. . . . . . . . 6
7.7 Limitation on Grant of Incentive Stock Options . . . . . . . . 6
7.8 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . 6
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS,
AND BENEFICIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.1 Employee Status. . . . . . . . . . . . . . . . . . . . . . . . 6
8.2 No Employment Contract . . . . . . . . . . . . . . . . . . . . 6
8.3 No Transferability . . . . . . . . . . . . . . . . . . . . . . 6
8.4 Plan Not Funded. . . . . . . . . . . . . . . . . . . . . . . . 7
8.5 Adjustments upon Recapitalizations and Corporate Changes . . . 7
8.6 Termination of Employment. . . . . . . . . . . . . . . . . . . 7
8.7 Death of Participant . . . . . . . . . . . . . . . . . . . . . 8
8.8 Disability of Participant. . . . . . . . . . . . . . . . . . . 8
8.9 Retirement of Participant. . . . . . . . . . . . . . . . . . . 8
8.10 Rights as a Stockholder. . . . . . . . . . . . . . . . . . . . 8
8.11 Deferral of Payments . . . . . . . . . . . . . . . . . . . . . 8
8.12 Acceleration of Awards . . . . . . . . . . . . . . . . . . . . 8
i
<PAGE>
IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.1 Termination, Suspension, and Amendment . . . . . . . . . . . . 8
9.2 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . 9
9.3 Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . 9
9.4 Restrictions of Elections Made by Participants . . . . . . . . 9
9.5 Limitations on the Corporation's Obligations . . . . . . . . . 10
9.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 10
9.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 10
9.8 Securities Law Requirements. . . . . . . . . . . . . . . . . . 10
9.9 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
ii
<PAGE>
HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
I. PURPOSE
The HydroMaid International, Inc. 1999 Stock Option and Incentive Plan
is intended to provide incentive to key employees and directors of, and key
consultants, vendors, customers, and others expected to provide significant
services to, the Corporation, to encourage proprietary interest in the
Corporation, to encourage such key employees to remain in the employ of the
Corporation and its Subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants, vendors,
customers, and others to increase their efforts in providing significant
services to the Corporation.
II. DEFINITIONS.
2.1 "Award" shall mean an Option, which may be designated an
Incentive Stock Option or a Nonstatutory Stock Option, in each case as
granted pursuant to the Plan.
2.2 "Award Agreement" shall mean any written agreement, contract,
or other instrument or document evidencing an Award.
2.3 "Beneficiary" shall mean the person, persons, trust, or trusts
entitled by will or the laws of descent and distribution to receive the
benefits specified under the Plan in the event of a Participant's death.
2.4 "Board" shall mean the Board of Directors of the Corporation.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the committee, if any, appointed by the
Board in accordance with Section 4 of the Plan, or the Board if no Committee
has been appointed.
2.7 "Common Stock" shall mean the Common Stock, $.001 par value,
of the Corporation.
2.8 "Corporation" shall mean HYDROMAID INTERNATIONAL, INC., a
Nevada corporation, and its Subsidiaries.
2.9 "Disability" shall mean the condition of a Participant who is
unable to perform his or her substantial and material job duties due to
injury or sickness or such other condition as the Board or Committee may
determine in its sole discretion and/or 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 12 months.
2.10 "Effective Date" shall mean September 20, 1999, the date the
Plan was adopted by the Board provided the stockholders of the Company ratify
the Plan within one year from its adoption by the Board.
1
<PAGE>
2.11 "Eligible Employee" shall mean an individual who is employed
(within the meaning of Code Section 3401 and the regulations thereunder) by
the Corporation. Additionally for purposes of this Plan, a Participant who
is a director or a consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
an Eligible Employee, and service as a director, consultant, vendor,
customer, or other provider of significant services to the Corporation or a
Subsidiary shall be deemed to be employment, except that no Incentive Stock
Option may be granted to a non-employee director or non-employee consultant,
vendor, customer, or other provider of significant services to the
Corporation or a Subsidiary.
2.12 "Event" shall mean any of the following:
(a) Any person or entity (or group of affiliated persons or
entities) acquires in one or more transactions, whether before or after the
effective date of the Plan, ownership of more than 50% of the outstanding
shares of stock entitled to vote in the election of directors of the
Corporation; or
(b) The dissolution or liquidation of the Corporation or a
reorganization, merger, or consolidation of the Corporation with one or more
entities, as a result of which the Corporation is not the surviving entity,
or a sale of all or substantially all of the assets of the Corporation as an
entirety to another entity.
For purposes of this definition, ownership does not include ownership
(i) by a person owning such shares merely of record (such as a member of a
securities exchange, a nominee, or a securities depository system), (ii) by a
person as a bona fide pledgee of shares prior to a default and determination
to exercise powers as an owner of the shares, (iii) by a person who is not
required to file statements on Schedule 13D by virtue of Rule 13d-1(b, or
(iv) by a person who owns or holds shares as an underwriter acquired in
connection with an underwritten offering pending and for purposes of resale.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
2.14 "Exercise Price" shall mean the price per Share of Common
Stock, determined by the Board or the Committee, at which an Award may be
exercised.
2.15 "Fair Market Value" shall mean the value of one Share of
Common Stock, determined as follows:
(a) If the Shares are traded on an exchange, the price at
which Shares traded at the close of business on the date of valuation; or
(b) If the Shares are traded over-the-counter on the OTC
System, the closing price if one is available, or the mean between the bid
and asked prices on such System at the close of business on the date of
valuation; or
(c) If neither (i) nor (ii) above applies, the fair market
value as determined by the Board or the Committee in good faith. Such
determination shall be conclusive and binding on all persons.
2.16 "Incentive Stock Option" shall mean an option described in
Section 422A(b) of the Code.
2.17 "Initial Grant" shall mean the initial grant of Awards as set
forth in Exhibit "A," if any, attached hereto and incorporated herein by
reference.
2.18 "Nonstatutory Stock Option" shall mean an option not described
in Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
2
<PAGE>
2.19 "Option" shall mean either an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.
2.20 "Participant" shall mean an Eligible Employee who has received
an Award under the Plan.
2.21 "Plan" shall mean the HydroMaid International, Inc. 1999 Stock
Option and Incentive Plan, as it may be amended from time to time.
2.22 "Purchase Price" shall mean the Exercise Price times the number
of Shares with respect to which an Award is exercised.
2.23 "Restricted Stock Awards" shall mean any Award of shares of
Common Stock that may be subject to certain restrictions and to a risk of
forfeiture.
2.24 "Retirement" shall mean the voluntary termination of employment
by an Employee upon the attainment of age 65 and the completion of not less
than 20 years of service with the Corporation or a Subsidiary.
2.25 "Rule 16b" shall mean Rule 16b of the Securities and Exchange Act
of 1934.
