<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
[Amendment No. ____]
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Clearworks Technologies, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1. Title of each class of securities to which transaction
applies:
Not Applicable
--------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
Not Applicable
--------------------------------------------------------------
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):
Not Applicable
--------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
Not Applicable
--------------------------------------------------------------
5. Total fee paid:
Not Applicable
--------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid: Not Applicable
-------------------------------------
2. Form, Schedule or Registration Statement No.: Not Applicable
---------------
3. Filing Party: Not Applicable
-----------------------------------------------
4. Date Filed: Not Applicable
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<PAGE>
CLEARWORKS TECHNOLOGIES, INC.
2450 FONDREN, SUITE 200
HOUSTON, TEXAS 77063
(713) 334-2595
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD _____, 2000
The Annual Meeting Of Stockholders of ClearWorks Technologies, Inc.
(the "Company") will be held on _____, 2000 at ______ a.m. (local time) at
___________________________, Houston, Texas, for the following purposes:
1. To elect a Board Of Directors consisting of three Directors.
2. To consider a proposal to amend our Certificate Of
Incorporation to change the name of our Company to ClearWorks.net, Inc.
2. To consider a proposal recommended by the Board Of Directors
to approve our 1999 Long-Term Incentive Plan.
4. To consider and vote upon a proposal recommended by the Board
Of Directors to ratify the selection of KPMG LLP to serve as our independent
certified accountants.
5. To transact any other business that properly may come before
the annual meeting.
Only the stockholders of record as shown on our transfer books at
the close of business on March __, 2000 are entitled to notice of, and to
vote at, the annual meeting.
All stockholders, regardless of whether they expect to attend the
meeting in person, are requested to complete, date, sign and return promptly
the enclosed form of proxy in the accompanying envelope (which requires no
postage if mailed in the United States). The person executing the proxy may
revoke it by filing with the Secretary of the Company an instrument of
revocation or a duly executed proxy bearing a later date, or by electing to
vote in person at the annual meeting.
ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE
ANNUAL MEETING.
By the Board Of Directors
Michael T. McClere
Chief Executive Officer
Houston, Texas
March __, 2000
<PAGE>
PROXY STATEMENT
CLEARWORKS TECHNOLOGIES, INC.
2450 FONDREN, SUITE 200
HOUSTON, TEXAS 77063
(713) 334-2595
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD _____, 2000
This proxy statement is provided in connection with the solicitation
of proxies by the Board Of Directors of ClearWorks Technologies, Inc., a
Delaware corporation (the "Company"), to be voted at the Annual Meeting Of
Stockholders to be held at ______ a.m. (local time) on _____, 2000 at
_______________________________, Houston, Texas, or at any adjournment or
postponement of the annual meeting. We anticipate that this proxy statement
and the accompanying form of proxy will be first mailed or given to
stockholders on or about March __, 2000.
The shares represented by all proxies that are properly executed and
submitted will be voted at the Annual Meeting in accordance with the
instructions indicated on the proxies. Unless otherwise directed, the shares
represented by proxies will be voted (1) for each of the three nominees for
director whose names are set forth on the proxy card, (2) in favor of the
amendment of our Certificate Of Incorporation to change the name of our
Company to ClearWorks.net, Inc., (3) in favor of adoption of the 1999
Long-Term Incentive Plan, and (4) in favor of ratification of KPMG LLP as our
independent certified accountants.
A stockholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of revocation to our Secretary, by
substituting a new proxy executed at a later date, or by requesting, in
person at the annual meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail;
however, following the initial solicitation, further solicitations may be
made by telephone or oral communication with stockholders. Our officers,
directors and employees may solicit proxies, but these persons will not
receive compensation for that solicitation other than their regular
compensation as employees. Arrangements also will be made with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to beneficial owners of the shares held of record by those persons.
We may reimburse those persons for reasonable out-of-pocket expenses incurred
by them in so doing. We will pay all expenses involved in preparing,
assembling and mailing this proxy statement and the enclosed material. A
majority of the issued and outstanding shares of common stock entitled to
vote, represented either in person or by proxy, constitutes a quorum at any
meeting of the stockholders. If sufficient votes for approval of the matters
to be considered at the annual meeting have not been received prior to the
meeting date, we intend to postpone or adjourn the annual meeting in order to
solicit additional votes. The form of proxy we are soliciting requests
authority for the proxies, in their discretion, to vote the stockholders'
shares with respect to a postponement or adjournment of the annual meeting.
At any postponed or adjourned meeting, we will vote any proxies received in
the same manner described in this proxy statement with respect to the
original meeting.
RECENT DEVELOPMENTS CONCERNING THE COMPANY
PRIVATE PLACEMENT OF SECURITIES
On December 13, 1999, we closed a private placement transaction with
Candlelight Investors LLC, a Delaware limited liability company. We refer to
this transaction as the "Private Placement".
In the Private Placement, we received from Candlelight a total of
$3,000,100 in exchange for $3,000,000 total face value 6% Convertible
Debentures (the "Debentures") together with warrants to
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purchase up to 210,000 shares of common stock (the "Warrants"). The Warrants
are exercisable at $3.16 per share. The Debentures are convertible at the
lower of $3.30 per share or 92 percent of the average of the three lowest
closing bid prices (the "Average Lowest Closing Price") for our common stock
during the 30 days immediately preceding conversion. However, if the Average
Lowest Closing Price is less than $1.50 per share, then the conversion price
of the Debentures shall be equal to the Average Lowest Closing Price without
modification. We also gave Candlelight the right to acquire, upon total
payment to us of $2,000,000, an additional $2,000,000 face value Debentures
and additional Warrants to purchase up to 140,000 shares of common stock. We
registered resales of the common stock underlying all Debentures and Warrants
that have been or may be issued to Candlelight
In connection with the Private Placement, we also agreed not to sell
our securities until July 4, 2000 unless the securities are (1) issued in
connection with a public offering of at least $15 million, (2) in connection
with an acquisition of additional businesses or assets, or (3) as
compensation to employees, consultants, officers or directors.
