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 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CONTESSA CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
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|_| 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CONTESSA CORPORATION
11 CHAMBERS STREET
PRINCETON, NEW JERSEY 08542
May 30, 2000
To Our Stockholders:
You are most cordially invited to attend the 2000 Annual Meeting of
Stockholders of Contessa Corporation at 10:00 A.M., local time, on June 20,
2000, at Buchanan Ingersoll Professional Corporation, 650 College Road East,
Princeton, New Jersey 08540.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented to the meeting.
It is important that your shares be represented at this meeting to assure
the presence of a quorum. Whether or not you plan to attend the meeting, we hope
that you will have your stock represented by signing, dating and returning your
proxy in the enclosed envelope, which requires no postage if mailed in the
United States, as soon as possible. Your stock will be voted in accordance with
the instructions you have given in your proxy.
Thank you for your continued support.
Sincerely,
Brendan Elliott
President
<PAGE>
CONTESSA CORPORATION
11 CHAMBERS STREET
PRINCETON, NEW JERSEY 08542
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 2000
The Annual Meeting of Stockholders (the "Meeting") of Contessa Corporation,
a Delaware corporation (the "Company"), will be held at Buchanan Ingersoll
Professional Corporation, 650 College Road East, Princeton, New Jersey 08540 on
June 20, 2000, at 10:00 A.M., local time, for the following purposes:
(1) To elect five Directors to serve until the next Annual Meeting of
Stockholders and until their respective successors shall have been duly
elected and qualified;
(2) To approve a proposal to amend the Company's Certificate of
Incorporation to change the Company's name from Contessa Corporation to
Fullcomm Technologies, Inc.;
(3) To approve a proposal to adopt the Company's 2000 Stock Plan;
(4) To ratify the appointment of Goldstein Golub Kessler LLP as independent
auditors for the year ending December 31, 2000; and
(5) To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
Holders of Common Stock $0.0001 par value, of record at the close of
business on May 1, 2000 are entitled to notice of and to vote at the Meeting, or
any adjournment or adjournments thereof. A complete list of such stockholders
will be open to the examination of any stockholder at the Company's principal
executive offices at 11 Chambers Street, Princeton, New Jersey 08542 for a
period of 10 days prior to the Meeting and at Buchanan Ingersoll Professional
Corporation, 650 College Road East, Princeton, New Jersey 08540 on the day of
the Meeting. The Meeting may be adjourned from time to time without notice other
than by announcement at the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL ENSURE A QUORUM
AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION. EACH PROXY GRANTED MAY
BE REVOKED BY THE STOCKHOLDER APPOINTING SUCH PROXY AT ANY TIME BEFORE IT IS
VOTED. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE
REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD SHOULD BE
SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED.
By Order of the Board of Directors
Wayne H. Lee
Secretary
Princeton, New Jersey
May 30, 2000
THE COMPANY'S 1999 ANNUAL REPORT ACCOMPANIES THE PROXY STATEMENT.
<PAGE>
CONTESSA CORPORATION
11 Chambers Street
Princeton, New Jersey 08542
----------------------------------------
PROXY STATEMENT
----------------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Contessa Corporation (the "Company") of proxies to be
voted at the Annual Meeting of Stockholders of the Company to be held on June
20, 2000, (the "Meeting") at Buchanan Ingersoll Professional Corporation, 650
College Road East, Princeton, New Jersey 08540 at 10:00 A.M., local time, and at
any adjournment or adjournments thereof. Holders of record of Common Stock,
$0.0001 par value ("Common Stock") as of the close of business on May 1, 2000
will be entitled to notice of and to vote at the Meeting and any adjournment or
adjournments thereof. As of that date, there were 8,367,624 shares of Common
Stock issued and outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote on any matter presented at the Meeting.
If proxies in the accompanying form are properly executed and returned, the
shares of Common Stock represented thereby will be voted in the manner specified
therein. If not otherwise specified, the shares of Common Stock represented by
the proxies will be voted (i) FOR the election of the five nominees named below
as Directors, (ii) FOR the approval to amend the Company's Certificate of
Incorporation to change the Company's name from Contessa Corporation to Fullcomm
Technologies, Inc.; (iii) FOR the approval of a proposal to adopt the Company's
2000 Stock Plan; (iv) FOR the ratification of the appointment of Goldstein Golub
Kessler LLP, as independent auditors for the year ending December 31, 2000, and
(v) in the discretion of the persons named in the enclosed form of proxy, on any
other proposals which may properly come before the Meeting or any adjournment or
adjournments thereof. Any Stockholder who has submitted a proxy may revoke it at
any time before it is voted, by written notice addressed to and received by the
Secretary of the Company, by submitting a duly executed proxy bearing a later
date or by electing to vote in person at the Meeting. The mere presence at the
Meeting of the person appointing a proxy does not, however, revoke the
appointment.
The presence, in person or by proxy, of holders of shares of Common Stock
having a majority of the votes entitled to be cast at the Meeting shall
constitute a quorum. The affirmative vote by the holders of a plurality of the
shares of Common Stock represented at the Meeting is required for the election
of Directors, provided a quorum is present in person or by proxy. Provided a
quorum is present in person or by proxy, all actions proposed herein, other than
the election of Directors, may be taken upon the affirmative vote of
Stockholders possessing a majority of the voting power represented at the
Meeting.
Abstentions are included in the shares present at the Meeting for purposes
of determining whether a quorum is present, and are counted as a vote against
for purposes of determining whether a proposal is approved. Broker non-votes
(when shares are represented at the Meeting by a proxy specifically conferring
only limited authority to vote on certain matters and no authority to vote on
other matters) are included in the determination of the number of shares
represented at the Meeting for purposes of determining whether a quorum is
present but are not counted for purposes of determining whether a proposal has
been approved and thus have no effect on the outcome.
This Proxy Statement, together with the related proxy card, is being mailed
to the Stockholders of the Company on or about May 30, 2000. The Annual Report
to Stockholders of the Company for the fiscal year ended December 31, 1999
("Fiscal 1999"), including financial statements (the "Annual Report"), is being
mailed together with this Proxy Statement to all Stockholders of record as of
May 1, 2000. In addition, the Company has provided brokers, dealers, banks,
voting trustees and their nominees, at the Company's expense, with additional
copies of the Annual Report so that such record holders could supply such
materials to beneficial owners as of May 1, 2000.
<PAGE>
ELECTION OF DIRECTORS
At the Meeting, five Directors are to be elected (which number shall
constitute the entire Board of Directors of the Company) to hold office until
the next Annual Meeting of Stockholders and until their successors shall have
been duly elected and qualified.
It is the intention of the persons named in the enclosed form of proxy to
vote the stock represented thereby, unless otherwise specified in the proxy, for
the election as Directors of the persons whose names and biographies appear
below. The persons whose names and biographies appear below are at present
Directors of the Company. In the event any of the nominees should become
unavailable or unable to serve as a Director, it is intended that votes will be
cast for a substitute nominee designated by the Board of Directors. The Board of
Directors has no reason to believe that the nominees named will be unable to
serve if elected. Each nominee has consented to being named in this Proxy
Statement and to serve if elected.