2.26 "Share" shall mean one share of Common Stock, adjusted in
accordance with Section 8.5 of the Plan (if applicable).
2.27 "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
2.28 "Stock Appreciation Right" shall mean the right granted to a
Participant to be paid an amount measured by the appreciation in the Fair
Market Value of the Common Stock from the date of grant to the date of
exercise of the right, with payment to be made in cash, Common Stock, or
property as specified in the Award or determined by the Committee.
2.29 "Stock Option Agreements" shall mean an Award Agreement
granting Options under the Plan.
2.30 "Stock Purchase Agreement" shall mean an agreement to exercise
Options under the Plan.
2.31 "Subsidiary" shall mean any corporation at least 50% of the
total combined voting power of which is owned by the Corporation or by
another Subsidiary.
2.32 "Tax Date" shall have the meaning set forth in Section 9.3
hereof.
III. EFFECTIVE DATE
The Effective Date of the Plan is September 20, 1999.
IV. ADMINISTRATION
The Plan shall be administered by the Board in compliance with Rule
16b-3, or by a Committee appointed by the Board, which Committee shall be
constituted to permit the Plan to comply with Rule 16b-3, and which shall
consist of not less than two members. The Board shall appoint one of the
3
<PAGE>
members of the Committee, if there be one, as Chairman of the Committee. If
a Committee has been appointed, the Committee shall hold meetings at such
times and places as it may determine. Acts of a majority of the Committee at
which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The Board, or the Committee if there be one, shall from time to
time at its discretion select the Eligible Employees and consultants who are
to be granted Awards, determine the number of Shares to be applicable to such
Award, and designate any Options as Incentive Stock Options or Nonstatutory
Stock Options, except that no Incentive Stock Option may be granted to a
non-employee director or a non-employee consultant. A member of the Board or
a Committee member shall in no event participate in any determination
relating to Awards held by or to be granted to such Board or Committee
member; however, a member of the Board or a Committee member shall be
entitled to receive Awards approved by the stockholders in accordance with
the provisions of Rule 16b-3. The interpretation and construction by the
Board, or by the Committee if there be one, of any provision of the Plan or
of any Award granted thereunder shall be final. No member of the Board or of
the Committee shall be liable for any action or determination made in good
faith with respect to the Plan or any Award granted thereunder. In addition
to any right of indemnification provided by the Articles of Incorporation or
Bylaws of the Corporation, such person shall be indemnified and held harmless
by the Corporation from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with any claim,
suit, action, or proceeding to which he may be a party by reason of any
action or omission under the Plan.
V. PARTICIPATION
5.1 ELIGIBILITY. Subject to the terms and conditions of Section
5.2 below, the Participants shall be such persons as the stockholders may
approve or as the Committee may select from among the following classes of
persons: (i) Eligible Employees of the Corporation or of a Subsidiary (who
may be officers, whether or not they are directors); and (ii) consultants,
vendors, customers, and others expected to provide significant services to
the Corporation or a Subsidiary.
For purposes of this Plan, a Participant who is a director or a
consultant, vendor, customer, or other provider of significant services to
the Corporation or a Subsidiary shall be deemed to be an Eligible Employee,
and service as a director, consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
employment, except that no Incentive Stock Option may be granted to a
non-employee director or non-employee consultant, vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary, and
except that no Nonstatutory Stock Option may be granted to a non-employee
director or non-employee consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary other than upon a
vote of a majority of disinterested directors finding that the value of the
services rendered or to be rendered to the Corporation or a Subsidiary by
such non-employee director or non-employee consultant, vendor, customer, or
other provider of services is at least equal to the value of the Awards
granted.
5.2 TEN-PERCENT STOCKHOLDERS. An Eligible Employee who owns more
than 10% of the total combined voting power of all classes of outstanding
stock of the Corporation, its parent or any of its Subsidiaries shall not be
eligible to receive an Award for an Incentive Stock Option unless (i) the
Exercise Price of the Shares subject to such Award is at least 110% of the
Fair Market Value of such Shares on the date of grant; and (ii) such Award by
its terms is not exercisable after the expiration of five years from the date
of grant.
5.3 STOCK OWNERSHIP. For purposes of Section 5.2 above, in
determining stock ownership an Eligible Employee shall be considered as
owning the stock owned, directly or indirectly, by or for his brothers,
sisters, spouses, ancestors, and lineal descendants. Stock owned, directly
or indirectly, by or for a corporation, partnership, estate, or trust shall
be considered as being owned proportionately by or
4
<PAGE>
for its stockholders, partners, or beneficiaries. Stock with respect to
which such Eligible Employee holds an Award shall not be counted.
5.4 OUTSTANDING STOCK. For purposes of Section 5.2 above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the Award to the Participant. "Outstanding
stock" shall not include shares authorized for issue under outstanding
Options or Purchase Rights held by the Participant or by any other person.
VI. STOCK SUBJECT TO THE PLAN
The stock subject to Awards granted under the Plan shall be Shares of
the Corporation's authorized but unissued or reacquired Common Stock. The
aggregate number of Shares which may be issued as Awards or upon exercise of
Awards under the Plan shall not exceed 1,200,000 shares. The number of
Shares subject to unexercised Options plus the number of Shares previously
issued under the Plan shall not at any time exceed the number of Shares
available for issuance under the Plan. In the event that any unexercised
Option, or any portion thereof, for any reason expires or is terminated, the
unexercised or unvested Shares allocable to such Option may again be made
subject to any Award. Any Shares withheld by the Corporation pursuant to
Section 9.3 shall not be deemed to be issued. The number of withheld Shares
shall be deducted from the applicable Award and shall not entitle the
Participant to receive additional Shares. The limitations established by
this Article VI shall be subject to adjustment in the manner provided in
Section 8.5 hereof upon the occurrence of an event specified therein.
VII. OPTIONS
7.1 STOCK OPTION AGREEMENTS. Options shall be evidenced by written
Stock Option Agreements in such form as the Committee shall from time to time
determine. Such agreements shall comply with and be subject to the terms and
conditions set forth below.
7.2 TYPE AND NUMBER OF SHARES. Each Option shall state the type of
Award and the number of Shares to which it pertains and shall provide for the
adjustment thereof in accordance with the provisions of Section 8.5 hereof.
7.3 EXERCISE PRICE. Each Option shall state the Exercise Price
thereof. The Exercise Price in the case of any Incentive Stock Option shall
not be less than the Fair Market Value on the date of grant and, in the case
of any Option granted to an Optionee described in Section 5.2 hereof, shall
not be less than 110% of the Fair Market Value on the date of grant. The
Exercise Price in the case of any Nonstatutory Stock Option shall not be less
than 85% of the Fair Market Value on the date of grant.