ACQUISITION OF ADDITIONAL SUBSIDIARIES
On December 30, 1999, we acquired all the outstanding stock of two
Texas corporations, United Computing Group, Inc. and United Consulting Group,
Inc. (collectively referred to as "UCG"). Both companies became wholly owned
subsidiaries of ClearWorks Integration. UCG provides Internet consulting,
design, and implementation, including the sale, installation and integration
of computer hardware equipment, as well as information technology and
staffing. This type of business is typically referred to in the technology
industry as an accelerator company. We paid 2,000,000 shares of common stock
for the purchase of UCG. In addition, we provided UCG a $500,000 loan, the
proceeds of which were used to repay loans to UCG made by former shareholders
of UCG. The funding for the cash portion of this acquisition was derived from
funds raised in the Private Placement.
FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our financial statements for the year ended December 31, 1998 are
included in our General Form For Registration Of Securities on Form 10-SB/A-3
and are incorporated into this proxy statement by reference. Our unaudited
financial statements for the nine months ended September 30, 1999 are
included in our Form 10-QSB for the quarter ended September 30, 1999 and are
incorporated into this proxy statement by reference. Each of these reports
also includes a Management's Discussion And Analysis Of Financial Condition
And Results Of Operations for the respective periods covered by the Reports.
Copies of these reports are being sent to each stockholder with this proxy
statement.
OFFICES AND CONTACT INFORMATION
Our main offices are located at 2450 Fondren, Suite 200, Houston,
Texas 77063. The telephone number is (713) 334-2595, our fax number is (713)
334-6565 and our web site is www.clearworks.net.
1. ELECTION OF DIRECTORS
At the annual meeting, the stockholders will elect three directors
to serve as our Board Of Directors. Each director will be elected to hold
office until the next annual meeting of stockholders and thereafter until his
successor is elected and qualified. The affirmative vote of a majority of the
shares represented at the annual meeting is required to elect each director.
Cumulative voting is not permitted in the election of directors.
Consequently, each stockholder is entitled to one vote for each share of
common stock held in his or her name. In the absence of instructions to the
contrary, the person named in the accompanying proxy shall vote the shares
represented by that proxy for the persons named below as management's
nominees for
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directors. Each of the nominees currently is a director of the Company.
Each of the nominees has consented to be named in this proxy
statement and to serve on the Board if elected. It is not anticipated that
any of the nominees will become unable or unwilling to accept nomination or
election, but, if that should occur, the persons named in the proxy intend to
vote for the election of such other person as the Board Of Directors may
recommend.
The following table sets forth, with respect to each nominee for
director, the nominee's age, his positions and offices with the Company, the
expiration of his term as a director, and the year in which he first became a
director. Individual background information concerning each of the nominees
follows the table. For additional information concerning the nominees,
including stock ownership and compensation, see "--Executive Compensation",
"--Stock Ownership Of Directors And Principal Stockholders", and "--Certain
Transactions With Management And Principal Stockholders".
<TABLE>
<CAPTION>
Position With Expiration Of Initial Date
Name Age the Company Term as Director as Director
---- --- ----------- ---------------- ------------
<S> <C> <C> <C> <C>
Michael T. McClere 39 Chairman of the Board and 2000 Annual Meeting March 1998
Chief Executive Officer
Raymond G. Harrell III 37 Director 2000 Annual Meeting January 2000
Dennis Majeski 54 Director 2000 Annual Meeting January 2000
</TABLE>
MICHAEL T. MCCLERE. Mr. McClere is our Chairman of the Board, Chief
Executive Officer and a director. Prior to joining us, Mr. McClere had been
involved in several businesses in the information technology (IT) area,
serving on the board of directors and as chief executive officer. Mr. McClere
has been involved in the purchasing of numerous businesses, as well as
selling businesses that he had assisted in the development. Mr. McClere's
business background includes all aspects of the development and
implementation of information technology businesses. Mr. McClere has also
assisted in the development and implementation of major technology
deployments for NASA in various space centers throughout the world. As a
consultant on information systems, Mr. McClere assisted Lockheed Engineering
& Sciences Company from May 1988 to October 1990, SAE, Inc. from May 1984 to
May 1988, and Baker Hughes from May 1979 to May 1984. Mr. McClere has over
seventeen years experience in the information technology field. He received a
BS in Computer Science from The University of Houston-University Park in 1988.
Mr. McClere is not a director of any other entity that has
securities registered under the Securities Exchange Act of 1934.
RAYMOND G. HARRELL III, age 37, has been a director of our company
since January 2000. Mr. Harrell currently is employed by Continental Airlines
as a Director of International Schedules and has been employed by Continental
Airlines since September 1987. He attended the University of Houston and in
1985 earned a Bachelor of Science degree in Industrial Distribution.
Mr. Harrell is not a director of any other entity that has securities
registered under the Securities Exchange Act of 1934.
DENNIS MAJESKI, age 54, has been a director of our company since
January 2000. He has been involved in the information technology field for
over 25 years. Mr. Majeski currently is employed by Alcatel, Inc. as a
Territory Manager and has been employed by Alcatel (formerly known as Xylan)
for two years. His business background includes all aspects of the
development and implementation of information technology. He was employed by
Milky Way Networks, Inc. from 1996 to 1997, Luxcom, Inc. from 1991 to 1996,
and AT&T from 1970 to 1982. He attended the University of Nebraska (1968 to
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<PAGE>
1974) and the Longview College (1974 to 1976).
