SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, For Use of the
Commission Only (as
permitted by Rule 14a-6(e)
(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SYMPOSIUM CORPORATION
---------------------
(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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| 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.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SYMPOSIUM CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 15, 2000
TO OUR SHAREHOLDERS:
Notice is hereby given that the 2000 Annual Meeting (the "Annual Meeting")
of Shareholders of Symposium Corporation ("Symposium" or the "Company") will be
held at the offices of the Company, 410 Park Avenue, Suite 830, New York, New
York 10022, at 9:00 A.M. (Eastern Daylight Savings Time) on September 15, 2000.
The Annual Meeting is being held for the following purposes:
1. To elect a Board of five Directors to hold office until the next
Annual Meeting of Shareholders and until their respective successors
have been elected. The persons nominated by the Board of Directors
of the Company (Messrs. Altbach, Kaufman, Cohen, Dorskind and
Lambert) are described in the accompanying Proxy Statement;
2. To approve amendments to the 1998 Stock Option Plan to, among other
things, increase the maximum number of shares of Common Stock that
may be issued under the Plan from 2,500,000 shares to 6,500,000
shares; and
3. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of common stock, par
value $0.001, which the Company has authority to issue by 75,000,000
from 75,000,000 to 150,000,000 and, consequently, to increase the
total number of shares of all classes of stock which the Company has
authority to issue by 75,000,000 from 85,000,000 to 160,000,000.
4. To transact such other business as may properly come before the
Annual Meeting or any of its adjournments or postponements.
Only shareholders of record of Common Stock at the close of business on
August 23, 2000 are entitled to notice of, and to vote at, the Annual Meeting
and any of its adjournments or postponements.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the Annual Meeting, you are
urged to mark, sign and return the enclosed Proxy as promptly as possible in the
postage prepaid envelope enclosed for that purpose.
[August 31, 2000]
By Order of the Board of Directors
Ronald Altbach
Chief Executive Officer and Chairman
of the Board of Directors
<PAGE>
--------------------------------------------------------------------------------
IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS
POSSIBLE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
--------------------------------------------------------------------------------
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
OF
SYMPOSIUM CORPORATION
to be held September 15, 2000
----------------------
PROXY STATEMENT
----------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Symposium Corporation, a Delaware
corporation ("Symposium" or the "Company"), for use at the 2000 Annual Meeting
of Shareholders (the "Annual Meeting") to be held at the offices of the Company,
410 Park Avenue, Suite 830, New York, New York 10022, on September 15, 2000 at
9:00 A.M., Eastern Daylight Savings Time, and at any of its adjournments or
postponements, for the purposes set forth herein and in the attached Notice of
Annual Meeting of Shareholders. Accompanying this Proxy Statement is the Board
of Directors' Proxy for the Annual Meeting, which you may use to indicate your
vote on the proposals described in this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will,
unless otherwise directed by the shareholder, be voted in accordance with the
recommendations of the Board of Directors set forth in this Proxy Statement. A
shareholder may revoke his or her Proxy at any time before it is voted either by
filing with the Secretary of the Company, at its principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and expressing a desire to vote his or her
shares in person.
The close of business on August 23, 2000, has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting or any adjournments or postponements of the Annual
Meeting. At the record date, [27,724,245] shares of Common Stock, par value
$0.001 per share (the "Common Stock"), were outstanding. The Common Stock is the
only outstanding class of capital stock of the Company with voting rights.
This Proxy Statement and the accompanying Proxy are being mailed to
shareholders on or about [September 1, 2000].
The principal executive offices of the Company are located at 410 Park
Avenue, Suite 830, New York, New York 10022, and the telephone number of the
Company is (212)752-2601.
VOTING PROCEDURES
A shareholder is entitled to cast one vote for each share held of record
on the record date on all matters to be considered at the Annual Meeting. A
majority of the outstanding shares of Common Stock must be represented in person
or by proxy at the Annual Meeting in order to constitute a quorum for the
transaction of business. The five nominees for election as directors at the
Annual Meeting who receive the highest number of affirmative votes held by
persons present at the Meeting in person or represented by Proxy will be
elected. Approval of the amendments to
<PAGE>
the Company's 1998 Stock Option Plan will require the affirmative vote of a
majority of the shares of Common Stock present at the Annual Meeting or
represented by proxy and entitled to vote thereon. Approval of the amendment to
the Company's Restated Certificate of Incorporation increasing the number of
shares of the Company's authorized Common Stock will require the affirmative
vote of a majority of the outstanding shares of Common Stock on the record date.
Abstentions and broker non-votes will be included in the number of shares
present at the Annual Meeting for the purpose of determining the presence of a
quorum. Abstentions will be counted toward the tabulation of votes cast on
proposals submitted to shareholders and will have the same effect as negative
votes, while broker non-votes will not be counted either as votes cast for or
against such matters.
At August 21, 2000, the closing sales price of the Common Stock as
reported on the American Stock Exchange ("AMEX") was $2.00 per share.
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with the By-laws of the Company, the Company's directors are
elected at each Annual Meeting of Shareholders and hold office until the next
election of directors and until their successors are duly elected and qualified.
The By-laws of the Company provide that the Board of Directors shall consist of
one or more directors as fixed from time to time by a vote of a majority of the
entire Board of Directors. The Board of Directors currently has fixed the number
of directors at five.
Unless otherwise instructed, the Proxy holders will vote the Proxies
received by them for the nominees named below. If any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the Proxies
will be voted for such other nominee(s) as shall be designated by the current
Board of Directors to fill any vacancy. The Company has no reason to believe
that any nominee will be unable or unwilling to serve if elected as a director.
The Board of Directors proposes the election of the following nominees as
directors:
Ronald Altbach
Richard Kaufman
Richard Cohen
Bruce Dorskind
Ken Lambert
If elected, each nominee is expected to serve until the 2001 Annual
Meeting of Shareholders or his successor is duly elected and qualified. The five
nominees for election as directors at the Annual Meeting who receive the highest
number of affirmative votes will be elected.
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<PAGE>
Information With Respect to Nominees and Executive Officers
The following table sets forth certain information with respect to the
nominees for director, executive officers and key employees.
Name Age Position
---------------------------- ------- -----------------------------------------
Ronald Altbach 53 Chairman of the Board, Chief Executive
Officer, Secretary and Director;
Chief Executive Officer of the
Company's wholly-owned subsidiary,
Media Outsourcing, Inc. ("MOS")
Richard Kaufman 56 Director, President and Chief Operating
Officer
Tim S. Ledwick 42 Chief Financial Officer of Symposium
and MOS
Polly Bauer 50 Executive Vice President - Credit
Richard Cohen 48 Director
Bruce Dorskind 49 Director
Ken Lambert 48 Director
The following is a brief summary of the background of each nominee for
director and executive officer of the Company:
Mr. Altbach has served as Chief Executive Officer and Chairman of the
Board since January 2000. Prior thereto, he served as Co-Chairman, Chief
Operating Officer and Secretary of Symposium since December 1998. From 1996
through June 1998, he served as Vice Chairman of Rosecliff, Inc., a New York
based merchant banking operation. From 1995 through 1997, Mr. Altbach served as
Chairman of Paul Sebastian, Inc., one of Rosecliff's portfolio companies. From
November 1998 through December 1994 and from February 1998 through December
1998, Mr. Altbach was the President of Olcott Corporation, a distributor of
luxury products.
Mr. Kaufman has served as a director of Symposium since July 1999 and as
its President and Chief Operating Officer since May 2000. Prior thereto, he
served as President and owner of 21st Funding Corporation, a company that
arranged debt financing for middle market businesses. In 1968, Mr. Kaufman
founded a computer company, Applied Digital Data Systems, Inc., which was listed
on the New York Stock Exchange in 1978 and was sold to National Cash Register
(NCR) in 1981.
Mr. Ledwick has served as Chief Financial Officer of Symposium since
September, 1999. From September 1994 to August 1999 he served as Senior Vice
President and Chief Financial Officer for Cityscape Financial Corp., a
specialty financial services company with operations in both the U.S. and the
U.K. Mr. Ledwick also has held management positions with
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<PAGE>
River Bank America, Inc., a financial institution, GTE Corporation, a
telecommunications company, and Peat Marwick Mitchell & Co. Mr. Ledwick is a
certified public accountant.
Ms. Bauer has served as Executive Vice President of Symposium's credit
division since September 1999. She previously served as President and Chief
Operating Officer of Executive Management Services, a subsidiary of Home
Shopping Network, Inc. ("HSN"), from January 1999 to September 1999, and from
January 1991 to January 1999 held various management positions at the Home
Shopping Credit Corporation, also an HSN subsidiary. Ms. Bauer's
responsibilities at HSN included planning, marketing, analysis, design and
implementation of credit card processing and financial service programs for a
variety of clients as well as for HSN.
Mr. Cohen has served as a director of Symposium since October 1998. He
has been president of Richard M. Cohen Consultants, which provides financial
consulting services primarily in the multimedia industry, since 1996. From
1993 to 1995 he was president of General Media, Inc., a publishing company
with international market presence. Mr. Cohen serves on the Boards of
Directors of Greg Manning Auctions, Inc., Directrix, Inc. and Dey & Co.
Mr. Lambert has served as a director of Symposium since March 2000. He has
been a the managing partner and Chief Executive Officer of The Lambert
Consulting Group LLC, a firm that provides strategic marketing consulting to
Internet companies, since 1998. From 1993 to 1998 he served in various executive
and Board level positions with D'Arcy Macius Benton & Bowles, Inc. an
international marketing communications organization.
Mr. Dorskind has served as a director of Symposium since March 2000. He
has been owner and managing director of The Dorskind Group since 1993. The
Dorskind Group is a strategic consulting firm specializing in recruitment
communications, international recruitment, and business development for the
financial services, marketing communications and publishing industries.
Board Meetings and Board Committees
The Board of Directors held four meetings during 1999. No director
attended less than 75% of all the meetings of the Board of Directors held while
he was a director.
The Board of Directors has an Audit Committee and a Compensation
Committee, but does not have a Nominating Committee. The Audit Committee, which
is currently composed of Messrs. Cohen, Dorskind and Lambert, reviews the
professional services provided by the Company's independent auditors and
monitors the scope and results of the annual audit; reviews proposed changes in
the Company's financial and accounting standards and principles; reviews the
Company's policies and procedures with respect to its internal accounting,
auditing and financial controls; makes recommendations to the Board on the
engagement of the independent auditors and addresses other matters that may come
before it or as directed by the Board of Directors. None of Messrs. Cohen,
Dorskind or Lambert is currently an officer of the Company or of any of its
subsidiaries, and all are "independent" under the AMEX listing requirements as
currently in effect. The Audit Committee held one meeting during the 1999 fiscal
year.