7.4 MEDIUM AND TIME OF PAYMENT. The Purchase Price shall be
payable in full in United States dollars upon the exercise of the Option;
provided, however, that if the applicable Stock Option Agreement so provides
the Purchase Price may be paid (i) by the surrender of Shares in good form
for transfer, owned by the Participant and having a Fair Market Value on the
date of exercise equal to the Purchase Price, or in any combination of cash
and Shares, as long as the sum of the cash so paid and the Fair Market Value
of the Shares so surrendered equal the Purchase Price, (ii) by cancellation
of indebtedness owed by the Corporation to the Participant, (iii) with a full
recourse promissory note executed by the Participant, or (iv) any combination
of the foregoing. The interest rate and other terms and conditions of such
note shall be determined by the Committee. The Committee may require that
the Participant pledge his or her Shares to the Corporation for the purpose
of securing the payment of such note. In no event shall the stock
certificate(s) representing such Shares be released to the Participant until
such note is paid in full.
5
<PAGE>
7.5 TERM AND NON-TRANSFERABILITY OF OPTIONS. Each Option shall
state the time or times which all or part thereof becomes exercisable. No
Option shall be exercisable after the expiration of 10 years from the date it
was granted, and no Option granted to a Participant described in Section 5.2
hereof shall be exercisable after the expiration of five years from the date
it was granted. During the lifetime of the Participant, the Option shall be
exercisable only by the Participant and shall not be assignable or
transferable. In the event of the Participant's death, the Option shall not
be transferable by the Participant other than by will or the laws of descent
and distribution.
7.6 MODIFICATION, EXTENSION, AND RENEWAL OF OPTION. Within the
limitations of the Plan, the Committee may modify, extend, or renew
outstanding Options or accept the cancellation of outstanding Options (to the
extent not previously exercised) for the granting of new Options in
substitution therefor. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Participant, alter or impair any
rights or obligations under any Option previously granted.
7.7 LIMITATION ON GRANT OF INCENTIVE STOCK OPTIONS. In the case of
Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect
to which Incentive Stock Options become exercisable by any Participant for
the first time during any calendar year (under this Plan and all other Plans
maintained by the Corporation, its parent, or its Subsidiaries) shall not
exceed $100,000. The Board or Committee may, however, with the Participant's
consent authorize an amendment to the Incentive Stock Option which renders it
a Nonstatutory Stock Option.
7.8 OTHER PROVISIONS. The Stock Option Agreements authorized under
the Plan may contain such other provisions not inconsistent with the terms of
the Plan (including, without limitation, restrictions upon the exercise of
the Option) as the Committee shall deem advisable.
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS, AND BENEFICIARIES
8.1 EMPLOYEE STATUS. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under the Plan to an
Eligible Employee or to Eligible Employees generally.
8.2 NO EMPLOYMENT CONTRACT. Nothing contained in the Plan (or in
the Award Agreements or in any other documents related to the Plan or to
Awards) shall confer upon any Eligible Employee or any Participant any right
to continue in the employ of the Corporation or constitute any contract or
agreement of employment, or interfere in any way with the right of the
Corporation to reduce such person's compensation or to terminate the
employment of such Eligible Employee or Participant, with or without cause,
but nothing contained in the Plan or any document related thereto shall
affect any other contractual right of any Eligible Employee or Participant.
Nothing contained in the Plan (or in the Award Agreements or in any other
documents related to the Plan or the Awards) shall confer upon any director
of the Corporation any right to continue as a director of the Corporation.
8.3 NO TRANSFERABILITY. Awards may be exercised only by, and
amounts payable or shares issuable pursuant to an Award shall be paid only to
or registered only in the name of, the Participant or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Disability, to the Participant's Personal Representative or, if
there is none, to the Participant. Other than by will or the laws of descent
and distribution, no right or benefit under the Plan or any Award, including,
without limitation, any Option or share of Restricted Stock that has not
vested, shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge and any such attempted
action shall be void and no such right or benefit shall be, in any manner,
liable for, or subject to, debts, contract, liabilities, engagements, or
torts of any Eligible Employee, Participant, or Beneficiary, in any case
except as may otherwise be expressly
6
<PAGE>
required by applicable law. The Board or the Committee shall disregard any
attempt at transfer, assignment, or other alienation prohibited by the
preceding sentence and shall pay or deliver such cash or shares of Common
Stock in accordance with the provisions of the Plan. Notwithstanding the
foregoing, the Board or the Committee may authorize exercise by or transfers
or payments to a third party in a specific case or more generally; provided,
however, with respect to any option or similar right (including any Stock
Appreciation Right), such discretion may only be exercised to the extent that
applicable rules under Section 16 of the Exchange Act would so permit without
disqualifying the Plan from certain benefits thereunder.
8.4 PLAN NOT FUNDED. No Participant, Beneficiary, or other person
shall have any right, title, or interest in any fund or in any specific asset
(including shares of Common Stock) of the Corporation by reason of any Award
granted hereunder. There shall be no funding of any benefits which may
become payable hereunder. Neither the provisions of the Plan (or of any
documents related hereto), nor the creation or adoption of the Plan, nor any
action taken pursuant to the provisions of the Plan shall create, or be
construed to create, a trust of any kind or a fiduciary relationship between
the Corporation and any Participant, Beneficiary, or other person. To the
extent that a Participant, a Beneficiary, or other person acquires a right to
receive an Award hereunder, such right shall be no greater than the right of
any unsecured general creditor of the Corporation. Awards payable under the
Plan shall be paid in shares of Common Stock or from the general assets of
the Corporation, and no special or separate fund or deposit shall be
established and no segregation of assets or shares shall be made to assure
payment of such Awards.
8.5 ADJUSTMENT UPON RECAPITALIZATIONS AND CORPORATE CHANGES. If
the outstanding shares of Common Stock are changed into or exchanged for
cash or a different number or kind of shares or securities of the
Corporation, or if the outstanding shares of the Common Stock are increased,
decreased, exchanged for, or otherwise changed, or if additional shares or
new or different shares or securities are distributed with respect to the
outstanding shares of the Common Stock, through a reorganization or merger in
which the Corporation is the surviving entity or through a combination,
consolidation, recapitalization, reclassification, stock split, stock
dividend, reverse stock split, stock consolidation, or other capital change
or adjustment, an appropriate adjustment shall be made in the number and kind
of shares of other consideration that is subject to or may be delivered under
the Plan and pursuant to outstanding Awards. A corresponding adjustment to
the consideration payable with respect to Awards granted prior to any such
change and to the price, if any, to be paid in connection with Restricted
Stock Awards shall also be made as appropriate. Corresponding adjustments
shall be made with respect to Stock Appreciation Rights related to Options to
which they are related. In addition, the Board or the Committee may grant
such additional rights in the foregoing circumstances as the Board or the
Committee deems to be in the best interest of any Participant and the
Corporation in order to preserve for the Participant the benefits of an Award.
