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
[X] Definitive Proxy Statement of the Commission
[ ] Definitive Additional Materials Only (as permitted by
[ ] Soliciting Material Pursuant to Rule Rule 14-a-6(e)(2)
14a-11(c) or Rule 14a-12
ZiaSun Technologies, INC.
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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 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:
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(2) Aggregate number of securities to which transactions 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>
ZiaSun Technologies, Inc.
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 2000
To The Shareholders:
The Annual Meeting of Shareholders of ZiaSun Technologies, Inc., will be
held at the Del Mar Hilton located at 15575 Jimmy Durante Blvd, Del Mar,
California 92014, on November 3, 2000, at 9:30 a.m. Pacific Standard Time, for
the following purposes:
1. To elect 5 Directors for a term of one (1) year each;
2. To approve the proposal to amend the Company's Articles of
Incorporation to increase the number of common shares which the
Company is authorized to issue to 250,000,000 shares of Common Stock,
$0.001 par value;
3. To approve the adoption of the Restated Bylaws;
4. To approve the adoption of the 1999 Stock Option Plan, as amended;
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record as of the close of business on September 15,
2000, are entitled to notice and to vote at this meeting or any postponements or
adjournments. A complete list of the shareholders entitled to vote at the
meeting will be open to the examination by any shareholder, for any purpose
germane to the meeting, during normal business hours for ten (10) days prior to
the date of the meeting, at the Company's offices at 462 Stevens Avenue, Suite
106, Solana Beach, CA 92075
A copy of the Annual Report for 1999 is being mailed with this proxy
material.
Attendance at the Annual Meeting will be limited to shareholders of the
Company. Shareholders will be required to furnish proof of ownership of the
Company's common stock before being admitted to the meeting. Shareholders
holding shares in the name of a broker or other nominee are requested to bring a
statement from the broker or nominee confirming their ownership in the Company's
Stock. Directions to the meeting's location accompany the Proxy Statement.
Whether or not you expect to attend in person, we urge you to sign, date
and return the enclosed Proxy at your earliest convenience. This will ensure the
presence of a quorum and your representation at the meeting. Promptly signing,
dating and returning the Proxy will save the Company the expense and extra work
of additional solicitation. An addressed envelope for which no postage is
required if mailed in the United States is enclosed for that purpose. Sending in
your Proxy will not prevent you from voting your stock at the meeting if you
desire to do so, as your proxy is revocable at your option.
If you plan on being in attendance in person, call ZiaSun's corporate
office at (858) 350-4060 and confirm your attendance.
By Order of the Board of Directors
/S/ Allen D. Hardman
Allen D. Hardman
October 3, 2000 President and Chief Executive Officer
Solana Beach, California
<PAGE>
Directions to the
2000 Annual Meeting of Shareholders
to be held at:
Del Mar Hilton
15575 Jimmy Durante Blvd.
Del Mar, California 92014-1901
Tel: (858) 792-5200 Fax: (858) 792-9538
Driving Directions
------------------
From San Diego:
--------------
Take I-5 Freeway North To Via De La Valle Exit, Turn Left And Go The Second
Light (Jimmy Durante Blvd), Turn Left Onto Jimmy Durante Blvd.
From Los Angeles:
----------------
Take I-5 Freeway South To The Via De La Valle Exit; Go Right To Jimmy Durante
Blvd; Make Left At First Stoplight (Jimmy Durante Blvd).
<PAGE>
ZiaSun Technologies, Inc.
462 Stevens Avenue, Suite 106
Solana Beach, CA 92075
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
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PROCEDURAL MATTERS
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General
-------
The enclosed Proxy Statement, which was first mailed to shareholders on
October 3, 2000, is furnished in connection with the solicitation of proxies by
the Board of Directors of ZiaSun Technologies, Inc. (the "Company") to be voted
at the Annual Meeting of Shareholders of the Company, to be held on November 3,
2000, at 9:30 am local time, at the Del Mar Hilton located at 15575 Jimmy
Durante Blvd, Del Mar, California, 92014, whose telephone number is (858)
792-5200, for purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. Directions to the meeting room will be posted in the lobby. When
proxies are properly dated, executed and returned, the shares they represent
will be voted at the meeting in accordance with the instructions of the
shareholder. If no specific instructions are given, the shares will be voted for
the election of the nominees for directors set forth herein and, at the
discretion of the proxy holders, upon such other business as may properly come
before the meeting or any adjournment or postponement thereof.
Record Date and Voting Securities
---------------------------------
Shareholders of record at the close of business on September 15, 2000, (the
"Record Date") will be entitled to vote at the meeting on the basis of one vote
for each share held. On September 15, 2000, there were 32,330,170 shares of the
common stock outstanding, held of record by approximately 474 shareholders.
Revocability of Proxies
-----------------------
Shareholders who execute proxies retain the right to revoke them at any
time prior to the exercise of the powers conferred thereby, by delivering a
signed statement to the Secretary of the Company at or prior to the meeting or
by executing another proxy dated as of a later date.
Solicitation
------------
The cost of solicitation will be borne by the Company. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to such
beneficial owners. The Company's directors, officers and employees, without
additional compensation, may solicit proxies personally or by telephone,
facsimile or telegram. Although the exact cost of preparation, mailing and
holding of the meeting is not known at this time, it is anticipated that the
cost will be approximately $20,000.
Page 1
<PAGE>
Voting Rights
-------------
Under the Nevada Revised Business Corporation Act and the Company's
Articles of Incorporation, as amended and its Bylaws, the holders of Common
Stock shall be entitled to one vote for each share of Company's Common stock
held at the Record Date for all matters, including the election of directors.
The required quorum for the transaction of business at the Annual Meeting is a
majority of the votes eligible to be cast by holders of shares of common stock
issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST," "WITHHELD," OR "ABSTAIN" are treated as being present at the Annual
Meeting for the purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such
matters. Abstentions will not be counted as a vote "FOR" or "AGAINST" a
proposal. Broker non-votes will be counted for the purpose of determining the
presence or absence of a quorum for the transaction of business, but such
non-votes will not be counted for the purposes of determining the number of
Votes Cast with respect to the particular proposal on which a broker has
expressly not voted. Thus a broker non-vote will not effect the outcome of the
voting on a proposal. Except with respect to elections of directors, any
shareholder entitled to vote may vote part of his or her shares in favor of a
proposal and refrain from voting the remaining shares or vote them against the
proposal. If a shareholder fails to specify the number of shares he or she is
affirmatively voting, it will be conclusively presumed that the shareholder's
approving vote is cast with respect to all shares the shareholder is entitled to
vote.
With respect to voting on the election of directors, shareholders shall not
be entitled to cumulate votes. The candidates receiving the highest number of
votes, up to the number of directors to be elected, shall be elected. Votes cast
against a candidate or which are withheld shall have no effect. Upon the demand
of any shareholder made before the voting begins, the election of directors
shall be by ballot rather than by voice vote. The proxy holders will have the
discretionary authority to vote all proxies received by them in such a manner as
to ensure the election of as many of the Board of Directors' nominees as
possible.
Voting Proxies
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The shares of common stock represented by all properly executed proxies
received in time for the meeting will be voted in accordance with the directions
given by the shareholders. If no specification is made, the shares will be voted
"FOR" the nominees named herein as directors, or their respective substitute as
may be appointed by the Board of Directors and "FOR" all other proposals.
Page 2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The following table sets forth security ownership information as of the
close of business on September 15, 2000, for individuals or entities in the
following categories at the Company's fiscal year end: (i) persons known by the
Company to own beneficially more than five percent (5%) of the Company's Common
stock, (ii) each director, (iii) each Named Executive Officer listed in the
"Summary Compensation Table" set forth herein, and (iv) all directors and
executive officers as a group. Said percentages are based on the total number of
shares issued and outstanding as of September 15, 2000.
Amount and Nature of Beneficial Ownership
-----------------------------------------
Presently
Executive Officers, Directors Common Exercisable
And Principal Shareholders Stock Options Total Percent
--------------------------------------------------------------------------------
D. Scott Elder 3,787,053 12,500 3,799,553 11.75%
5252 North Edgewood Drive
Suite 325
Provo Utah 84604
Ross W. Jardine 3,787,053 12,500 3,799,553 11.75%
5252 North Edgewood Drive
Suite 325
Provo Utah 84604
Momentum Media Ltd. 3,499,980 0 3,499,980 10.83%
304 Dominion Centre
43 Queen's Road
East Wanchai, Hong Kong
Hans Von Meiss 150,000 0 150,000 *
Rebwiesstrasse 31
8702 Zollikon Switzerland
Allen D. Hardman 75,000 37,500 112,500 *
462 Stevens Avenue
Suite 106
Solana Beach, CA 92075
Christopher D. Outram 7,350 0 7,350 *
65 Kingway
London, WC2B 6TD
United Kingdom
All Directors and Officers 7,806,456 0 7,806,456 24.15%
as a Group (5 persons)
----------------------------
* Represents less than one percent
Page 3
<PAGE>
Section 16(a) Compliance
------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes of ownership of Common Stock
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, with respect to the quarter ended June 30,
2000, all Section 16(a) filing requirements applicable to each person who, was
an officer, director and greater than ten percent beneficial owner, were
complied with, with the exception of (a) the failure of Mr. Anthony Tobin, a
former officer and director of the Company and the principal of Vulcan
Consultants Limited, to file a Form 4, Change of Statement of Beneficial
Ownership with regard to the sale of 275,000 shares of common stock of the
Company in a private transaction, and (b) the Initial Statements of Beneficial
Ownership for Hans von Meiss and Christopher D. Outram, outside directors of the
Company which were filed late. In the case of Messrs. Von Meiss and Outram, this
was corrected by a subsequent filing.
PROPOSAL 1.
-----------
ELECTION OF DIRECTORS
---------------------
Five directors are to be elected at the annual meeting, to hold office for
a term of one (1) year. It is intended that the accompanying Proxy will be voted
in favor of the nominees to serve as directors unless the shareholder indicates
to the contrary on the Proxy. Management expects that the nominees will be
available for election, but if any such nominee is not a candidate at the time
the election occurs, it is intended that such Proxy will be voted for the
election of another nominee to be designated by the Board of Directors to fill
any such vacancy. Votes withheld will be counted for the purpose of determining
the presence or absence of a quorum for the transaction of business at the
meeting but have no other legal effect upon the election of directors under
Nevada law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED BELOW TO THE BOARD OF DIRECTORS
PRESENT DIRECTORS WHO ARE NOMINEES FOR RE-ELECTION
Position
Name of Nominee Age (Proposed Term as Director)
--------------- --- ---------------------------
Allen D. Hardman 59 Director - 1 Year
D. Scott Elder 41 Director - 1 Year
Ross W. Jardine 38 Director - 1 Year
Hans Von Meiss 52 Director - 1 Year
Christopher D. Outram 51 Director - 1 Year
Page 4
<PAGE>
Nominees
--------
ALLEN D. HARDMAN was appointed as a Director and the Vice President of the
Company on October 5, 1999. In April 2000 Mr. Hardman was appointed as President
and Chief Executive Office of the Company. Mr. Hardman earned an Industrial
Engineering Technical Diploma from the University of Utah in 1966 and a
Bachelors Degree in Business Administration from California State University in
1975. Mr. Hardman served as the Managing Director of Business Development for
Roeslein & Associates from June 1993 through June 1997. Mr. Hardman was the Vice
President of Operations of Best way USA from July 1997 until the Company's
spin-off of Best way USA in October 1998. Mr. Hardman has 35 years of varied
business experience, some with small companies and some with mid-to-large
corporations. His work experience includes president for a company furnishing
pre-assembled manufacturing systems on a global basis, director of business
development for industrial manufacturing systems, national sales manager for
systems products, manufacturing engineering, product and systems engineering,
consulting engineering, operations management, project management for
multi-million dollar projects installed worldwide, manufacturing quality control
and customer service management.
During the last several years, and particularly the last two years, Mr.
Hardman has restructured several small businesses to either establish their
viability as an enterprise and/or increase their operating proficiency and
potential for profitability. He has also been intimately involved in identifying
and establishing some strategic partner alliances and/or joint ventures. This
allowed the companies involved to improve their respective competitive
position(s) in the marketplace through improved product or intellectual property
designs, which resulted from the synergy realized by combining their individual
product offerings.
D. SCOTT ELDER was elected as a director of the Company in May 1999, and as
the Chairman of the Board in June 1999. From 1994 to 1997, Mr. Elder owned and
operated two consulting businesses, D. Scott Elder & Associates and The Business
Alliance Company, which developed marketing and training programs. In 1998 Mr.
Elder continued to operate the consulting business of D. Scott Elder& Associates
and founded OIA with Ross W. Jardine. Mr. Elder served as the President of OIA
until his appointment as the CEO and Chairman of the Board of the Company in
June 1999. Mr. Elder has a degree in Communications from Brigham Young
University and an M.B.A. from the University of Phoenix in 1997. Mr. Elder is
also currently the Vice President of Online Investors Advantage, Inc., a Utah
Corporation ("OIA"), a company he co-founded with Ross Jardine in 1997. OIA
provides educational workshops and video-based home study training programs that
teach people how to use its Investor Toolbox web site in order to make sound
stock investing decisions and manage their own stock investments. The Company
recently acquired OIA.
Before devoting full time to OIA, Mr. Elder was the owner of The Business
Alliance Company, which developed joint-venture marketing and training programs.
Some of the companies Mr. Elder has developed joint-venture projects with
include General Mills, Procter & Gamble, Rubbermaid, and Zane Publishing, a
company that markets educational programs through Amway.