While the Audit Committee does not presently operate under a charter, it
is in the process of adopting a charter in compliance with the applicable AMEX
requirements. In connection with
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<PAGE>
the listing of its Common Stock on the AMEX on August 1, 2000, the Company
received a sixty-day waiver of the AMEX Audit Committee charter requirements.
The Compensation Committee currently consists of Messrs. Lambert and
Dorskind. The purpose of the Compensation Committee is to review, on an annual
basis or more frequently as it deems appropriate, the performance of the
executive officers of the Company, review the amount and form of compensation
payable to the executive officers of the Company and report to the Board on an
annual basis, making recommendations regarding compensation of the executive
officers. In addition, the Compensation Committee administers the 1998 Stock
Option Plan. The Compensation Committee met on five occasions during 1999.
The Board of Directors also has an Executive Committee, which currently
consists of Messrs. Altbach, Kaufman and Cohen. The Executive Committee has been
empowered to exercise all of the powers and authorities of the Board of
Directors in the management of the business and affairs of the Corporation,
except that the Executive Committee does not have power and authority with
respect to the following matters: (i) approving or adopting, or recommending to
the shareholders, any action or matter expressly required by the Delaware
General Corporation Law to be submitted to the shareholders for approval, or
(ii) adopting, amending or repealing any By-law of the Corporation.
Compensation OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Prior to August 23, 2000, directors did not receive cash compensation for
services rendered as directors. [On August 23, 2000, the Board adopted a
resolution setting director compensation at $2,500 for each meeting attended].
During 1999, the Board granted certain directors options to acquire an aggregate
of 350,000 shares of Common Stock. Any additional option grants to directors
will be in the discretion of the Compensation Committee.
Board members are reimbursed for reasonable expenses incurred in
connection with attending meetings of the Board and of committees of the Board.
Executive Compensation
The following table sets forth, for the fiscal year ended December 31,
1999, the compensation earned for services rendered in all capacities by
Symposium's chief executive officer and the other highest-paid executive
officers serving as such at the end of 1999 whose actual or annualized
compensation for that fiscal year was in excess of $100,000. The individuals
named in the table will be hereinafter referred to as the "Named Officers." No
other executive officer of Symposium received compensation in excess of $100,000
during fiscal year 1999. Other than as set forth below, no executive officer who
would otherwise have been included in this table on the basis of 1999 salary and
bonus resigned or terminated employment during the year. No executive officer of
the Company received any cash compensation for any of the two fiscal years ended
prior to 1999.
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<PAGE>
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
Awards
--------------------------------------------------------------------------------
Name and Principal Fiscal Salary Bonus Other Annual Securities
Position Year Compensation Underlying
Ended Options (#)
--------------------------------------------------------------------------------
Ronald Altbach 1999 $313,670 - - 150,000
Chairman of the Board of
Directors and Chief
Executive Officer(*)
--------------------------------------------------------------------------------
Rupert Galliers-Pratt, 1999 $287,500 - - 200,000
former Chief Executive
Officer(+)
--------------------------------------------------------------------------------
Polly Bauer(++) 1999 $58,333 $38,000 $10,000(ss) 100,000(**)
Executive Vice
President - Credit
--------------------------------------------------------------------------------
Tim Ledwick(+++) 1999 $59,036 75,000(++++)
Chief Financial Officer
--------------------------------------------------------------------------------
--------
* Prior to January 28, 2000, Mr. Altbach was Co-Chairman of the Board of
Directors and Chief Operating Officer.
+ On January 28, 2000, Mr. Galliers-Pratt resigned as Chief Executive
Officer and Co-Chairman of the Board of Directors. Compensation for Mr.
Galliers-Pratt's services as Chief Executive Officer was paid to Executive
Management Services, a Company wholly-owned by Mr. Galliers-Pratt,
pursuant to the terms of a consulting agreement among Executive Management
Services, Mr. Galliers-Pratt and the Company, dated as of January 1, 1999.
++ Pursuant to an employment agreement between Ms. Bauer and the Company,
dated as of August 20, 1999, Ms. Bauer was entitled to a base annual
compensation of $200,000 for 1999, plus a non-discretionary bonus of
$38,000 payable on December 31, 1999, provided that Ms. Bauer remained in
the Company's employ at such time. The amounts shown for Ms. Bauer in this
"Summary Compensation Table" represent salary and bonus payments made to
Ms. Bauer for services rendered under the agreement from August 20, 1999
(the effective date of the agreement), through December 31, 1999.
ss Prior to entering into full time employment with the Company, Ms. Bauer
served as a Company consultant and was paid $10,000 in consideration of
those services.
** Includes 50,000 options to purchase Common Stock that were not vested as
of December 31, 1999.
+++ Pursuant to an employment agreement between Mr. Ledwick and the Company,
dated as of September 21, 1999, Mr. Ledwick is entitled to a base annual
compensation of $210,000 for 1999. The amounts shown for Mr. Ledwick in
this "Summary Compensation Table" represent salary payments made to Mr.
Ledwick for services rendered under the agreement from September 21, 1999
(the date Mr. Ledwick commenced his employment with the Company), through
December 31, 1999.
++++ None of the 75,000 options to purchase Common Stock granted to Mr. Ledwick
were vested as of December 31, 1999.
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<PAGE>
Options and Stock Appreciation Rights
The following table contains information concerning the grant of stock
options under the Company's 1998 Stock Option Plan to the Named Officers during
the 1999 fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------
Individual Grants
--------------------------------------------------------------------------------
Name Number of % of Underlying Exercise Expiration
Securities Options Granted Price Date
Underlying to Employees in ($/Share)(2)
Options Fiscal Year
Granted(#)(1)
--------------------------------------------------------------------------------
Ronald Altbach 150,000 28.6% $1.00 3/18/03
--------------------------------------------------------------------------------
Rupert Galliers-Pratt 200,000 38.1% $1.00 3/18/03
--------------------------------------------------------------------------------
Polly Bauer 100,000 19.0% $6.375 8/20/04
--------------------------------------------------------------------------------
Tim Ledwick 75,000 14.3% $5.625 9/21/04
--------------------------------------------------------------------------------
------------------------
(1) Each option has a maximum term of ten years, subject to earlier
termination in the event of the optionee's cessation of service with
Symposium. Each option provides for adjustments to such option's exercise
price and corresponding proportional adjustments in the number of shares
purchasable upon exercise of such option in the event of any stock splits,
reverse stock splits and the payment of dividends on the Common Stock. In
the event of any capital reorganization, any reclassification of the
Common Stock, or the consolidation or merger of the Company (collectively
a "Reorganization"), whereby the Company is the continuing corporation,
such option holder shall be entitled, upon exercise of such options, to
purchase such number and kind of shares, interests or other property that
such option holder would have been entitled to receive had such option
holder exercised such options immediately prior to such Reorganization. In
the event of a dissolution or liquidation of the Company, or any
Reorganization whereby the Company is not the continuing corporation, each
option shall terminate; provided, however, that (i) in the event of a
Reorganization whereby the Company is not the continuing corporation, the
continuing corporation may, but is not obligated to, tender to any
optionee options to purchase shares of the continuing corporation and (ii)
if the continuing corporation does not so tender options to purchase
shares of the continuing corporation, all options granted shall become,
prior to any liquidation, dissolution or Reorganization whereby the
Company is not the continuing corporation, immediately exercisable
notwithstanding any installment provision provided for under any option
grant.
(2) The exercise price may be paid in cash or, in the sole discretion of the
Board: (i) by delivery of other shares of Common Stock (valued at fair
market value on the exercise date); (ii) through cashless exercise (by
reducing the number of shares otherwise purchasable upon exercise); (iii)
through use of a note payable to the order of the Company in the amount of
the purchase price due upon exercise, or through any other deferred
payment arrangement approved by the Board; or (iv) by use of any other
legal consideration.
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<PAGE>
Option Exercise and Holdings
The following table provides information with respect to the Named
Officers concerning the exercisability of options during fiscal year 1999 and
unexercisable options held as of the end of fiscal year 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR ("FY")
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Name Shares Value No. of Securities Value of Unexercised
Acquired Realized Underlying Unexercised In-the-Money Options
on (1) Options at FY-End (#) at FY-End (Market
Exercise price of shares at
FY-End less exercise
price) ($)(1)
---------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald Altbach - - 150,000 150,000 $178,125 $178,125
---------------------------------------------------------------------------------------------
Rupert-Galliers Pratt - - 200,000 200,000 $237,500 $237,500
---------------------------------------------------------------------------------------------
Polly Bauer - - 50,000 50,000 0 0
---------------------------------------------------------------------------------------------
Tim Ledwick - - 0 75,000 0 0
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</TABLE>
(1) Based on the fair market value of Symposium's common stock on December 31,
1999 of $2.1875 per share, the closing sales price per share on that date
on the OTCBB.
Employment and Consulting Contracts
In January 1999, the Company entered into an employment agreement with
Ronald Altbach (the "Altbach Employment Agreement"). Under the Altbach
Employment Agreement, Mr. Altbach was paid $112,500, in consideration of
services rendered as Chief Operating Officer through June 30, 1999, and $175,000
in consideration of services rendered as Chief Operating Officer from July 1
through December 31, 1999. During the fiscal year ended December 31, 1999, Mr.
Altbach was also paid a $2,000 monthly car allowance. The Company may terminate
Mr. Altbach's employment at any time, with or without cause, provided that any
termination without cause requires the Company to continue to pay Mr. Altbach
his then effective rate of pay for a period of two years following the date of
such termination. Mr. Altbach may terminate the Altbach Employment Agreement
upon not less than 60 days notice to the Company.