8.6 TERMINATION OF EMPLOYMENT, EXCEPT BY DEATH, DISABILITY, OR
RETIREMENT. If a Participant ceases to be an Employee for any reason other
than his or her death, Disability or Retirement, such Participant shall have
the right, subject to the restrictions of Section 8.3 above, to exercise any
Award at any time within three months after termination of employment, but
only to the extent that, at the date of termination of employment, the
Participant's right to exercise such Award had accrued pursuant to the terms
of the applicable agreement and had not previously been exercised; provided,
however, that if the Participant was terminated (i) "for cause" as defined in
any applicable employment agreement, (ii) pleads or is found guilty of a
felony involving an act of dishonesty or moral turpitude by a court of
competent jurisdiction; (iii) has engaged in serious misconduct; (iv) has
made any material misrepresentation to the Company; (v) has committed a
willful, unexcused breach of his duty in the course of Executive's
employment; (vi) has been guilty of habitual neglect of Executive's duties;
or (vii) has usurped a corporate opportunity, is guilty of fraudulent
embezzlement of property or funds of the Company, or committed any act of
fraud or intentional misrepresentation or any other act involving moral
turpitude, dishonesty, or other misconduct that would constitute a felony,
any Award not exercised in full prior to such termination shall be canceled.
For this purpose, the employment
7
<PAGE>
relationship shall be treated as continuing intact while the Participant is
on military leave, sick leave, or other bona fide leave of absence (to be
determined in the sole discretion of the Board or the Committee). The
foregoing notwithstanding, in the case of an Incentive Stock Option,
employment shall not be deemed to continue beyond the 90th day after the
Participant's reemployment rights are guaranteed by statute or by contract.
8.7 DEATH OF PARTICIPANT. If a Participant dies while an Employee,
or after ceasing to be an Employee but during the period while he or she
could have exercised the Award under this Section 8.7, and has not fully
exercised the Award, then the Award may be exercised in full at any time
within 12 months after the Participant's death (but not later than the date
of termination fixed in the applicable agreement), by the executors or
administrators of his or her estate or by any person or persons who have
acquired the Award directly from the Participant by bequest or inheritance,
but only to the extent that, at the date of death, the Participant's right to
exercise such Award had accrued and had not been forfeited pursuant to the
terms of the applicable agreement and had not previously been exercised.
8.8 DISABILITY OF PARTICIPANT. If a Participant ceases to be an
Employee by reason of Disability, such Participant shall have the right to
exercise the Award at any time within 12 months after termination of
employment (but not later than the termination date fixed in the applicable
Agreement), but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable Award Agreement and had not
previously been exercised.
8.9 RETIREMENT OF PARTICIPANT. If a Participant ceases to be an
Employee by reason of Retirement, such Participant shall have the right to
exercise the Award at any time within three months after termination of
employment (but not later than the termination date fixed in the applicable
Award Agreement), but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable Award Agreement and had not
previously been exercised.
8.10 RIGHTS AS A STOCKHOLDER. A Participant, or a transferee of a
Participant, shall have no rights as a stockholder with respect to any Shares
covered by his or her Award until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities, or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 8.5 hereof.
8.11 DEFERRAL OF PAYMENTS. The Board or the Committee may approve
the deferral of any payments that may become due under the Plan. Such
deferrals shall be subject to any conditions, restrictions, or requirements
as the Board or the Committee may determine.
8.12 ACCELERATION OF AWARDS. Immediately prior to the occurrence of
an Event, (i) each Option and Stock Appreciation Right under the Plan shall
become exercisable in full; (ii) Restricted Stock delivered under the Plan
shall immediately vest free of restrictions; and (iii) each other Award
outstanding under the Plan shall be fully vested or exercisable, unless,
prior to the Event, the Board or the Committee otherwise determines that
there shall be no such acceleration or vesting of an Award or otherwise
determines those Awards which shall be accelerated or vested and to the
extent to which they shall be accelerated or vested, or that an Award shall
terminate, or unless in connection with such Event the Board provides (A) for
the assumption of such Awards theretofore granted; or (B) for the
substitution for such Awards of new awards covering securities or obligations
(or any combination thereof) of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind of
shares and prices; or (C) for the payment of the fair market value of the
then outstanding Awards. In addition, the Board or the Committee may grant
such additional rights in the foregoing circumstances as the Board or the
Committee deems to be in the best interest of the Participant and the
Corporation in order to preserve for the Participant the benefits of an
Award. For
8
<PAGE>
purposes of this Section 8.12 only, Board shall mean the Board of Directors
of the Corporation as constituted immediately prior to the Event. In
addition, the Board may in its sole discretion accelerate the exercisability
or vesting of any or all Awards outstanding under the Plan in circumstances
under which the Board or the Committee determines such acceleration
appropriate.
IX. MISCELLANEOUS
9.1 TERMINATION, SUSPENSION, AND AMENDMENT. The Board or the
Committee may, at any time, suspend, amend, modify, or terminate the Plan (or
any part thereof) and may, with the consent of a Participant, authorize such
modifications of the terms and conditions of such Participant's Award as it
shall deem advisable; provided that, except as permitted under the provisions
of Section 8.5 hereof, no amendment or modification of the Plan may be
adopted without approval by a majority of the shares of the Common Stock
represented (in person or by proxy) at a meeting of stockholders at which a
quorum is present and entitled to vote thereat, if such amendment or
modification would:
(i) materially increase the benefits accruing to
Participants under the Plan within the meaning of Rule 16b-3 under the
Exchange Act or any successor provision;
(ii) materially increase the aggregate number of shares which
may be delivered pursuant to Awards granted under the Plan; or
(iii) materially modify the requirements of eligibility for
participation in the Plan.
Neither adoption of the Plan nor the provisions hereof shall limit the
authority of the Board to adopt other Plans or to authorize other payments of
compensation and benefits under applicable law. No Awards under the Plan may
be granted or amended during any suspension of the Plan or after its
termination. The amendment, suspension, or termination of the Plan shall
not, without the consent of the Participant, alter or impair any rights or
obligations pertaining to any Awards granted under the Plan prior to such
amendment, suspension, or termination.
9.2 NO FRACTIONAL SHARES. No Award or installment thereof shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.
9.3 TAX WITHHOLDING. As required by law, federal, state, or local
taxes that are subject to the withholding of tax at the source shall be
withheld by the Corporation as necessary to satisfy such requirements. The
Corporation is entitled to require deduction from other compensation payable
to each Participant or, in the alternative: (i) the Corporation may require
the Participant to advance such sums; or (ii) if a Participant elects, the
Corporation may withhold (or require the return of) Shares having the Fair
Market Value equal to the sums required to be withheld. If the Participant
elects to advance such sums directly, written notice of that election shall
be delivered prior to such exercise and, whether pursuant to such election or
pursuant to a requirement imposed by the Corporation, payment in cash or by
check of such sums for taxes shall be delivered within 10 days after the
exercise date. If the Participant elects to have the Corporation withhold
Shares (or be entitled to the return of Shares) having a Fair Market Value
equal to the sums required to be withheld, the value of the Shares to be
withheld (or returned) will be equal to the Fair Market Value on the date the
amount of tax to be withheld (or subject to return) is to be determined (the
"Tax Date").