Mr. Majeski is not a director of any other entity that has
securities registered under the Securities Exchange Act of 1934.
OTHER EXECUTIVE OFFICERS
SHANNON D. MCLEROY. Mr. McLeroy serves as our President and
Secretary. Mr. McLeroy has been in the systems integration business for over
ten years. He has worked beginning as a technician and has progressed through
various stages of management. Mr. McLeroy has managed teams of engineers to
deploy technical computer services with the last three companies with which
he has worked. Mr. McLeroy was solely responsible for managing and putting
together a team of computer professionals to run a major portion of Exxon
USA's network. This network was responsible for delivering key financial and
business data to enable Exxon to perform its business.
CARL A. CHASE. Mr. Chase is our Chief Financial Officer and the
Treasurer. Mr. Chase is responsible for managing the finance, accounting,
tax, treasury, investor relations and risk management functions. Prior to
joining us, Mr. Chase was Vice President-Finance and Chief Financial Officer
of Bannon Energy Incorporated, a privately owned energy company involved in
the exploration for and production of oil, natural gas and natural gas
liquids from December 1992 to August 1999. At Bannon, Mr. Chase was
responsible for the financial and administrative functions including
financial reporting, investor relations, liaison with financial institutions,
financing for capital programs, product price hedging and risk management.
Mr. Chase has 24 years experience in the areas of finance, accounting and
administration, primarily in the oil and gas industry. He has held various
positions with both major and independent oil and gas companies. In those
positions, Mr. Chase was responsible for SEC reporting and compliance,
obtaining financing for capital programs, mergers and acquisitions, budgeting
and forecasting and policies, procedures and internal controls. Mr. Chase
received a Bachelor of Accountancy degree from the University of Oklahoma in
1975.
Each of the officers serves at the pleasure of the Board Of
Directors. There are no family relationships among our officers and directors.
BOARD AND COMMITTEE MEETINGS
The Board Of Directors met four times during the fiscal year ended
December 31, 1999 and all directors were present at each of those meetings.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), requires our directors, executive officers and beneficial owners of
more than 10% of our common stock to file with the SEC initial reports of
ownership and reports of changes in ownership of our common stock and other
equity securities. We believe that during the year ended December 31, 1999,
our officers, directors and beneficial owners of more than 10% of our common
stock complied with all Section 16(a) filing requirements, except that three
persons were late in filing their initial statements of beneficial ownership
on Form 3, which forms were required to be filed no later than 10 days after
we became subject to Section 16(a). The persons who were late in filing Forms
3 were: Michael T. McClere, our Chief Executive Officer, Chairman Of The
Board and a beneficial owner of more than 10% of our common stock; Shannon D.
McLeroy, our President and Secretary; and Carl A. Chase, our Chief Financial
Officer and Treasurer.
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<PAGE>
In making these statements concerning compliance with Section 16(a),
we have relied upon the written representations of our directors and officers
and our review of the copies of beneficial ownership statements of changes
filed with us by our officers and directors.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth in summary form the compensation
received during each of the last three successive completed fiscal years by
Michael T. McClere, our Chief Executive Officer and Chairman Of The Board and
Shannon D. McLeroy, our President and Secretary. None of our other executive
officers received total salary and bonus exceeding $100,000 during any of the
last three completed years. Carl A. Chase, our Chief Financial Officer and
Treasurer, is earning an annual salary of $108,000 for 2000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
Other Annual Restricted LTIP All Other
Name and Fiscal Year Salary Bonus Compensation Stock Awards Options Payouts Compensation
Principal Position ($)(1) ($)(2) ($)(3) ($) (#) ($)(4) ($)(5)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael T. McClere, 1999 $144,792 -0- -0- -0- 500,000 (6) -0- -0-
Chief Executive Officer 1998 (7)(8) $ 78,125 -0- -0- -0- -0- -0- -0-
and Chairman Of The 1997 $ -0- -0- -0- -0- -0- -0- -0-
Board
- ----------------------------------------------------------------------------------------------------------------------------------
Shannon D. McLeroy, 1999 $104,792 -0- -0- -0- 500,000 (6) -0- -0-
President and Secretary 1998 (7) $ 73,375 -0- -0- -0- -0- -0- -0-
1997 $ 11,250 -0- -0- -0- -0- -0- -0-
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The dollar value of base salary (cash and non-cash) received
during the year indicated.
(2) The dollar value of bonus (cash and non-cash) received during
the year indicated.
(3) During the period covered by the Summary Compensation Table,
we did not pay any other annual compensation not properly
categorized as salary or bonus, including perquisites and
other personal benefits, securities or property.
(4) Except for our 1999 Long-Term Incentive Plan and 1998 Stock
Warrant Plan, we do not have in effect any plan that is
intended to serve as incentive for performance to occur over a
period longer than one fiscal year.
(5) All other compensation received that we could not properly
report in any other column of the Summary Compensation Table
including annual contributions or other allocations to vested
and unvested defined contribution plans, and the dollar value
of any insurance premiums paid by us on our behalf with
respect to term life insurance for the benefit of the named
executive officer, and the full dollar value of the remainder
of the premiums paid by us on our behalf.
(6) These options were granted in accordance with our 1999
Long-Term Incentive Plan. For additional information regarding
this plan, please see below "-1999 Long-Term Incentive Plan".