The current members of the Board of Directors who are also nominees for
election to the Board are:
SERVED AS A
NAME AGE DIRECTOR SINCE POSITIONS WITH THE COMPANY
---- --- -------------- --------------------------
Brendan Elliott.......... 23 2000 President, Treasurer and
Director
Additional nominees for election to the Board who are not currently members
of the Board of Directors are:
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
Howard M. Weinstein...... 36 Chief Executive Officer
Wayne H. Lee............. 25 Executive Vice President and
Secretary
Richard T. Case.......... 50
David Rector............. 53
The principal occupations and business experience, for at least the past
five years, of each Director is as follows:
HOWARD M. WEINSTEIN has been appointed as the Company's Chief Executive
Officer commencing on May 22, 2000. Prior to joining the Company, from 1989 to
May 2000, Mr. Weinstein held multiple roles at GE Industrial Systems, a division
of General Electric. While at GE Industrial Systems, Mr. Weinstein held the
following positions: from 1998 until joining the Company, Mr. Weinstein worked
in strategic marketing as the Vertical Marketing Manager; from 1997 to 1998, he
served as the Product Marketing Manager for the Industrial Drives business; from
1995 to 1997, he served as the General Industries and Heavy Industries
Engineering Manager; from 1996 to 1999, he also worked in business development
and project management; from 1990 to 1995, he served as the Engineering
Automation Leader; and from 1989 to 1990, he served as the Control System
Engineer. Prior to his employment at GE Industrial Systems, Mr. Weinstein was
employed by Newport News Shipbuilding where he worked on instrumentation and
controls for nuclear propulsion systems for aircraft carriers and fast attack
submarines. Mr. Weinstein graduated from Virginia Tech in 1986 with a Bachelor
of Science degree in electrical engineering.
- 2 -
<PAGE>
BRENDAN G. ELLIOTT was elected President, Treasurer and Director of the
Company upon the consummation of the merger of Fullcomm, Inc., a New Jersey
corporation ("Fullcomm") into Fullcomm Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of the Company in March, 2000. Mr. Elliott is the
Co-Founder, President, Treasurer, Chief Technology Officer and Director of
Fullcomm and has been involved with Fullcomm since its inception in January
1999. Prior to founding Fullcomm, Mr. Elliott had worked at the Princeton
University Civil Engineering and Operations Research Lab. His expertise in the
computer science and encryption fields has helped him to lead research and
development activities for the Company. Mr. Elliott graduated from Princeton
University with a Bachelor of Arts degree in computer science.
WAYNE H. LEE was elected Executive Vice President and Secretary of the
Company upon the consummation of the merger of Fullcomm, Inc., a New Jersey
corporation ("Fullcomm"), into Fullcomm Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of the Company in February, 2000. Mr.
Lee is the Co-founder Executive Vice President and Secretary of Fullcomm and has
been involved with Fullcomm since its inception in January 1999. His
understanding of the product and the applicable markets has helped to shape the
business and marketing strategies of Fullcomm to date. Prior to joining
Fullcomm, Mr. Lee had worked for the Hyundai Corporation in Seoul, South Korea.
Mr. Lee graduated from Princeton University with a Bachelor of Arts degree in
economics.
RICHARD T. CASE is the President of Benchmark Associates, Inc. and a
consultant to the Company. From January 2000 to May 2000, Mr. Case served as the
Chief Executive Officer of Fullcomm. Mr. Case has over 28 years of executive
line management experience with Fortune 500 companies and as a management
consultant. He has served as a consultant since 1981 to numerous industries in
the area of raising capital, turnarounds, strategic planning, acquisitions and
mergers, operational analysis, product development, strategic marketing,
international market development, organizational behavior, and culture change.
Prior to that, he was a senior executive with three Fortune 500 companies,
Baxter Laboratories, Corning Glass Works and American Hospital Supply
Corporation, where he served as Director of New Business Development,
responsible for acquisition and mergers. Mr. Case holds a Masters in Business
Administration degree from the University of Southern California where he
graduated first in his class; and a Bachelor of Science degree in Management and
Finance from Bradley University. Mr. Case is a published author, has hosted a
weekly business radio program, has received The Wall Street Journal Achievement
Award, and is listed in Who's Who in American Business.
DAVID RECTOR served as a Director of the Company from June 1998 until March
2000. Since 1998, Mr. Rector has been a principal of the David Stephen Group, a
business consulting firm which focuses on the needs of emerging companies. From
1992 to 1998, Mr. Rector was affiliated with Viking Investment Group II, Inc.,
an investment banking partnership. During such time, from August 1996 to January
1999, Mr. Rector served as a Director of Tamboril Cigar Company ("Tamboril").
From August 1996 to March 1997, Mr. Rector served as the Executive Vice
President and General Manager of Tamboril. He has also served as the Secretary
of Tamboril. From June 1992 to April 1994, he served as the President and Chief
Executive Officer of Supercart International, a distributor of shopping carts.
Prior to that, from 1985 to 1992, Mr. Rector was a principal of Blue Moon, a
women's accessory company specializing in fasteners. From 1980 to 1985, Mr.
Rector served as President of Sunset Designs, a designer of leisure time craft.
From 1972 to 1980, Mr. Rector held various managerial sales and marketing
positions with Crown Zellerbach Corporation, a multi-billion dollar manufacturer
of paper and forest products.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE
NOMINEES FOR THE BOARD OF DIRECTORS.
COMMITTEES AND MEETINGS OF THE BOARD
The Company's Board of Directors has the authority to designate from among
its members an executive committee and one or more other committees. To date,
however, no such committees have been formed. During fiscal 1999, there were no
meetings of the Board of Directors although the Board of Directors often acted
by unanimous consent.
- 3 -
<PAGE>
COMPENSATION OF DIRECTORS
During the fiscal year ended December 31, 1999, members of the Company's
Board received no compensation for serving as Board members.
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the
Company:
CAPACITIES IN IN CURRENT
NAME AGE WHICH SERVED POSITION SINCE
---- --- ------------ --------------
Howard M. Weinstein...... 36 Chief Executive Officer May 2000
Brendan G. Elliott....... 23 President, Treasurer and February 2000
Director
Wayne H. Lee ............ 25 Executive Vice President and February 2000
Secretary
-----------
None of the Company's executive officers is related to any other executive
officer or to any Director of the Company. Executive officers of the Company are
elected annually by the Board of Directors and serve until their successors are
duly elected and qualified.
EXECUTIVE COMPENSATION
Summary of Compensation in Fiscal 1999
There was no compensation paid to any of the Company's officers during
1999. See "Employment Contracts, Termination of Employment and Change-in-Control
Arrangements" for a discussion relating to the current salary of the Company's
officers.
Option Grants in Fiscal 1999
No options were granted to or exercised by the Named Executives in fiscal
1999.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On January 28, 2000, Richard T. Case entered into an employment contract
with Fullcomm for a term of two years, whereby the Company agreed to pay Mr.
Case a base salary of $10,000 per month and options to purchase 175,000 shares
of the Common Stock of Fullcomm at $.10 per share and exercisable with respect
to the Company's Common Stock post-merger as if such options had been exercised
prior to the date of the Merger. The contract also provides for four week paid
vacation and life and health insurance. Effective as of May 22, 2000, Mr. Case
resigned as the Company's Chief Executive Officer, but will continue to provide
consulting services to the Company as a consultant.