9.4 RESTRICTIONS ON ELECTIONS MADE BY PARTICIPANTS. Elections by
Participants to have Shares withheld (or subject to return) for this purpose
will be subject to the following restrictions: (i) the election must be made
prior to the Tax Date; (ii) the election must be irrevocable; (iii) the
election will be subject to the Board's disapproval; and (iv) if the
Participant is an "officer" within the meaning of Section 16 of the Exchange
Act, the election shall be subject to such additional restrictions as
9
<PAGE>
the Board or the Committee may impose in an effort to secure the benefits of
any regulations thereunder.
9.5 LIMITATIONS ON THE CORPORATION'S OBLIGATIONS. The Corporation
shall not be obligated to issue shares and/or distribute cash to the
Participant upon any Award exercise until such payment has been received or
Shares have been withheld, unless withholding (or offset against a cash
payment) as of or prior to the exercise date is sufficient to cover all such
sums due or which may be due with respect to such exercise. In addition, the
Board or the Committee may grant to a Participant a cash bonus in any amount
required by federal, state, or local tax law to be withheld with respect to
an Award.
9.6 COMPLIANCE WITH LAWS. The Plan, the granting of Awards under
the Plan, the Stock Option Agreements, and Stock Purchase Agreements and the
delivery of Options, Shares, and Awards (and/or the payment of money or
Common Stock) pursuant thereto and the extension of any loans hereunder are
subject to such additional requirements as the Board or the Committee may
impose to assure or facilitate compliance with all applicable federal and
state laws, rules and regulations (including, without limitation, securities
laws and margin requirements) and to such approvals by any regulatory or
governmental agency which may be necessary or advisable in connection
therewith. In connection with the administration of the Plan or the grant of
any Award, the Board or the Committee may impose such further limitations or
conditions as in its opinion may be required or advisable to satisfy, or
secure the benefits of, applicable regulatory requirements (including those
rules promulgated under Section 16 of the Exchange Act or those rules that
facilitate exemption from or compliance with the Securities Act or the
Exchange Act), the requirements of any stock exchange upon which such shares
or shares of the same class are then listed, and any blue sky or other
securities laws applicable to such shares.
9.7 GOVERNING LAWS. The Plan and all Awards granted under the Plan
and the documents evidencing Awards shall be governed by, and construed in
accordance with, the laws of the State of Utah as the Corporation's
principle place of business.
9.8 SECURITIES LAW REQUIREMENTS.
(a) LEGALITY OF ISSUANCE. The issuance of any Shares upon
the exercise of any Option and the grant of any Option shall be contingent
upon the following:
(i) the Corporation and the Participant shall have
taken all actions required to register the Shares under the Securities Act of
1933, as amended (the "Securities Act"), and to qualify the Option and the
Shares under any and all applicable state securities or "blue sky" laws or
regulations, or to perfect an exemption from the respective registration and
qualification requirements thereof;
(ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or
Federal law shall have been satisfied.
(b) RESTRICTIONS ON TRANSFER. Regardless of whether the
offering and sale of Shares under the Plan has been registered under the
Securities Act or has been registered or qualified under the securities laws
of any state, the Corporation may impose restrictions on the sale, pledge, or
other transfer of such Shares (including the placement of appropriate legends
on stock certificates) if, in the judgment of the Corporation and its
counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Securities Act, the securities laws of
any state, or any other law. In the event that the sale of Shares under the
Plan is not registered under the Securities Act
10
<PAGE>
but an exemption is available which required an investment representation or
other representation, each Participant shall be required to represent that
such Shares are being acquired for investment, and not with a view to the
sale or distribution thereof, and to make such other representations as are
deemed necessary or appropriate by the Corporation and its counsel. Any
determination by the Corporation and its counsel in connection with any of
the matters set forth in this Section 9.8(b) shall be conclusive and binding
on all persons. Stock certificates evidencing Shares acquired under the Plan
pursuant to an unregistered transaction shall bear a restrictive legend
reading substantially as follows and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable law:
THESE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN ISSUED
IN RELIANCE UPON EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS.
THESE SHARES OR ANY INTEREST HEREIN MAY NOT, BE OFFERED, SOLD OR
TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.
(c) REGISTRATION OR QUALIFICATION OF SECURITIES. The
Corporation may, but shall not be obligated to register or qualify the
issuance of Awards and/or the sale of Shares under the Securities Act or any
other applicable law. The Corporation shall not be obligated to take any
affirmative action in order to cause the issuance of Awards or the sale of
Shares under the Plan to comply with any law.
(d) EXCHANGE OF CERTIFICATES. If, in the opinion of the
Corporation and its counsel, any legend placed on a stock certificate
representing shares issued under the Plan is no longer required, the holder
of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares but lacking such legend.
9.9 EXECUTION. To record the adoption of the Plan in the form set
forth above by the Board effective as of September 20, 1999, the Corporation
has caused this Plan to be executed in the name and on behalf of the
Corporation where provided below by an officer of the Corporation thereunto
duly authorized.
HYDROMAID INTERNATIONAL, INC.
By:
-------------------------------------
Culley W. Davis, Chief Executive Officer
ATTEST:
- -------------------------------
Bruce H. Haglund, SECRETARY
(Corporate Seal)
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<PAGE>
EXHIBIT A
INITIAL GRANTS
EMPLOYEES/SERVICE PROVIDERS
(All Options to Vest Equally Over Three Years)
<TABLE>
<CAPTION>
NAME ISO/NQ NUMBER
--------------------- ---------- ----------
<S> <C> <C>
Benjamin Aguayo ISO 22,500
Jennifer Lee ISO 10,000
Heather Bateman ISO 10,000
Mark S. Brewer ISO 10,000
Lorene B. Childs ISO 20,000
Culley W. Davis ISO 250,000
Tina M. Ellis ISO 10,000
Tom L. Grissom, Sr. ISO 10,000
James Hadlock ISO 10,000
Stacey Holdaway ISO 10,000
Paul Kujanpaa ISO 30,000
Ronald L. LaFord ISO 10,000
Tyson LaFord ISO 10,000
John W. Nagel ISO 10,000
Matthew Nagel ISO 2,500
Edward B. Paulsen NQ 25,000
</TABLE>
DIRECTORS
(All Options to Vest in
Quarterly Increments Over One Year)
<TABLE>
<CAPTION>
NAME ISO/NQ NUMBER
--------------------- ---------- ----------
<S> <C> <C>
Culley W. Davis ISO 50,000
Ronald L. LaFord ISO 50,000
Mark S. Brewer ISO 50,000
John W. Nagel ISO 50,000
Bruce H. Haglund NQ 50,000
Bradley E. Zarbock NQ 50,000
</TABLE>
-----------------------
Initial grants total 750,000.