(7) As part of our April 1998 recapitalization with Southeast, a
Stock Warrant Plan dated April 24, 1998 was executed by the
former management of Southeast in conjunction with the
Agreement for Purchase of Common Stock dated April 1, 1998 and
Addendum to Agreement for Purchase of Common Stock dated April
24, 1998. In the Addendum to Agreement for Purchase of Common
Stock, the management of Southeast agreed to issue warrants to
each of the stockholders of Southeast in amounts proportionate
to their stockholdings in Southeast. The names of the
stockholders and the number of warrants issued to each are set
forth below. Although Mr. McLeroy, Mr. McClere and entities
related to Mr. McClere each received warrants in this
transaction, we did not recognize issuance of the warrants to
be compensation to either Mr. McLeroy or Mr. McClere because
the warrants were exchanged for equity interests owned by each
of the persons or entities named below:
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<TABLE>
<CAPTION>
Name: Warrant Class Amount
----- ------------- ------
<S> <C> <C>
Shannon D. McLeroy A 300,000
B 300,000
Michael T. McClere A 210,000
B 210,000
Tech Technologies Services LLC* A 240,000
B 240,000
Rachel McClere 1998 Trust A 50,000
B 50,000
McClere Family Trust A 200,000
B 200,000
</TABLE>
---------------------------
* Celia Figueroa is the General Manager of Tech Technologies
Services LLC and therefore may be considered a beneficial owner of the
warrants held in the name of Tech Technologies. At the time of the
transaction described above, Ms. Figueroa was Secretary and General
Counsel of the Company. Also, as described below in "-- Stock Ownership
Of Directors And Principal Officers", Michael T. McClere owns 90% of
the outstanding equity interests in Tech Technologies and also may be
considered to be a beneficial owner of the warrants held in the name of
Tech Technologies.
For a description of the Class A and Class B warrants, see "Description
of Securities - Warrants".
(8) From January 1, 1998 to March 31, 1998, we engaged Tech Technologies as
a consultant pursuant to a consulting agreement that provided that Tech
Technologies would provide financial and managerial consulting services
to us in exchange for $10,000 per month. During that period, Michael T.
McClere was the General Manager of Tech Technologies. Effective April
1, 1998 the consulting agreement with Tech Technologies was terminated
and Mr. McClere became an employee of our company.
OPTION GRANTS TABLE
The following table sets forth information concerning individual grants
of stock options made during the fiscal year ended December 31, 1999 to each
person named above in the Summary Compensation Table.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
% of Total Options
Options Granted to Employees Exercise or Base Expiration
Name Granted (#) in Fiscal Year Price ($/Share) Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael T. McClere 500,000 17.4% $2.00/Share 12/09/04
- -------------------------------------------------------------------------------------------------------------
Shannon D. McLeroy 500,000 17.4% $2.00/Share 12/09/04
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The options described above were issued pursuant to our 1999 Long Term
Incentive Plan and will become exercisable only upon approval of that plan by
our stockholders as described below in "-Long Term Incentive Plan". The
options are shown in this table and also in the Summary Compensation Table
under "Long Term Compensation Awards Options".
LONG-TERM INCENTIVE PLAN
On May 12, 1999, the Long-Term Incentive Plan (the "1999 Plan") was
adopted by our Board Of Directors. Pursuant to the 1999 Plan, an aggregate of
10,000,000 shares of common stock may be granted to our employees, or
employees of our subsidiaries, who have contributed or are contributing to
our success. Alternatively, options to purchase common stock, stock
appreciation rights or cash may be granted instead of outright awards of
stock. In order to become and remain fully effective, the 1999 Plan must be
approved by our stockholders on or before May 12, 2000. The 1999 Plan is
subject to approval by our stockholders at the annual meeting, and no shares
may be issued pursuant to the 1999 Plan unless
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and until it is approved by the stockholders. The options that may be granted
pursuant to the 1999 Plan may be either incentive options qualifying for
beneficial tax treatment for the recipient or nonqualified options. The 1999
Plan currently is administered by the Board Of Directors. Administration of
the 1999 Plan includes determination of the terms of options granted under
the 1999 Plan. At February 17, 2000, options to purchase 3,017,500 shares
were outstanding under the 1999 Plan and options to purchase 6,982,500 shares
were available to be granted pursuant to the 1999 Plan. For additional
information regarding the 1999 Plan, see below "2. Proposal To Adopt 1999
Long-Term Incentive Plan".
On December 9, 1999, options to purchase 500,000 shares of our
common stock were granted to each of Michael T. McClere and Shannon McLeroy
pursuant to the 1999 Plan. Upon stockholder approval of the 1999 Plan, these
options will then be exercisable at a price of $2.00 per share and all of the
options will expire on December 9, 2004. Also on December 9, 1999, options to
purchase 400,000 shares for $.25 per share were granted to Carl Chase
pursuant to the 1999 Plan. Mr. Chase's options also expire on December 9,
2004. Upon stockholder approval of the 1999 Plan, options held by Mr. Chase
to purchase 100,000 shares will then be exercisable and options to purchase
100,000 shares will become exercisable on each of August 16, 2001, August 16,
2002 and August 16, 2003. The options issued to each of Messrs. McClere and
McLeroy also are included above in both the Summary Compensation Table and
the Option Grants Table.
STOCK WARRANT PLAN
Effective as of April 24, 1998, Southeast instituted a Stock Warrant
Plan (the "Warrant Plan"). After the merger of Southeast into our company on
May 12, 1998, the Warrant Plan continued to be effective as our stock warrant
plan. Pursuant to the Warrant Plan, we may issue warrants to purchase common
stock, including Class A Warrants or Class B Warrants, to key employees,
directors, and other persons who have contributed or are contributing to our
success. Each Class A or Class B Warrant allows the holder to purchase one
share of common stock. The maximum number of shares underlying all warrants
that may be granted pursuant to the Warrant Plan is limited to 5,000,000
shares. The Warrant Plan is administered by the Board Of Directors. At
February 17, 2000, Class A Warrants to purchase 1,000,000 shares and Class B
Warrants to purchase 1,000,000 shares were outstanding under the Warrant
Plan, additional warrants to purchase 1,010,000 shares also were outstanding
under the Warrant Plan, and warrants to purchase 1,990,000 shares were
available to be granted pursuant to the Warrant Plan.