ROSS W. JARDINE was appointed as a director of the Company on April 7,
1999, and is also the President of Online Investors Advantage, Inc., a Utah
Corporation ("OIA") a wholly owned subsidiary of the Company. Mr. Jardine
graduated cum laude from Brigham Young University in 1987 with a degree in
communications. In 1990 Mr. Jardine founded Jacobson & Jardine, Inc. a Sports
Marketing and Promotion company. Mr. Jardine served as President until August
1994 during which time Mr. Jardine was responsible for operations and the
developed and marketed licensed products for major sporting events. These
clients included National Football League, Indy 500, Kentucky Derby, America's
Cup 1992, Nabisco, Albertsons, Coca Cola, Fisher Price, American Home Products,
RJ Reynolds and many others. In 1994 he became interested in the Internet and
moved his business online. This experience led him to start a consulting
business focused on teaching other business owners how to get their own
businesses online. Mr. Jardine founded Electronic Marketing Services (later
renamed iMALL, Inc) in 1994 and served as President until January 1996. From
January 1996 through August 1997 Mr. Jardine served as speaker/consultant for
iMALL. iMALL went public in 1996 was recently sold to Excite@home for $425
million.
Page 5
<PAGE>
In 1997 Mr. Jardine left iMALL to focus on creating a program to train
investors in using the Internet to invest. Together with D. Scott Elder, Mr.
Jardine founded OIA, (www.i-advantage.com), a company focused on teaching people
how to invest using their personal computers and the Internet. The Company
quickly established itself as a leader in online investor education, and is
highly recommended by the Security Blanket.com, (www.thesecurityblanket.com).
OIA conducts dozens of workshops and seminars in cities around the country where
investors learn to use the most advanced investment tools available on the
Internet. Mr. Jardine serves as President of OIA and conducts many of the
training programs put on by OIA.
HAN VON MEISS was appointed as a director of the Company on January 17,
2000. Mr. Von Meiss received a Bachelors Degree in Economics in 1973 from the
University of St. Gallen, Switzerland. After receiving an MBA in 1977 from
INSEAD, Fountaine bleau, France, he spent seven years in investment banking with
Bankers Trust International Ltd. and Chase Manhattan Ltd. in London. Then, from
1984 to 1988, Mr. von Meiss served as the CEO of Dr. Ing. Koenig AG, a leading
Swiss service center for flat steel and industrial fasteners. He spent the
following 3 years from 1988 to 1991 in financial consulting. Then, in 1991, Mr.
von Meiss became the CEO of a publicly-quoted Dutch company after its
privatization from the Dutch Government, and served in that position until 1994.
In 1994, he became the CEO of Swiss Textile Group via an acquisition and
completed a turnaround and eventual sale of the business in 1997. Since 1997,
Mr. Von Meiss has been involved in financial management and consulting, and
pursued investments in Internet-related businesses. He also serves on the Board
of a private bank, an industrial concern, an M&A consulting Company, and his own
company, G. von Meiss AG.
CHRISTOPHER D. OUTRAM Was appointed as a director of the Company on April
21, 2000. Mr. Outram received double first class honors in mechanical
engineering and industrial economics in 1972 from the University of Birmingham
in the UK. He also received the Engineering and the Economics prizes for his
course. Following university, Mr. Outram pursued a career in Marketing and
Accountancy with Mobile Oil Company, Air Products Limited and CCL Systems. He
then attended INSEAD Business School in France, where he graduated with an MBA
with distinction. Following 2 years at the world-renowned strategy consultancy,
The Boston Consulting Group, Mr. Outram became Strategic Planning Director of
one of its clients, The Van Gelder Paper Company in the Netherlands. Two years
later Mr. Outram joined Booz Allen & Hamilton in London, where he was elected
Partner in 1986. 1987 saw the creation of OC&C Strategy Consultants (OC&C) of
which Mr. Outram was the founding Director. OC&C now operates directly and
through alliances on a global basis and can deploy in excess of 200 consultants.
OC&C and its sister firms advise clients on strategy, strategic business
development and M&A activity. Some 70% of the company business is now related to
the Internet. The consultancy advises large corporations, as well as smaller
start-ups, regarding their Internet strategies. The combined understanding of
the operating dynamics of both large and small players in the Internet arena has
allowed OC&C to develop very creative and ambitious strategies for its clients.
Mr. Outram has also been instrumental in the creation of e-commerce venturing
businesses, both in Silicon Valley in the U.S., as well as in Europe.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES
-----------------------------------------------------------
During calendar 1999, three meetings (including regularly scheduled and
special meetings) of the Board of Directors were held. The Board of Directors
has a Compensation Committee (the "Compensation Committee"), an Audit Committee
(the "Audit Committee"), and a Stock Option Plan Committee (the "Plan Committee"
or "Plan Administrator"). Messrs. Jardine, Von Meiss and Outram serve as members
of the Compensation Committee and also serve as members of the Audit Committee.
The Compensation Committee reviews and makes recommendations regarding annual
compensation for Company officers, and the Audit Committee oversees the
Company's financial reporting process on behalf of the Company's Board of
Directors. The Compensation and Audit Committees were established in April of
2000, and as such there were no meetings of the Compensation or Audit Committees
during 1999. Directors who served during 1999 attended all the meetings of the
Board of Directors of the Company. Directors are reimbursed for out-of-pocket
expenses incurred in attending meetings of the Board of Directors and the
committees.
Messrs. Jardine, Hardman and Mr. Eric Montandon, the President of Momentum
Asia Inc., a wholly owned subsidiary of the Company, serve as members of the
Plan Committee. The Plan Committee shall effect the grant of options under the
Company's 1999 Stock Option Plan (the "Plan") by execution of instruments in
writing in a form approved by the Committee. Subject to the express terms and
conditions of the Plan, the Committee shall have full power to construe the Plan
and the terms of any option granted under the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan or options and to make all
other determinations necessary or advisable for the Plan's administration.
Page 6
<PAGE>
Compensation of Directors and Executive Officers
------------------------------------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------
Long Term Compensation
--------------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------
Securities All
Other Underlying Other
Annual Restricted Options/ LTIP Compen-
Name and Year or Compen- Stock SAR's Payouts sation
Principal Period Salary Bonus sation) Awards (#) ($) ($)
Position Ended ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allen D. Hardman(1) 1999 $132,000 0 0 0 0 0 0
President and CEO 1998 $132,000 0 0 0 0 0 0
1997 $120,000 0 0 0 100,000 0 0
Anthony L. Tobin(2) 1999 $120,000 0 0 0 0 0 0
Vice President 1998 $121,800 0 $31,200 0 0 0 0
and COO of 1997 0 0 0 0 0 0 0
Asia Operations
D. Scott Elder(3) 1999 $102,360 $40,930 0 0 0 0 378,000
Chairman of the 1998 $ 31,500 0 0 0 0 0 174,127
Board of Directors 1997 $0 0 0 0 0 0 0
Dennis E. McGrory 1999 $0 0 0 0 0 0 0
Secretary 1998 $0 0 0 0 0 0 0
1997 $0 0 0 0 0 0 0
Ross D. Jardine 1999 $ 46,860 $123,430 0 0 0 0 378,000
President of OIA 1998 $0 0 0 0 0 0 208,520
1997 $0 0 0 0 0 0 0
Hans Von Meiss 1999 $0 0 0 0 0 0 0
Director 1998 $0 0 0 0 0 0 0
1997 $0 0 0 0 0 0 0
</TABLE>
---------------------------------------
(1) Mr. Hardman, the President and CEO of the Company is currently subject to
an Employment Agreement with the Company. See "Employment Contracts" below.
(2) Mr. Tobin who resigned as an officer and director of the Company effective
as of April 21, 2000, is the owner of Crossbow Consultants Limited which
previously received $10,000 per month from the Company's prior subsidiary,
Momentum Internet Incorporated, for the services provided by Crossbow
Consultants. In 1999, Crossbow received a total of $120,000 from the
Company's subsidiary, Momentum Internet Incorporated, for the services
provided by Crossbow Consultants. On September 13, 2000, the Company
completed the sale of Momentum Internet Inc., to Vulcan Consultants
Limited, thereby divesting any interest in Momentum Internet Inc., and
subsidiaries and website of Momentum Internet Inc., which the Company had.
Page 7
<PAGE>
In 1998 in addition to the $10,000 per month Crossbow received, Mr. Tobin
through his employment agreement with Momentum Associates Limited, a
subsidiary of Momentum Internet Incorporated, also received a monthly
housing allowance of approximately $2,600 and a management fee of
approximately $150 per month, for total 1998 compensation of $153,000.
(3) In 1999, Mr. Elder received a base salary of $102,360, a bonus of $40,930
and $378,000 in payment of deferred compensation from OIA, for total 1999
compensation of $521,290. In 1998, Mr. Elder received a base salary of
$31,500, consulting fees of $24,127, and $150,000 in payment of deferred
compensation, for total 1998 compensation of $205,627.
(4) Dennis McGrory resigned as the Secretary of the Company on July 12, 2000.
(5) In 1999, Mr. Jardine received a base salary of $46,860, a bonus of $123,430
and $378,000 in payment of deferred compensation from OIA, for total 1999
compensation of $548,290. In 1998, Mr. Jardine received consulting fees of
$58,520 and $150,000 in payment of deferred compensation from OIA, for
total 1998 compensation of $208,520.
Employment Contracts
--------------------
Allen D. Hardman, the President and CEO and a director of the Company has
an Employment Agreement with the Company which commenced on July 1, 1997 for a
term of 5 years. Pursuant to the terms of the agreement, the Company's board of
directors may, in its sole discretion, grant raises, bonuses, etc. in an amount
not less that the cost of living increase for the greater San Diego area.
Additionally, Mr. Hardman's Employment Agreement contains a stock option which
entitles Mr. Hardman the option to purchase one hundred thousand (100,000)
shares of the Common Stock of the Company, at $2.00 per share, subject to
adjustment for splits, in equal installments of twenty-five (25,000) shares each
beginning after one (1) year of employment for consecutive years. To date Mr.
Hardman has exercised the first 3 vested portions of the stock option. On August
2, 2000, the Company entered into an Amended and Restated Employment Agreement
and Stock Option with Mr. Hardman. In conjunction with the appointment of Allen
D. Hardman as the President and CEO of the Company, Mr. Hardman received an
increase in his annual salary to $200,000. Additionally, Mr. Hardman was granted
an option to purchase an additional 50,000 shares of common stock of the Company
pursuant to the terms of the Company's 1999 Stock Option Plan, with the exercise
price of said options being the closing price as of the date of execution of the
Amended and Restated Employment Agreement. The option shall vest and be
exercisable immediately with regard to 50% of said option shares, and
exercisable with regard to the remaining 50% of said shares as of May 1, 2002.
The options shall be exercisable for a period of seven (7) years from the date
of the grant.
Stock Options
-------------
On December 15, 1999, the Board of Directors adopted the ZiaSun
Technologies, Inc. 1999 Stock Option Plan (the "1999 "Plan"). The 1999 Plan
allows the Company to attract and retain employees and directors of the Company
and its subsidiaries and to provide such persons with incentives and awards for
superior performance. The 1999 Plan is administered by a committee appointed by
the Board of Directors of the Company, which has broad flexibility in designing
stock-based incentives. The Board of Directors determines the number of shares
granted and the option exercise price, but such exercise price of Incentive
Stock Options (ISO) may not be less than one hundred percent of the fair market
value of Common Stock on the grant date.
On June 5, 2000, pursuant to the request of the California Department of
Corporations in conjunction with the Company's Application for Qualification by
Coordination of the 1999 Stock Option Plan and the issuance of the Company's
Common Stock and Stock Options under the Plan, the Board of Directors adopted
the Amended 1999 Stock Option Plan. The Plan was amended to clarify various
matters in the Plan, including, but not limited to (a) that the Plan
Administrator has the power to determine the fair market value of the shares of
the Company's Common Stock and the value of each Incentive and Nonqualified
Stock Option to be issued under the Plan based on the recent fair market price
of securities of the same class that are publicly traded; (b) that with regard
to the right to exercise an Incentive Stock Option, Nonqualified Stock Option
and any Stock Option granted to any non-employee director, that in no event
shall the right to exercise each of said options fall below the rate of at least
20% per year over five (5) years from the date the option is granted, subject to
the condition of continued employment during such time; and (c) that at no time
shall the total number of shares to be issued upon exercise of all outstanding
options and the total number of shares called for under the Plan exceed a number
of shares which is equal to 30% of the then outstanding shares of the Company. A
copy of the Amended 1999 Stock Option Plan is attached hereto.
Page 8
<PAGE>
On April 17, 2000, subsequent to the fiscal year ended December 31, 1999,
the Company's Stock Option Committee granted a total of 272,400 Incentive Stock
Options to the eligible employees of the Company and its subsidiaries, who have
been continuously employed by the Company or a subsidiary of the Company, for a
minimum of one (1) year. The exercise price of said options is $6.38, which was
the closing price of the Company's common stock on April 17, 2000. The effective
date of such grants was May 1, 2000. The options shall vest and be exercisable
with regard to 50% of said shares immediately and exercisable with regard to the
remaining 50% of said shares as of May 1, 2002. The options shall be exercisable
for a period of seven (7) years from the date of the grant. However, as a result
of the sale by the Company of Momentum Internet Inc. to Vulcan Consultants
Limited, 39,000 of the above referenced options shall expire on October 13,
2000.
As stated above Mr. Hardman has a stock option which entitles Mr. Hardman
the option to purchase one hundred thousand (100,000) shares of the Common Stock
of the Company, at $2.00 per share, in equal installments of twenty-five
(25,000) shares each beginning after one (1) year of employment for 4
consecutive years. To date Mr. Hardman has exercised the first 3 vested portions
of the stock option. Additionally, in conjunction with Mr. Hardman's appointment
of President and CEO, Mr. Hardman was granted an option to purchase an
additional 50,000 shares of common stock of the Company pursuant to the terms of
the Company's 1999 Stock Option Plan, with the exercise price of said options
being the closing price as of the date of execution of the Amended and Restated
Employment Agreement which was $3.125. The option shall vest and be exercisable
immediately with regard to 50% of said option shares, and exercisable with
regard to the remaining 50% of said shares as of May 1, 2002. The options shall
be exercisable for a period of seven (7) years from the date of the grant.