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
HYDROMAID INTERNATIONAL, INC.
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of
____________________________ (the "Effective Date") by and between HYDROMAID
INTERNATIONAL, INC., a Utah corporation (the "COMPANY"), and __________________
(the "OPTIONEE") pursuant to the COMPANY's 1999 Stock Option and Incentive Plan
(the "Plan").
The Board of Directors of the COMPANY has adopted the Plan as of
September 20, 1999 to which this Agreement and the option granted hereunder
("Option") are subject, and the Board of Directors of the COMPANY has
determined that it is to the advantage and in the best interest of the
COMPANY and its stockholders to grant the Option provided for herein to
OPTIONEE as an inducement to remain in the employ of the COMPANY, and as an
incentive for increased effort during such service.
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and
option to purchase from the COMPANY, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of shares of the
authorized $.001 par value Common Stock of the COMPANY, at the purchase
price of $1.00 per share (being not less than the fair market value per share
of said stock on the date hereof) as OPTIONEE may from time to time elect,
exercisable on or after the Effective Date hereof for a period of 10 years
(the latter date hereinafter referred to as the "Terminal Date"), all in
accordance with the schedule attached hereto and marked Exhibit "A." No
partial exercise of such Option may be for less than 250 full shares, unless
the number purchased is the total number at the time purchasable under the
Option. In no event shall the COMPANY be required to transfer fractional
shares to OPTIONEE. This Agreement and the Option granted hereunder are
subject to the Plan, a copy of which is attached hereto and incorporated
herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from the Effective Date, as hereinabove provided, by written
notice which shall;
2.1 state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name
the shares are to be issued (if the shares are issued to individuals), the
names, addresses, and Social Security Numbers of such persons;
2.2 contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as
are required by law or as may be satisfactory to the COMPANY's counsel;
2.3 be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or persons
other than the OPTIONEE, be accompanied by proof, satisfactory to counsel for
the COMPANY, of the right of such person or persons to exercise the Option;
and
2.4 be accompanied by a payment for the purchase price of
those shares with respect to which the Option is being exercised in the form
of cash or check.
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<PAGE>
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates
for shares of Common Stock as to which the Option shall be exercised shall
be registered in the name of the person or persons exercising the Option.
The COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b)
compliance with all then applicable requirements of law; and (c) admission of
such shares for trading privileges on any stock exchange on which the stock
may then be listed.
4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the
number of shares of Common Stock of the COMPANY subject to be granted upon
exercise of this Option which it now holds as authorized and unissued shares.
If the Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject
thereto shall be free from any restrictions occasioned by this Option
Agreement. If the COMPANY has been listed on a stock exchange, the COMPANY
will not be required to issue or deliver any certificate or certificates for
shares to be issued hereunder until such shares have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange on which outstanding shares of the same class may then be listed and
until the COMPANY has taken such steps as may, in the opinion of counsel for
the COMPANY, be required by law and applicable regulations, including the
rules and regulations of the Securities and Exchange Commission, and state
blue sky laws and regulations, in connection with the issuance or sale of
such shares. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted
hereunder to the extent such rights shall not have been exercised, shall
terminate and become null and void on the Terminal Date or sooner if OPTIONEE
ceases to be in the continuous employ of the COMPANY (whether by resignation,
retirement, dismissal, or otherwise), except that: (a) in the event of
termination of such employment for any reason other than the permanent
disability of OPTIONEE, as defined in Section 22(e)(3) of the Internal
Revenue Code, as amended and as presently in effect (the "Code"), or for
cause, OPTIONEE may at any time within a period of three months thereafter
exercise the Option granted hereunder to the extent such Option was
exercisable by OPTIONEE on the date of the termination of such employment;
and (b) in the event of the permanent disability of OPTIONEE while in the
employ of the COMPANY, the Option granted hereunder, to the extent that
OPTIONEE was entitled to exercise such Option on the date of OPTIONEE's
disability, may be exercised within one year after such termination as a
result of disability by OPTIONEE or the person or persons to whom OPTIONEE's
rights under the Option granted hereby shall pass by will or by the
applicable laws of descent and distribution. Notwithstanding anything herein
to the contrary, however, the Option and all rights herein granted shall be
exercisable in all events six months prior to the Terminal Date and in all
events terminate and become null and void 10 years from the date of this
Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of OPTIONEE, the
Option and all rights granted hereunder shall be exercisable only by
OPTIONEE, and except as in paragraph 5 otherwise provided, the Option and all
rights granted hereunder shall not be transferred, assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise), and shall
not be subject to execution, attachment, or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of
such Option or of such rights contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon such Option or such rights,
such Option and such rights shall immediately become null and void.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise
the Option granted hereunder as to the first increment of shares as shown in
Exhibit "A," OPTIONEE must remain in the continuous employ of the COMPANY for
the period of at least six months from the date hereof.
8. STOCK AS INVESTMENT. By accepting this Option, the OPTIONEE
acknowledges for OPTIONEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired
2
<PAGE>
for investment and not for distribution, and upon the transfer of any or all
of the shares subject to the Option granted hereunder, the OPTIONEE, or heirs
or legatees receiving such shares, shall deliver to the COMPANY a
representation in writing that such shares are being acquired in good faith
for investment and not for distribution. The OPTIONEE shall not dispose
(whether by sale, exchange, gift, or any other transfer) of any shares of
stock acquired pursuant to the exercise of the Option granted hereunder,
within two years after the grant of this Option or one year after the
transfer of such shares to him upon his exercise of such Option. OPTIONEE
further recognizes that any disposition (whether a sale, exchange, gift, or
any other transfer) of any shares of stock prior to the aforementioned
periods will not only be a breach of this Agreement, but will also disqualify
the Option as a Incentive Stock Option under Section 422A of the Code.
9. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of
any change in the Common Stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option
may be substituted for the Option granted hereunder or such Option may be
assumed by an employer corporation, or a parent or subsidiary of such
corporation, in connection with any transaction to which such Section is
applicable. Upon the dissolution or liquidation of the COMPANY other than in
connection with a transaction to which such Section is applicable, the Option
granted hereunder shall terminate and become null and void, but OPTIONEE
shall have the right immediately prior to such dissolution or liquidation to
exercise the Option granted hereunder to the full extent not before exercised.
10. RIGHT AS STOCKHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges
of a stockholder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the stockholder of
record on the books of the COMPANY.