In August 1999, the Company entered into an employment agreement with
Polly Bauer (the "Bauer Employment Agreement"). Pursuant to the Bauer Employment
Agreement, Ms. Bauer is entitled to base annual compensation at a rate of
$200,000 for the period ending September 30, 2000, with annual increases of 5%
effective as of September 30, 2000 and each succeeding September 30. Ms. Bauer
was also entitled to a non-discretionary bonus of $38,000 payable on December 1,
1999 and is entitled a bonus for each year, commencing with the year ending
December 31, 2000 (provided Ms. Bauer has not terminated her employment as of
such
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<PAGE>
date), equal to 10% of Net Consulting Income of the Symposium Credit Services
Division (the "Division") for such year. "Net Consulting Income" for any year is
defined as the amount by which the gross revenues actually received by the
Company during such year from consulting services rendered by the Division
exceeds the sum of (i) Ms. Bauer's salary and benefit costs for such year, (ii)
all compensation paid to or on behalf of other Division employees for such year,
(iii) all operating expenses of the Division for such year, and (iv) if the
Division has more than three employees or engages in any business other than the
provision of consulting services, an amount determined in good faith by the
Company, after consultation with Ms. Bauer, representing the Division's
reasonable and fair share of Company general and administrative expenses for
such year. The Company may terminate Ms. Bauer's employment at any time with or
without cause, provided that if, prior to March 20, 2001, Ms. Bauer is
terminated by the Company without cause, the Company is required to continue to
pay Ms. Bauer her then effective base salary and benefits until September 20,
2001. If, after March 20, 2001, Ms. Bauer is terminated by the Company without
cause, the Company is required to continue to pay Ms. Bauer her then effective
base salary and benefits for six months following the date of such termination.
Ms. Bauer will also be entitled to receive any accrued bonus through the date of
termination.
In September 1999, the Company entered into an employment agreement with
Tim S. Ledwick (the "Ledwick Employment Agreement"). Pursuant to the Ledwick
Employment Agreement, Mr. Ledwick is entitled to base annual compensation at a
rate of $210,000. In addition, on or before January 31 of each year, commencing
with the year 2000, the Board of Directors or the Chief Executive Officer of the
Company, following consultation with Mr. Ledwick, are required to establish a
bonus plan for such year which will permit Mr. Ledwick to earn a bonus for the
year in an amount ranging from $20,000 to $40,000. The terms and conditions of
the bonus plan shall be within the sole discretion of the Board and/or the Chief
Executive Officer and may provide objective and/or subjective criteria for
earning a bonus. The Company may terminate Mr. Ledwick's employment at any time
with or without cause, provided, that if, prior to March 20, 2001, Mr. Ledwick
is terminated by the Company without cause, the Company is required to continue
to pay Mr. Ledwick his then effective base salary and benefits until two months
following the date of such termination. If, after March 20, 2001, Mr. Ledwick is
terminated by the Company without cause, the Company is required to continue to
pay Mr. Ledwick his then effective base salary and benefits for six months
following the date of such termination; provided, however, that if Mr. Ledwick
is terminated by the Company without cause at any time after any person has
acquired more than fifty percent of the outstanding voting securities of the
Company, Mr. Ledwick will be entitled to his then effective base salary and
benefits for a period of one year following such termination. If terminated
without cause, Mr. Ledwick would also be entitled to receive a pro rata portion
of his bonus for the year in which his employment terminates.
In January 1999, the Company entered into a Consulting Agreement (the
"Consulting Agreement") with Executive Management Services ("Executive"), a
company wholly owned by Rupert Galliers-Pratt. Under the Consulting Agreement,
Executive was paid $112,500 in consideration for services rendered by Mr.
Galliers-Pratt through June 30, 1999, and $175,000 in consideration for services
rendered by Mr. Galliers-Pratt from July 1 through December 31, 1999. During the
fiscal year ended December 31, 1999, Mr. Galliers-Pratt was paid a $2,000
monthly car allowance. In August 2000, the Company, Executive and Mr.
Galliers-Pratt entered
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<PAGE>
into a letter agreement confirming that the Consulting Agreement had been
terminated effective January 28, 2000 and agreeing that in consideration for any
amounts that may be owing to Executive and/or Mr. Galliers-Pratt, the Company
would (i) pay Executive and Mr. Galliers-Pratt an aggregate of $250,000,
$105,000 of which was paid upon execution and delivery of the letter agreement,
with additional payments of $15,000 due on the last day of each month commencing
on August 31, 2000 through April 30, 2001, and a final payment of $10,000 due on
May 31, 2001 and (ii) issue to Executive five-year warrants to purchase 125,000
shares of the Company's Common Stock at an exercise price of $2.50 per share.
Recent Developments
In August 2000, the Company entered into an employment agreement
with Richard Kaufman (the "Kaufman Employment Agreement") effective as of May
2000. Pursuant to the Kaufman Employment Agreement, Mr. Kaufman is entitled to
minimum annual base salary of $330,000 for services rendered during the period
ending December 31, 2000, $330,000 for services rendered during the year 2001,
and $350,000 for services rendered during the year 2002. Mr. Kaufman is also
entitled to a bonus of $50,000 for services rendered during the year 2000, and
bonuses for services rendered during the years 2001 and 2002 of a minimum of
$100,000 per year, and a maximum of $200,000 and $260,000, respectively, per
year. Mr. Kaufman is also entitled to receive certain automobile expenses and,
subject to and promptly after shareholder approval of amendments to the 1998
Stock Option Plan, Mr. Kaufman will be granted 600,000 options having an
exercise price of $2.00 per share with a three year (quarterly) vesting
schedule. The Company may terminate Mr. Kaufman's employment at any time, with
or without cause, provided that any termination without cause requires the
Company to continue to pay Mr. Kaufman his salary in effect as of the date
immediately prior to the effective date of such termination, and to continue to
provide all payments, benefits and expense reimbursements to which Mr. Kaufman
is entitled for the remainder of the term of the Kaufman Employment Agreement,
ending December 31, 2002. Additionally, all unvested options shall immediately
become fully vested and exercisable, and Mr. Kaufman shall be entitled to
receive all guaranteed bonuses payable for the remaining term of the Kaufman
Employment Agreement. Mr. Kaufman may terminate the Kaufman Employment Agreement
upon not less than 30 days' notice to the Company.
Certain Transactions with Directors, Executive Officers and Certain Beneficial
Holders
During 1999 the Company paid a total of $85,000 to Richard Kaufman, a
Director of the Company, and, as of May 2000, the Company's President and Chief
Operating Officer, for services rendered in connection with the financing
relating to the Company's acquisition (the "DSI Acquisition") of substantially
all the assets and certain liabilities of Direct Sales International, L.P., a
Georgia limited partnership ("DSI").
On January 28, 2000 (the "Closing Date"), Symposium, through its
wholly-owned subsidiary Media Outsourcing, Inc. ("MOS"), acquired substantially
all of the assets and certain liabilities of DSI pursuant to an Asset Purchase
Agreement dated as of January 28, 2000, by and among the Company, DSI, MOS, and
Richard Prochnow, the sole stockholder of the general partner of DSI and the
owner of over 90% of the partnership interests in DSI. The purchase price paid
by Symposium to acquire the net assets of DSI was approximately $27.6 million,
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including: (i) $25.0 million in cash paid to the seller; (ii) an agreement to
loan $1.5 million to AmeriNet, Inc. ("AmeriNet") a company in which Mr. Prochnow
holds a majority interest; and (iii) approximately $1.1 million in closing costs
and fees.
In connection with the DSI Acquisition, in June 1999, Symposium issued
2,500,000 shares of its Common Stock to Mr. Prochnow for a $2,500,000 principal
amount promissory note (the "Note") in favor of the Company bearing interest at
a rate of 7.75% per annum payable on the earlier of December 31, 2000 and the
Closing Date. On the Closing Date, the Note was amended as follows: the maturity
date was extended to January 14, 2003 (provided that one-third of the net
proceeds of any sale of his Symposium Common Stock must be applied to repay the
Note); the requirement to pay interest on outstanding amounts not yet due was
rescinded, and in lieu thereof, the amended Note provides for interest at 10%
per annum, commencing on the date of any payment default under the amended Note.
Symposium has entered into a Registration Rights Agreement with Mr. Prochnow
which provides that Mr. Prochnow may sell up to 600,000 shares of Symposium
Common Stock to Symposium at $3.00 per share between January 15, 2001 and March
13, 2001, and also requires the Company to register 1,000,000 of the 2,500,000
shares within 120 days after January 28, 2000. Furthermore 600,000 shares were
released from a Pledge Agreement executed by Mr. Prochnow on June 9, 1999.
MOS has entered into a three-year Consulting Agreement with Mr. Prochnow
pursuant to which Mr. Prochnow is entitled to receive $50,000 per month plus
benefits. Such amount has been guaranteed by Symposium.
In February, 2000, the Company decided not to exercise an option it held
(the "Option") to acquire 50.1% of the outstanding stock of AmeriNet, but as a
prerequisite to consummating the DSI Acquisition agreed to provide a $1.5
million credit facility to AmeriNet in addition to a $500,000 loan made during
1999. Mr. Prochnow owns 50% of the common stock of AmeriNet. Due to the
uncertainty of AmeriNet's ability to repay any of the loans, the Company is
treating its commitment to provide additional funding to AmeriNet as an increase
in the purchase price of DSI. Under the original terms of the AmeriNet credit
facility, the Company was obligated (1) to lend AmeriNet $100,000 per month for
the ten months beginning in March, 2000 through December 2000, inclusive, and
(2) on or before July 28, 2000, to purchase for $500,000 a $500,000 principal
amount note issued by AmeriNet to RLP Holdings L.P., an affiliate of Mr.
Prochnow (the "RLP Note"). The Company has loaned AmeriNet an aggregate of
$300,000 under the credit facility and the Company and AmeriNet have agreed that
subsequent loan installments will be made as and when requested by AmeriNet but,
in any event, in amounts not to exceed $50,000 per month. In addition, RLP has
agreed to extend the date by which the Company is required to purchase the RLP
Note from July 28, until December 31, 2000. The Company and RLP are also
discussing an arrangement pursuant to which the Company would satisfy its
obligation to purchase the RLP Note by issuing 1,000,000 shares of Common Stock
to RLP, but no agreement has been reached on this matter.
On January 28, 2000, in connection with the DSI Acquisition, Lancer
Offshore, Inc. ("Lancer") purchased 1,900,000 shares of Common Stock, 20,000
shares of the Company's Series A Convertible Preferred Stock, par value $0.001
(the "Series A Shares"), constituting all of the issued and outstanding Series A
Shares, and, as described below, 45,000 shares of its
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Series C Convertible Preferred Stock, par value $0.001 (the "Series C Shares"),
for aggregate consideration of $6,500,000.