On February 28, 2000, Brendan G. Elliott entered into an employment
contract with Fullcomm for a term of two years, whereby the Company agreed to
pay Mr. Elliott a base salary of $5,000 per month. The contract also provides
for bonus payments, four weeks paid vacation and life and health insurance.
On April 28, 2000, Howard M. Weinstein entered into an employment contract
with Fullcomm for a term of two years commencing on May 22, 2000, whereby the
Company agreed to pay Mr. Weinstein a base salary of $130,000 annually and
options to purchase 625,074 shares of the Common Stock of the Company at the
fair market value on the date of grant, subject to certain conditions. The
contract also provides for bonus payments, four weeks paid vacation and health
and dental insurance.
- 4 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company's Common Stock is the only class of stock entitled to vote at
the Meeting. Only stockholders of record as of the closing of business on May 1,
2000 (the "Record Date") are entitled to receive notice of and to vote at the
2000 Annual Meeting of Stockholders. As of the Record Date, there are
approximately 61 holders of record and 273 beneficial holders of the Company's
Common Stock, and the Company has outstanding 8,367,624 shares of its Common
Stock, and each outstanding share is entitled to one (1) vote at the Meeting.
The following table sets forth certain information, as of the Record Date, with
respect to holdings of the Company's Common Stock by (i) each person known by
the Company to be the beneficial owner of more than 5% of the total number of
shares of Common Stock outstanding as of such date, (ii) each of the Company's
Directors (which includes all nominees), Named Executives and Chief Executive
Officer, and (iii) all Directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(1) OF CLASS(2)
------------------------------------ -------------------- --------
<S> <C> <C>
(i) Certain Beneficial Owners:
Phillip O. Escaravage (3).......................... 1,525,000 18.2
(ii) Directors (which includes all nominees),
Named Executives and Chief Executive Officer:
Howard M. Weinstein (4)............................ --
Brendan G. Elliott (5)............................. 1,800,000 21.5
Wayne H. Lee (6)................................... 1,125,000 13.4
Richard T. Case (7)................................ 175,000 2.0
Thomas E. Knudson.................................. -- *
Anthony Markofsky (8) ............................. 390,000 4.7
David Rector (9) .................................. -- *
(iii) All Directors and current executive
officers as a group (5 persons) (10)......... 5,015,000 59.9
........
</TABLE>
-----------
* Less than 1%
(1) Except as otherwise indicated, all shares are beneficially owned and sole
investment and voting power is held by the persons named. Unless otherwise
provided, all addresses should be care of Contessa Corporation, 11 Chambers
Street, Princeton, New Jersey 08542.
(2) Applicable percentage of ownership is based on 8,367,624 shares of Common
Stock outstanding on May 1, 2000, plus any presently exercisable stock
options held by such holder and options which will become exercisable
within 60 days after May 1, 2000.
(3) The address for Mr. Escaravage is c/o Senesco Technologies, Inc. 34
Chambers Street, Princeton, New Jersey 08542. Represents 1,525,000 shares
of Common Stock owned of record as of May 1, 2000.
(4) Excludes 625,074 shares of Common Stock underlying options which become
exercisable after of July 1, 2000.
(5) Represents 1,800,000 shares of Common Stock owned of record as of May 1,
2000.
(6) Represents 1,125,000 shares of Common Stock owned of record as of May 1,
2000.
(7) Represents 175,000 shares of Common Stock underlying options which are
exercisable as of May 1, 2000 or sixty (60) days after such date.
- 5 -
<PAGE>
(8) The address for Mr. Markofsky is c/o Tamboril Cigar Company, 2600 S.W. 3rd
Avenue, Miami, Florida 33129. Represents 300,000 shares of Common Stock
owned of record as of May 1, 2000.
(9) The address for Mr. Rector 1640 Terrace Way, Walnut Creek, California
94596.
(10) Includes 175,000 shares of Common Stock subject to options and 11,760 Stock
Purchase Warrants which were exercisable as of May 1, 2000.
AMENDMENT TO CERTIFICATE OF INCORPORATION
The Stockholders are being asked to approve a proposal to authorize the
Board of Directors to change the name (the "Amendment") of the Company to
Fullcomm Technologies, Inc., which was approved by the Board of Directors as of
January 28, 2000. The purpose of the name change is to adopt a name which would
be indicative of the Company's core expertise and technologies. If the
Stockholders vote in favor of this proposal, the Amendment will become effective
upon the filing of a Certificate of Amendment to the Certificate of
Incorporation with the Delaware Secretary of State. The Board of Directors
intends to cause such Certificate of Amendment to be filed as soon as
practicable after the date of the Annual Meeting.
Upon approval by the stockholders, Article First of the Certificate of
Incorporation would read in its entirety as follows:
"FIRST: The name of the corporation (hereinafter called the "Corporation")
-----
is Fullcomm Technologies, Inc."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE PROPOSAL
TO PROVIDE THE BOARD OF DIRECTORS THE AUTHORITY TO AMEND THE CERTIFICATE OF
INCORPORATION OF THE COMPANY TO IMPLEMENT THE AMENDMENT.
PROPOSAL TO APPROVE THE 2000 STOCK PLAN
The Board of Directors has adopted, and is submitting to stockholders for
approval, the Company's 2000 Stock Plan (the "2000 Stock Plan"), a copy of which
is attached hereto as Exhibit A.
---------
The 2000 Stock Plan shall remain in effect until terminated by the Board of
Directors. A total of 1,000,000 shares of common stock were reserved for
issuance upon the exercise of options or the grant of restricted stock awards or
stock awards under the 2000 Stock Plan. However, the total number of shares
reserved for issuance under the 2000 Stock Plan may be automatically increased
in the event such number of shares represents less than 20% of the outstanding
shares of our common stock on December 31 of any future year commencing December
31,2000. Those eligible to receive stock option grants, restricted stock awards
and stock awards under the 2000 Stock Plan include employees, non-employee
directors and consultants. The 2000 Stock Plan is administered by the Company's
entire Board of Directors and will be administered by the Compensation Committee
of the Board of Directors upon the establishment of such committee.
Subject to the provisions of the 2000 Stock Plan, the administrator of the
2000 Stock Plan has the discretion to determine the optionees and/or grantees,
the type of options or awards to be granted, the vesting provisions, the terms
of the grants and other related provisions as are consistent with the 2000 Stock
Plan. The exercise price of an incentive stock option may not be less than the
fair market value per share of the our common stock on the date of grant or, in
the case of an optionee who beneficially owns 10% or more of the voting power of
all classes of our capital stock, not less than 110% of the fair market value
per share on the date of grant. The exercise price of a non-qualified stock
option may not be less than 85% of the fair market value per share of our common
stock on the date of grant. In addition, the 2000 Stock Plan allows for the
grant of restricted stock awards and stock awards subject to the restrictions
and conditions as the administrator may determine at the time of grant.
The term of each stock option granted under the 2000 Stock Plan shall be
stated in the applicable option agreement, provided, however, in the case of
incentive stock options, the term shall be no more than ten years from the date
of grant, subject to earlier termination upon or after a fixed period following
the optionee's death, disability
- 6 -
<PAGE>
or termination of employment with us. The term of any options granted to a
holder of more than 10% of our capital stock may be no longer than five years.