COMPENSATION OF OUTSIDE DIRECTORS
Members of our Board Of Directors, regardless of whether employed by
us, are not compensated for meeting attendance or otherwise, but are entitled
to reimbursement for travel expenses. We do not pay additional amounts for
committee participation or special assignments of the Board Of Directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
Currently, there are no written employment contracts with respect to
any of our officers and no compensatory plan or arrangement that results or
will result from the resignation, retirement, or any other termination of an
executive officer's employment or from a change in control of our company or
a change in an executive officer's responsibilities following a change in
control.
STOCK OWNERSHIP OF DIRECTORS AND PRINCIPAL STOCKHOLDERS
As of February 17, 2000, there were 20,894,957 shares of common
stock outstanding. The following table sets forth information as of that date
with respect to the beneficial ownership of common stock by each director and
nominee for director, by all executive officers and directors as a group, and
by each other person known by us to be the beneficial owner of more than five
percent of the common stock:
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<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned (1) Shares Outstanding
------------------- ---------------------- ------------------
<S> <C> <C>
Michael T. McClere 6,103,699 (2) 26.8%
2450 Fondren, Suite 200
Houston, Texas 77063
Shannon D. McLeroy 2,875,625 (3) 13.1%
2450 Fondren, Suite 200
Houston, Texas 77063
Carl A. Chase 100,000 (4) *
2450 Fondren, Suite 200
Houston, Texas 77063
Raymond G. Harrell III 600 *
4335 Alysheba Lane
Friendswood, Texas 77546
Dennis Majeski 1,000 *
25227 Grogan's Mill Road, Suite 125
The Woodlands, Texas 77380
All Executive Officers and Directors as a 9,380,924 (2)(3)(4) 38.6%
group (five persons)
Tech Technologies Services LLC 1,980,000 (5) 9.3%
2450 Fondren, Suite 205
Houston, Texas 77063
</TABLE>
- ---------------------------------
*Less than one percent.
(1) "Beneficial ownership" is defined in the regulations promulgated by the
U.S. Securities and Exchange Commission as having or sharing, directly
or indirectly (A) voting power, which includes the power to vote or to
direct the voting, or (B) investment power, which includes the power to
dispose or to direct the disposition, of shares of the common stock of
an issuer. The definition of beneficial ownership includes shares
underlying options or warrants to purchase common stock, or other
securities convertible into common stock, that currently are
exercisable or convertible or that will become exercisable or
convertible within 60 days. Unless otherwise indicated, the beneficial
owner has sole voting and investment power.
(2) Includes options to purchase up to 500,000 shares of common stock at an
exercise price of $2.00 per share, which options will be exercisable
until December 9, 2004. These options were granted pursuant to the 1999
Plan and will become exercisable only upon approval of the 1999 Plan by
the stockholders. Also includes Class A warrants to purchase 210,000
shares of common stock held by Mr. McClere, Class A warrants to
purchase 50,000 shares held by the Rachel McClere 1998 Trust and Class
A warrants to purchase 200,000 shares held by the McClere Family Trust.
The Class A warrants currently are exercisable at an exercise price of
$3.00 per share until the warrants expire on April 24, 2003. Also
includes Class B warrants to purchase 210,000 shares of common stock
held by Mr. McClere, Class B warrants to purchase 50,000 shares held by
the Rachel McClere 1998 Trust and Class B warrants to purchase 200,000
shares held by the McClere Family Trust. The Class B warrants currently
are exercisable at an exercise price of $6.00 per share until the
warrants expire on April 24, 2008. Also includes 312,500 shares held by
the Rachel McClere 1998 Trust and 1,250,000 shares held by the McClere
Family Trust. Also includes 1,500,000 shares of common stock and
warrants to purchase 480,000 shares of common stock, all of which are
held by Tech Technologies Services LLC. Mr. McClere owns 90 percent of
the outstanding equity interests in Tech Technologies Services LLC. The
warrants held by Tech Technologies are described in footnote (5) below.
The securities held by Tech Technologies are included twice in the
table; they are listed as being held beneficially by both Mr. McClere
and Tech Technologies.
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<PAGE>
(3) Includes options to purchase up to 500,000 shares of common stock at an
exercise price of $2.00 per share, which options will be exercisable
until December 9, 2004. These options were granted pursuant to the 1999
Plan and will become exercisable only upon approval of the 1999 Plan by
the stockholders. Also includes immediately exercisable Class A
warrants to purchase 300,000 shares of common stock at an exercise
price of $3.00 per share until the warrants expire on April 24, 2003.
Also includes immediately exercisable Class B warrants to purchase
300,000 shares of common stock at an exercise price of $6.00 per share
until the warrants expire on April 24, 2008. Also includes 625 shares
held by Mr. McLeroy's wife.
(4) Includes options to purchase up to 100,000 shares of common stock until
December 9, 2004. Exercise of these options is subject to stockholder
approval of the 1999 Plan. On December 9, 1999, Mr. Chase was granted
options to purchase up to 400,000 shares for $.25 per share until
December 9, 2004. Upon receipt of stockholder approval, options to
purchase 100,000 of these shares will then be immediately exercisable,
and options to purchase 100,000 will become exercisable on each of
August 16, 2001, August 16, 2002 and August 16, 2003.