The Series A Shares were initially redeemable at an aggregate redemption
price of $100 per share (together with accrued dividends at a rate of 16% per
annum). Since Series A Shares remained outstanding subsequent to February 27,
2000, the Company was required to issue to Lancer, as the holder of the Series A
Shares, an aggregate of 16,125 shares of Common Stock per day for each day that
the Series A Shares remained outstanding from February 28 through March 28, 2000
and 26,875 shares of Common Stock per day for each day that such Series A Shares
remained outstanding after March 28, 2000. On March 21, 2000, Lancer agreed to
extend the mandatory redemption date of the Series A Shares from March 28 to
April 12, 2000 in consideration of the issuance to it of an aggregate of 275,000
shares of Common Stock.
If the Series A Shares were not redeemed by the mandatory redemption date,
the Company would have been required to issue, monthly in advance, five-year
warrants to purchase 215,000 shares of Common Stock at an exercise price of $.10
per share, for each 30-day period such Series A Shares remained outstanding from
and after such mandatory redemption date and the conversion price at which the
Series A Shares were convertible into shares of Common Stock would have
decreased from $2.00 to $0.10.
On March 27, 2000, Lancer, in full satisfaction of its rights as holder of
the Series A Shares, (i) converted its holdings of Series A Shares including
accrued and unpaid dividends into an aggregate of 4,414,666 shares of Common
Stock (representing an effective conversion price of $.50 per share); (ii) the
Company agreed to issue to Lancer (A) warrants to purchase 1,103,500 shares of
Common Stock at an exercise price of $0.50 per share, and (B) warrants to
purchase 1,103,500 shares of Common Stock at an exercise price of $1.00 per
share. In addition, the Company paid to Capital Research, Ltd. (the placement
agent for the Series A Shares and, as a result of consideration paid to it by
the Company as a result of its role in financing the DSI Acquisition, the
beneficial owner of in excess of 5% of the Company's Common Stock) a fee
consisting of 220,000 shares of Common Stock.
On January 28, 2000, also in connection with the DSI Acquisition, the
Company issued 52,892 Series C Shares and 1,763,067 shares of Common Stock
resulting in net proceeds to the Company totaling approximately $5.0 million.
Lancer purchased 45,000 of the Series C Shares and 1,500,000 shares of such
Common Stock for an aggregate purchase price of $4.5 million. In connection with
such purchase, the Company also reduced the exercise price of 2,000,000 warrants
previously issued to Lancer from $3.50 per share to $1.00 per share. The Series
C Shares were initially convertible into shares of Common Stock at $2.00 per
share and are entitled to a 10% cumulative dividend, payable quarterly in cash
or shares of Common Stock (at the option of the Company). The Series C Shares
were initially mandatorily redeemable on the earlier of July 26, 2000 or upon
the consummation of a financing transactions resulting in gross proceeds of at
least $10 million at a redemption price of $100 per share, together with accrued
dividends.
On April 24, 2000, Lancer and the other holders of the Series C Shares
agreed to extend the mandatory redemption date of the Series C Shares from July
26, 2000 to December 26, 2000 in exchange for 2,247,067 shares of Common Stock
(of which Lancer received 1,500,000 shares
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as its pro rata share) and a reduction in the effective conversion rate from
$2.00 per share to $1.00 per share. If the Company fails to redeem the Series C
Shares by the mandatory redemption date, the Company must issue to the holders
of the Series C Shares an aggregate of 370,244 five-year Common Stock purchase
warrants (7 warrants per Series C Share) with an exercise price of $0.25 per
share each month until such Series C Shares are fully redeemed.
On June 14, 2000, the Company issued and sold (the "Series C Offering") an
additional 7,500 shares of Series C Convertible Preferred Stock, par value $.001
(the "New Series C Shares") and 250,000 shares of Common Stock, par value $.001,
to Lancer. In connection with such issuance and sale, the Company also agreed to
reduce the exercise price of warrants to purchase 2,000,000 shares of Common
Stock held by Lancer from $1.00 to $0.50 per share. The aggregate consideration
received for the New Series C Shares, the Common Stock and the repricing of the
warrants was $750,000. In connection with the Series C Offering, the Company
also paid a fee to Capital Research Ltd. consisting of a cash payment of
$43,750, 562.5 New Series C Shares, five-year warrants to purchase 100,000
shares of Common Stock at a price of $1.88 per share and 18,750 shares of Common
Stock. If the Company fails to redeem the New Series C Shares by the mandatory
redemption date, the Company must issue to Lancer and Capital Research Ltd.
188,125 five-year warrants with an initial exercise price of $0.25 per share
each month until the New Series C Shares are fully redeemed.
On July 18, 2000, Lancer, Capital Research Ltd. and the other holders of
the Series C Shares agreed to waive the requirement that the failure of the
Company to redeem the Series C Shares and/or New Series C Shares on or before
the mandatory redemption date will trigger a reduction in the conversion price
of such shares from $1.00 to $0.25. In consideration for this waiver, the
Company agreed to issue to such holders an aggregate of 1,523,750 shares of
Common Stock, pro rata in accordance with their percentage holders of the Series
C and New Series C Shares (of which Lancer and Capital Research Ltd. received
1,312,404 shares and 98,855 shares, respectively), and to issue to Capital
Research Ltd., as a fee in connection with such waiver, an additional 1,500
Series C Shares and 50,000 shares of Common Stock. This waiver does not affect
the Company's obligation to issue warrants, on a monthly basis, if the Company
fails to redeem the New Series C Shares and Series C Shares on or before the
mandatory redemption date.
Lancer and Capital Research Ltd. are entitled to demand and "piggyback"
registration rights with respect to: (i) the Common Stock issued or issuable
upon (A) conversion of the Series A Shares, Series C Shares and New Series C
Shares, (B) the exercise of the outstanding warrants issued to them and (C) the
exercise of any warrants that the Company may be required to issue in the event
of a failure to redeem the Series C Preferred on or before December 26, 2000.
Lancer and Capital Research Ltd. are also entitled to the same registration
rights with respect to the other shares of Common Stock issued to it as
described above. The Company has also agreed to provide Lancer monthly financial
statements and has granted a designated representative of Lancer visitation
rights with respect to any meeting of the Company's Board of Directors.
The Company believes, based on its review of its stock ledger and
information provided to it by its transfer agent, that as of March 1999 when it
made its initial acquisition of securities of the Company, Lancer Offshore
beneficially owned approximately 16.5 % of the Company's Common Stock and
Michael Lauer, in his capacity as a general partner of Lancer Partners
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(which also acquired beneficial ownership of approximately 16.5% of the
Company's Common Stock in March 1999) and investment manager of Lancer Offshore,
indirectly beneficially owned approximately 33% of the Company's Common Stock.
As a result of the transactions described above, as of August 23, 2000, Lancer
Offshore's beneficial ownership of the Common Stock increased to approximately
54.1%, and Mr. Lauer's indirect beneficial ownership of the Common Stock
increased to approximately 56.8%. See "Principal Shareholders" below.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Symposium's officers, directors and persons who are the beneficial owners of
more than 10% of the Common Stock to file initial reports of ownership and
reports of changes in ownership of the Common Stock with the Commission.
Officers, directors and beneficial owners of more than 10% of the Common Stock
are required by Commission regulations to furnish Symposium with copies of all
Section 16(a) forms they file.
Based on its review of the copies of such forms and certain written
representations furnished to it, Symposium believes that, during the period from
January 1 through December 31, 1999, (i) Richard Prochnow failed to file a Form
3 disclosing his initial acquisition of more than 10% of the Company's Common
Stock in June 1999, (ii) Michael Lauer, Lancer Partners and Lancer Offshore
failed to file Form 3's disclosing their acquisition of beneficial ownership of
more than 10% of the Company's Common Stock in March 1999, and (iii) all other
officers, directors and beneficial owners of more than 10% of the Common Stock
complied with applicable Section 16(a) requirements.
Principal Shareholders
The following table sets forth as of August 23, 2000 certain information
relating to the ownership of the Common Stock by (i) each person known by the
Company to be the beneficial owner of more than five percent of the outstanding
shares of the Common Stock, (ii) each of the Company's directors, (iii) each
executive officer, and (iv) all of the Company's executive officers and
directors as a group.
Amount And
Nature Of
Name And Address Beneficial Percent
Of Beneficial Owner(1) Ownership(2) Of Class
---------------------- ------------ --------
Richard Prochnow 2,500,000 9.0%
2550 Heritage Court, Suite 106
Atlanta, Georgia 30339
Michael Lauer 21,019,069 (3) 56.8%
980 Post Road East
Westport, Connecticut 06880
The Shropshire Trust Company, Ltd. 1,200,000 (4) 4.3%
M.L.H. Quinn & Co.
Bermuda Commercial Bank Bldg.
44 Church Street
Hamilton HM 12 Bermuda
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Capital Research Ltd. 2,757,273 (5) 9.5%
27241 Paseo Peregrino
San Juan Capistrano, CA 92675
Ronald Altbach 1,425,000 (6) 5.1%
Lancer Offshore Inc. 20,019,069 (7) 54.1%
Kaya Flamboyan 9
Curacao, Netherlands Antilles
Richard Cohen 170,000 (8) *
Richard Kaufman 170,000 (9) *
Tim S. Ledwick 0 (10) *
Polly Bauer 50,000 (11) *
Ken Lambert 90,000 (12) *
Bruce Dorskind 90,000 (13) *
All officers and directors as a group
(7) persons) 1,895,000 6.8%
--------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner is in the
care of Symposium Corporation, 410 Park Avenue, Suite 830, New York, NY 10022.
(2) Unless otherwise indicated and subject to applicable community property
laws, Symposium believes that all persons named in the table have sole voting
and investment power with respect to all shares of common stock beneficially
owned by them. A person is deemed to be the beneficial owner of securities that
may be acquired by such person within 60 days of August 23, 2000 upon the
exercise of options, warrants or convertible securities. Each beneficial owner's
percentage of ownership is determined by assuming all options, warrants or
convertible securities that are held by such person (but not held by any other
person) and which are exercisable or convertible within 60 days of August 23,
2000 have been exercised or converted. Percent of Class (third column above) is
based on [27,724,245] shares of Common Stock outstanding as of August 23, 2000,
as adjusted to give effect to the assumptions regarding conversion and exercise
in the previous sentence.
(3) Includes shares owned by Lancer Offshore (see note 7) and 1,000,000 shares
owned by Lancer Partners, which Mr. Lauer may be deemed to beneficially own by
virtue of his status as investment manager of Lancer Offshore and General
Partner of Lancer Partners.