Options granted under the 2000 Stock Plan to our employees will vest in the
manner determined by our board of directors. Typically, options are not
assignable or otherwise transferable except by will or as per the laws of
descent and distribution. The administrator, however, may in its discretion
provide that certain options may be transferred to one or more transferees
provided certain conditions are satisfied. In the event of a merger or
consolidation of us with or into another corporation or the sale of all or
substantially all of our assets in which the successor corporation does not
assume outstanding options or issue equivalent options, our board of directors
is required to provide accelerated vesting of outstanding options.
Federal Income Tax Aspects
(a) INCENTIVE STOCK OPTIONS
Some options to be issued under the Plan will be designated as ISOs and are
intended to qualify under Section 422 of the Code. Under the provisions of that
Section and the related regulations, an optionee will not be required to
recognize any income for Federal income tax purposes at the time of grant of an
ISO. Additionally, the Company will not be entitled to any deduction. The
exercise of an ISO also is not a taxable event, although the difference between
the option price and the fair market value on the date of exercise is an item of
tax preference for purposes of the alternative minimum tax. The taxation of gain
or loss upon the sale of stock acquired upon exercise of an ISO depends in part
on whether the stock is disposed of at least two years after the date the option
was granted and at least one year after the date the stock was transferred to
the optionee, referred to as the ISO Holding Period.
If the ISO Holding Period is not met, then, upon disposition of such
shares, referred to as a disqualifying disposition, the optionee will realize
compensation, taxable as ordinary income, in an amount equal to the excess of
the fair market value of the shares at the time of exercise over the option
price, limited, however to the gain on sale. Any additional gain would be
taxable as capital gain (see discussion of capital gains under the section
relating to NQSOs, below). If the optionee disposes of the shares in a
disqualifying disposition at a price that is below the fair market value of the
shares at the time the ISO was exercised and such disposition is a sale or
exchange to an unrelated party, the amount includible as compensation income to
the optionee will be limited to the excess of the amount received on the sale or
exchange over the exercise price.
If the optionee recognizes ordinary income upon a disqualifying
disposition, the Company generally will be entitled to a tax deduction in the
same amount.
Effective as of January 1, 1998 the holding period for long-term capital
gain treatment is reduced to one year. Hence, if the ISO Holding Period is met,
any disposition on or after January 1, 1998 would be taxable as a long-term
capital gain or loss; any such gains are taxable at a maximum rate of 20%.
A maximum capital gains rate of 18% will apply to certain sales after
December 31, 2000 of shares acquired upon the exercise of an ISO if such shares
have been held for at least five years.
If the ISO is exercised by delivery of previously owned shares of Common
Stock in partial or full payment of the option price, no gain or loss will
ordinarily be recognized by the optionee on the transfer of such previously
owned shares. However, if the previously owned transferred shares were acquired
through the exercise of an ISO, the optionee may realize ordinary income with
respect to the shares used to exercise an ISO if such transferred shares have
not been held for the ISO Holding Period. If an ISO is exercised through the
payment of the exercise price by the delivery of Common Stock, to the extent
that the number of shares received exceeds the number of shares surrendered,
such excess shares will possibly be considered ISO stock with a zero basis.
(b) NON-QUALIFIED STOCK OPTIONS
Some options to be issued under the Plan will be designated as NQSOs. If
(as in the case of NQSOs granted under the Plan at this time) the NQSO does not
have a "readily ascertainable fair market value" at the time of the grant, the
NQSO is not included as compensation income at the time of grant. Rather, the
optionee realizes compensation income only when the NQSO is exercised and the
optionee has become substantially vested in the shares transferred. The shares
are considered to be substantially vested when they are either transferable or
not subject to a substantial risk of forfeiture. The amount of income realized
is equal to the excess of the fair market
- 7 -
<PAGE>
value of the shares at the time the shares become substantially vested over the
sum of the exercise price plus the amount, if any, paid by the optionee for the
NQSO. If a NQSO is exercised through payment of the exercise price by the
delivery of Common Stock, to the extent that the number of shares received by
the optionee exceeds the number of shares surrendered, ordinary income will be
realized by the optionee at that time only in the amount of the fair market
value of such excess shares, and the tax basis of such excess shares will be
such fair market value. When the optionee disposes of the shares acquired
pursuant to a NQSO, the optionee will recognize capital gain or loss equal to
the difference between the amount received for the shares and the optionee's
basis on the shares.
Under the Plan, the optionee's basis in the shares will be the exercise
price plus the compensation income realized at the time of exercise. Under tax
legislation which became effective as of January 1, 1998 the capital gain or
loss will be short-term (with gains generally subject to tax as ordinary income)
if the shares are disposed of within one year after the option is exercised and
long term (with gains generally subject to tax at a maximum rate of 20%) if the
shares are disposed of more than one year after the option is exercised.
A maximum capital gains rate of 18% will apply to certain sales, after
December 31, 2000, of shares acquired upon the exercise of an NQSO if such
shares have been held for at least five years.
The Company is generally entitled to a deductible compensation expense in
an amount equivalent to the amount included as compensation income to the
optionee. This deduction is allowed in the Company's taxable year in which the
income is included as compensation to the optionee.
Except as otherwise indicated, the preceding discussion is based upon
Federal tax laws and regulations in effect on the date of the preparation of
this Summary, which are subject to change, and upon an interpretation of the
relevant sections of the Code, their legislative histories and the income tax
regulations which interpret similar provisions of the Code. Furthermore, the
forgoing is only a general discussion of the Federal income tax aspects of the
Plan and does not purport to be a complete description of all Federal income tax
aspects of the Plan. Optionees may also be subject to state and local taxes in
connection with the grant or exercise of options granted under the Plan and the
sale or other disposition of shares acquired upon exercise of the options. Each
key employee receiving a grant of options should consult with his or her
personal tax advisor regarding the Federal, state and local tax consequences of
participating in the Plan.
Previously Granted Options Under the Plan
There have been no previously granted options under the Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has, subject to stockholder approval,
retained Goldstein Golub Kessler LLP as independent auditors of the Company for
the fiscal year ending December 31, 2000. Neither of the firms nor any of its
Directors has any direct or indirect financial interest in or any connection
with the Company in any capacity other than as auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF GOLDSTEIN GOLUB KESSLER LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
One or more representatives of Goldstein Golub Kessler LLP is expected to
attend the Meeting and have an opportunity to make a statement and/or respond to
appropriate questions from stockholders.
STOCKHOLDERS' PROPOSALS
Stockholders who wish to submit proposals for inclusion in the Company's
proxy statement and form of proxy relating to the 2001 Annual Meeting of
Stockholders must advise the Secretary of the Company of such proposals in
writing by January 31, 2001.
- 8 -
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the Meeting other than the matters referred to above and does not
intend to bring any other matters before the Meeting. However, if other matters
should come before the Meeting, it is intended that holders of the proxies will
vote thereon in their discretion.
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of the Company, whose notice of meeting is attached to this Proxy
Statement, and the entire cost of such solicitation will be borne by the
Company.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone and telegram by Directors, officers and other employees of
the Company who will not be specially compensated for these services. The
Company will also request that brokers, nominees, custodians and other
fiduciaries forward soliciting materials to the beneficial owners of shares held
of record by such brokers, nominees, custodians and other fiduciaries. The
Company will reimburse such persons for their reasonable expenses in connection
therewith.
Certain information contained in this Proxy Statement relating to the
occupations and security holdings of Directors and officers of the Company is
based upon information received from the individual Directors and officers.