Option Grants Table
-------------------
The following tables reflect certain information, with respect to stock
options granted under the Company's stock option plans to certain executive
officers and directors during fiscal 1999.
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
--------------------------------------
Number Of % Of Total
Securities Options
Underlying Granted To Exercise
Options Employees Or Base
Granted In Fiscal Price Expiration
Name (#) Year(%) ($/Sh)(1) Date
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allen D. Hardman(1)(2) 0 0.00% N/A N/A
Ross W. Jardine(2) 0 0.00% N/A N/A
D. Scott Elder(2) 0 0.00% N/A N/A
Hans Von Meiss 0 0.00% N/A N/A
Christopher Outram 0 0.00% N/A N/A
Anthony D. Tobin(3)(4) 0 0.00% N/A N/A
Dennis McGrory(5) 0 0.00% N/A N/A
</TABLE>
---------------------
(1) Does not include an option granted on August 2, 2000, to purchase 50,000
shares of common stock at exercise price of $3.125 of which 25,000 are
presently exercisable with the remaining 25,000 of said options exercisable
as of May 1, 2002. Said options expiring on August 2, 2007.
Page 9
<PAGE>
(2) Does not include an option granted on April 17, 2000, to purchase 25,000
shares of common stock at exercise price of $6.38 of which 12,500 of said
options are presently exercisable with the remaining 12,500 of said options
exercisable as of May 1, 2002. Said options expiring on April 30, 2007.
(3) Does not include an option granted on April 17, 2000, to purchase 25,000
shares of common stock at exercise price of $6.38 of which 12,500 of said
options are presently exercisable with the remaining 12,500 of said options
exercisable as of May 1, 2002. As a result of the sale by the Company of
Momentum Internet Inc. to Vulcan Consultants Limited, the options expire on
October 13, 2000.
(4) Anthony D. Tobin resigned as an officer and director of the Company
effective as of April 21, 2000.
(5) Dennis McGrory resigned as the Secretary of the Company on July 12, 2000.
Option Exercise and Year End-Value Table
----------------------------------------
The following tables reflect certain information, with respect to the
exercise of stock options by certain executive officers during fiscal 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
---------------------------------------------------
Number Of
Securities Value Of
Underlying Unexercised
Unexercised In-The-Money
Options At Options At
Fy-End(#) Fy-End($)(1)
------------------------------------------
Shares Value
Acquired On Realized Exercisable(E)/ Exercisable(E)/
Name Exercise(#) ($) Unexercisable(U) Unexercisable(U)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allen D. Hardman 25,000 $200,0000 0(E) 0 (E)
75,000 (U) $838,500 (U)
Ross W. Jardine 0 0 0 (E) / 0 (U) 0 (E) / 0 (U)
D. Scott Elder 0 0 0 (E) / 0 (U) 0 (E) / 0 (U)
Hans Von Meiss 0 0 0 (E) / 0 (U) 0 (E) / 0 (U)
Christopher Outram 0 0 0 (E) / 0 (U) 0 (E) / 0 (U)
Anthony D. Tobin(1) 0 0 0 (E) / 0 (U) 0 (E) / 0 (U)
Dennis McGrory(2) 0 0 0 (E) / 0 (U) 0 (E) / 0 (U)
</TABLE>
------------------
(1) Anthony D. Tobin resigned as an officer and director of the Company
effective as of April 21, 2000.
(2) Dennis McGrory resigned as the Secretary of the Company on July 12, 2000.
Page 10
<PAGE>
PROPOSAL 2.
-----------
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
COMMON SHARES WHICH THE COMPANY IS AUTHORIZED TO ISSUE TO 250,000,000 SHARES OF
COMMON STOCK, $0.001 PAR VALUE
On April 21, 2000, the Company's Board of Directors approved the Amendment
to the Company's Articles of Incorporation in order to increase the number of
Common Shares which the Company is authorized to issue from 50,000,000 shares,
$0.001 par value to 250,000,000 shares of Common Stock, $0.001 par value (the
"Common Stock" or "Common Shares"). A copy of the proposed Certificate of
Amendment to the Articles of Incorporation is attached hereto as Exhibit 1.
Vote Required For Adoption
--------------------------
The affirmative vote of holders of a majority of the Common Shares entitled
to vote at the meeting is required to approve the proposed amendment. If the
shareholders do not approve the amendment, the Company's Amended and Restated
Articles of Incorporation, as presently in effect, will continue in effect.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
Page 11
<PAGE>
PROPOSAL 3.
-----------
RATIFICATION OF THE ADOPTION OF THE RESTATED COMPANY BYLAWS
-----------------------------------------------------------
On August 2, 2000, pursuant to the request of the California Department of
Corporations on June 16, 2000, in conjunction with the Company's Application for
Qualification by Coordination of the 1999 Stock Option Plan and the issuance of
the Company's Common Stock and Stock Options under the Plan, the Board of
Directors adopted the Restated Bylaws of the Company to (a) amend Section 2.02
to provide that special meetings of the shareholders may also be called by a
vote of 10% of more of the outstanding shares; and (b) amend Section 3.04 to
make it clear that directors may be removed with or without cause. A copy of the
Restated Bylaws are attached hereto as Exhibit 2.
Vote Required For Adoption
--------------------------
The affirmative vote of holders of a majority of the Common Shares entitled
to vote at the meeting is required to approve the Restated Bylaws. If the
shareholders do not approve the Restated Bylaws, the Company's current Amended
and Restated Bylaws, as presently in effect, will continue to be the governing
Bylaws of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
Page 12
<PAGE>
PROPOSAL 4.
-----------
RATIFICATION OF THE ADOPTION OF THE 1999 STOCK OPTION PLAN, AS AMENDED
-----------------------------------------------------------------------
On December 15, 1999, the Board of Directors adopted the ZiaSun
Technologies, Inc. 1999 Stock Option Plan (the "1999 `Plan"). The 1999 Plan
allows the Company to attract and retain employees and directors of the Company
and its subsidiaries and to provide such persons with incentives and awards for
superior performance. The 1999 Plan is administered by a committee appointed by
the Board of Directors of the Company, which has broad flexibility in designing
stock-based incentives. The Board of Directors determines the number of shares
granted and the option exercise price, but such exercise price of Incentive
Stock Options (ISO) may not be less than one hundred percent of the fair market
value of Common Stock on the grant date.
On June 5, 2000, pursuant to the request of the California Department of
Corporations in conjunction with the Company's Application for Qualification by
Coordination of the 1999 Stock Option Plan and the issuance of the Company's
Common Stock and Stock Options under the Plan, the Board of Directors adopted
the Amended 1999 Stock Option Plan. The Plan was amended to clarify various
matters in the Plan, including, but not limited to (a) that the Plan
Administrator has the power to determine the fair market the shares of the
Company's Common Stock and the value of each Incentive and Nonqualified Stock
Option to be issued under the Plan based on the recent fair market price of
securities of the same class that are publicly traded; (b) that with regard to
the right to exercise an Incentive Stock Option, Nonqualified Stock Option and
any Stock Option granted to any non-employee director, that in no event shall
the right to exercise each of said options fall below the rate of at least 20%
per year over five (5) years from the date the option is granted, subject to the
condition of continued employment during such time; and (c) that at no time
shall the total number of shares to be issued upon exercise of all outstanding
options and the total number of shares called for under the Plan exceed a number
of shares which is equal to 30% of the then outstanding shares of the Company. A
copy of the Amended 1999 Stock Option Plan is attached hereto as Exhibit 3.
Vote Required For Adoption
--------------------------
The affirmative vote of holders of a majority of the Common Shares entitled
to vote at the meeting is requited to approve the proposed 1999 Stock Option
Plan, as amended.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVAL OF
THE 1999 STOCK OPTION PLAN, AS AMENDED
Page 13
<PAGE>
Deadline for Receipt of Shareholder Proposals for the 2001 Annual Meeting
-------------------------------------------------------------------------
Proposals of shareholders of the Company, which are intended to be
presented at the Company's next Annual Meeting of Shareholders, must be received
by the Company no later than March 31, 2001, and otherwise be in compliance with
the Company's Articles of Incorporation and Bylaws, as amended, and with
applicable laws and regulations in order to be included in the Proxy Statement
and form of Proxy relating to that meeting.
OTHER BUSINESS
--------------
The Company knows of no other matters to be submitted at this meeting. If
any other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
By Order of the Board of Directors
/S/ Allen D. Hardman
Allen D. Hardman
October 3, 2000 President and Chief Executive Officer
Solana Beach, California
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999, AND ITS MOST RECENT QUARTERLY REPORT ON 10-Q FOR THE QUARTER
ENDED JUNE 30, 2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS
AVAILABLE AND CAN BE ACCESSED AND DOWNLOADED VIA THE INTERNET AT
HTTP://WWW.SEC.GOV/CGI-BIN/SRCH-EDGAR, AND SIMPLY TYPING IN "ZIASUN", OR ITS CIK
NUMBER "0001085705."
OR, PLEASE WRITE TO:
ZiaSun Technologies, Inc.
Attn: Investor Relations
462 Stevens Avenue
Suite 106
Solana Beach, CA 92075
Page 14
<PAGE>
Appendix A
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
--------------------------------------------------------------------------------
Allen D. Hardman, hereby certifies that:
1. He is the President and acting Secretary of ZiaSun Technologies, Inc.,
a Nevada Corporation.
2. Article 5., of the Articles of Incorporation of this Corporation is
amended to read as follows:
Article 5. The Corporation is authorized to issue one (1) class of
shares to be designated as Common Stock ("Common Stock"). The total
number of shares of Common Stock this Corporation shall have the
authority to issue is Two Hundred Fifty Million Shares (250,000,000)
with a par value of $0.001 per share.
3. The current number of authorized shares before the amendment to
Article 5., as set forth above is 50,000,000 shares of Common Stock,
$0.001 Par Value.
4. The number of authorized shares after the amendment to Article 5., as
set forth above is 250,000,000 shares of Common Stock, $0.001 Par
Value.
5. The foregoing Restated Articles of Incorporation have been duly
approved by the board of directors.
6. The foregoing Amended Articles of Incorporation have been duly
approved by the required vote of shareholders in accordance with
Section 78.3390 of the Nevada Revised Act. The total number of
outstanding shares of the corporation is _________________. The number
of votes entitled to be cast on the amendment is ____________ and the
number of votes indisputably represented at the meeting at which the
foregoing amendment was approved was _________________. The total
number of undisputed votes cast for the amendment was
________________, which was sufficient for approval of the same.
The undersigned declare under the penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Diego, California on November __, 2000
----------------------------------
By: Allen D. Hardman
Its: President and Acting Secretary
A-1
<PAGE>
Appendix B
RESTATED BYLAWS
OF
ZIASUN TECHNOLOGIES, INC.
(A Nevada Corporation)
================================================================================
ARTICLE I.
----------
OFFICES
-------
Section 1.01. Location of Offices. The corporation may maintain such
offices within or without the State of Nevada as the Board of Directors may from
time to time designate or require.
Section 1.02. Principal Office. The address of the principal office of the
corporation shall be at the address of the registered office of the corporation
as so designated in the office of the Secretary of State of the state of
incorporation, or at such other address as the Board of Directors shall from
time to time determine.
ARTICLE II.
-----------
MEETING OF SHAREHOLDERS
-----------------------
Section 2.01. Annual Meetings. The annual meeting of the shareholders shall
be held on such date as the Board of Directors shall determine by resolution. If
the election of directors shall not be held on the day thus designated for any
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be practical.
Section 2.02. Special Meetings. Special meetings of the stockholders may be
held at the office of the corporation in the State of Nevada, or elsewhere,
whenever called by Board of Directors, or the Chairman of the Board of
Directors, or the President, or the Secretary, or by one or more shareholders
holding shares in the aggregate entitled to cast not less than ten percent (10%)
of the votes at any shareholder meeting. Not less than ten (10) nor more than
sixty (60) days written notice of such meeting, specifying the day, hour and
place, when and where such meeting shall be convened, and the objects for
calling the same, shall be mailed in the United States Post Office, or via
express or overnight mail, addressed to each of the stockholders of record at
the time of issuing the notice, and at his, her, or its address last known, as
the same appears on the books of the corporation.
The written certificate of the officer or officers calling any special
meeting setting forth the substance of the notice, and the time and place of the
mailing of the same to the several stockholders, and the respective addresses to
which the same were mailed, shall be prima facie evidence of the manner and fact
of the calling and giving such notice.
All business to be lawfully transacted by the stockholders of the
corporation may be transacted at any special meeting or at the adjournment
thereof. Only such business, however, shall be acted upon at special meeting of
the stockholders as shall have been referred to in the notice calling such
meetings; but at any stockholders' meeting at which all of the outstanding
capital stock of the corporation is represented, either in person or by proxy,
any lawful business may be transacted, and such meeting shall be valid for all
purposes.
Section 2.03. Place of Meetings. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual or special meeting. A waiver of notice, signed by all
shareholders entitled to vote at a meeting, may designate any place, either
within or without the state of incorporation, as the place for the holding of
such meeting. If no designation is made, the place of meeting shall be the
registered office of the corporation in the state of incorporation.
B-1
<PAGE>
Appendix B
Section 2.04. Notice of Meetings. Notification of the annual meeting shall
state the purpose or purposes for which the meeting is called and the date,
time, and the place, which may be within or without this state, where it is to
be held. A copy of such notice shall be either delivered personally to, or shall
be mailed with postage prepaid, to each stockholder of record entitled to vote
at such meeting not less than ten (10) nor more than sixty (60) days before such
meeting. If mailed, notice shall be directed to a stockholder at his address as
it appears upon the records of the corporation. Upon such mailing of any such
notice, the service thereof shall be complete and the time of the notice shall
begin to run from the date upon such notice is deposited in the mail for
transmission to said stockholder. Personal delivery of such notice to any
officer of a corporation, association, or any member of a partnership, shall
constitute delivery of such notice to such corporation, association, or any
member of a partnership.