(4) Shropshire Trust Company Ltd. is an independent trust company and is
unaffiliated with Symposium other than as a beneficial owner of 1,200,000 shares
as trustee for Shropshire Trust No. 1,
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Shropshire Trust No. 2, Shropshire Trust No. 3 and Shropshire Trust No. 4, each
of which holds 300,000 shares of common stock. The beneficiaries of the
Shropshire Trust No. 1, Shropshire Trust No. 2, Shropshire Trust No. 3 and
Shropshire Trust No. 4 are the children of Rupert Galliers-Pratt, former Chief
Executive Officer of Symposium Corporation.
(5) Includes 717,334 shares of Common Stock issuable upon exercise of warrants
and 545,450 issuable upon exercise of the Company's convertible preferred
securities.
(6) Includes: (i) 475,000 shares of Common Stock owned by his wife; and (ii)
425,000 shares of Common Stock issuable upon exercise of stock options. Does not
include 125,000 shares issuable upon exercise of warrants that are not
exercisable within 60 days of August 23.
(7) Includes 4,000,000 shares of Common Stock issuable upon exercise of warrants
and 5,250,000 shares of Common Stock issuable upon exercise of the Company's
convertible preferred securities.
(8) Includes 20,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days. Does not include 100,000 shares of
common stock issuable upon the exercise of stock options which vest more than 60
days from August 23, 2000.
(9) Includes 170,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days. Does not include 80,000 shares of
Common Stock issuable upon the exercise of stock options which vest more than 60
days from August 23, 2000.
(10) Does not include 75,000 shares of common stock issuable upon exercise of
options which vest more than 60 days from August 23, 2000.
(11) Does not include 50,000 shares of Common Stock issuable upon exercise of
stock options which vest more than 60 days from August 23, 2000.
(12) Includes 90,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days. Does not include 60,000 shares of
Common Stock issuable upon exercise of stock options which vest more than 60
days from August 23, 2000.
(13) Includes 90,000 shares of Common Stock issuable upon exercise of stock
options that are exercisable within 60 days. Does not include 60,000 shares of
Common Stock issuable upon exercise of stock options which vest more than 60
days from August 23, 2000.
There are no family relationships among the executive officers or
directors of Symposium.
PROPOSAL TWO
AMENDMENT TO THE COMPANY'S 1998 STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES AUTHORIZED FOR ISSUANCE AND
MAKE CERTAIN OTHER CHANGES
General
The Board of Directors has approved amendments (the "Plan Amendments") to
the 1998 Option Plan (the "Option Plan") to (i) increase the number of shares of
Common Stock available
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for issuance under the Option Plan from 2,500,000 shares to 6,500,000 shares;
and (ii) limit the number of shares with respect to which options may be granted
in a year to any optionee to 2,000,000 shares. The Plan Amendment described in
clause (ii) is related to the "performance-based compensation" exception to the
"million dollar limit" on corporate tax deductions under Section 162(m) of the
Internal Revenue Code of 1986 as amended (the "Code"). The Plan Amendments are
being submitted to the shareholders for approval.
The Board of Directors approved the Plan Amendment to increase the number
of shares because substantially all of the shares available for issuance under
the Option Plan are subject to outstanding options. In the past, the Company has
granted an aggregate of 2,413,000 stock options to officers, directors,
employees and consultants at exercise prices ranging from $0.01 to $6.375 per
share. In addition, as of the date of this Proxy Statement, the Compensation
Committee has authorized options to purchase an additional 2,125,000 shares of
Common Stock, which options are subject to approval of the Plan Amendments by
the shareholders. The Board of Directors believes that the ability to grant
stock-based awards is important to the future success of the Company. The grant
of stock options can motivate high levels of performance and provide an
effective means of recognizing employee contributions to the success of the
Company. In addition, stock options can be valuable in recruiting and retaining
personnel and providing incentives to its current employees. The increase in the
number of shares available for awards under the Option Plan will enable the
Company to continue to realize the benefits of granting stock-based
compensation.
Interest of Certain Persons in the Plan Amendments
In May and August, 2000, the Compensation Committee of the Board of
Directors resolved, subject to approval of the Plan Amendments by shareholders,
to grant the following options to the persons set forth below:
--------------------------------------------------------------------------------
Optionee Shares of Common Stock Underlying Option
--------------------------------------------------------------------------------
Ronald Altbach 1,000,000
--------------------------------------------------------------------------------
Richard Kaufman 600,000
--------------------------------------------------------------------------------
Tim Ledwick 225,000
--------------------------------------------------------------------------------
Dennis Gougion 150,000
--------------------------------------------------------------------------------
Sally Smith 150,000
--------------------------------------------------------------------------------
The option grants to Messrs. Altbach, Kaufman and Ledwick are subject to vesting
in equal quarterly installments over the three year period from the date of
grant and have an exercise price of $2.00 per share. The option grants to Mr.
Gougion and Ms. Smith, each a Senior Vice President of MOS, vest as to 50,000
shares on December 31, 2000, an additional 50,000 shares on December 31, 2001
and as to the balance on December 31, 2002 and also have an exercise price of
$2.00 per share. In each case the exercise price of these options is greater
than or equal to the fair market value of the Common Stock on the date of grant.
In the event that the fair market value of the Common Stock on the date the
shareholders approve the Plan Amendments exceeds the exercise price of these
options, then the Company will be required, for financial reporting purposes, to
amortize the expense of any such options (such expense being equal to the
difference between the fair market value of the Common Stock on the date of such
shareholder approval and the exercise price on such date)
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over the shorter of the length of the recipient's employment with the Company
and the period over which the option vests.
The Plan Amendments are intended, in part, to increase the number of
shares available under the Option Plan to an amount sufficient to allow the
grant of the foregoing options. See also "Option Plan Amendment Benefits to
Directors and Executive Officers."
Under Section 162(m) of the Code, remuneration in excess of $1 million
that is paid to certain "covered employees" of a publicly-held corporation
(generally, the corporation's chief executive officer and its four most highly
compensated employees other than the chief executive officer) is not deductible
by the corporation. However, the deduction may be preserved under an exception
for "performance-based compensation."
To qualify for the "performance-based" exception, a plan must satisfy
certain requirements including the establishment of performance goals by a
compensation committee of the Board of Directors that consists solely of two or
more outside directors. Under the Section 162(m) regulations, a stock option
plan is deemed to satisfy the performance goal requirement if the plan states
the maximum number of shares with respect to which options or rights may be
granted during a specified period with respect to any employee. The Plan
Amendment limits the number of shares with respect to which options may be
granted in a year to any optionee to 2,000,000 shares. The Board of Directors
believes that the adoption of this amendment will enable the Company to continue
to realize the maximum benefits available to it under federal tax laws
applicable to stock option plans.
Summary of the Option Plan
Purpose
The purpose of the Option Plan is to advance the interests of the Company
and its shareholders by strengthening the Company's ability to obtain and retain
the services of the types of employees, consultants, officers and directors who
will contribute to the Company's long term success and to provide incentives
which are linked directly to increases in stock value which will inure to the
benefit of all shareholders of the Company.
The Board of Directors approved the Option Plan in December 1998. The
shareholders approved the Option Plan by written consent in April 1999 and
approved certain amendments to the Option Plan at the 1999 Annual Meeting of
Shareholders in September 1999.
Administration
The Option Plan is administered by the Compensation Committee of the Board
of Directors. The party administering the Option Plan is referred to as the
"Administrator." Subject to the provisions of the Option Plan, the Administrator
has full and final authority to (i) to select from among eligible directors,
officers, employees and consultants, those persons to be granted awards under
the Option Plan, (ii) to determine the type, size and terms of individual awards
to be made to each person selected, (iii) to determine the time when awards will
be granted and to establish objectives and conditions (including, without
limitation, vesting and performance conditions), if any, for earning awards,
(iv) to amend the terms or conditions of any outstanding
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award, subject to applicable legal restrictions and to the consent of the other
party to such award, (v) to authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the Option Plan,
and (vii) to make any and all other determinations which the Administrator
determines to be necessary or advisable in the administration of the Option
Plan. The Administrator has full power and authority to administer and interpret
the Plan and to adopt, amend and revoke such rules, regulations, agreements,
guidelines and instruments for the administration of the Option Plan and for the
conduct of its business as the Administrator deems necessary or advisable. No
person shall receive Options representing more than 50% of the aggregate number
of shares of Common Stock that may be issued under the Option Plan. Under the
Plan Amendments, the aggregate number of shares of Common Stock that may be
subject to Options granted to any person in a calendar year shall not exceed
2,000,000 shares.
Eligibility
Options may be granted to persons selected by the Administrator in its
discretion who are, at the time of grant, directors, officers, employees or
consultants of the Company, or any of its subsidiaries (a "Participant");
provided, that, Incentive Stock Options may be granted only to individuals who
are employees of the Company or any of its Subsidiaries.
Awards
The Option Plan provides for the grant of stock options intended to
qualify as incentive stock options ("ISOs") within the meaning of Section 422 of
the Internal Revenue Code of 1986 as amended (the "Code") and stock options that
are not intended to qualify as ISOs within the meaning of the Code ("NQOs")
(collectively, "Options") in such amounts and subject to such terms and
conditions as the Administrator shall in its discretion determine. Each Option
award is evidenced by an "Option Agreement" containing such terms as the
Administrator shall determine.
Each ISO must be in compliance with each of the following conditions:
1. The exercise period may not be more than 10 years from the date the
ISO is granted (five years in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company).
2. The exercise price per share of each ISO may not be less than 100%
of the fair market value of a share of Common Stock on the date on
which the ISO is granted (110% of the fair market value in the case
of a 10% shareholder described in the previous paragraph).
3. The aggregate fair market value of shares of Common Stock with
respect to which ISOs are exercisable for the first time by an
"optionee" during any calendar year (determined on the grant date)
under all plans of the company and its affiliates may not exceed
$100,000; the Options or portions thereof that exceed such limit
shall be treated as NQOs.
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4. If the optionee's employment with the Company terminates, the
optionee must exercise the ISO, to the extent it was exercisable at
termination, within three months of termination.
5. ISOs are exercisable during the lifetime of the person to whom
the ISO is granted only by such person.
Payment
The exercise price shall be paid, to the extent permitted by applicable
law and regulations, in cash, with previously-owned Common Stock, by reducing
the number of shares of Common Stock otherwise issuable pursuant to the award,
according to a deferred payment or other arrangement, or in another form of
legal consideration that may be acceptable to the Administrator.