CONTESSA CORPORATION WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS REPORT ON
FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1999, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS STOCKHOLDERS OF
RECORD ON MAY 1, 2000 AND TO EACH BENEFICIAL STOCKHOLDER ON THAT DATE UPON
WRITTEN REQUEST MADE TO THE SECRETARY OF THE COMPANY. A REASONABLE FEE WILL BE
CHARGED FOR COPIES OF REQUESTED EXHIBITS.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN
THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD WILL BE
APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors
Wayne H. Lee
Secretary
Princeton , New Jersey
May 30, 2000
- 9 -
<PAGE>
CONTESSA CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby constitutes and appoints Richard T. Case and Brendan
G. Elliott, and each of them, his or her true and lawful agent and proxy with
full power of substitution in each, to represent and to vote on behalf of the
undersigned all of the shares of Contessa Corporation (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the law firm of Buchanan Ingersoll Professional
Corporation, 650 College Road East, 4th Floor, Princeton, New Jersey at 10:00
A.M., local time, on Tuesday, June 20, 2000 and at any adjournment or
adjournments thereof, upon the following proposals more fully described in the
Notice of Annual Meeting of Stockholders and Proxy Statement for the Meeting
(receipt of which is hereby acknowledged).
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS.
Nominees: Brendan G. Elliott, Howard M. Weinstein, Wayne H. Lee,
Richard T. Case and David Rector.
(Mark one only)
VOTE FOR all the nominees listed above; except vote withheld from the following
nominees (if any). | |
------------------------------------------------------------------
VOTE WITHHELD from all nominees. | |
(continued and to be signed on reverse side)
<PAGE>
2. APPROVAL OF PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME FROM CONTESSA CORPORATION TO FULLCOMM TECHNOLOGIES,
INC.
FOR | | AGAINST | | ABSTAIN | |
3. APPROVAL OF PROPOSAL TO ADOPT THE COMPANY'S 2000 STOCK PLAN.
FOR | | AGAINST | | ABSTAIN | |
4. APPROVAL OF PROPOSAL TO RATIFY THE APPOINTMENT OF GOLDSTEIN GOLUB KESSLER
LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2000.
FOR | | AGAINST | | ABSTAIN | |
5. In his discretion, the proxy is authorized to vote upon other matters as
may properly come before the Meeting.
Dated: NOTE: This proxy must be signed
--------------------------- exactly as the name appears hereon.
When shares are held by joint
-------------------------------- tenants, both should sign. If the
Signature of Stockholder signer is a corporation, please sign
full corporate name by duly authorized
-------------------------------- officer, giving full title as such. If
Signature of Stockholder if held the signer is a partnership, please
jointly sign in partnership name by authorized
person.
I will | | will not | | attend the
Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
<PAGE>
EXHIBIT A
---------
CONTESSA CORPORATION
2000 STOCK PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Plan are to attract
--------------------
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Non-Employee
members of the Board and Consultants (sometimes referred to herein as
"Participants") of the Company and its Subsidiaries and to promote the success
of the Company's business.
2. CERTAIN DEFINITIONS. As used herein, the following definitions shall
--------------------
apply:
(a) "Award" or "Awards," except where referring to a particular
category of grant under the Plan, shall include Incentive Stock Options,
Nonstatutory Stock Options, Restricted Stock Awards and Stock Awards.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended,
including any successor law thereto.
(d) "Committee" means any Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock, $.01 par value, of the
Company.
(f) "Company" means Contessa Corporation, a Delaware corporation.
(g) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any Non-Employee Director of the Company
whether compensated for such services or not.
(h) "Continuous Status as an Employee" means the absence of any
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of
absence approved by the Board, provided that such leave is for a period of not
more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers between
locations of the Company or between the Company, its Subsidiaries or its
successor.
(i) "Employee" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
(k) "Fair Market Value" means: (i) if the Common Stock is admitted to
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), the Fair Market Value on any given date shall be the average
of the highest bid and lowest asked prices of the Common Stock reported for such
date or, if no bid and asked prices were reported for such date, for the last
day preceding such date for which such prices were reported; or (ii) if the
Common Stock is admitted to trading on a United States securities exchange or
the NASDAQ National Market System, the Fair Market Value on any date shall be
the closing price reported for the Common Stock on such exchange or system for
such date or, if no sales were reported for such date, for the last day
preceding such date for which a sale was reported; (iii) notwithstanding the
foregoing, the Fair Market Value of the Common Stock on the effective date of
the Company's Initial Public Offering shall be the offering price to the public
of the Common Stock on such date; and (iv) in the absence of an established
market for the Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Plan Administrator.
(l) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(m) "Initial Public Offering" means the first underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of the Common Stock to the
public.
(n) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(o) "Option" means a stock option granted pursuant to the Plan.
(p) "Optioned Stock" means the Common Stock subject to an Option.
(q) "Optionee" means an Employee, Consultant or Non-Employee Director
who receives an Option.
(r) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(s) "Plan" means this 2000 Stock Plan.
(t) "Plan Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(u) "Restricted Stock" means shares of Common Stock acquired pursuant
to a Restricted Stock Award under Section 12 below.
(v) "Restricted Stock Award" means any Award granted pursuant to
Section 12 of the Plan.
(w) "Share" means a share of the Common Stock, as may be adjusted from
time to time in accordance with Section 15 of the Plan.
-2-
<PAGE>
(x) "Stock Award" means any award granted pursuant to Section 13 of
the Plan.
(y) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
(z) "Termination for Cause" shall include, but not be limited to, a
finding by the Board of the Participant's: (i) performance of duties in an
incompetent manner; (ii) commission of any act of fraud, insubordination,
misappropriation or personal dishonesty relating to or involving the Company in
any material way; (iii) gross negligence; (iv) violation of any express
direction of the Company or any material violation of any rule, regulation,
policy or plan established by the Company from time to time regarding the
conduct of its employees or its business, if such violation is not remedied by
the Participant within thirty (30) days of receiving notice of such violation
from the Company; (v) violation of any obligation of Participant's consulting
relationship or Continuous Status as an Employee with the Company that is
demonstrably willful and deliberate on the Participant's part and is not
remedied by the Participant within thirty (30) days after receiving notice of
such violation from the Company; (vi) disclosure or use of confidential
information of the Company, other than as required in the performance of the
Participant's duties; (vii) actions that are clearly contrary to the best
interest of the Company; (viii) conviction of a crime constituting a felony or
any other crime involving moral turpitude, or no conviction, but the substantial
weight of credible evidence indicates that the Participant has committed such a
crime; or (ix) the Participant's use of alcohol or any unlawful controlled
substance to an extent that it interferes with the performance of the
Participant's duties.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 15
-------------------------
of the Plan, the initial maximum number of shares of Common Stock that may be
issued under the Plan shall be one million (1,000,000) shares; provided,
--------
however, that the maximum number of shares available under the Plan shall
-------
automatically be increased to an amount equal to twenty percent (20%) of the
shares of Common Stock outstanding on any December 31, beginning on December 31,
2000; and provided, further, that the foregoing formula shall never result in a
decrease in the maximum number of shares of Common Stock available for issuance
under the Plan. For purposes of the foregoing limitation, the shares of Common
Stock underlying any Awards which are forfeited, canceled, reacquired by the
Company, satisfied without the issuance of Common Stock or otherwise terminated
(other than by exercise) shall be added back to the number of shares of Common
Stock available for issuance under the Plan. Notwithstanding the foregoing: (i)
no more than one million (1,000,000) shares shall be available for the award of
Incentive Stock Options; and (ii) on and after the date that the Plan is subject
to Section 162(m) of the Code, Options with respect to no more than two hundred
fifty thousand (250,000) shares of Common Stock may be granted to any one
individual Participant during any one (1) calendar year period. Common Stock to
be issued under the Plan may be either authorized and unissued shares or shares
held in treasury by the Company.