(5) Includes currently exercisable Class A warrants to purchase 240,000
shares of common stock at an exercise price of $3.00 per share until
the warrants expire on April 24, 2003. Also includes currently
exercisable Class B warrants to purchase 240,000 shares of common stock
at an exercise price of $6.00 per share until the warrants expire on
April 24, 2008. All of the securities indicated are included twice in
the table; they are listed as being held beneficially by both Michael
T. McClere and Tech Technologies Services LLC. Mr. McClere owns 90
percent of the outstanding equity interests in Tech Technologies.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND PRINCIPAL STOCKHOLDERS
During 1997, we borrowed $22,000 from Michael T. McClere with a note
due November 13, 1998 and borrowed an additional $30,000 from Mr. McClere
with a note due March 31, 1999. These notes were repaid during 1999. During
1999, we advanced to Mr. McClere an aggregate of $52,000. Mr. McClere has
advised us that he believes that substantially all of this amount will be
covered by actual expenses previously incurred by Mr. McClere on our behalf.
In connection with the transaction between Millennium Integration
Technologies, Inc. ("Millennium") and Southeast Tire Recycling, Inc., during
1998 a total of 1,312,500 shares of common stock were issued to Michael T.
McClere and 1,875,000 shares of common stock were issued to Shannon D.
McLeroy, who together were the principal stockholders of Millennium. We also
agreed to issue warrants to purchase 920,000 shares of stock to Mr. McClere
and his affiliates, warrants to purchase 600,000 shares of stock to Mr.
McLeroy and warrants to purchase 480,000 shares of stock to Tech Technologies
Services LLC. Mr. McClere is the beneficial owner of 90 percent of the
outstanding equity interests of Tech Technologies. The General Manager of
Tech Technologies is Celia Figueroa who was our General Counsel and Secretary
at the time of this transaction. One-half of the warrants were Class A
warrants and one-half were Class B warrants. For a description of the Class A
and Class B warrants, see "Description Of Securities - Warrants".
On December 13, 1999, we borrowed $150,000 from Michael T. McClere,
our Chairman Of The Board and Chief Executive Officer. This loan was
evidenced by a promissory note and bore interest at the rate of 12% per year
until we repaid it on January 10, 2000.
On December 9, 1999, options to purchase 500,000 shares of our
common stock were granted to each of Michael T. McClere and Shannon McLeroy
pursuant to the 1999 Plan. Upon stockholder approval of the 1999 Plan, these
options will be exercisable at a price of $2.00 per share and all of the
options will expire on December 9, 2004. Also on December 9, 1999, options to
purchase 400,000 shares for $.25 per share were granted to Carl Chase
pursuant to the 1999 Plan. Upon stockholder approval of the 1999 Plan, option
held by Mr. Chase to purchase 100,000 shares will then be exercisable and
options to purchase 100,000 shares will become exercisable on each of August
16, 2001, August 16, 2002 and August 16, 2003. Mr. Chase's options also
expire on December 9, 2004.
Except as described above, during the last two years there were no
transactions between us and our directors, executive officers or known
holders of greater than five percent of the common stock in
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<PAGE>
which the amount involved exceeded $60,000 and in which any of the foregoing
persons had or will have a material interest.
2. PROPOSAL TO ADOPT 1999 LONG-TERM INCENTIVE PLAN
The Board Of Directors has adopted, subject to stockholder approval,
our 1999 Long-Term Incentive Plan (the "1999 Plan"). The 1999 Plan will
terminate, and all options granted under the Plan will be void, if the Plan
is not approved by the stockholders on or before May 12, 2000.
Pursuant to the 1999 Plan, an aggregate of 10,000,000 shares of
common stock may be granted to our employees, or employees of our
subsidiaries, who have contributed or are contributing to our success.
Alternatively, options to purchase common stock, stock appreciation rights or
cash may be granted instead of outright awards of stock. The options that may
be granted pursuant to the 1999 Plan may be either incentive options
qualifying for beneficial tax treatment for the recipient or nonqualified
options.
The effect of the adoption of the 1999 Plan will be to make shares
available for issuance pursuant to stock awards under the 1999 Plan and to
increase the number of shares upon the exercise of options that may be
granted under all our stock option plans, which will allow us to grant more
options from time to time and thereby augment our program of providing
incentives to employees. The number of shares authorized to be issued
pursuant to the 1999 Plan is a maximum aggregate. Therefore, the number of
incentive options granted reduces the remaining number of options that can be
granted as non-qualified options; similarly, the number of non-qualified
options granted reduces the remaining number of option that can be granted as
incentive options. Likewise, the number of shares awarded outright reduces
the number of options that may be issued, and the number of options issued
reduces the number of shares available for awards of stock. There currently
are 72 employees eligible to receive incentive options, non-qualified options
or other awards pursuant to the 1999 Plan.
The 1999 Plan will be administered by an option committee which may
be composed of either the entire Board Of Directors or by a committee,
appointed by the Board Of Directors, of at least two directors. If the option
committee consists of less than the entire Board, each member of the
committee is required to be a "non-employee director" as defined in SEC
regulations. To the extent necessary for any option granted under the 2000
Plan to be considered as performance based compensation that is not subject
to limitations on deductibility under the Internal Revenue Code (the "Code"),
each member shall be an "outside director" as defined in the Code and related
regulations. A "non-employee director" is a director who (1) is not currently
an officer or employee of the Company or any of its subsidiaries; (2) does
not receive compensation from the Company in excess of $60,000 for services
rendered other than as a director; and (3) is not involved in any transaction
that is required to be disclosed in our Form 10-KSB and proxy reports as a
related party transaction. An "outside director" means, generally, a director
who (1) is not a current employee of the Company, (2) is not a former
employee of the Company who receives compensation for prior services during
the taxable year in question, (3) has not been an officer of the Company, and
(4) does not receive compensation from the Company, either directly or
indirectly, in any capacity other than as a director. The option committee
has discretion to select the persons to whom awards, rights, incentive
options or non-qualified options will be granted, the number of shares to be
granted, the terms of the grants and the exercise price of any options
granted. However, no option may be exercisable more than 10 years after the
granting of the option, and no option may be granted under the 1999 Plan
after May 12, 2009.