Transferability
Options granted under the Option Plan are not transferable by the
Participant except by will or by the laws of descent and distribution.
Certain Corporate Changes
Upon a change in capitalization of the Company, a stock dividend or split
a merger or combination of shares and certain other similar events, the Option
Plan provides for an adjustment in the number of shares of Common Stock
available to be issued under the Option Plan, the maximum number of shares with
respect to which Options may be granted to a participant in a year, and the
number and exercise price-per-share of shares of Common Stock subject to
Options.
Amendment and Termination
The Board may at any time amend the Option Plan in whole or in part,
provided that no such action may adversely affect any rights or obligations with
respect to any outstanding Options.
The Option Plan will terminate on the earlier of the date the Board
terminates the Option Plan or December 31, 2007. Termination of the Option Plan
will not terminate any outstanding Options.
Federal Income Tax Consequences for Stock Options
The following is a general discussion of the principal tax considerations
for both ISOs and NQOs and is based upon the tax laws and regulations of the
United States existing as of the date hereof, all of which are subject to
modification at any time. Various state laws may provide for tax consequences
that vary significantly from those described below. In addition, tax
consequences different from those described below may result in the event of the
exercise of an option after termination of the participant's employment by
reason of death.
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Incentive Stock Options
In general, no income is recognized for federal income tax purposes by an
optionee at the time the option is granted or exercised. The optionee will
recognize capital gain or loss when the optionee disposes of his or her Common
Stock, with treatment as a long- or short-term gain or loss being determined by
the length of the holding period. Such gain or loss is generally measured by the
difference between the exercise price of the option and the amount received for
the Common Stock at the time of the disposition.
However, if an optionee disposes of the Common Stock acquired upon
exercise of an ISO within two years after grant of the option or within one year
after acquiring the Common Stock, the disposition will be considered a
"disqualifying disposition" and the treatment will be different. In such a case,
the difference between the exercise price of the stock and the fair market value
of the stock on the date of exercise will be treated as ordinary income, and any
amount realized upon disposition of the Common Stock in excess of the fair
market value of the shares on the date of exercise will be treated as capital
gain.
If an optionee uses shares acquired upon the exercise of an ISO to
exercise another ISO, and the sale of the shares so surrendered for cash on the
date of surrender would be a disqualifying disposition of such shares, the use
of such shares to exercise an ISO also would constitute a disqualifying
disposition.
For purposes of calculating the "alternative minimum tax," the excess of
the fair market value of the stock at the exercise date over the exercise price
of the ISO is included in computing that year's alternative minimum taxable
income, even though the exercise may not otherwise result in a taxable event.
The Company is not entitled to a deduction as a result of the grant or
exercise of an ISO. If the optionee has compensation taxable as ordinary income
as a result of a disqualifying disposition, the Company shall be entitled to a
deduction in an amount equal to the compensation income resulting from the
disqualifying disposition in the taxable year of the Company in which the
disqualifying disposition occurs.
Nonqualified Stock Options
No income is recognized by a holder of NQOs at the time of grant. In
general, when shares of Common Stock are issued to a holder pursuant to exercise
of an NQO, the holder will recognize ordinary income equal to the excess of the
fair market value of the shares on the date of exercise over the exercise price.
The shares acquired by the optionee upon such exercise shall have a tax basis
equal to the fair market value of the shares on the exercise date. Upon any
subsequent sale of such shares, the optionee shall recognize a capital gain (or
loss) in an amount equal to the difference between the amount realized on the
sale and such tax basis. Whether such gain or loss is characterized as long- or
short-term will depend on the optionee's holding period.
Generally, in connection with the exercise of an NQO, the Company will be
entitled to a deduction for federal income tax purposes in the year and in the
same amount as the optionee is considered to have realized ordinary income.
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<PAGE>
In general, the "million-dollar limit" under Section 162(m) of the Code
provides that, subject to certain exceptions, remuneration in excess of $1
million that is paid to certain "covered employees" of a publicly-held
corporation (generally, the corporation's chief executive officer and its four
most highly compensated employees other than the chief executive officer) shall
not be deductible by the corporation. Grants of options under the Option Plan
made by a committee comprised solely of two or more outside directors and the
exercise price of which is equal to or greater than the fair market value of the
Common Stock on the date of grant generally shall be eligible for an exception
to the million-dollar limit applicable to certain qualified "performance-based
compensation."
Option Plan Amendment Benefits to Directors and Executive Officers
The following table sets forth information regarding the benefits which
will be received assuming passage of the proposed Plan Amendments to the Option
Plan by the following persons and groups (based on options approved for grant as
of August 23, 2000).
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<PAGE>
Name and Principal Position Dollar Value Number of Shares
--------------------------- ------------ ----------------
Ronald Altbach $0 1,000,000
Chairman & Chief Executive Officer
Richard Kaufman $0 600,000
President & Chief Operating Officer
Tim Ledwick $0 225,000
Chief Financial Officer
Dennis Gougion $0 150,000
Senior Vice President--MOS
Sally Smith $0 150,000
Senior Vice President--MOS
(1) The dollar value of the option listed represents the difference between
the market value (the closing sales price as of August 21, 2000) and the
exercise price.
Required Vote
The approval of the Plan Amendments requires the affirmative vote of a
majority of the shares of the Company's Common Stock present or represented and
entitled to vote on this matter at the 2000 Annual Meeting. An abstention will
be counted toward the tabulation of votes cast and will have the same effect as
a vote against the proposal. A broker non-vote, however, will not be treated as
a vote cast for or against approval of the proposal.
The Board of Directors has adopted resolutions that set forth the Plan
Amendments, declares the advisability of such Plan Amendments, and submits the
Plan Amendments to the shareholders for approval. The Board recommends approval
of the Plan Amendments by the shareholders.
PROPOSAL THREE
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION TO INCREASE
THE AUTHORIZED COMMON STOCK
On August 23, 2000, the Board of Directors of the Company approved the
amendment set forth below (the "Charter Amendment") to the Company's Restated
Certificate of Incorporation which, if adopted, would increase the number of
shares of Common Stock which the Company has authority to issue by 75,000,000,
from 75,000,000 to 150,000,000 and, consequently, would increase the total
number of shares of all classes of capital stock which the Company has authority
to issue by 75,000,000, from 85,000,000 to 160,000,000.
The first paragraph of Article THIRD of the Company's Amended and Restated
Certificate of Incorporation reads as follows before giving effect to the
Amendment:
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<PAGE>
THIRD: 1. The authorized capital stock of the Corporation shall
consist of 85,000,000 shares of which 75,000,000 shares shall be
designated Common Stock, par value $0.001 per share (the "Common Stock"),
and 10,000,000 shares shall be designated Preferred Stock, par value
$0.001 per share (the "Preferred Stock").
Pursuant to the Charter Amendment, the first paragraph of Article THIRD of
the Restated Certificate of Incorporation would be deleted and replaced by the
following:
THIRD: 1. The authorized capital stock of the Corporation shall
consist of 160,000,000 shares of which 150,000,000 shares shall be
designated Common Stock, par value $0.001 per share (the "Common Stock"),
and 10,000,000 shares shall be designated Preferred Stock, par value
$0.001 per share (the "Preferred Stock").
The Board of Directors has adopted resolutions that set forth the Charter
Amendment, declare the advisability of the Charter Amendment, and submit the
Charter Amendment to the shareholders for approval. The Board recommends
approval of the Charter Amendment by the shareholders.
Reasons for Charter Amendment and Interests of Certain Persons in the Charter
Amendment
In the past, the Company has issued Common Stock to raise funds for its
operations, as incentive compensation to employees, directors, outside
consultants, contractors and advisors and as compensation for services rendered
to the Company by certain consultants and advisors. The Company anticipates that
it will issue Common Stock for these purposes in the future and in connection
with stock based acquisitions of existing companies that can bring value to the
Company's shareholders. However, if the Charter Amendment is not approved, the
Company will not have sufficient additional shares of authorized Common Stock
for these purposes.
As described above under Proposal Two, the Board of Directors has adopted
amendments to the Company's 1998 Stock Option Plan increasing the number of
shares available for grant of options thereunder from 2,500,000 to 6,500,000.
If the Charter Amendment is not approved, the Company will be unable to reserve
a sufficient number of shares of Common Stock to provide for this increase in
the 1998 Stock Option Plan.
As of August 23, 2000, there were [27,724,245] issued and outstanding
shares of Common Stock and the Company was required to reserve approximately
42.6 million additional shares of Common Stock for issuance upon exercise of
outstanding options and warrants and conversion of outstanding convertible
securities (the "Derivative Securities"). The number of shares reserved for
issuance upon conversion or exercise of Derivative Securities is based upon the
actual numbers of shares of Common Stock into which outstanding Derivative
Securities are convertible or for which such Derivative Securities are
exercisable, except in the case of the Company's outstanding shares of Series A
Convertible Preferred Stock (the "New Series A Shares") and certain warrants
issued to the holder of the New Series A Shares. The Company is contractually
obligated to reserve a number of shares of Common Stock for issuance upon
exercise of the New Series A Preferred Shares and related warrants calculated on
the assumption that such New Series A Preferred Shares and warrants were
convertible and/or exercisable at an
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<PAGE>
effective price of $0.25 per share (rather than the actual current conversion
price of $1.9250 per share and warrant exercise price of $1.485 per share,
respectively). Accordingly, the Company is required to reserve 22,477,500 shares
of Common Stock for issuance upon conversion of the New Series A Preferred
Shares and exercise of the related warrants, even though less than 3,000,000
shares of Common Stock would be issuable if all New Series A Shares were
converted and all related warrants were exercised at the respective conversion
and exercise prices currently in effect. However, the conversion price of the
New Series A Preferred Shares is based upon the market price of the Common Stock
and, accordingly, such conversion price could decline, and the number of shares
of Common Stock issuable upon conversion of the New Series A Preferred Shares
would correspondingly increase, if the market price of the Common Stock
decreases below the current conversion price. The conversion price of the New
Series A Shares and the exercise price of the related warrants are also subject
to downward adjustment under certain circumstances to protect the holders
against dilution.