Section 2.05. Waiver of Notice. If all the stockholders of the corporation
shall waive notice of the annual or special meeting, no notice of such meeting
shall be required. Further, whenever all the stockholders shall meet in person
or by proxy, such meeting shall be valid for all purposes without call or
notice, and at such meeting any corporate action may be taken.
Section 2.06. Default Notice. If the address of any stockholder does not
appear upon the books of the corporation, it will be sufficient to address any
notice to said stockholder at the registered office of the corporation within
the state of Nevada.
Section 2.07. Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation may provide
that the share transfer books shall be closed, for the purpose of determining
shareholders entitled to notice of or to vote at such meeting, but not for a
period exceeding sixty (60) days. If the share transfer books are closed for the
purpose of determining shareholders entitled to notice of or to vote at such
meeting, such books shall be closed for at least ten (10) days immediately
preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty (60) and, in case of a meeting
of shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the share transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting or
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof. Failure to comply
with this Section shall not affect the validity of any action taken at a meeting
of shareholders.
Section 2.08. Voting Lists. At each meeting of the stockholders, a full,
true and complete list, in alphabetical order, of all the stockholders entitled
to vote at such meeting, and indicating the number of shares held by each,
certified by the Secretary of the corporation, shall be furnished, which list
shall be prepared not less than ten (10) nor more than sixty (60) days before
such meeting, and shall be open to the inspection of the stockholders, or their
agents or proxies, at the place where such meeting is to be held, and not less
than ten (10) nor more than sixty (60) days prior thereto. Only the persons in
whose names shares of stock are registered on the books of the corporation for
not less than ten (10) nor more than sixty (60) days preceding the date of such
meeting, as evidenced by the list of stockholders so furnished, shall be
entitled to vote at such meeting. Proxies and powers of attorney to vote must be
filed with the secretary of the corporation before an election or a meeting of
the stockholders, or they cannot be used at such election or meeting.
Section 2.09. Voting Rights. At each meeting of the stockholders, every
stockholder shall be entitled to vote in person or by his or her duly authorized
proxy appointed by instrument in writing subscribed by such stockholder or by
his or her duly authorized attorney. Each stockholder shall have one (1) vote
for each share of stock standing registered in his or her or its name on the
books of the corporation. The votes for directors, and upon demand by any
stockholder, the votes upon any question before the meeting, shall be by viva
voce.
B-2
<PAGE>
Appendix B
Section 2.10. Quorum. At all stockholders' meetings, the holders of a
majority of the entire issued and outstanding capital stock of the corporation,
shall constitute a quorum for all purposes of such meetings.
If holders of the amount of stock necessary to constitute a quorum shall
fail to attend, in person or by proxy, at the time and place fixed by these
Bylaws for any annual meeting, or fixed by a notice as above provided for a
special meeting, a majority in interest of the stockholders present in person or
by proxy may adjourn from time to time without notice other than by announcement
at the meeting, until holders of the amount of stock requisite to constitute a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted as
originally called.
Section 2.11. Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case the
instrument authorizing such proxy to act shall have been executed in writing by
the registered holder or holders of such shares, as the case may be, as shown on
the share transfer of the corporation or by his or her or her attorney thereunto
duly authorized in writing. Such instrument authorizing a proxy to act shall be
delivered at the beginning of such meeting to the secretary of the corporation
or to such other officer or person who may, in the absence of the secretary, be
acting as secretary of the meeting. In the event that any such instrument shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one shall (unless the
instrument shall otherwise provide) have all of the powers conferred by the
instrument on all persons so designated. Persons holding stock in a fiduciary
capacity shall be entitled to vote the shares so held and the persons whose
shares are pledged shall be entitled to vote, unless in the transfer by the
pledge or on the books of the corporation he or she shall have expressly
empowered the pledgee to vote thereon, in which case the pledgee, or his or her
or her proxy, may represent such shares and vote thereon.
Section 2.12. Voting Procedures. At each meeting of the stockholders, the
polls shall be opened and closed; the proxies and ballots issued, received, and
be taken in charge of, for the purpose of the meeting, and all questions
touching the qualifications of voters and the validity of proxies, and the
acceptance or rejection of votes, shall be decided by two (2) inspectors. The
presiding officer of the meeting shall appoint such inspectors at or prior to
the meeting.
Section 2.13. Written Consent by Majority of Stockholders. In accordance
with NRS 78.320(b)(2), any action which may be taken at any annual or special
meeting of the stockholders may be taken without a meeting and without prior
notice if consent thereto is signed by stockholders holding at least a majority
of the voting power, except that if a different proportion of voting power is
required for such an action at a meeting, then that proportion of written
consent is required.
Section 2.14. Order of Business. At the stockholders' meetings, the regular
order of business shall be as follows:
(a) Reading and approval of the Minutes of previous meeting or meetings;
(b) Reports of the Board of Directors, the President, Chief Financial
Officer and Secretary of the corporation in the order named;
(c) Reports of Committees;
(d) Election of Directors;
(e) Unfinished business;
(f) New business;
(g) Adjournment.
B-3
<PAGE>
Appendix B
ARTICLE III.
------------
DIRECTORS AND THEIR MEETINGS
----------------------------
Section 3.01. General Powers. The property, affairs, and business of the
corporation shall be managed by its Board of Directors. The Board of Directors
is vested with the complete and unrestrained authority in the management of all
the affairs of the corporation, and is authorized to exercise for such purpose
as the General Agent of the corporation, its entire corporate authority. The
Board of Directors may exercise all the powers of the corporation whether
derived from law or the Articles of Incorporation, except such powers as are by
statute, by the Articles of Incorporation or by these Bylaws, vested solely in
the shareholders of the corporation.
Section 3.02. Number, Term, and Qualifications. The Board of Directors of
the corporation shall consist of such number, not less than three (3) or more
than seven (7) persons or such number as shall be fixed from time to time by the
Board of Directors. Each director shall hold office until the next annual
meeting of shareholders of the corporation and until his or her successor shall
have been duly elected and qualified. Directors need not be citizens of the
United States or residents of the state of incorporation or shareholders of the
corporation.
Section 3.03. Resignations. A director may resign at any time by delivering
a written resignation to either the president, a vice president, the secretary,
or assistant secretary, if any. The resignation shall become effective on its
acceptance by the Board of Directors; provided that if the board has not acted
thereon within ten days from the date presented, the resignation shall be deemed
accepted.
Section 3.04. Removal. At a meeting expressly called for that purpose, one
or more directors may be removed with or without cause, by a vote of a majority
of the shares of outstanding stock of the corporation entitled to vote at an
election of directors.
Section 3.05. Vacancies and Newly Created Directorship. All vacancies,
including those caused by an increase in the number of directors, may be filled
by a majority of the remaining directors, though less than a quorum, unless it
is otherwise provided in the Articles of Incorporation.
Section 3.06. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this bylaw immediately following, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide by resolution the time and place, either within or without the state
of incorporation, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.07. Special Meetings. Special meetings of the Board of Directors
may be held on the call of the Chairman of the Board, Chief Executive Officer,
President, Vice President, Chief Financial Officer or Secretary on at least one
(1) day notice by mail, facsimile, e-mail or telegraph to directors' resident in
the State of Nevada, and on at least three (3) days notice by mail, or three (3)
days notice by mail, facsimile, e-mail or telegraph, to directors not resident
in said state.
Any meeting of the Board, no matter where held, at which all of the members
shall be present, even though without or of which notice shall have been waived
by all absentees, provided a quorum shall be present, shall be valid for all
purposes unless otherwise indicated in the notice calling the meeting or in the
waiver of notice. Any and all business may be transacted by any meeting, either
regular or special, of the Board of Directors.
Section 3.08. Location of Directors Meeting. Meetings of the directors may
be held at the principal office of the corporation in the State of Nevada, or
elsewhere, at such place or places as the Board of Directors may, from time to
time, determine.
Section 3.09. Meetings by Telephone Conference Call. The Board of Directors
may provide, by resolution, for the holding of additional regular meetings,
without notice other than such resolution. The Board of Directors may hold any
such additional regular meetings by telephone conference or other means of
electronic communication by which all directors can hear and speak to each of
the other directors.
B-4
<PAGE>
Appendix B
Section 3.10. Quorum. A majority of the Board of Directors in office
shall constitute a quorum for the transaction of business, but if at any meeting
of the Board there be less than a quorum present, a majority of those present
may adjourn from time to time, until a quorum shall be present, and no notice of
such adjournment shall be required. The Board of Directors may prescribe rules
not in conflict with these Bylaws for the conduct of its business; provided,
however, that in the fixing of salaries of the officers of the corporation, the
unanimous action of all the directors shall be required.
Section 3.11. Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, and the individual directors shall have no power as such.
Section 3.12. Written Consent to Action by Directors. In accordance with
NRS 78.315(2), any action required or permitted to be taken at any annual or
special meeting of board of directors, or of a committee thereof may be taken
without a meeting, if before or after the action consent thereto is signed by
all members of the board or the committee.
Section 3.13. Order of Business. The regular order of business at meetings
of the Board of Directors shall be as follows:
(a) Reading and approval of the minutes of any previous meeting or
meetings;
(b) Reports of officers and committeemen;
(c) Election of officers;
(d) Unfinished business;
(e) New business;
(f) Adjournment.
Section 3.14. Report to and Action on behalf of the Stockholders. The Board
of Directors shall make a report to the stockholders at annual meetings of the
stockholders of the condition of the corporation, and shall furnish each of the
stockholders with a true copy thereof upon request.
The Board of Directors, in its discretion, may submit any contract or act
for approval or ratification at any annual meeting of the stockholders called
for the purpose of considering any such contract or act, which, if approved, or
ratified by the vote of the holders of a majority of the capital stock
represented in person or by proxy at such meeting, provided that a lawful quorum
of stockholders be there represented in person or by proxy, shall be valid and
binding upon the corporation and upon all the stockholders thereof, as if it had
been approved or ratified by every stockholder of the corporation.
Section 3.15. Formation of Executive Committee. The Board of Directors may,
by resolution passed by a majority of the whole Board, designate an Executive
Committee. This Committee shall consist of two (2) or more members besides the
President, who by virtue of his or her office, shall be a member and the
chairman thereof. The Committee shall in the interim between the meetings of the
Board, exercise all powers of that body in accordance with the general policy of
the corporation and under the direction of the Board of Directors. It shall also
attend to and supervise all the financial operations of the corporation, and
shall examine and audit all the corporation's accounts at the close of each
fiscal year, and at such other times, as it may deem necessary. The Secretary
shall be the Secretary of the Committee and shall attend its meetings, and its
meetings shall be held on the call of the President. All members of the
Committee must be given at least two (2) days notice of meetings either by mail,
facsimile, e-mail or telegraph or by personal communication, either by telephone
or otherwise. A majority of the members of the Committee shall keep due records
of all meetings and actions of the Committee, and such records shall at all
times be open to the inspection of any director.
Section 3.16. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefore.
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Appendix B
Section 3.17. Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her or her dissent shall be entered in the minutes of the meeting, unless
he or she shall file his or her or her written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof, or
shall forward such dissent by registered or certified mail to the secretary of
the corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
ARTICLE IV.
-----------
OFFICERS AND THEIR DUTIES
-------------------------
Section 4.01. Number. The officers of the corporation shall be a president,
one or more vice-presidents, as shall be determined by resolution of the Board
of Directors, a secretary, a treasurer, and such other officers as may be
appointed by the Board of Directors. The Board of Directors may elect, but shall
not be required to elect, a chairman of the board and the Board of Directors may
appoint a general manager.
Section 4.02. Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the Board
of Directors. Each such officer (whether chosen at an annual meeting of the
Board of Directors to fill a vacancy or otherwise) shall hold his or her office
until the next ensuing annual meeting of the Board of Directors and until his or
her successor shall have been chosen and qualified, or until his or her death,
or until his or her resignation or removal in the manner provided in these
Bylaws. Any one person may hold any two or more of such offices, except that the
president shall not also be the secretary. No person holding two or more offices
shall act in or execute any instrument in the capacity of more than one office.
The chairman of the board, if any, shall be and remain a director of the
corporation during the term of his or her office. No other officer need be a
director.
Section 4.03. Subordinate Officers, Etc. The Board of Directors may from
time to time, by resolution, appoint such additional Vice Presidents and
additional Assistant Secretaries, Assistant Chief Financial Officers and
Transfer Agents as it may deem advisable; prescribe their duties, fix their
compensation, and all such appointed officers shall be subject to removal at any
time by the Board of Directors. All officers, agents and factors shall be chosen
and appointed in such manner and shall hold their office for such terms as the
Board of Directors may by resolution prescribe.
Section 4.04. Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall take
effect on delivery.
Section 4.05. Removal. Any officer may be removed from office at any
special meeting of the Board of Directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without cause.
Any officer or agent appointed in accordance with the provisions of Section 4.03
hereof may also be removed, either with or without cause, by any officer on whom
such power of removal shall have been conferred by the Board of Directors.
Section 4.06. Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or any other cause, or if a new office shall be created, then such vacancies or
new created offices may be filled by the Board of Directors at any regular or
special meeting.
Section 4.07. The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties.
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Appendix B
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors; and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08. The President. The president shall have the following powers
and duties:
(a) He or she shall be the chief executive officer of the corporation,
and, subject to the direction of the Board of Directors, shall have general
charge of the business, affairs, and property of the corporation and
general supervision over its officers, employees, and agents;
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders
and Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing
shares of the corporation, the issuance of which shall have been authorized
by the Board of Directors; and
(e) He or she shall have all power and shall perform all duties
normally incident to the office of a president of a corporation, and shall
exercise such other powers and perform such other duties as from time to
time may be assigned to him or her by the Board of Directors.