11. NOTICES. Any notice to be given under the terms of this
Agreement shall be addressed to the COMPANY in care of its Secretary at the
main offices for the transaction of its business, and any notice to be given
to OPTIONEE shall be addressed to OPTIONEE at the address set forth above, or
at such other place as either party may hereafter designate in writing to the
other. Any such notice shall be deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as herein required, certified
and deposited (postage and certification prepaid) in a post office regularly
maintained by the United States Government.
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the
benefit of and be binding upon each successor of the COMPANY. All
obligations imposed upon the OPTIONEE and all rights granted to the COMPANY
under this Agreement shall be binding upon the OPTIONEE's heirs, legal
representatives, and successors. This Agreement shall be the sole and
exclusive source of any and all rights which the OPTIONEE, OPTIONEE's heirs,
legal representatives, or successors may have in respect to the Plan or any
options or Common Stock granted or issued thereunder, whether to OPTIONEE,
or to any other person.
13. INTERNAL REVENUE CODE. All Options granted hereunder are
granted pursuant to the Internal Revenue Code, as amended, as it is in force
and effect at the date of grant.
14. RESOLUTION OF DISPUTES. Any dispute or disagreement which
should arise under, or as a result of, or in any way relate to, the
interpretation, construction, or application of this Agreement will be
submitted first to the Board of Directors for resolution and then to an
appropriate court within the State of Utah, if necessary.
3
<PAGE>
IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President, to be sealed by its corporate seal,
and attested by its Secretary, and OPTIONEE has hereunto set his or her hand
the date and year first above written, which is the time of the granting of
the Option hereunder.
"COMPANY" "OPTIONEE"
HYDROMAID INTERNATIONAL, INC.,
a Nevada corporation
By:
---------------------------------------- -------------------------------
Culley W. Davis, CHIEF EXECUTIVE OFFICER
-------------------------------
(Corporate Seal)
ATTEST:
By:
-------------------------------
Bruce H. Hagland, SECRETARY
4
<PAGE>
EXHIBIT "A"
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
HYDROMAID INTERNATIONAL, INC.
-----------------------------
EXERCISE SCHEDULE
<TABLE>
<CAPTION>
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
<S> <C>
</TABLE>
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
HYDROMAID INTERNATIONAL, INC.
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made
as of _________________________ (the "Effective Date") by and between
HYDROMAID INTERNATIONAL, INC., a Utah corporation, (the "COMPANY") and
______________________, (the "OPTIONEE"), pursuant to the COMPANY's 1999
Stock Option and Incentive Plan (the "Plan").
The Board of Directors of the COMPANY has adopted the Plan as of
September 20, 1999 to which this Agreement and the option granted hereunder
("Option") are subject, and the Board of Directors of the COMPANY has
determined that it is to the advantage and in the best interest of the
COMPANY and its stockholders to grant the Option provided for herein to
OPTIONEE to afford additional incentive to consultants, vendors, customers,
and others to increase their efforts in providing significant services to the
COMPANY.
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and
Option to purchase from the COMPANY, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of _________________ shares of the
authorized no par value Common Stock of the COMPANY, at the purchase price
of $1.00 per share (being not less than 85% of the fair market value per
share of said stock on the date hereof) as OPTIONEE may from time to time
elect, exercisable on or after the Effective Date hereof for a period of 10
years (the latter date hereinafter referred to as the "Terminal Date"), all
in accordance with the schedule attached hereto and marked Exhibit "A." No
partial exercise of such Option may be for less than 250 full shares, unless
the number purchased is the total number at the time purchasable under the
option. In no event shall the COMPANY be required to transfer fractional
shares to OPTIONEE. This Agreement and the Option granted hereunder are
subject to the Plan, a copy of which is attached hereto and incorporated
herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from time to time, as hereinabove provided, by written notice
which shall;
2.1 state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name
the shares are to be issued (if the shares are issued to individuals), the
names, addresses, and Social Security Numbers of such persons;
2.2 contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as
are required by law or as may be satisfactory to the COMPANY's counsel;
2.3 be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or persons
other than the OPTIONEE, be accompanied by proof, satisfactory to counsel for
the COMPANY, of the right of such person or persons to exercise the Option;
and
2.4 be accompanied by a payment for the purchase price of
those shares with respect to which the Option is being exercised in the form
of cash or check.
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates
for shares of Common Stock as to which the Option shall be exercised shall
be registered in the name of the person or persons exercising the Option.
The COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b)
compliance with all then applicable requirements of law; and (c)
1
<PAGE>
admission of such shares for trading privileges on any stock exchange on
which the stock may then be listed.
4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the
number of shares of Common Stock of the COMPANY subject to be granted upon
exercise of this Option which it now holds as authorized and unissued shares.
If the Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject
thereto shall be free from any restrictions occasioned by this Option
Agreement. If the COMPANY has been listed on a stock exchange, the COMPANY
will not be required to issue or deliver any certificate or certificates for
shares to be issued hereunder until such shares have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange on which outstanding shares of the same class may then be listed and
until the COMPANY has taken such steps as may, in the opinion of counsel for
the COMPANY, be required by law and applicable regulations, including the
rules and regulations of the Securities and Exchange Commission, and state
blue sky laws and regulations, in connection with the issuance or sale of
such shares. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted
hereunder to the extent such rights shall not have been exercised, shall
terminate and become null and void on the Terminal Date or sooner if OPTIONEE
ceases to provide service to the COMPANY (referred to as "employment" for
purposes of this Agreement) (whether by resignation, retirement, dismissal,
or otherwise), except that: (a) in the event of termination of such
employment for any reason other than the permanent disability of OPTIONEE, as
defined in Section 22(e)(3) of the Internal Revenue Code, as amended and as
presently in effect (the "Code"), or for cause, OPTIONEE may at any time
within a period of three months thereafter exercise the Option granted
hereunder to the extent such Option was exercisable by OPTIONEE on the date
of the termination of such employment; and (b) in the event of the permanent
disability of OPTIONEE while in the employ of the COMPANY, the Option granted
hereunder, to the extent that OPTIONEE was entitled to exercise such Option
on the date of OPTIONEE's disability, may be exercised within one year after
such termination as a result of disability by OPTIONEE or the person or
persons to whom OPTIONEE's rights under the Option granted hereby shall pass
by will or by the applicable laws of descent and distribution.
Notwithstanding anything herein to the contrary, however, the Option and all
rights herein granted shall be exercisable in all events six months prior to
the Terminal Date and in all events terminate and become null and void 10
years from the date of this Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of OPTIONEE, the
Option and all rights granted hereunder shall be exercisable only by OPTIONEE
or OPTIONEE's rightful assigns.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise
the Option granted hereunder as to the first increment of shares as shown in
Exhibit "A," OPTIONEE must remain in the continuous employ of the COMPANY for
the period of at least six months from the date hereof.