The increase in the authorized number of shares of Common Stock could have
certain beneficial effects on the Company's principal shareholders depending
upon the exact nature and circumstances of any actual issuances of authorized
but unissued shares. The increase could deter takeovers, in that additional
shares could be issued (within the limits imposed by applicable law) in one or
more transactions that could make a change in control or takeover of the Company
more difficult. For example, additional shares could be issued by the Company so
as to dilute the stock ownership or voting rights of persons seeking to obtain
control of the Company. Similarly, the issuance of additional shares to certain
persons allied with the Company's management could have the effect of making it
more difficult to remove the Company's current management by diluting the stock
ownership or voting rights of persons seeking to cause such removal.
Subject to applicable laws and regulations, the Company does not intend to
solicit further approval from the holders of Common Stock for the issuance of
the Common Stock authorized by the Charter Amendment.
No holder of shares of Common Stock is entitled as such, as a matter of
right, to subscribe for or purchase any part of any new or additional issue of
any stock of any class, series or kind whatsoever, or to subscribe for or
purchase securities convertible into stock of any class, series or kind
whatsoever.
Required Vote
The approval of the Charter Amendment requires the affirmative vote of a
majority of the shares of the Company's Common Stock issued and outstanding as
of the record date. Accordingly, abstentions and broker non-votes will have the
same effect as a vote against the proposal.
OTHER INFORMATION
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder who intends to present a proposal at the next Annual
Meeting of Shareholders for inclusion in the Company's Proxy Statement and Proxy
form relating to such
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<PAGE>
Annual Meeting must submit such proposal to the Company at its principal
executive offices by May 1, 2001.
INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP, independent public accountants, were selected by the
Board of Directors to serve as independent public accountants of the Company for
the year ended December 31, 2000. Representatives of Grant Thornton LLP are
expected to be present at the Annual Meeting, and will be afforded the
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions from shareholders.
SOLICITATION OF PROXIES
The Company will bear the entire cost of the solicitation of proxies,
including the preparation, assembly, printing and mailing of this Proxy
Statement and any additional material furnished to shareholders. In addition,
the Company may reimburse certain persons for their costs of forwarding the
proxy material to shareholders. The Company does not anticipate that it will be
necessary to supplement its solicitation of proxies by mail with telephone,
telegram or personal solicitation of proxies by directors, officers of employees
of the Company. However, if such persons are called upon to solicit proxies on
behalf of the Company, no additional compensation will be paid for any of such
services.
INCORPORATION BY REFERENCE
We incorporate by reference into this Proxy Statement the following
information included in reports filed with the Securities and Exchange
Commission:
1. Items 6 (Management's Discussion And Analysis of Financial Condition
and Results of Operations) and 7 (Financial Statements) included in our
Annual Report on Form 10-KSB for the year ended December 31, 1999; and
2. Items 1 (Financial Statements) and 2 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) included in our
Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000.
3. Items 1 (Financial Statements) and 2 (Management's Discussion and
Analysis of Financial Condition and Results of Operations) included in our
Quarterly Report on Form 10-QSB for the three months and six months ended
June 30, 2000.
A copy of these reports is being mailed to each shareholder with this
Proxy Statement.
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<PAGE>
ADDITIONAL INFORMATION
The Company files reports and other information with the
Securities and Exchange Commission. Copies of these documents may be obtained at
the SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. The Company's SEC filings are also available from commercial
document retrieval services or on the SEC's web site at http://www.sec.gov.
Shareholders may also request a copy of the Company's financial reports filed
with the SEC by contacting the Company's Secretary at 410 Park Avenue, Suite
830, New York, New York 10022, telephone number (212) 752-2601.
On behalf of the Board of Directors
Ronald Altbach
Chairman of the Board and Chief
Executive Officer
New York, New York
[August 31, 2000]
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<PAGE>
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
SYMPOSIUM CORPORATION
The undersigned, a shareholder of Symposium Corporation, a Delaware
corporation (the "Company"), hereby appoints Ronald Altbach and Tim Ledwick, and
each of them, the proxies of the undersigned, each with full power of
substitution, to attend, vote and act for the undersigned at the Annual Meeting
of Shareholders of the Company to be held on September 15, 2000, and any
adjournments thereof, to vote and represent all of the shares of the Company
which the undersigned would be entitled to vote, as follows:
Please mark your votes as in this example
The Board of Directors recommends a WITH vote on Proposal ONE, and a FOR
vote on Proposals Two and Three.
1. ELECTION OF DIRECTORS, as provided in the Company's Proxy Statement.
|_| WITH |_| WITHOUT THE AUTHORITY TO VOTE FOR THE NOMINEES LISTED
BELOW
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR A NOMINEE, LINE THROUGH, OR
OTHERWISE STRIKE OUT, THE NAME BELOW.)
Ronald Altbach
Richard Kaufman
Richard Cohen
Bruce Dorskind
Ken Lambert
2. APPROVAL OF AMENDMENTS TO THE 1998 STOCK OPTION PLAN.
FOR |_| AGAINST |_| ABSTAIN |_|
3. APPROVAL OF AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED CAPITAL STOCK.
FOR |_| AGAINST |_| ABSTAIN |_|
The undersigned hereby revokes any other proxy to vote at such Meeting,
and hereby ratifies and confirms all that said proxy may lawfully do by virtue
hereof. WITH RESPECT TO SUCH OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENTS THEREOF, SAID PROXY IS AUTHORIZED TO VOTE IN
ACCORDANCE WITH ITS BEST JUDGMENT.
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<PAGE>
This proxy will be voted in accordance with the instructions as set forth
above. THIS PROXY WILL BE CREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
ELECTION OF THE DIRECTORS NAMED ABOVE, FOR THE AMENDMENTS TO THE 1998 STOCK
OPTION PLAN, FOR THE AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION AND
AS SAID PROXY SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME BEFORE THE
MEETING, UNLESS OTHERWISE DIRECTED.
IMPORTANT: Please sign name exactly as it appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or authorizing
officer. If a partnership, please sign in partnership name by authorized person.
SIGNATURE Date
--------------------------- ---------------------------
SIGNATURE Date
--------------------------- ---------------------------
Note: Please sign, date and return promptly in the enclosed envelope which
requires no postage if mailed in the United States.
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<PAGE>
SYMPOSIUM CORPORATION
1998 STOCK OPTION PLAN
Conformed to include all amendments adopted by the Board of Directors
through August 23, 2000,
except that amendment which is attached separately hereto.
1. THE PLAN.
The purpose of this 1998 Stock Option Plan (the "PLAN") is to provide
incentives and rewards to selected eligible directors, officers, employees and
consultants of Symposium Corporation (the "COMPANY") and its subsidiaries in
order to assist the Company and its subsidiaries in attracting, retaining and
motivating those persons by providing for or increasing the proprietary
interests of those persons in the Company, and by associating their interests in
the Company with those of the Company's shareholders.
2. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Board") or such other
committee or subcommittee as the Board may designate or as shall be formed by
the abstention or recusal of a non-Qualified Member (as defined below) of such
committee (the "Committee"). The members of the Committee shall be appointed by,
and serve at the pleasure of, the Board. At all times that the Committee acts in
connection with the Plan it shall be referred to as the "ADMINISTRATOR" and it
shall consist solely of Qualified Members, the number of whom shall not be less
than two. A "Qualified Member" is both a "non-employee director" within the
meaning of Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange
Act of 1934 (the "1934 Act") and an "outside director" within the meaning of
section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
(b) POWERS AND AUTHORITY. The Administrator shall have all the powers
vested in it by the terms of the Plan, including exclusive authority (i) to
select from among eligible directors, officers, employees and consultants, those
persons to be granted options ("OPTIONS") under the Plan; (ii) to determine the
type, size and terms of individual Options (which need not be identical) to be
made to each person selected, including whether an Option will be an Incentive
Stock Option or a Nonqualified Option (both as defined below); (iii) to
determine the time when Options will be granted and to establish objectives and
conditions (including, without limitation, vesting and performance
conditions),if any, for earning Options; (iv) to amend the terms or conditions
of any outstanding Options, subject to applicable legal restrictions and to the
consent of the other party to such Options; (v) to determine the duration and
purpose of leaves of absences which may be granted to holders of Options without
constituting termination of their employment for purposes of their Options;
(vi)to authorize any person to execute, on behalf of the Company, any instrument
required to carry out the purposes of the Plan; and (vii) to make any and all
other determinations which it determines to be necessary or advisable in the
administration of the Plan. The Administrator shall have full power and
authority to administer and interpret the Plan and to adopt, amend and revoke
such rules, regulations, agreements, guidelines and instruments for the
administration of the Plan and for the
<PAGE>
conduct of its business as the Administrator deems necessary or advisable. The
Administrator's interpretation of the Plan, and all actions taken and
determinations made by the Administrator pursuant to the powers vested in it
hereunder, shall be conclusive and binding on all parties concerned, including
the Company, its shareholders, any optionee and any other employee of the
Company or any of its subsidiaries.
3. PERSONS ELIGIBLE UNDER THE PLAN.
(a) INCENTIVE STOCK OPTIONS. Any person who is an employee of the Company
or any of its subsidiaries shall be eligible to be considered for the grant of
Options under the Plan which qualify as "incentive stock options"("INCENTIVE
STOCK OPTIONS") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "CODE").
(b) NONQUALIFIED STOCK OPTIONS. Any person who is a director, officer,
employee or consultant of the Company or any of its subsidiaries shall be
eligible to be considered for the grant of Options under the Plan which do not
qualify as Incentive Stock Options ("NONQUALIFIED OPTIONS").
4. OPTIONS.
Subject to the provisions of the Plan, the Administrator, in its sole and
absolute discretion, shall determine all of the types, terms and conditions of
each Option granted pursuant to the Plan. The provisions of separate Options
need not be identical, but each Incentive Stock Option shall be in compliance
with the substance of each of the following provisions:
(a) TERM. The exercise period may not be more than 10 years from the date
the Incentive Stock Option is granted. In the case of an Incentive Stock Option
granted to a person who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, the exercise
period may not be more than 5 years from the date such Incentive Stock Option is
granted.
(b) PRICE. The exercise price of an Incentive Stock Option may not be less
than 100% of the Fair Market Value of the Common Stock at the time the Incentive
Stock Option is granted (110% of the Fair Market Value in the case of any person
who owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company). In the absence of an established market
for the Common Stock, the Fair Market Value of the Common Stock shall be
determined in good faith by the Administrator;
(c) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person.
(d) EMPLOYMENT STATUS. In the event that the optionee's employment with
the Company terminates, the optionee must exercise the Incentive Stock Option,
to the extent it was exercisable at termination, within three months of such
termination.