Section 4.09. The Vice Presidents. The Board of Directors may, from time to
time, designate and elect one or more vice presidents, one of whom may be
designated to serve as executive vice president. Each vice president shall have
such powers and perform such duties as from time to time may be assigned to him
or her by the Board of Directors or the president. At the request or in the
absence or disability of the president, the executive vice president or, in the
absence or disability of the executive vice president, the vice president
designated by the Board of Directors or (in the absence of such designation by
the Board of Directors) by the president, the senior vice president, may perform
all the duties of the president, and when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the president.
Section 4.10. Chief Financial Officer. The Chief Financial Officer shall
have the custody of all the funds and securities of the corporation. When
necessary or proper, he or she shall endorse on behalf of the corporation for
collection checks, notes, an other obligations; he or she shall jointly with
such other officer as shall be designated by these Bylaws, sign all checks made
by the corporation, and shall pay out and dispose of the same under the
direction of the Board of Directors. The Chief Financial Officer shall sign with
the President all bills of exchange and promissory notes of the corporation; he
or she shall also have the care and custody of the stocks, bonds, certificates,
vouchers, evidence of debts, securities, and such other property belonging to
the corporation as the Board of Directors shall designate; he or she shall sign
all papers required by law or by these By-laws or the Board of Directors to be
signed by the Chief Financial Officer. Whenever required by the Board of
Directors, the Chief Financial Officer shall render a statement of the
corporation's cash account; he or she shall enter regularly in the books of the
corporation to be kept by him or her for the purpose, full and accurate accounts
of all moneys received and paid by him or her on account of the corporation. The
Chief Financial Officer shall at all reasonable times exhibit the books of
account to any Director of the corporation during business hours, and shall
perform all acts incident to the position of Chief Financial Officer subject to
the control of the Board of Directors.
The Chief Financial Officer shall, if required by the Board of Directors,
give bond to the corporation conditioned for the faithful performance of all his
or her duties as Chief Financial Officer in such sum, and with such security as
shall be approved by the Board of Directors, with the expense of such bond to be
borne by the corporation.
Section 4.11. Salaries. The salaries and other compensation of the officers
of the corporation shall be fixed from time to time by the Board of Directors,
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents appointed in accordance with the provisions of Section 4.03
hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he or she is also a director of the
corporation.
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Appendix B
Section 4.12. Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his or her
duties to the corporation, including responsibility for negligence and for the
accounting of all property, monies, or securities of the corporation which may
come into his or her hands.
ARTICLE V.
----------
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
----------------------------------------
Section 5.01. How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may deem
appropriate, each of which committees shall consist of two or more directors.
Members of the executive committee and of any such other committees shall be
designated annually at the annual meeting of the Board of Directors; provided,
however, that at any time the Board of Directors may abolish or reconstitute the
executive committee or any other committee. Each member of the executive
committee and of any other committee shall hold office until his or her
successor shall have been designated or until his or her resignation or removal
in the manner provided in these Bylaws.
Section 5.02. Powers. During the intervals between meetings of the Board of
Directors, the executive committee shall have and may exercise all powers of the
Board of Directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the Board of Directors or
to amend these Bylaws, and except for such powers as by law may not be delegated
by the Board of Directors to an executive committee.
Section 5.03. Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix its
own presiding and recording officer or officers, and may meet at such place or
places, at such time or times and on such notice (or without notice) as it shall
determine from time to time. It will keep a record of its proceedings and shall
report such proceedings to the Board of Directors at the meeting of the Board of
Directors next following.
Section 5.04. Quorum and Manner of Acting. At all meetings of the executive
committee, and of such other committees as may be designated hereunder by the
Board of Directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee, and of such other
committees as may be designated hereunder by the Board of Directors, shall act
only as a committee and the individual members thereof shall have no powers as
such.
Section 5.05. Vacancies. If any vacancies shall occur in the executive
committee or of any other committee designated by the Board of Directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the Board of Directors.
Section 5.06. Compensation. The Board of Directors may allow a fixed sum
and expenses of attendance to any member of the executive committee, or of any
other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
Section 5.07. Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the Board of Directors,
may resign at any time by delivering a written resignation to either the
president, the secretary, or assistant secretary, or to the presiding officer of
the committee of which he or she is a member, if any shall have been appointed
and shall be in office. Unless otherwise specified herein, such resignation
shall take effect on delivery.
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Appendix B
Section 5.08. Removal. The Board of Directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
ARTICLE VI.
-----------
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 6.01. Execution of Instruments. Subject to any limitation contained
in the Articles of Incorporation or these Bylaws, the president or vice
president, may, in the name and on behalf of the corporation, execute and
deliver any contract or other instrument authorized in writing by the Board of
Directors. The Board of Directors may, subject to any limitation contained in
the Articles of Incorporation or in these Bylaws, authorize in writing any
officer or agent to execute and delivery any contract or other instrument in the
name and on behalf of the corporation; any such authorization may be general or
confined to specific instances.
Section 6.02. Loans. No loans or advances shall be contracted on behalf of
the corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed
as security for the payment of any loan, advance, indebtedness, or liability of
the corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
Section 6.03. Deposits. All moneys of the corporation shall be deposited
when and as received by the Chief Financial Officer in such bank or banks or
other depository as may from time to time be designated by the Board of
Directors, and such deposits shall be made in the name of the corporation.
Section 6.04. Checks, Drafts, Etc. No note, draft, acceptance, endorsement
to other evidence of indebtedness shall be valid or against the corporation
unless the same shall be signed by the President or a Vice President, and
attested by the Secretary or an Assistant Secretary, or signed by the Chief
Financial Officer or an Assistant Chief Financial Officer and countersigned by
the President, Vice President, or Secretary, except that the Chief Financial
Officer or an Assistant Chief Financial Officer, may, without countersignature,
sign payroll checks and make endorsements for deposit to the credit of the
corporation in all its duly authorized depositories. No check or order for money
shall be signed in blank by more than one (1) officer of the corporation.
Section 6.05. Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or a vice president and by the secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
Where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has been used on
any such bond or debenture, should cease to be an officer of the corporation for
any reason before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as through the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such officer. The corporation shall make
no loan or advance of money to any stockholder or officer therein unless the
Board of Directors shall otherwise authorize.
Section 6.06. Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by or
standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to any
such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the Board of Directors.
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Appendix B
Section 6.07. Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any vice
president and the secretary or assistant secretary of the corporation, or by any
officer or agent there under authorized by the Board of Directors.
Section 6.08. Mortgages and Liens. The directors shall have the power to
authorize and cause to be executed, mortgages and liens without limit as to
amount upon the property and franchise of this corporation, and pursuant to the
affirmative vote, either in person or by proxy, of the holders of a majority of
the capital stock issued and outstanding; the directors shall have authority to
dispose in any manner of the whole property of this corporation.
ARTICLE VII.
------------
CAPITAL STOCK
-------------
Section 7.01. Issuance. The capital stock of the corporation shall be
issued in such manner and at such times and upon such conditions as shall be
prescribed by the Board of Directors.
Section 7.02. Stock Certificates. Ownership of stock in the corporation
shall be evidenced by certificates of stock in such forms as shall be prescribed
by the Board of Directors, and shall be under the seal of the corporation and
signed by the President or the Vice President and also by the Secretary or an
Assistant Secretary. All certificates shall be consecutively numbered; the name
of the person owing the shares represented thereby with the number of shares and
the date of issue shall be entered on the corporation's books. No certificates
shall be valid unless it is signed by the President or Vice President and by the
Secretary or Assistant Secretary. All certificates surrendered to the
corporation shall be canceled and no new certificate shall be issued until the
former certificate for the same number of shares shall have been surrendered or
canceled.
Section 7.03. Stock Transfer. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation of the certificate
therefore, made either in person or under assignment; a new certificate shall be
issued therefore. Whenever any transfer shall be expressed as made for
collateral security and not absolutely, the same shall be so expressed in the
entry of said transfer on the books of the corporation.
Section 7.04. Transfer Rules and Transfer Agent. The Board of Directors
shall have the power and authority to make all such rules and regulations not
inconsistent herewith as it may deem expedient concerning the issue, transfer
and registration of certificates for shares of the capital stock of the
corporation. The Board of Directors may appoint a transfer agent and a registrar
of transfers and may require all stock certificates to near the signature of
each transfer agent and such registrar of transfer.
Section 7.05. Stock Ledgers. The Stock Transfer Books shall be closed for
all meetings of the stockholders for the period of ten (10) days prior to such
meetings and shall be closed for the payment of dividends during such periods
from time to time may be fixed by the Board of Directors, and during such
periods no stock shall be transferable.
Section 7.06. Lost or Destroyed Certificates. The corporation may issue a
new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate or his or her legal representatives, to give the corporation a bond
in such form and amount as the Board of Directors may direct, and with such
surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
to do so.
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Appendix B
Section 7.07. Closing of Transfer Books and Fixing of Record Date.
------------------------------------------------------------------
(a) The Board of Directors shall have power to close the share books of the
corporation for a period of not to exceed sixty (60) days preceding the date of
any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholders for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent.
(c) If the share transfer books shall be closed or a record date set for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for, or such record date
shall be, at least ten (10) days immediately preceding such meeting.
Section 7.08. No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any jurisdiction
to which the corporation may become subject by reason of the conduct of
business, the ownership of assets, the residence of shareholders, the location
of offices or facilities, or any other item, the corporation elects not to be
governed by the provisions of any statute that (i) limits, restricts, modified,
suspends, terminates, or otherwise affects the rights of any shareholder to cast
one vote for each share of common stock registered in the name of such
shareholder on the books of the corporation, without regard to whether such
shares were acquired directly from the corporation or from any other person and
without regard to whether such shareholder has the power to exercise or direct
the exercise of voting power over any specific fraction of the shares of common
stock of the corporation issued and outstanding or (ii) grants to any
shareholder the right to have his or her stock redeemed or purchased by the
corporation or any other shareholder on the acquisition by any person or group
of persons of shares of the corporation. In particular, to the extent permitted
under the laws of the state of incorporation, the corporation elects not to be
governed by any such provision, including the provisions of the Nevada Control
Share Acquisitions Act, Sections 78.378 to 78.3793, inclusive, of the Nevada
Revised Statutes, or any statute of similar effect or tenor.
Section 7.09. Dividends. The Board of Directors shall have the power to
reserve over and above the capital stock paid in, such an amount, in its
discretion, as it may deem advisable to fix as a reserve fund, and may, from
time to time, declare dividends from the accumulated profits of the corporation
in excess of the amounts so reserved, and pay the same to the stockholders of
the corporation, and may also, if it deems the same advisable, declare stock
dividends of the unissued capital stock.
ARTICLE VIII.
-------------
INDEMNIFICATION, INSURANCE, AND OFFICER AND DIRECTOR CONTRACTS
--------------------------------------------------------------
Section 8.01. Indemnification: Third Party Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, or suit by or
in the right of the corporation to procure a judgment in its favor by reason of
the fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any such action, suit or proceeding,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he or she had reasonable
cause to believe that his or her conduct was unlawful.
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Appendix B
Section 8.02. Indemnification; Corporate Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit, if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such a person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine on application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 8.03. Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in Sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith. Any
other indemnification under Sections 8.01 and 8.02 hereof, shall be made by the
corporation upon a determination that indemnification of the officer, director,
employee, or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Sections 8.01 and 8.02 hereof. Such
determination shall be made either (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit, or proceeding; or (ii) by independent legal counsel on a written opinion;
or (iii) by the shareholders by a majority vote of a quorum of shareholders at
any meeting duly called for such purpose.
Section 8.04. General Indemnification. The indemnification provided by this
Section shall not be deemed exclusive of any other indemnification granted under
any provision of any statute, in the corporation's Articles of Incorporation,
these Bylaws, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent, and shall inure to
the benefit of the heirs and legal representatives of such a person.
Section 8.05. Advances. Expenses incurred in defending a civil or criminal
action, suit, or proceeding as contemplated in this Section may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon a majority vote of a quorum of the Board of Directors and upon
receipt of an undertaking by or on behalf of the director, officers, employee,
or agent to repay such amount or amounts unless if it is ultimately determined
that he or she is to indemnified by the corporation as authorized by this
Section.
Section 8.06. Scope of Indemnification. The indemnification authorized by
this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who ceases to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification permitted
by law.
Section 8.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, employee, or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against any such liability and under the laws of the state
of incorporation, as the same may hereafter be amended or modified.
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Appendix B
ARTICLE IX.
-----------
MISCELLANEOUS
-------------
Section 9.01. Company Records. A copy of the Stock and Transfer Books,
Articles of Incorporation and the Bylaws of the corporation shall be kept at its
principal office of the corporation in the State of Nevada, and at such other
places as may be prescribed by the Board of Directors.
Section 9.02. Salaries. No director nor executive officer shall be entitled
to any salary or compensation for any services performed for the corporation,
unless such salary or compensation shall be fixed by resolution of the Board of
Directors, adopted by the unanimous vote of all of the directors voting in favor
thereof.
ARTICLE X.
----------
AMENDMENT OF BYLAWS
-------------------
Section 10.01. Amendment Procedures. Amendments and changes of these Bylaws
may be made at any regular or special meeting of the Board of Directors by a
majority vote of the Board of Directors, or may be made by a vote of, or a
consent in writing signed by, the holders of a majority of the issued and
outstanding capital stock.
CERTIFICATE OF SECRETARY
------------------------
The undersigned does hereby certify that he is the secretary of ZiaSun
Technologies, Inc., a corporation duly organized and existing under and by
virtue of the laws of the State of Nevada; that the above and foregoing Restated
Bylaws of said corporation were duly adopted by the Board of Directors of the
corporation and by the Shareholders of the corporation, and that the above and
foregoing Bylaws are now in full force and effect.