The 1999 Plan provides that the exercise price of incentive options
granted cannot be less than the fair market value of the underlying common
stock on the date the incentive options are granted. No incentive option may
be granted to an employee who, at the time the incentive option would be
granted, owns more than ten percent of our outstanding stock unless the
exercise price of the incentive option granted to the employee is at least
110 percent of the fair market value of the stock subject to the incentive
option. In addition, the aggregate fair market value (determined as of the
date an option is
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<PAGE>
granted) of the common stock underlying incentive options granted to a single
employee which become exercisable in any single calendar year may not exceed
$100,000.
All options granted under the 1999 Plan will become fully
exercisable upon the occurrence of a change in control of the Company or
certain mergers or other reorganizations or asset sales described in the 1999
Plan.
Options granted pursuant to the 1999 Plan will not be transferable
during the optionee's lifetime except in limited circumstances set forth in
the 1999 Plan. Subject to the other terms of the 1999 Plan, the option
committee has discretion to provide vesting requirements and specific
expiration provisions with respect to the incentive options and non-qualified
options granted.
It currently is anticipated that the issuance of the options and
underlying shares of common stock will be covered by an effective
registration statement. Transactions effected pursuant to a valid
registration statement will enable an optionee exercising options to receive
unrestricted stock that may be transferred or sold in the open market unless
the optionee is a director, executive officer or otherwise an affiliate of
the Company. In the case of a director, executive officer or other affiliate,
the common stock acquired through exercise of options may be reoffered or
resold only pursuant to an effective registration statement or pursuant to
Rule 144 under the Securities Act or another exemption from the registration
requirements of the Securities Act. It also is anticipated that sales by
affiliates will be covered by an effective registration statement.
If a change, such as a stock split, is made in our capitalization
which results in an exchange or other adjustment of each share of common
stock for or into a greater or lesser number of shares, the option committee
may proportionally adjust the exercise price and in the number of shares
subject to each outstanding option. In the event of a stock dividend, the
option committee also may adjust the terms of options so that each optionee
may receive, upon exercise of the option, the equivalent of any stock
dividend that the optionee would have received had he or she been the holder
of record of the shares purchased upon exercise. The option committee also
may make provisions for adjusting the number of shares subject to outstanding
options if we have one or more reorganizations, recapitalizations, rights
offerings, or other increases or reductions of shares of outstanding common
stock.
The Board Of Directors may at any time terminate the 1999 Plan or
make such amendments or modifications to the 1999 Plan that the Board Of
Directors deems advisable, except that no amendments may impair previously
outstanding options unless consented to by the option holder, and amendments
that materially modify eligibility requirements for receiving options, that
materially increase the benefits accruing to persons eligible to receive
options, or that materially increase the number of shares under the 1999 Plan
must be approved by our stockholders.
The incentive options issuable under the 1999 Plan are structured to
qualify for favorable tax treatment provided for "incentive stock options" by
Section 422 of the Code. All references to the tax treatment of the incentive
options are under the Code as currently in effect. Pursuant to Section 422 of
the Code, optionees will not be subject to federal income tax at the time of
the grant or at the time of exercise of an incentive option. In addition,
provided that the stock underlying the incentive option is not sold less than
two years after the grant of the incentive option and is not sold less than
one year after the exercise of the incentive option, then the difference
between the exercise price and the sales price will be treated as long-term
capital gain or loss. An optionee also may be subject to the alternative
minimum tax upon exercise of his incentive options. We will not be entitled
to receive any income tax deductions with respect to the granting or exercise
of incentive options or the sale of the common stock underlying the incentive
options.
Non-qualified options will not qualify for the special tax benefits
given to incentive options under Section 422 of the Code. An optionee does
not recognize any taxable income at the time the optionee is
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<PAGE>
granted a non-qualified option. However, upon exercise of these options, the
optionee recognizes ordinary income for federal income tax purposes measured
by the excess, if any, of the then fair market value of the shares over the
exercise price. The ordinary income recognized by the optionee will be treated
as wages and will be subject to income tax withholding by the Company. Upon an
optionee's sale of shares acquired pursuant to the exercise of a non-qualified
option, any difference between the sale price and the fair market value of the
shares on the date when the option was exercised will be treated as long-term
or short-term capital gain or loss. Upon an optionee's exercise of a
non-qualified option, we will be entitled to a tax deduction in the amount
recognized as ordinary income to the optionee provided that the compensation
amount is reasonable and we satisfy the applicable reporting requirements
required under U.S. Treasury regulations.
The Company has granted options pursuant to the 1999 Plan that will
be void if the stockholders do not approve the 1999 Plan prior to May 12,
2000. The following table sets forth information concerning the portion of
these conditional grants of stock options made pursuant to the 1999 Plan to
Michael T. McClere and Shannon D. McLeroy (as described above under "Executive
Compensation"), to all current executive officers of the Company as a group,
and to all employees, including all current officers who are not executive
officers, as a group. No grants of options were made under the 1999 Plan to
any current directors who are not also executive officers.
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
1999 LONG-TERM INCENTIVE PLAN
Aggregate Exercise Number Of Shares
Name and Position Price of Options ($)* Underlying Options
----------------- --------------------- ------------------
<S> <C> <C>
Michael T. McClere, Chief Executive Officer and $1,000,000 500,000
Chairman of the Board
Shannon D. McLeroy, President and Secretary $1,000,000 500,000
All Current Executive Officers as a Group $2,100,000 1,400,000
(Three Persons)
All Employees as a Group (Excluding Executive $1,253,125 1,617,500
Officers; 69 Persons)
</TABLE>
- ------------------
* The dollar value shown is the aggregate exercise price of all options
granted to the person or group indicated as of February 17, 2000.