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<PAGE>
(e) AGGREGATE FAIR MARKET VALUE OF INCENTIVE STOCK OPTIONS. To the extent
that the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year under all plans of the
Company and its affiliates exceeds one hundred thousand dollars ($100,000), the
Options or portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonqualified Options.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
(a) MAXIMUM SHARES AVAILABLE. The aggregate number of shares of Common
Stock that may be issued or issuable pursuant to the Plan shall not exceed an
aggregate of 2,500,000 shares of Common Stock, subject to adjustment as provided
in Section 6 of the Plan. Any shares of Common Stock subject to an Option which
for any reason expires or is terminated unexercised as to such shares shall
again be available for issuance under the Plan. The aggregate number of shares
of Common Stock that may be issued at any time pursuant to Options granted under
the Plan shall be reduced by the number of shares of Common Stock which were
otherwise issuable pursuant to Options granted under this Plan but which were
withheld by the Company as payment of the purchase price of the Common Stock
issued pursuant to such Options or as payment of the recipient's tax withholding
obligation with respect to such issuance.
(b) PAYMENT FOR SHARES. The exercise price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (1) in cash at the time the Option
is exercised, or (2) at the discretion of the Administrator, either at the time
of the grant or exercise of the Option, (A) by delivery to the Company of other
shares of Common Stock, the value of which shall be the Fair Market Value of
such Common Stock, (B) according to a deferred payment or other
arrangement(which may include, without limiting the generality of the foregoing,
the use of other shares of Common Stock) with the person to whom the Option is
granted, (C)by reducing the number of shares of Common Stock otherwise issuable
pursuant to the Option or (D) in any other form of legal consideration that may
be acceptable to the Administrator.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be payable at the minimum rate of interest necessary
to avoid the imputation of interest, under the applicable provisions of the Code
and Treasury Regulations.
(c) MAXIMUM NUMBER OF SHARES AVAILABLE FOR GRANT TO ANY PERSON. No person
shall receive Options representing more than 50% of the aggregate number of
shares of Common Stock that may be issued pursuant to all Options under the Plan
as set forth in Section 5(a) of this Agreement.
6. RECAPITALIZATIONS.
Unless otherwise provided in the option agreement:
(a) If outstanding shares of the Common Stock of the Company shall be
subdivided into a greater number of shares, or a dividend in Common Stock shall
be paid in respect of the Common Stock, the exercise price of any outstanding
Option in effect immediately prior to such
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<PAGE>
subdivision or immediately after the record date of such dividend, be
proportionately reduced, and conversely, if outstanding shares of the Common
Stock of the Company shall be combined into a smaller number of shares, the
exercise price of any outstanding Option in effect immediately prior to such
combination shall, simultaneously with the effectiveness of such combination, be
proportionately increased.
(b) When any adjustment is required to be made in the exercise price, the
number of shares purchasable upon the exercise of any outstanding Option shall
be adjusted to that number of shares determined by dividing (1) an amount equal
to the number of shares purchasable upon the exercise of the Option immediately
prior to such adjustment, multiplied by the exercise price in effect immediately
prior to such adjustment, by (2) the exercise price in effect immediately after
such adjustment.
(c) In case of any capital reorganization, any reclassification of the
Common Stock of the Company (other than recapitalization described in Paragraph
6(a) of this Plan), or the consolidation or merger of the Company with another
person where the Company is the "surviving corporation," as defined in Paragraph
6 (h) below (collectively referred to hereinafter as "REORGANIZATIONS"), the
holder of any outstanding Option shall thereafter be entitled to purchase on
exercise of the Option the kind and number of shares of stock or other
securities or property of the Company receivable upon such Reorganization by a
holder of the number of shares of the Common Stock of the Company which such
Option entitles the holder to purchase from the Company immediately prior to
such Reorganization: and in any such case appropriate adjustments shall be made
in the application of the provisions set forth in the option agreements and in
this Plan with respect to the rights and interests thereafter of the optionee,
to the end that the provisions set forth in the option agreements and in this
Plan ( including the specified changes and other adjustments to the exercise
price) shall thereafter be applicable in relation to any shares or other
property thereafter purchasable upon exercise of such Option.
(d) Each outstanding Option shall terminate upon a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation provided that (1) each optionee to whom no Option
has been tendered by the surviving corporation pursuant to the terms of item
(2)immediately below shall have the right exercisable during a ten-day period
ending on the fifth day prior to such dissolution or liquidation, or merger or
consolidation in which the Company is not the surviving corporation, to exercise
his or her Option in whole or in part, without regard to any installment
provisions under his or her Option agreement; and (2) in its sole and absolute
discretion, the surviving corporation may, but shall not be so obligated, tender
to any optionee an option or options to purchase shares of the surviving
corporation, and such new option or options shall contain such terms and
provisions as shall substantially preserve the rights and benefits of any Option
then outstanding under this Plan.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board or
Administrator, whose determination in that respect shall be final, binding and
conclusive.
(f) Except as expressly provided in this Section 6, no optionee shall have
any rights by reason of any subdivision or consolidation of shares of stock of
any class or the payment of
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<PAGE>
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, and the dissolution, liquidation, merger, consolidation or
split-up or sale of assets or stock to another corporation, or any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of or exercise price for the shares
subject to such optionee's Option.
(g) The grant of an Option pursuant to the Plan shall not affect in anyway
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve or liquidate, or to sell or transfer all or any
part of its business or assets.
(h) The determination as to which party to a Reorganization is the
"SURVIVING CORPORATION" shall be made on the basis of the relative equity
interest of the shareholders in the corporation existing after the
Reorganization, as follows: if following any reorganization the holders of
outstanding voting securities of the Company immediately prior to the
reorganization own equity securities possessing more than 50% of the voting
power of the corporation existing following the reorganization, then for
purposes of the Option, the Company shall be the surviving corporation. In all
other cases, the Company shall not be the surviving corporation. In making the
determination of ownership by the shareholders of a corporation immediately
after the reorganization of equity securities pursuant to this Section
6(h),equity securities which the shareholders owned immediately before the
reorganization, as shareholders of another party to the transaction shall be
disregarded. Further, for purposes of this Section 6(h) only, outstanding voting
securities of a corporation shall be calculated by assuming the conversion of
all equity securities convertible (immediately or at some future time) into
shares entitled to vote.
7. MISCELLANEOUS PROVISIONS.
(a) DEFINITIONS.
(1) "SUBSIDIARY" means any future corporation which would be a
"SUBSIDIARY CORPORATION," as that term is defined in Section 424(f) of the Code,
of the Company.
(2) "OR" means "and/or."
(3) "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock as determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in the Common Stock) on the last market trading day
prior to the day of determination, as reported in the WALL STREET JOURNAL or
such other source as the deems reliable;
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(ii) If the Common Stock is quoted on the Nasdaq System (but
not on the Nasdaq National Market) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a share of Common Stock shall be the mean between the bid and asked prices for
the Common Stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(b) CONDITIONS ON ISSUANCE. Securities shall not be issued pursuant to
Options unless the grant and issuance thereof shall comply with all relevant
provisions of law and the requirements of any securities exchange or quotation
system upon which any securities of the Company are listed, and shall be further
subject to approval of counsel for the Company with respect to such compliance.
Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is determined by Company counsel to be necessary
to the lawful issuance and sale of any security or Options, shall relieve the
Company of any liability in respect of the nonissuance or sale of such
securities as to which requisite authority shall not have been obtained.
(c) RIGHTS AS A SHAREHOLDER. An optionee shall have no rights as a holder
of Common Stock with respect to Options hereunder, unless and until certificates
for shares of such stock are issued to the optionee.
(d) AGREEMENTS. All Options granted under the Plan shall be evidenced by
written agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Administrator shall from time to time adopt.
(e) WITHHOLDING TAXES. The Company shall have the right to require upon
exercise of an Option the payment (through withholding from the optionee's
salary or otherwise) of any federal, state, local or foreign taxes required
bylaw to be withheld. The obligation of the Company to issue Common Stock shall
be subject to the restrictions imposed by any and all governmental authorities.
(f) NO RIGHTS TO OPTION. No person shall have any right to be granted an
Option under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any person any right to be retained in the employ of the
Company or any of its subsidiaries or shall interfere with or restrict in anyway
the rights of the Company or any of its subsidiaries, which are hereby reserved,
to discharge an employee at any time for any reason whatsoever, with or without
good cause.
(g) ACCELERATION. The Administrator shall have the power to accelerate the
time at which an Option may first be exercised or the time during which an
Option or any part thereof will vest, notwithstanding the provisions in the
Option stating the time at which it may first be exercised or the time during
which it will vest.
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(h) TRANSFERABILITY. Except as otherwise provided by the Administrator,
options granted under the Plan are not transferable other than as designated by
the optionee by will or by the laws of descent and distribution.
8. AMENDMENTS AND TERMINATION.
(a) AMENDMENTS. The Board may at any time and from time to time amend the
Plan in whole or in part, but no such action shall adversely affect any rights
or obligations with respect to any outstanding Options. However, with the
consent of the optionee affected, the Administrator may amend outstanding
agreements evidencing Options under the Plan in a manner not inconsistent with
the terms of the Plan.
(b) TERMINATION. The Plan shall terminate on the earlier to occur of the
date the Board terminates the Plan and December 31, 2007. The termination of the
Plan shall not terminate any outstanding Options.
9. EFFECTIVE DATE.
The Plan is effective on December 3, 1998.
10. GOVERNING LAW.
The Plan and any agreements entered into thereunder shall be construed and
governed by the laws of the State of New York applicable to contracts made
within, and to be performed wholly within, such state, without regard to the
application of conflict of laws rules thereof.
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AMENDMENT TO THE SYMPOSIUM CORPORATION 1998 STOCK OPTION PLAN
Pursuant to the authority granted to the Board of Directors under Section 8(a)
of the Symposium Corporation Stock Option Plan (the "Plan") to amend said Plan,
the Plan is hereby amended in the following respects:
1. Effective September 15, 2000, Section 5(a) of the Symposium Corporation
1998 Stock Option Plan (the "Plan") is amended by replacing "2,500,000 shares"
with "6,500,000 shares" in the first sentence thereof.
2. Effective September 15, 2000, Section 5(c) of the Plan is revised by
adding the following sentence at the end thereof:
"In addition, the aggregate number of shares of Common Stock that may be
subject to Options granted to any person in a calendar year shall not exceed
2,000,000 shares."