Dated: ____________________ ________________________________
Secretary
B-13
<PAGE>
Appendix C
ZIASUN TECHNOLOGIES, INC.
(A Nevada Corporation)
AMENDED 1999 STOCK OPTION PLAN
--------------------------------------------------------------------------------
The following constitutes the provisions of the 1999 Stock Option Plan of
ZiaSun Technologies, Inc.
ARTICLE 1
---------
OVERVIEW
--------
1.1 Purpose. The purpose of the 1999 Stock Option Plan (the "Plan") is to
attract, retain, and reward persons providing services to ZiaSun Technologies,
Inc., a Nevada Corporation, and any successor corporation thereto (collectively
referred to as the "Company"), and any present or future parent and/or
subsidiary corporations of such corporation (all of which along with the Company
being individually referred to as a "Participating Company" and collectively
referred to as the "Participating Company Group"), and to motivate such persons
to contribute to the growth and profits of the Participating Company Group in
the future. For purposes of the Plan, a parent corporation and a subsidiary
corporation shall be as defined in Sections 424(e) and 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code").
1.2 Administration. The following provisions shall govern the
administration of the Plan:
(a) Administration By Board And/Or Committee. The Plan shall be
administered by the Board of Directors of the Company (the "Board")
and/or by a duly appointed committee of the Board having such powers
as shall be specified by the Board. Any subsequent references herein
to the Board shall also mean the committee if such committee has been
appointed, and unless the powers of the committee have been
specifically limited.
(b) Committee Powers. The Committee shall effect the grant of options
under the Plan by execution of instruments in writing in a form
approved by the Committee. Subject to the express terms and conditions
of the Plan, the Committee shall have full power to construe the Plan
and the terms of any option granted under the Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan or
options and to make all other determinations necessary or advisable
for the Plan's administration, including, without limitation, the
power to:
(i) determine which persons meet the requirements of Sections 2,
3, and 4 hereof for selection as participants in the Plan;
(ii) determine to whom of the eligible persons, if any, options
shall be granted under the Plan;
(iii) establish the terms and conditions required or permitted to
be included in every option agreement or any amendments thereto,
including whether options to be granted there under shall be
"Incentive Stock Options," as defined in section 422 of the Code,
or nonqualified stock options not described in sections 422(b) or
423(a) of the Code;
(iv) specify the number of shares to be covered by each option;
(v) determine the fair market value of shares of the Company's
common stock based on the recent fair market price of securities
of the same class that are publicly traded.
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Appendix C
(vi) take appropriate action to amend any option hereunder,
provided that no such action may be taken without the written
consent of the affected optionee;
(vii) cancel outstanding options and issue replacement options
therefore with the consent of the affected optionee; and
(viii) make all other determinations deemed necessary or
advisable for administering the Plan.
The Committee's determination on the foregoing matters shall be conclusive.
(c) Special Rule for Officers and Directors. The grant of options to
employees who are officers or directors of the Company and to
nonemployee directors of the Company may be made by and all discretion
with respect to the material terms of the options may be exercised by
either (i) the Board of Directors, or (ii) a duly appointed committee
of the Board composed solely of two or more nonemployee directors
having full authority to act in the matter. The term "nonemployee
directors" shall have the meaning set forth in Rule 16b-3 as
promulgated by the Securities and Exchange Commission ("SEC") under
section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as that rule may be amended from time to time, and as
interpreted by the SEC ("Rule 16b-3").
(d) Options Authorized. Options may be either Incentive Stock Options
as defined in Section 422 of the Code ("Incentive Stock Options") or
nonqualified stock options.
1.3 Eligibility.
(a) Eligible Persons. Options may be granted only to employees
(including officers) and directors of the Participating Company Group,
or to individuals who are rendering services as consultants to the
Participating Company Group. The Board shall, in its sole discretion,
determine which persons shall be granted Options (an "Optionee").
Notwithstanding any other provision of the Plan, no Eligible Person
shall in any single calendar year be granted options to purchase more
than an aggregate of three hundred thousand (300,000) shares of the
Company's common stock under the Plan, as adjusted pursuant to Section
6.2.
(b) Restrictions on Option Grants. A director of a Participating
Company may only be granted a nonqualified stock option unless the
director is also an employee of the Participating Company Group. An
individual who is rendering services as a consultant, advisor, or
other independent contractor may only be granted a nonqualified stock
option.
1.4 Shares Subject to Option. Options shall be for the purchase of shares
of the authorized but unissued common stock or treasury shares of common stock
$0.001 par value of the Company (the "Stock"), subject to adjustment as provided
in Section 6.2 below. The maximum number of shares of Stock which may be issued
under the Plan shall be Two Million Five Hundred Thousand (2,500,000) shares. In
the event that any outstanding Option for any reason expires or is terminated or
canceled and/or shares of Stock subject to repurchase are repurchased by the
Company, the shares allocable to the unexercised portion of such Option, or such
repurchased shares, may again be subject to an Option grant. Notwithstanding the
foregoing, any such shares shall be made subject to a new Option only if the
grant of such new Option and the issuance of such shares pursuant to such new
Option would not cause the Plan or any Option granted under the Plan to
contravene Rule 16b-3.
1.5 Time for Granting Options. All Options shall be granted, if at all,
within seven (7) years from the earlier of the date the Plan is adopted by the
Board or the date the Plan approved by the stockholders of the Company.
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Appendix C
1.6 Terms, Conditions and Form of Options. Subject to the provisions of the
Plan, the Board shall determine for each Option (which need not be identical)
the number of shares of Stock for which the Option shall be granted, the
exercise price of the Option, the timing and terms of exercisability and vesting
of the Option, the time of expiration of the Option, the effect of the
Optionee's termination of employment or service, whether the Option is to be
treated as an Incentive Stock Option or as a nonqualified stock option, the
method for satisfaction of any tax withholding obligation arising in connection
with the Option, including by the withholding or delivery of shares of stock,
and all other terms and conditions of the Option not inconsistent with the Plan.
Options granted pursuant to the Plan shall be evidenced by written agreements
specifying the number of shares of Stock covered thereby, in such form as the
Board shall from time to time establish, which agreements may incorporate all or
any of the terms of the Plan by reference and shall comply with and be subject
to the following terms and conditions:
ARTICLE 2
---------
INCENTIVE STOCK OPTIONS
-----------------------
2.1 Incentive Stock Option Terms and Conditions. Options granted to
employees (but not to nonemployee directors) under the terms and conditions of
this Section 2 are intended to be Incentive Stock Options under section 422 of
the Code. Each Incentive Stock Option granted under the Plan shall be authorized
by action of the Committee and shall be evidenced by a written agreement in such
form as the Committee shall from time to time approve, which agreement shall
comply with and be subject to the following terms and conditions:
(a) Exercise Price. The exercise price for each Option shall be
established at the sole discretion of the Board; provided, however,
that:
(i) the exercise price per share for an Incentive Stock Option
shall be not less than one hundred percent (100%) of the fair
market value, as determined by the Board based on the recent
market price of securities of the same class that are publicly
traded;
(ii) no Incentive Stock Option granted to an Optionee who at the
time the Option is granted owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes
of stock of a Participating Company within the meaning of Section
422(b)(6) of the Code (a "Ten Percent Owner Optionee") shall have
an exercise price per share less than one hundred ten percent
(110%) of the fair market value, as determined by the Board, of a
share of Stock on the date of the granting of the Option.
Notwithstanding the foregoing, an Option may be granted with an
exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or
substitution for another option in a manner qualifying with the
provisions of Section 424(a) of the Code.
(b) Exercise Period of Options. The Board shall have the power to set,
including by amendment of an Option, the time or times within which
each Option shall be exercisable or the event or events upon the
occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however, that no
Option shall be exercisable after the expiration of seven (7) years
after the date such Option is granted. No Incentive Stock Option
granted to an individual who owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company, as determined under the stock ownership rules
specified in Subsection 2.1(c), shall be exercisable after the
expiration of seven (7) years from the date on which that option is
granted.
(c) Determination of Stock Ownership. For purposes of determining in
Subsections 2.1(a) and 2.1(b) whether an employee owns stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, an employee shall be
considered as owning the stock owned, directly or indirectly, by or
for his or her brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants. Stock owned,
directly or indirectly, by or for a corporation, partnership, estate,
or trust shall be considered as being owned proportionately by or for
its shareholders, partners, or beneficiaries. Stock with respect to
which the employee holds an option shall not be counted.
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Appendix C
(d) Right to Exercise. Each Incentive Stock Option shall become
exercisable and vest according to the terms and conditions established
by the Board and reflected in the written agreement evidencing the
option. In no event shall the right to exercise each Incentive Stock
Option fall below the rate of at least 20% per year over five (5)
years from the date the option is granted, subject to the condition of
continued employment during such time. Notwithstanding the preceding
sentences, all outstanding Incentive Stock Options shall immediately
become exercisable in full in the event that (i) the shareholders of
the Company approve a dissolution or liquidation of the Company or a
sale of all or substantially all of the Company's assets to another
entity; (ii) a tender within the meaning of section 14 of the
Securities Exchange Act of 1934, as amended, is made for five percent
(5%) or more of the Company's outstanding capital stock by any person
other than the Company or an affiliate; or (iii) the Company effects
an underwritten public offering of its securities pursuant to a
registration statement filed under the Securities Act of 1933. Each
Incentive Stock Option shall be subject to termination before its date
of expiration as provided in Subsection 2.1(e).
(e) Termination of Employee Options. If an optionee who is an employee
ceases to be an employee of the Company, his or her rights to exercise
an Incentive Stock Option then held shall be only as follows:
(i) Death. If an optionee dies while he or she is employed by the
Company, the optionee's estate shall have the right for a period
of six (6) months (or such longer period as the Committee may
determine at the date of grant or during the term of the option)
after the date of death to exercise the option to the extent the
optionee was entitled to exercise the option on that date,
provided the date of exercise is in no event after the expiration
of the term of the option. To the extent the option is not
exercised within this period, the option will terminate. An
optionee's "estate" shall mean the optionee's legal
representative or any person who acquires the right to exercise
an option by reason of the optionee's death.
(ii) Disability. If an optionee's employment with the Company
ends because the optionee becomes disabled, the optionee or his
or her qualified representative (in the event of the optionee's
mental disability) shall have the right for a period of twelve
(12) months after the date on which the optionee's employment
ends to exercise the option to the extent the optionee was
entitled to exercise the option on that date, provided the date
of exercise is in no event after the expiration of the term of
the option. To the extent the option is not exercised within this
period, the option will terminate.
(iii) Resignation. If an optionee voluntarily resigns from the
Company, the optionee shall have the right for a period of two
(2) months after the date of resignation to exercise the option
to the extent the optionee was entitled to exercise the option on
that date, provided the date of exercise is in no event after the
expiration of the term of the option. To the extent the option is
not exercised within this period, the option will terminate.
(iv) Termination for Reasons other than Cause. If an optionee's
employment is terminated by the Company for reasons other than
"Cause," the optionee shall have the right for a period of two
(2) months after the date of termination to exercise the option
to the extent the optionee was entitled to exercise the option on
that date, provided the date of exercise is in no event after the
expiration of the term of the option. To the extent the option is
not exercised within this period, the option will terminate. The
termination of an optionee's employment by the Company will be
for reasons other than Cause if the termination is NOT due to an
act by the optionee that is described below under "Termination
for Cause."
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Appendix C
(v) Termination for Cause. If an optionee's employment is
terminated by the Company for "Cause," the optionee shall have
the right for a period of one (1) month after the date of
termination to exercise the option to the extent the optionee was
entitled to exercise the option on that date, provided the date
of exercise is in no event after the expiration of the term of
the option. To the extent the option is not exercised within this
period, the option will terminate. For the purpose of this
clause, "Cause" shall mean that: the optionee is determined by
the Committee to have committed an act of embezzlement, fraud,
dishonesty, or breach of fiduciary duty to the Company, or to
have deliberately disregarded the rules of the Company which
resulted in loss, damage, or injury to the Company, or because
the optionee has made any unauthorized disclosure of any of the
secrets or confidential information of the Company, has induced
any client or customer of the Company to break any contract with
the Company, has induced any principal for whom the Company acts
as agent to terminate the agency relationship, or has engaged in
any conduct that constitutes unfair competition with the Company.
(f) Notice of Sale. If an optionee sells or otherwise disposes of any
Shares acquired upon exercise of an Incentive Stock Option, the
optionee shall give the Company notice of the sale or disposition
within five business (5) days thereafter.
(g) Other Reasons. If an optionee's employment with the Company ends
for any reason not mentioned above in this Subsection 2(e), all rights
of the optionee in an Incentive Stock Option, to the extent that it
has not been exercised, shall terminate 30 days after the date the
optionee's employment ends.
(h) Limit on Exercise of Incentive Stock Options. To the extent that
the aggregate fair market value (determined as of the time the option
is granted) of the Stock with respect to which Incentive Stock Options
are exercisable for the first time by any individual during any
calendar year (under all plans of the Company and its parent and
subsidiary corporations) exceeds One Hundred Thousand Dollars
($100,000), the options shall be treated as options that are not
Incentive Stock Options.
ARTICLE 3
---------
NONQUALIFIED STOCK OPTION
-------------------------
3.1 Nonqualified Stock Option Terms and Conditions. The options granted
under the terms and conditions of this Section 3 are nonqualified stock options
and are not intended to qualify as either a qualified stock option or an
Incentive Stock Option as those terms are defined by applicable provisions of
the Code. Each nonqualified stock option granted under the Plan shall be
authorized by action of the Committee and shall be evidenced by a written
agreement in such form as the Committee shall from time to time approve, which
agreement shall comply with and be subject to the following terms and
conditions:
(a) Exercise Price. The exercise price of each nonqualified stock
option shall not be less than eighty five percent (85%) of the fair
market value of a Share of the Company on the date the option is
granted; provided, however, that the exercise price of a nonqualified
stock option granted to an individual who owns stock possessing more
than ten percent (10%) of the combined voting power of the Company,
its parent, or subsidiaries shall not be less than one hundred ten
percent (110%) of the fair market value of a Share of the Company on
the date the option is granted. The fair market value of each
nonqualified stock option shall be determined by the Board based on
the recent market price of securities of the same class that are
publicly traded.