-3-
<PAGE>
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by:
----------------------------
(i) the full Board; or (ii) a committee of the Board comprised of two or more
"Non-Employee Directors" within the meaning of Rule 16b-3(b)(3) promulgated
under the Exchange Act. Subject to the provisions of the Plan, the Plan
Administrator is authorized to:
(a) construe the Plan and any Award under the Plan;
(b) select the Directors, officers, Employees and Consultants of
the Company and its Subsidiaries to whom Awards may be granted;
(c) determine the number of shares of Common Stock to be covered by
any Award;
(d) determine and modify from time to time the terms and
conditions, including restrictions, of any Award and to approve
the form of written instrument evidencing Awards;
(e) accelerate at any time the exercisability or vesting of all or
any portion of any Award and/or to include provisions in awards
providing for such acceleration;
(f) impose limitations on Awards, including limitations on transfer
and repurchase provisions;
(g) extend the exercise period within which Options may be exercised;
and
(h) determine at any time whether, to what extent, and under what
circumstances Common Stock and other amounts payable with respect
to an Award shall be deferred either automatically or at the
election of the Participant and whether and to what extent the
Company shall pay or credit amounts constituting interest (at
rates determined by the Plan Administrator) or dividends or
deemed dividends on such deferrals.
The determination of the Plan Administrator on any such matters shall be
conclusive.
5. DELEGATION OF AUTHORITY TO GRANT AWARDS. The Plan Administrator, in its
---------------------------------------
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Plan Administrator's authority and duties with respect to granting
Awards to individuals who are not subject to the reporting provisions of Section
16 of the Act or "covered employees" within the meaning of Section 162(m) of the
Code. The Plan Administrator may revoke or amend the terms of such a delegation
at any time, but such revocation shall not invalidate prior actions of the Chief
Executive Officer that were consistent with the terms of the Plan.
-4-
<PAGE>
6. ELIGIBILITY.
-----------
(a) Directors, officers, Employees and Consultants of the Company or
its Subsidiaries who, in the opinion of the Plan Administrator, are mainly
responsible for the continued growth and development and future financial
success of the business shall be eligible to participate in the Plan.
(b) The Plan shall not confer upon any Participant any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
7. STOCK OPTIONS.
-------------
(a) Options granted pursuant to the Plan may be either Options which
are Incentive Stock Options or Nonstatutory Stock Options. Incentive Stock
Options and Nonstatutory Stock Options shall be granted separately hereunder.
The Plan Administrator, shall determine whether and to what extent Options shall
be granted under the Plan and whether such Options granted shall be Incentive
Stock Options or Nonstatutory Stock Options; provided, however, that: (i)
-------- -------
Incentive Stock Options may be granted only to Employees of the Company or any
Subsidiary; and (ii) no Incentive Stock Option may be granted following the
tenth (10th) anniversary of the effective date of the Plan. The provisions of
the Plan and any Option Agreement pursuant to which Incentive Stock Options
shall be issued shall be construed in a manner consistent with Section 422 of
the Code (or any successor provision) and rules and regulations promulgated
thereunder.
(b) To the extent that Options designated as Incentive Stock Options
(under all plans of the Company or any Parent or Subsidiary) become exercisable
by a Participant for the first time during any calendar year for Common Stock
having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000),
the portion of such Options which exceeds such amount shall be treated as
Nonstatutory Stock Options. For purposes of this Section 7, Options designated
as Incentive Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of Common Stock shall be determined
as of the time the Option with respect to such Common Stock is granted. If the
Code is amended to provide for a different limitation from that set forth in
this Section 7, such different limitation shall be deemed incorporated herein
effective as of the amendment date and with respect to such Options as required
or permitted by such amendment to the Code. If an Option is treated as an
Incentive Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Section 7, the Participant may
designate which portion of such Option the participant is exercising. In the
absence of such designation, the Participant shall be deemed to have exercised
the Incentive Stock Option portion of the Option first. Separate certificates
representing each such portion shall be issued upon the exercise of the Option.
8. TERM OF PLAN. The Plan shall become effective on June 20, 2000,
------------
provided the Plan has been previously adopted by the Board and approved by the
shareholders of the Company as described in Section 22 of the Plan. The Plan
shall remain in effect until terminated under Section 18 of the Plan.
-5-
<PAGE>
9. TERM OF OPTIONS. The term of each Option shall be the term stated in
---------------
the Option Agreement; provided, however, that in the case of an Incentive Stock
-------- -------
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement. In the
case of an Option granted to an Optionee who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
10. OPTION EXERCISE PRICE AND CONSIDERATION.
---------------------------------------
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than
one hundred ten percent (110%) of the Fair Market Value per Share on the
date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option granted to any
person, the per Share exercise price shall be no less than eighty-five
percent (85%) of the Fair Market Value per Share on the date of grant.
(b) The Option exercise price of each share purchased pursuant to an
Option shall be paid in full at the time of each exercise of the Option: (i) in
cash; (ii) by check; (iii) by cash equivalent; (iv) by delivering to the Company
a notice of exercise with an irrevocable direction to a broker-dealer registered
under the Exchange Act to sell a sufficient portion of the shares and deliver
the sale proceeds directly to the Company to pay the exercise price; (v) in the
discretion of the Plan Administrator, through the delivery to the Company of
previously-owned shares of Common Stock having an aggregate Fair Market Value
equal to the Option exercise price of the shares being purchased pursuant to the
exercise of the Option; provided, however, that shares of Common Stock delivered
in payment of the exercise price must have been held by the Participant for at
least six (6) months in order to be utilized to pay the exercise price; or (vi)
in the discretion of the Plan Administrator, through any combination of the
foregoing methods of payment.
-6-
<PAGE>
11. EXERCISE OF OPTION.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
--------------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Plan Administrator, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company through a method of payment allowable under Section 10(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 15 of the Plan.
(b) Termination of Employment. Except as set forth below, in the
--------------------------
event of termination of an Optionee's Continuous Status as an Employee,
consulting relationship or Director status with the Company (as the case may
be), such Optionee may, but only within ninety (90) days (or such other period
of time as is determined by the Board, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option and not
exceeding ninety (90) days) after the date of such termination (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that Optionee was
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
------------------------
Section 11(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee, consulting relationship or Director status (as the case
may be) as a result of his or her total and permanent disability (as defined in
Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent the Optionee was otherwise entitled to exercise it at
the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
-7-
<PAGE>
(d) Death of Optionee.
-----------------
(i) In the event of the death of an Optionee during the term of
Optionee's Continuous Status as an Employee, consulting relationship or Director
status with the Company (as the case may be), the Option may be exercised, at
any time within twelve (12) months following the date of death (but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
the Optionee was entitled to exercise the Option at the date of death. To the
extent that Optionee was not entitled to exercise the Option at the date of
death, or if the Option is not exercised by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance to the
extent so entitled within the time specified herein, the Option shall terminate.