8. STOCK AS INVESTMENT. By accepting this Option, the OPTIONEE
acknowledges for OPTIONEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired for investment and not for
distribution, and upon the transfer of any or all of the shares subject to
the Option granted hereunder, the OPTIONEE, or heirs or legatees receiving
such shares, shall deliver to the COMPANY a representation in writing that
such shares are being acquired in good faith for investment and not for
distribution.
9. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of
any change in the Common Stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option
may be substituted for the Option granted hereunder or such Option may be
assumed by an employer corporation, or a parent or subsidiary of such
corporation, in connection with any transaction to which such Section is
applicable. Upon the dissolution or liquidation of the COMPANY other than in
connection with a transaction to which such Section is applicable, the Option
2
<PAGE>
granted hereunder shall terminate and become null and void, but OPTIONEE
shall have the right immediately prior to such dissolution or liquidation to
exercise the Option granted hereunder to the full extent not before exercised.
10. RIGHT AS STOCKHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs, or legatees, shall be or have any rights or privileges
of a stockholder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the stockholder of
record on the books of the COMPANY.
11. NOTICES. Any notice to be given under the terms of this
Agreement shall be addressed to the COMPANY in care of its Secretary at the
main offices for the transaction of its business, and any notice to be given
to OPTIONEE shall be addressed to OPTIONEE at the address set forth above, or
at such other place as either party may hereafter designate in writing to the
other. Any such notice shall be deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as herein required, certified,
and deposited (postage and certification prepaid) in a post office regularly
maintained by the United States Government.
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the
benefit of and be binding upon each successor of the COMPANY. All
obligations imposed upon the OPTIONEE and all rights granted to the COMPANY
under this Agreement shall be binding upon the OPTIONEE's heirs, legal
representatives, and successors. This Agreement shall be the sole and
exclusive source of any and all rights which the OPTIONEE, OPTIONEE's
assigns, heirs, legal representatives, or successors may have in respect to
the Plan or any options or Common Stock granted or issued thereunder,
whether to OPTIONEE, or to any other person.
13. RESOLUTION OF DISPUTES. Any dispute or disagreement which
should arise under, or as a result of, or in any way relate to, the
interpretation, construction, or application of this Agreement will be
submitted first to the Board of Directors for resolution and then to an
appropriate court within the State of Utah, if necessary.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President, to be sealed by its corporate seal,
and attested by its Secretary, and OPTIONEE has hereunto set his or her hand
the date and year first above written, which is the time of the granting of
the Option hereunder.
"COMPANY" "OPTIONEE"
HYDROMAID INTERNATIONAL, INC.,
a Nevada corporation
By:
------------------------------------------ -------------------------------
Culley W. Davis, CHIEF EXECUTIVE OFFICER
-------------------------------
(Corporate Seal)
ATTEST:
By:
-------------------------------
Bruce H. Hagland, SECRETARY
3
<PAGE>
EXHIBIT "A"
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
HYDROMAID INTERNATIONAL, INC.
-----------------------------
EXERCISE SCHEDULE
<TABLE>
<CAPTION>
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
<S> <C>
</TABLE>
4
<PAGE>
HYDROMAID INTERNATIONAL, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 20, 1999
The undersigned hereby constitutes and appoints Culley W. Davis and
Bruce H. Haglund, and each of them, the true and lawful attorneys, agents,
and proxies of the undersigned, with full power of substitution, to vote with
respect to all the shares of Common Stock, par value $.001, of HYDROMAID
INTERNATIONAL, INC. (the "Company"), standing in the name of the undersigned
at the close of business on October 1, 1999, at the Annual Meeting of
Stockholders to be held November 20, 1999, and at any and all adjournments
and postponements thereof, to vote:
1. Election of Directors:
_____ FOR all nominees listed below
(Except as marked to the contrary below)
_____ WITHHOLD AUTHORITY
CULLY W. DAVIS RONALD L. LAFORD MARK S. BREWER JOHN W. NAGEL
BRUCE H. HAGLUND BRADLEY E. ZARBOCK J. STEVEN YOUNG
2. To approve the Company's 1999 Stock Option and Incentive Plan providing
for a total of 1,200,000 shares of the Company's Common Stock to be set
aside for grant as approved by the Board of Directors:
_____ FOR _____ AGAINST _____ ABSTAIN
3. To consider and ratify the appointment of SQUAR, MILNER & REEHL, LLP as
independent auditor of the Company for the fiscal year ending
December 31, 1999:
_____ FOR _____ AGAINST _____ ABSTAIN
4. In their discretion, the Board of Directors is authorized to vote this
Proxy upon such other matters as may properly come before the meeting
or any adjournment or postponement thereof.
The shares represented by this Proxy will be voted in the manner directed
herein by the undersigned stockholder. If no directions to the contrary are
made, this Proxy will be voted FOR the election of all of the director
nominees named above and FOR approval of Proposals 2, 3, and 4 if necessary.
DATED:___________________, 1999.
[LABEL] -----------------------------------
(Signature)
-----------------------------------
(Signature, if held jointly)
IMPORTANT: Please sign exactly as your name appears at the left. Each joint
owner should sign. Executors, administrators, trustees, should give full
title. If a corporation, please sign in full corporate name by an authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
- -------------------------------------------------------------------------------
TO VOTE BY PROXY, PLEASE MARK, SIGN, DATE AND
RETURN THIS PAGE IN THE ENCLOSED ENVELOPE PROMPTLY.
- -------------------------------------------------------------------------------
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF HYDROMAID INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1999
HYDROMAID INTERNATIONAL, INC.
You are cordially invited to attend the Annual Meeting of
Stockholders of HYDROMAID INTERNATIONAL, INC. (the "Company"), which will be
held Saturday, November 20, 1999, at the Salt Palace Convention Center, 90
South West Temple, Salt Lake City, Utah 84101,telephone number (801)
521-2822, at 7:00 p.m. local time, or any adjournment thereof for the
following purposes:
1. To elect Company directors for the upcoming year;
2. To approve the Company's 1999 Stock Option and Incentive Plan
providing for a total of 1,200,000 shares of the Company's Common Stock to be
set aside for grant as approved by the Board of Directors;
3. To consider and ratify the appointment of SQUAR, MILNER & REEHL,
LLP as independent auditor of the Company for the fiscal year ending December
31, 1999; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 1,
1999 will be entitled to vote at the Annual Meeting or adjournment thereof.
By Order of the Board of Directors
/s/ Culley W. Davis
----------------------------------
Culley W. Davis
Chairman of the Board
October 20, 1999
IMPORTANT
PLEASE COMPLETE, DATE, SIGN, AND MAIL PROMPTLY THE ENCLOSED PROXY FORM IN THE
POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO
DO SO EVEN THOUGH YOU HAVE RETURNED YOUR PROXY.