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Appendix C
(b) Exercise Period of Options. The Board shall have the power to set,
including by amendment of an Option, the time or times within which
each Option shall be exercisable or the event or events upon the
occurrence of which all or a portion of each Option shall be
exercisable and the term of each Option; provided, however, that no
Option shall be exercisable after the expiration of seven (7) years
after the date such Option is granted. No nonqualified stock option
granted to an individual who owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company, as determined under the stock ownership rules
specified in Subsection 3.1(c), shall be exercisable after the
expiration of seven (7) years from the date on which that option is
granted.
(c) Determination of Stock Ownership. For purposes of determining in
Subsections 3.1(a)and 3.1(b) whether an employee owns stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, an employee shall be considered as
owning the stock owned, directly or indirectly, by or for his or her
brothers and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust
shall be considered as being owned proportionately by or for its
shareholders, partners, or beneficiaries. Stock with respect to which
the employee holds an option shall not be counted.
(d) Right to Exercise. Each nonqualified stock option shall become
exercisable and vest according to the terms and conditions established
by the Committee and reflected in the written agreement evidencing the
option. Each nonqualified stock option shall be subject to termination
before its date of expiration as provided in Subsection 3.1(e). In no
event shall the right to exercise each nonqualified stock option fall
below the rate of at least 20% per year over five (5) years from the
date the option is granted, subject to the condition of continued
employment during such time.
(e) Terminations of Options. If an optionee ceases to be an employee
of the Company, his or her rights to exercise a nonqualified stock
option then held shall be only as follows:
(i) Death. If an optionee dies while he or she is employed by the
Company, the optionee's estate shall have the right for a period
of six (6) months (or such longer period as the Committee may
determine at the date of grant or during the term of the option)
after the date of death to exercise the option to the extent the
optionee was entitled to exercise the option on that date,
provided the date of exercise is in no event after the expiration
of the term of the option. To the extent the option is not
exercised within this period, the option will terminate. An
optionee's "estate" shall mean the optionee's legal
representative or any person who acquires the right to exercise
an option by reason of the optionee's death.
(ii) Disability. If an optionee's employment with the Company
ends because the optionee becomes disabled, the optionee or his
or her qualified representative (in the event of the optionee's
mental disability) shall have the right for a period of twelve
(12) months after the date on which the optionee's employment
ends to exercise the option to the extent the optionee was
entitled to exercise the option on that date, provided the date
of exercise is in no event after the expiration of the term of
the option. To the extent the option is not exercised within this
period, the option will terminate.
(iii) Resignation. If an optionee voluntarily resigns from the
Company, the optionee shall have the right for a period of two
(2) months after the date of resignation to exercise the option
to the extent the optionee was entitled to exercise the option on
that date, provided the date of exercise is in no event after the
expiration of the term of the option. To the extent the option is
not exercised within this period, the option will terminate.
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Appendix C
(iv) Termination For Reasons Other Than Cause. If an optionee's
employment is terminated by the Company for reasons other than
"Cause," the optionee shall have the right for a period of two
(2) months after the date of termination to exercise the option
to the extent the optionee was entitled to exercise the option on
that date, provided the date of exercise is in no event after the
expiration of the term of the option. To the extent the option is
not exercised within this period, the option will terminate. The
termination of an optionee's employment by the Company will be
for reasons other than Cause if the termination is NOT due to an
act by the optionee that is described below under "Termination
for Cause."
(v) Termination For Cause. If an optionee's employment is
terminated by the Company for "Cause," the optionee shall have
the right for a period of one (1) month after the date of
termination to exercise the option to the extent the optionee was
entitled to exercise the option on that date, provided the date
of exercise is in no event after the expiration of the term of
the option. To the extent the option is not exercised within this
period, the option will terminate. For the purpose of this
clause, "Cause" shall mean that: the optionee is determined by
the Committee to have committed an act of embezzlement, fraud,
dishonesty, or breach of fiduciary duty to the Company, or to
have deliberately disregarded the rules of the Company which
resulted in loss, damage, or injury to the Company, or because
the optionee has made any unauthorized disclosure of any of the
secrets or confidential information of the Company, has induced
any client or customer of the Company to break any contract with
the Company, has induced any principal for whom the Company acts
as agent to terminate the agency relationship, or has engaged in
any conduct that constitutes unfair competition with the Company.
ARTICLE 4
---------
NON-EMPLOYEE DIRECTOR OPTIONS
-----------------------------
4.1 Grants to Non-Employee Directors. All options granted to nonemployee
directors shall be subject to the following terms and conditions:
(a) Limits. The aggregate amount of Shares (as adjusted pursuant to
Section 6.2) subject to options granted to all nonemployee directors
as a group shall not exceed twenty percent (20%) of the Shares plus
Shares underlying expired or terminated options that are added back to
the number of Shares available under the Plan.
(b) Nonqualified Options. All stock options granted to nonemployee
directors pursuant to the Plan shall be nonqualified stock options.
(c) Exercise Price. The exercise price of each option granted to a
nonemployee director shall not be less than 85% of fair market value
per Share; provided, however, that the exercise price of an option
granted to a nonemployee director who owns stock possessing more than
ten percent (10%) of the combined voting power of the Company, its
parent, or subsidiaries shall not be less than one hundred ten percent
(110%) of the fair market value of a Share of the Company on the date
the option is granted. The fair market value of the Shares shall be
determined by the Board based on the recent market price of securities
of the same class that are publicly traded.
(d) Duration of Options. Each option granted to a nonemployee director
shall be for a term determined by the Board; provided, however, that
the term of any option may not exceed seven (7) years.
(e) Right to Exercise. Each option granted to a nonemployee director
shall become exercisable and vest according to the terms and
conditions established by the Board and reflected in the written
agreement evidencing the option. In no event shall the right to
exercise each non-employee director option fall below the rate of at
least 20% per year over five (5) years from the date the option is
granted, subject to the condition of continued employment during such
time. Each option granted to a nonemployee director shall be subject
to termination before its date of expiration as provided in Subsection
4.1(f).
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Appendix C
(f) Terminations of Non-employee Director Options. If a non-employee
director ceases to be a director of the Company, his or her rights to
exercise an option then held shall be only as follows:
(i) Death. If a nonemployee director dies while he or she is
serving on the Board of the Company, the director's estate shall
have the right for a period of six (6) months (or such longer
period as the Committee may determine at the date of grant or
during the term of the option) after the date of death to
exercise the option to the extent the director was entitled to
exercise the option on that date, provided the date of exercise
is in no event after the expiration of the term of the option. To
the extent the option is not exercised within this period, the
option will terminate. A director's "estate" shall mean the
director's legal representative or any person who acquires the
right to exercise an option by reason of the director's death.
(ii) Disability. If a nonemployee director's Board membership
ends because the director becomes disabled, the director or his
or her qualified representative (in the event of the director's
mental disability) shall have the right for a period of twelve
(12) months after the date on which the director's Board
membership ends to exercise the option to the extent the director
was entitled to exercise the option on that date, provided the
date of exercise is in no event after the expiration of the term
of the option. To the extent the option is not exercised within
this period, the option will terminate.
(iii) Resignation. If a nonemployee director voluntarily resigns
from the Company's Board, the director shall have the right for a
period of six (6) months after the date of resignation to
exercise the option to the extent the director was entitled to
exercise the option on that date, provided the date of exercise
is in no event after the expiration of the term of the option. To
the extent the option is not exercised within this period, the
option will terminate.
(iv) Termination for Reasons other than Cause. If a nonemployee
director's Board membership is terminated by the Company for
reasons other than "Cause," the director shall have the right for
a period of six (6) months after the date of termination to
exercise the option to the extent the director was entitled to
exercise the option on that date, provided the date of exercise
is in no event after the expiration of the term of the option. To
the extent the option is not exercised within this period, the
option will terminate. The termination of a nonemployee
director's Board membership will be for reasons other than Cause
if the termination is NOT due to an act by the director that is
described below under "Termination for Cause."
(v) Termination For Cause. If a nonemployee director's Board
membership is terminated by the Company for "Cause," the director
shall have the right for a period of one (1) month after the date
of termination to exercise the option to the extent the director
was entitled to exercise the option on that date, provided the
date of exercise is in no event after the expiration of the term
of the option. To the extent the option is not exercised within
this period, the option will terminate. For the purpose of this
clause, "Cause" shall mean that: the director is determined by
the Committee to have committed an act of embezzlement, fraud,
dishonesty, or breach of fiduciary duty to the Company, or to
have deliberately disregarded the rules of the Company which
resulted in loss, damage, or injury to the Company, or because
the director has made any unauthorized disclosure of any of the
secrets or confidential information of the Company, has induced
any client or customer of the Company to break any contract with
the Company, has induced any principal for whom the Company acts
as agent to terminate the agency relationship, or has engaged in
any conduct that constitutes unfair competition with the Company.
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Appendix C
(vi) Other Reasons. If a nonemployee director's Board membership
ends for any reason not mentioned above in this Subsection
4.1(f), all rights of the director in an option, to the extent
that it has not been exercised, shall terminate on the date the
director's Board membership ends.
ARTICLE 5
----------
STANDARD FORMS OF STOCK OPTION AGREEMENT
----------------------------------------
5.1 Incentive Stock Options. Unless otherwise provided for by the Board at
the time an Option is granted, an Option designated as an Incentive Stock Option
shall comply with and be subject to the terms and conditions of an Incentive
Stock Option Agreement which shall be in such form as designated by the Board of
Directors or Committee from time to time.
5.2 Nonqualified Stock Options. Unless otherwise provided for by the Board
at the time an Option is granted, an Option designated as a Nonqualified Stock
Option shall comply with and be subject to the terms and conditions of a
Nonqualified Stock Option Agreement which shall in such form as designated by
the Board of Directors or Committee from time to time.
5.3 Standard Term For Options. Unless otherwise provided for by the Board
in the grant of an Option, any Option granted hereunder shall be exercisable for
a term of seven (7) years.
5.4 Authority To Vary Terms. The Board shall have the authority from time
to time to modify, extend, renew or vary the terms of any of the standard forms
of Stock Option Agreement described in Article 6 below either in connection with
the grant or amendment of an individual Option or in connection with the
authorization of a new standard form or forms; provided, however, that the terms
and conditions of such revised or amended standard form or forms of stock option
agreement shall be in accordance with the terms of the Plan. Such authority
shall include, but not by way of limitation, the authority to grant Options
which are not immediately exercisable.
ARTICLE 6
---------
ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS
---------------------------------------------------------
The following terms and conditions shall apply to all options granted
pursuant to the plan:
6.1 Payment of Exercise Price.
(a) Exercise of Options. Optionees may exercise options only by
providing written notice to the Company at the address specified in
the written agreement evidencing the option. The notice must be
accompanied by full payment in cash for the Shares as to which the
options are exercised.
(b) Forms of Payment Authorized. Payment of the exercise price for the
number of shares of Stock being purchased pursuant to any Option shall
be made (i) in cash, by check, or cash equivalent, (ii) by tender to
the Company of shares of the Company's stock owned by the Optionee
having a fair market value, as determined by the Board (but without
regard to any restrictions on transferability applicable to such stock
by reason of federal or state securities laws or agreements with an
underwriter for the Company), not less than the exercise price, (iii)
by the assignment of the proceeds of a sale of some or all of the
shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions
of Regulation T., as promulgated from time to time by the Board of
Governors of the Federal Reserve System), (iv) by the withholding of
shares being acquired upon exercise of the Option having a fair market
value, as determined by the Board (but without regard to any
restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for
the Company), not less than the exercise price, or (v) by any
combination thereof. The Board may at any time or from time to time
grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price and/or which
otherwise restrict one (1) or more forms of consideration.
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Appendix C
(c) Tender of Company Stock. Notwithstanding the foregoing, an Option
may not be exercised by tender to the Company of shares of the
Company's stock to the extent such tender of stock, as determined by
the Board, would constitute a violation of the provisions of any law,
regulation and/or agreement restricting the redemption of the
Company's stock. Unless otherwise provided by the Board, an Option may
not be exercised by tender to the Company of shares of the Company's
stock unless such shares of the Company's stock either have been owned
by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company. An optionee may also
exercise an option by the delivery and surrender of Shares which (i)
have been owned by the optionee for at least six (6) months or for
such other period as the Committee may require; and (ii) have an
aggregate fair market value on the date of surrender equal to the
exercise price. In addition, an option may be exercised by delivering
to the Company (i) an exercise notice instructing the Company to
deliver the certificates for the Shares purchased to a designated
brokerage firm; and (ii) a copy of irrevocable instructions delivered
to the brokerage firm to sell the Shares acquired upon exercise of the
option and to deliver to the Company from the sale proceeds sufficient
cash to pay the exercise price and applicable withholding taxes
arising as a result of the exercise
(d) Assignment of Proceeds of Sale. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion,
to establish, decline to approve and/or terminate any program and/or
procedures for the exercise of Options by means of an assignment of
the proceeds of a sale of some or all of the shares of Stock to be
acquired upon such exercise.
6.2 Adjustment of and Changes In Capitalization.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares covered by each
outstanding option, and the number of Shares which have been
authorized for issuance under the Plan but as to which no options have
yet been granted, as well as the price per Share covered by each
outstanding option, shall be proportionately adjusted for any increase
or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, recapitalization,
combination or reclassification of the Shares, or any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have
been "effected without receipt of consideration." Such adjustment
shall be made by the Board of Directors, whose determination in that
respect shall be final, binding, and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an option.