(ii) In the event of the death of an Optionee within thirty
(30) days after the termination of Optionee's Continuous Status as an Employee,
consulting relationship or Director status with the Company (as the case may be)
pursuant to Section 11(b) above, the Option may be exercised, at any time within
six (6) months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the date of death, or
if the Option is not exercised by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance to the
extent so entitled within the time specified herein, the Option shall terminate.
(e) Termination for Cause or Post-Termination Relationship with
-----------------------------------------------------------------
Competing Business. Notwithstanding the provisions of Section 11(b) above, in
-------------------
the event of "Termination for Cause" of an Optionee's Continuous Status as an
Employee, consulting relationship or Director status with the Company (as the
case may be) or in the event that such Optionee within the option term becomes
an employee, consultant or director of a Competing Business (as defined herein),
any Option held by the Optionee, whether vested or unvested, shall forthwith
terminate. In addition to the immediate forfeiture of all Options upon the
occurrence of the events specified in the preceding sentence, Optionee shall
automatically forfeit all shares underlying any exercised portion of an Option
for which the Company has not yet delivered the share certificates, upon refund
by the Company of the exercise price paid by the Optionee for such Shares. For
purposes of this Plan, the term "Competing Business" shall mean any person,
corporation or other entity engaged in the business of: (i) providing strategic
Internet consulting services, interactive Internet solutions, application
management services and management consulting services; or (ii) selling or
attempting to sell any product or service which is the same as or similar to
products or services sold by the Company within the last year prior to
termination of such Participant's employment, consulting relationship or
Director status, as the case may be, hereunder.
-8-
<PAGE>
12. RESTRICTED STOCK AWARDS.
-----------------------
(a) The Plan Administrator may grant Restricted Stock Awards to any
officer, Employee or Consultant of the Company and its Subsidiaries. A
Restricted Stock Award entitles the recipient to acquire shares of Common Stock
subject to such restrictions and conditions as the Plan Administrator may
determine at the time of grant. Conditions may be based on continuing employment
(or other business relationship) and/or achievement of pre-established
performance goals and objectives.
(b) Upon execution of a written instrument setting forth the
Restricted Stock Award and paying any applicable purchase price, a Participant
shall have the rights of a shareholder with respect to the Common Stock subject
to the Restricted Stock Award, including, but not limited to, the right to vote
and receive dividends with respect thereto; provided, however, that shares of
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Common Stock subject to Restricted Stock Awards that have not vested shall be
subject to the restrictions on transferability described in Section 12(d) below.
Unless the Plan Administrator shall otherwise determine, certificates evidencing
the Restricted Stock shall remain in the possession of the Company until such
Restricted Stock is vested as provided in Section 12(c) below.
(c) The Plan Administrator at the time of grant shall specify the
date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which Restricted Stock shall become vested,
subject to such further rights of the Company or its assigns as may be specified
in the instrument evidencing the Restricted Stock Award. If the grantee or the
Company, as the case may be, fails to achieve the designated goals or the
grantee's relationship with the Company is terminated prior to the expiration of
the vesting period, the grantee shall forfeit all shares of Common Stock subject
to the Restricted Stock Award which have not then vested.
(d) Unvested Restricted Stock may not be sold, assigned transferred,
pledged or otherwise encumbered or disposed of except as specifically provided
herein or in the written instrument evidencing the Restricted Stock Award.
13. STOCK AWARDS. The Plan Administrator may, in its sole discretion,
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grant (or sell at a purchase price determined by the Plan Administrator) a Stock
Award to any officer, Employee or Consultant of the Company or its Subsidiaries,
pursuant to which such individual may receive shares of Common Stock free of any
vesting restrictions (a "Stock Award") under the Plan. Stock Awards may be
granted or sold as described in the preceding sentence in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to such individual.
14. WITHHOLDING TAX OBLIGATIONS.
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(a) Whenever Shares are to be issued under the Plan, the Company
shall have the right to require the Participant to remit to the Company an
amount sufficient to satisfy applicable federal, state and local tax withholding
requirements prior to the delivery of any certificate for Shares; provided,
--------
however, that in the case of a Participant who receives an Award of Shares under
-------
the Plan which is not fully vested, the Participant shall remit such amount on
the first business day following the Tax Date. The "Tax Date" for purposes of
this Section 14 shall
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be the date on which the amount of tax to be withheld is determined. If a
Participant makes a disposition of shares acquired upon the exercise of an
Incentive Stock Option within either two (2) years after the Option was granted
or one (1) year after its exercise by the Participant, the Participant shall
promptly notify the Company and the Company shall have the right to require the
Participant to pay to the Company an amount sufficient to satisfy federal, state
and local tax withholding requirements.
(b) A Participant who is obligated to pay the Company an amount
required to be withheld under applicable tax withholding requirements may pay
such amount: (i) in cash; (ii) in the discretion of the Plan Administrator,
through the delivery to the Company of previously-owned shares of Common Stock
having an aggregate Fair Market Value on the Tax Date equal to the tax
obligation, provided that the previously owned shares delivered in satisfaction
of the withholding obligations must have been held by the Participant for at
least six (6) months; or (iii) in the discretion of the Plan Administrator,
through a combination of the procedures set forth in subsections (i) and (ii) of
this Section 14(b).
(c) A Participant who is obligated to pay to the Company an amount
required to be withheld under applicable tax withholding requirements in
connection with either the exercise of a Nonstatutory Stock Option, the receipt
of a Restricted Stock Award or Stock Award under the Plan may, in the discretion
of the Plan Administrator, elect to satisfy this withholding obligation, in
whole or in part, by requesting that the Company withhold shares of stock
otherwise issued to the Participant having a Fair Market Value on the Tax Date
equal to the amount of the tax required to be withheld; provided, however, that
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shares may be withheld by the Company only if such withheld shares have vested.
Any fractional amount shall be paid to the Company by the Participant in cash or
shall be withheld from the Participant's next regular paycheck.
(d) An election by a Participant to have shares of stock withheld to
satisfy federal, state and local tax withholding requirements pursuant to
Section 14(c) must be in writing and delivered to the Company prior to the Tax
Date.
15. ADJUSTMENT OF NUMBER AND PRICE OF SHARES.
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Any other provision of the Plan notwithstanding:
(a) If, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of Common Stock are
increased or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, the
Plan Administrator shall make an appropriate or proportionate adjustment in: (i)
the number of Options that can be granted to any one individual Participant;
(ii) the number and kind of shares or other securities subject to any then
outstanding Awards under the Plan; and (iii) the price for each share subject to
any then outstanding Options under the Plan, without changing the aggregate
exercise price (i.e., the exercise price multiplied by the number of shares) as
to which such Options remain exercisable; and (iv) the maximum
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number of shares that may be issued under the Plan, the maximum number of shares
that are available for the award of Incentive Stock Options and the maximum
number of shares that may be granted to any one individual Participant during
any one (1) calendar year period, each as set forth in Section 3 hereof. The
adjustment by the Plan Administrator shall be final, binding and conclusive.