(b) Dissolution, Liquidation, Sale, or Merger. In the event of a
proposed dissolution or liquidation of the Company, options
outstanding under the Plan shall terminate immediately before the
consummation of such proposed action. The Board will, in such
circumstances, provide written notice to the optionees of the expected
dates of termination of outstanding options and consummation of the
proposed dissolution or liquidation.
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<PAGE>
Appendix C
In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into
another corporation in a transaction in which the Company is not the
surviving corporation, outstanding options may be assumed or
equivalent options may be substituted by the successor corporation (or
a parent or subsidiary of the successor corporation), unless the
successor corporation does not agree to assume the options or to
substitute equivalent options. If outstanding options are not assumed
or substituted by equivalent options, all outstanding options shall
terminate immediately before the consummation of the sale or merger
(subject to the actual consummation of the sale or merger) and the
Company shall provide written notice to the optionees of the expected
dates of termination of the options and consummation of the
transaction. If the transaction is not consummated, unexercised
options shall continue in accordance with their original terms.
(c) Notice of Adjustments, Fractional Shares. To the extent the
foregoing adjustments relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose determination
in that respect shall be final, binding, and conclusive. No right to
purchase fractional shares shall result from any adjustment in options
pursuant to this Section 6.2. In case of any such adjustment, the
shares subject to the option shall be rounded down to the nearest
whole share. Notice of any adjustment shall be given by the Company to
each holder of an option which was in fact so adjusted and the
adjustment (whether or not notice is given) shall be effective and
binding for all purposes of the Plan.
No adjustment shall be made for dividends or other rights for which
the record date is prior to the date of such issuance, except as
provided in this Section 6.2.
Any issue by the Company of shares of stock of any class, or
securities convertible into shares of any class, shall not affect the
number or price of Shares subject to the option, and no adjustment by
reason thereof shall be made. The grant of an option pursuant to the
Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its
capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its
business or assets.
6.3 Transfer of Control. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company:
(a) the acquisition of direct or indirect ownership of stock by any
person, entity or group of persons or entities acting in concert
possessing more than a majority of the beneficial interest in the
voting stock of the Company;
(b) the direct or indirect sale or exchange by the stockholders of the
Company of all or substantially all of the stock of the Company where
the stockholders of the Company before such sale or exchange do not
retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or
exchange;
(c) a merger or consolidation where the stockholders of the Company
before such merger or consolidation do not retain, directly or
indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such merger or consolidation;
(d) the sale, exchange, or transfer of all, or substantially all, of
the assets of the Company other than a sale, exchange, or transfer to
one (1) or more subsidiary of the Company; or
C-11
<PAGE>
Appendix C
(e) a liquidation or dissolution of the Company. For purposes of the
foregoing, if a group of persons or entities begins to act in concert,
and if such group meets the beneficial ownership requirements set
forth in clause (a) above, then such acquisition shall be deemed to
have occurred on the date the Company first becomes aware of such
group or its actions.
(f) a Stock Option Agreement may, in the discretion of the Board,
provide for accelerated vesting in the event of a Transfer of Control.
In the event of a Transfer of Control, the surviving, continuing,
successor, or purchasing corporation or parent corporation thereof, as
the case may be (the "Acquiring Corporation"), shall either assume the
Company's rights and obligations under outstanding stock option
agreements or substitute options for the Acquiring Corporation's stock
for such outstanding Options. In the event the Acquiring Corporation
elects not to assume or substitute for such outstanding Options in
connection with the Transfer of Control, any unexercisable and/or
unvested shares subject to such outstanding stock option agreements
shall be immediately exercisable and fully vested as of the date
thirty (30) days prior to the proposed effective date of the Transfer
of Control. The exercise and/or vesting of any Option that was
permissible solely by reason of this Section 6.3 shall be conditioned
upon the consummation of the Transfer of Control. Any Options which
are neither assumed or substituted for by the Acquiring Corporation in
connection with the Transfer of Control nor exercised as of the date
of the Transfer of Control shall terminate and cease to be outstanding
effective as of the date of the Transfer of Control.
6.4 Options Non-Transferable. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be assignable
or transferable by the Optionee, except by will or by the laws of descent and
distribution. In addition, in order for Shares acquired upon exercise of
Incentive Stock Options to receive the tax treatment afforded such Shares, the
Shares may not be disposed of within two years from the date of the option grant
nor within one year after the date of transfer of such Shares to the optionee.
6.5 Termination or Amendment of Plan or Options. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan or any
Option at any time; provided, however, that without the approval of the
Company's stockholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
Section 6.2 above), (b) no change in the class eligible to receive Incentive
Stock Options, and (c) no expansion in the class eligible to receive
nonqualified stock options. In addition to the foregoing, the approval of the
Company's stockholders shall be sought for any amendment to the Plan for which
the Board deems stockholder approval necessary in order to comply with Rule
16b-3. In any event, no amendment may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such amendment is required to enable an Option designated as an Incentive
Stock Option to qualify as an Incentive Stock Option.
The Plan, unless sooner terminated, shall terminate on December 14, 2006,
seven (7) years from the date the Plan was originally adopted by the Board. An
option may not be granted under the Plan after the Plan is terminated.
6.6 Information to Optionees. The Company shall provide to each Optionee
during the period for which he or she has one or more outstanding options,
copies of all annual reports and all other information which is provided to
shareholders of the Company. The Company shall not be required to provide such
information to key employees whose duties in connection with the Company assure
their access to equivalent information.
6.7 Privileges of Stock Ownership, Securities Law Compliance. No Optionee
shall be entitled to the privileges of stock ownership as to any Shares not
actually issued and delivered to the Optionee. The exercise of any option under
the Plan shall be conditioned upon the registration of the Shares with the SEC
and qualification of the options and underlying Shares under the California
securities laws, unless in the opinion of counsel to the Company registration or
qualification is not necessary. The Company shall diligently endeavor to comply
with all applicable securities laws before any options are granted under the
Plan and before any Shares are issued pursuant to the exercise of such options.
C-12
<PAGE>
Appendix C
6.8 Limitation of Rights.
(a) No Right to an Option. Nothing in the Plan shall be construed to
give any employee or any nonemployee director of the Company any right
to be granted an option.
(b) No Employment Rights. Neither the Plan nor the granting of an
option nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express
or implied, that the Company will employ or continue the Board
membership of an optionee for any period of time, or in any position,
or at any particular rate of compensation.
6.9 Limitations on Number of Shares. At no time shall the total number of
shares issuable upon exercise of all outstanding options and the total number of
shares called for under the Plan exceed a number of shares which is equal to 30%
of the then outstanding shares of the Company.
ARTICLE 7
---------
MISCELLANEOUS PROVISIONS
------------------------
7.1 Effective Date of Plan. The Plan will become effective upon approval by
the Company's shareholders within twelve (12) months of the date the Plan is
adopted by the Company's Board of Directors. Options may be granted under the
Plan at any time after the Plan becomes effective and before the termination of
the Plan.
7.2 Indemnification. To the extent permitted by applicable law in effect
from time to time, no member of the Board or the Committee shall be liable for
any action or omission of any other member of the Board or Committee nor for any
act or omission on the member's own part, excepting only the member's own
willful misconduct or gross negligence. The Company shall pay expenses incurred
by, and satisfy a judgment or fine rendered or levied against, a present or
former director or member of the Committee in any action against such person
(whether or not the Company is joined as a party defendant) to impose liability
or a penalty on such person for an act alleged to have been committed by such
person while a director or member of the Committee arising with respect to the
Plan or administration thereof or out of membership on the Committee or by the
Company, or all or any combination of the preceding; provided the director or
Committee member was acting in good faith, within what such director or
Committee member reasonably believed to have been within the scope of his or her
employment or authority and for a purpose which he or she reasonably believed to
be in the best interests of the Company or its shareholders. Payments authorized
hereunder include amounts paid and expenses incurred in settling any such action
or threatened action. This section does not apply to any action instituted or
maintained in the right of the Company by a shareholder or holder of a voting
trust certificate representing shares of the Company. The provisions of this
section shall apply to the estate, executor, administrator, heirs, legatees or
devisees of a director or Committee member, and the term "person" as used in
this section shall include the estate, executor, administrator, heirs, legatees
or devisees of such person.
7.3 Withholding. The Company shall have the right to condition the issuance
of Shares upon exercise of an option upon payment by the optionee of any
applicable taxes required to be withheld under federal, state or local tax laws
or regulations in connection with the exercise. To the extent permitted in an
optionee's stock option agreement, an optionee may elect to pay such tax by (i)
requesting the Company to withhold a sufficient number of Shares from the total
number of Shares issuable upon exercise of the option or (ii) delivering a
sufficient number of Shares which have been held by the optionee for at least
six (6) months (or such other period as the Committee may require) to the
Company. This election is subject to approval or disapproval by the Committee.
The value of Shares withheld or delivered shall be the fair market value of the
Shares on the date the exercise becomes taxable as determined by the Committee.
C-13
<PAGE>
Appendix C
7.4 Further Assurances. All parties to this Plan agree to perform any and
all further acts and to execute and deliver any documents that may reasonably be
necessary to carry out the provisions of this Plan.
7.5 Attorneys' Fees. In any legal action or other proceeding brought by any
party to enforce or interpret the terms of this Plan, the prevailing party shall
be entitled to recover reasonable attorneys' fees and costs.
7.6 Governing Law. The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the Code or the
securities laws of the United States, shall be governed by the law of the State
of California.
7.7 Notices. Any written notice to the Company required by any of the
provisions of the Plan shall be addressed to the chief personnel officer or to
the chief executive officer of the Company, and shall become effective when it
is received by the office of the chief personnel officer or the chief executive
officer.
7.8 Entire Agreement. This Plan, together with those documents that are
referenced in the Plan, are intended to be the final, complete, and exclusive
statement of the terms of the agreement between Employee and the Company with
regard to the subject matter of this Plan. This Agreement supersedes all other
prior agreements, communications, and statements, whether written or oral,
express or implied, pertaining to that subject matter. This Plan may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements, oral or written, and may not be explained or supplemented by
evidence of consistent additional terms. This Plan does not effect the terms and
conditions of any options granted by the Company prior to the date of adoption
of this Plan by the Board of Directors.
7.9 Successors and Assigns. Optionee agrees that he will not assign, sell,
transfer, delegate, or otherwise dispose of, whether voluntarily or
involuntarily, or by operation of law, any rights or obligations under this
Plan, except as expressly permitted by this Plan. Any such purported assignment,
sale, transfer, delegation, or other disposition shall be null and void. Subject
to the limitations set forth in this Plan, the Plan shall be binding on and
inure to the benefit of the successors and assigns of the Company and any
successors and permitted assigns of Employee, including any of his executors,
administrators, or other legal representatives. It shall not benefit any person
or entity other than those specifically enumerated in this Agreement.
7.10 Severability. If any provision of this Plan, or its application to any
person, place, or circumstance, is held by an arbitrator or a court of competent
jurisdiction to be invalid, unenforceable, or void, that provision shall be
enforced to the greatest extent permitted by law, and the remainder of this
Agreement and of that provision shall remain in full force and effect as applied
to other persons, places, and circumstances.
7.11 Interpretation. This Plan shall be construed as a whole, according to
its fair meaning, and not in favor of or against any party. By way of example
and not in limitation, this Plan shall not be construed in favor of the party
receiving a benefit nor against the party responsible for any particular
language in this Plan. Captions are used for reference purposes only and should
be ignored in the interpretation of the Plan. Unless the context requires
otherwise, all references in this Plan to Paragraphs are to the paragraphs of
this Plan.
The undersigned hereby certify that the foregoing Amended 1999 Stock Option
Plan was duly adopted and approved by the Board of Directors on June 5, 2000.
------------------------------ -----------------------------------
Allen D. Hardman Dennis McGrory
President and CEO Secretary
C-14
<PAGE>
ZIASUN TECHNOLOGIES, INC.
PROXY
--------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors, as Proxies, each
with the power to appoint his or her substitute, and hereby authorizes them to
represent and to vote ALL of the shares of the common stock of ZiaSun
Technologies, Inc., standing in the name of the undersigned at the ANNUAL
Meeting of SHAREHOLDERS to be held on November 3, 2000, and upon such other
matters as may properly come before the meeting. Any prior proxy or voting
instructions are hereby revoked.
The Directors Recommend a vote FOR Proposals 1, 2, 3 and 4.
1. Election of Directors: The Election of Allen D. Hardman, D. Scott Elder,
Ross W. Jardine, Hans Von Meiss and Christopher D. Outram, as Directors of
the Company to serve for a term of one (1) year until the next annual
meeting of shareholders or until their successor is duly appointed and
qualified.
FOR all nominees (except as WITHHOLD AUTHORITY
marked to the contrary above) [ ] to vote for all nominees [ ]
If withholding authority for a specific nominee please cross a line through
said directors name above.
2. The proposal to amend the Company's Articles of Incorporation to increase
the number of common shares which the company is authorized to issue to
250,000,000 shares of Common Stock, $0.001 par value.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the adoption of the Restated Bylaws.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approved the adoption of the 1999 Stock Option Plan, as amended.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
--------------------------------------------------------------------------------
PROXY/VOTING INSTRUCTIONS
Annual Meeting of Shareholders - November 3, 2000
The shares represented by this proxy will be voted as directed by the
Shareholder. If no specification is made, the shares will be voted FOR ALL
proposals. When signing as attorney, executor, administrator, trustee or
guardian, give full title as such, and when stock has been issued in the names
of two or more persons, all should sign unless evidence of authority to sign on
behalf of the others is attached.
Shares Represented by Proxy: _____________________
Dated: ________________________________
-------------------------------- ----------------------------------
Signatures Signatures
-------------------------------- ----------------------------------
Name of Shareholder Name of Shareholder
PLEASE RETURN ALL PROXIES TO: ZIASUN TECHNOLOGIES, INC.
462 Stevens Avenue
Suite 106
Solana Beach, California 92075