(b) In the event that, by reason of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall authorize the issuance or assumption of an Option
or Options in a transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the Plan Administrator may
grant an Option or Options upon such terms and conditions as it may deem
appropriate for the purpose of assumption of the old Option, or substitution of
a new Option for the old Option, in conformity with the provisions of Code
Section 424(a) and the rules and regulations thereunder, as they may be amended
from time to time.
(c) No adjustment or substitution provided for in this Section 15
shall require the Company to issue or to sell a fractional share under any
Option Agreement or share award agreement and the total adjustment or
substitution with respect to each Option and share award agreement shall be
limited accordingly.
(d) In the case of the dissolution or liquidation of the Company,
the Plan and all Awards granted hereunder shall terminate. In the event of such
proposed termination, each Participant shall be notified of such termination and
shall be permitted to exercise for a period of at least fifteen (15) days prior
to the date of such termination all Options held by such Participant which are
then exercisable.
(e) In the case of: (i) a merger, reorganization or consolidation in
which the Company is acquired by another person or entity (other than a holding
company formed by the Company); (ii) the sale of all or substantially all of the
assets of the Company to an unrelated person or entity which is not an
"affiliate" (as defined in Rule 144 of the Securities Act of 1933) of the
Company; or (iii) the sale of all of the capital stock of the Company to an
unrelated person or entity which is not an "affiliate" of the Company (in each
case, a "Fundamental Transaction"), all Options shall be assumed or equivalent
options shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. For the purposes of this paragraph,
the Options shall be considered assumed if, following the Fundamental
Transaction, the Options confer the right to purchase, for each Share subject to
the Options immediately prior to the Fundamental Transaction, the consideration
(whether stock, cash, or other securities or property) received in the
Fundamental Transaction by holders of Common Stock for each Share held on the
effective date of the Fundamental Transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
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consideration received in the Fundamental Transaction was not solely common
stock of the successor corporation or its Parent, the Board may, with the
consent of the successor corporation and the Participant, provide for the
consideration to be received upon the exercise of the Options, for each Share
subject to the Options, to be solely common stock of the successor corporation
or its Parent equal in Fair Market Value to the per share consideration received
by holders of Common Stock in the Fundamental Transaction.
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In the event that such successor corporation does not agree to assume
the Options or to substitute equivalent options, the Board shall provide for
each Optionee to have the right to exercise all Options then held by such
Optionee, including Options which would not otherwise be exercisable. In such
event, the Board shall notify each Optionee that such Options shall be fully
exercisable for a period of fifteen (15) days from the date of receipt of such
notice, and that such Options will terminate upon the expiration of such period.
Notwithstanding anything in the Plan to the contrary, the acceleration
of exercisability in this Section shall not occur in the event that such
acceleration would, in the opinion of the Company's independent auditors, make
the Fundamental Transaction ineligible for pooling of interests accounting
treatment and the Company intends to use such treatment with respect to such
transaction. The Board shall obtain a written statement from the Company's
independent auditors with respect to the effect of accelerated exercisability of
outstanding Options prior to providing any Optionee with the notice contemplated
by this Section.
(f) In the event that the Company shall be merged or consolidated
with another corporation or entity, other than with a corporation or entity
which is an "affiliate" of the Company, under the terms of which holders of
capital stock of the Company will receive upon consummation thereof a cash
payment for each share of capital stock of the Company surrendered pursuant to
such transaction (the "Cash Purchase Price"), the Board may provide that all
outstanding options shall terminate upon consummation of such transaction and
each Optionee shall receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (i) the Cash Purchase Price multiplied by the number of
shares of Capital Stock of the Company subject to outstanding options held by
such optionee exceeds (ii) the aggregate exercise price of such options.
16. NONTRANSFERABILITY. A Participant's rights under the Plan, including
------------------
the right to any shares or amounts payable may not be assigned, pledged, or
otherwise transferred except, in the event of a Participant's death, to the
Participant's designated beneficiary or, in the absence of such a designation,
by will or by the laws of descent and distribution; provided, however, that the
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Plan Administrator may, in its discretion, at the time of grant of a
Nonstatutory Stock Option or by amendment of an Option Agreement for an
Incentive Stock Option or a Nonstatutory Stock Option, provide that Options
granted to or held by a Participant may be transferred, in whole or in part, to
one or more transferees and exercised by any such transferee, provided further
that: (i) any such transfer must be without consideration; (ii) each transferee
must be a member of such Participant's "immediate family" (as defined below) or
a trust, family limited partnership or other estate planning vehicle established
for the exclusive benefit of one or more members of the Participant's immediate
family; and (iii) such transfer is specifically approved by the Plan
Administrator following the receipt of a written request for approval of the
transfer; and provided further that any Incentive Stock Option which is amended
to permit transfers during the lifetime of the Participant shall, upon the
effectiveness of such amendment, be treated thereafter as a Nonstatutory Stock
Option. In the event an Option is transferred as contemplated in this Section,
such transfer shall become effective when approved by the Plan Administrator and
such Option may not be subsequently transferred by the transferee other than by
will or the laws of descent and distribution. Any transferred Option shall
continue to be governed by and subject to the terms and conditions of this Plan
and the relevant Option Agreement, and the transferee shall be
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entitled to the same rights as the Participant as if no transfer had taken
place. As used in this Section, "immediate family" shall mean, with respect to
any person, any spouse, child, stepchild or grandchild, and shall include
relationships arising from legal adoption.
17. TERMINATION - CERTAIN FORFEITURES. Notwithstanding any other provision
---------------------------------
of the Plan to the contrary, a Participant shall have no right to exercise any
Option or vest or receive payment of any Restricted Stock Award or Stock Award
if: (a) the Participant is Terminated for Cause; or (b) if following the
Participant's termination from the Company and prior to the Company's delivery
of the shares of Common Stock underlying an Award, the Participant becomes an
officer or director of, a consultant to or employed by a Competing Business.
Furthermore, notwithstanding any other provision of the Plan to the contrary, in
the event that a Participant receives or is entitled to the delivery or vesting
of Common Stock pursuant to an Award during the twelve (12) month period prior
to the Participant's termination from the Company or during the twelve (12)
months following the Participant's termination from the Company, the Company, in
its sole discretion, may require the Participant to return or forfeit the cash
and/or Common Stock received with respect to such award (or its economic value
as of (i) the date of the exercise of Options; (ii) the date immediately
following the end of the Restricted Period for Restricted Stock Awards; or (iii)
the date of grant with respect to Stock Awards, as the case may be) in the event
that the Participant becomes an officer or director of, a consultant to or
employed by a Competing Business within eighteen (18) months of such
Participant's termination from the Company. The Company's right to require
forfeiture under this Section 17 must be exercised within ninety (90) days after
the discovery of an occurrence triggering the Plan Administrator's right to
require forfeiture but in no event later than twenty-four (24) months after the
Participant's termination from the Company.
18. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may at any time amend,
---------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
-------------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
19. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
--------------------------------------
pursuant to any Award under the Plan unless the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
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requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
20. RESERVATION OF SHARES. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
21. AGREEMENTS. Options and Restricted Stock Awards shall be
----------
evidenced by written agreements in such form as the Board shall approve from
time to time.
22. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
---------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.
23. INFORMATION TO OPTIONEES. The Company shall provide to each Optionee,
------------------------
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide such
information if the issuance of Options under the Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.
* * * * *
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