REQUIRED VOTE; BOARD RECOMMENDATION
The approval of holders of shares representing a majority of the
votes represented at the annual meeting will be necessary to adopt the 2000
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO ADOPT THE 2000 PLAN.
3. PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION TO CHANGE THE NAME OF THE COMPANY
The Board Of Directors has approved, and recommends to the
stockholders the approval of, (1) changing the name of the Company from
ClearWorks Technologies, Inc. to ClearWorks.net, Inc., and (2)
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<PAGE>
the filing of an amended Certificate Of Incorporation with the Delaware
Secretary Of State in order to effect the name change.
We began using the name ClearWorks.net, Inc. in April 1999. The
primary reason for the use of the new name, which refers to the Internet, is
that we utilize Internet protocol technology in supplying services to our
customers. In order to provide these services, we install and maintain fiber
optic and copper data transmission lines from our data transmission facilities
to our prospective customers' properties. After the lines have been installed,
we sell our customers telephone service, access to the Internet, and cable and
satellite television programs, all of which are transmitted in digital format
over the same lines. We refer to our ability to simultaneously offer
telephone, Internet and video products as "Bundled Digital Servicessm". Our
activities also relate to the Internet because our use of high-speed fiber
optic cable is anticipated to aid in reducing Internet bottlenecks.
The Board Of Directors has determined that the proposed name change
is in the best interests of the Company and its stockholders because the name
ClearWorks.net, Inc. more accurately reflects our focus on utilizing Internet
protocol technology to supply our Bundled Digital Servicessm, including
Internet-related products.
REQUIRED VOTE; BOARD RECOMMENDATION
The affirmative vote of the majority of the outstanding shares is
required to approve the name change.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY.
4. PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP
AS CERTIFIED INDEPENDENT ACCOUNTANTS
The Board Of Directors recommends that the stockholders vote in favor
of ratifying the selection of the certified public accounting firm of KPMG LLP
of Houston, Texas as the auditors who will audit financial statements, prepare
tax returns, and perform other accounting and consulting services we request
for the fiscal years ended December 31, 1999 and 2000 or until the Board Of
Directors, in its discretion, replaces them.
Our financial statements for the fiscal year ended December 31, 1998
were audited by the accounting firm of McManus & Co., P.C of Morris Plains,
New Jersey. The Board determined to change auditors because KPMG LLP is more
widely recognized in the national business community, which may enable us to
more readily transact business if our operations continue to expand as
presently contemplated. The decision to change auditors was based on potential
future business prospects; there was no disagreement with McManus & Co., P.C.
regarding accounting methods, auditing procedures or any other matters.
An affirmative vote of the majority of shares represented at the
annual meeting is necessary to ratify the selection of auditors. There is no
legal requirement for submitting this proposal to the stockholders; however,
the Board Of Directors believes that it is of sufficient importance to seek
ratification. Whether the proposal is approved or defeated, the Board may
reconsider its selection of KPMG LLP. It is expected that one or more
representatives of KPMG LLP will be present at the annual meeting and will be
given an opportunity to make a statement if they desire to do so and to
respond to appropriate questions from stockholders. It is not expected that a
representative of McManus & Co., P.C. will attend the meeting.
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<PAGE>
The Board Of Directors unanimously recommends that the stockholders
vote for approval of KPMG LLP as the Company's certified independent
accountants.
OTHER BUSINESS
The Board Of Directors is not aware of any other matters that are to
be presented at the annual meeting, and it has not been advised that any other
person will present any other matters for consideration at the meeting.
Nevertheless, if other matters should properly come before the annual meeting,
the stockholders present, or the persons, if any, authorized by a valid proxy
to vote on their behalf, shall vote on such matters in accordance with their
judgment.
VOTING PROCEDURES
Votes at the annual meeting are counted by an inspector of election
appointed by the Chairman of the meeting. If a quorum is present, an
affirmative vote of a majority of the votes entitled to be cast by those
present in person or by proxy is required for the approval of items submitted
to stockholders for their consideration, unless a different number of votes is
required by Delaware law or our certificate of incorporation. Under Delaware
law, the proposal to amend our certificate of incorporation to change the name
of the company requires the approval of a majority of all the outstanding
shares. Abstentions by those present at the annual meeting are tabulated
separately from affirmative and negative votes and do not constitute
affirmative votes. If a stockholder returns his proxy card and withholds
authority to vote for any or all of the nominees, the votes represented by the
proxy card will be deemed to be present at the meeting for purposes of
determining the presence of a quorum but will not be counted as affirmative
votes. Shares in the names of brokers that are not voted are treated as not
present.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS;
DISCRETIONARY AUTHORITY TO VOTE PROXIES
In order to be considered for inclusion in the proxy statement and
form of proxy relating to our next annual meeting of stockholders following
the end of our 2000 fiscal year, proposals by individual stockholders must be
received by us no later than November 23, 2000. Stockholder proposals also
must comply with certain SEC rules and regulations.
In addition, the proxy solicited by the Board of Directors for the
2001 annual meeting of stockholders will confer discretionary authority on any
stockholder proposal presented at that meeting unless we are provided with
notice of that proposal no later than February 7, 2001.
INCORPORATION BY REFERENCE
We incorporate by reference into this proxy statement the following
information included in reports filed with the Securities And Exchange
Commission:
1. Item 2 (Management's Discussion And Analysis) and Part F/S
(Financial Statements) included in our on Form 10-SB/A-3; and
2. Items 1 (Financial Statements) and 2 (Management's Discussion And
Analysis Of Results Of Operations And Financial Condition) included in
our Quarterly Report on Form 10-QSB for the quarter ended September
30, 1999.
AVAILABILITY OF OTHER DOCUMENTS
Upon written request, we will provide, without charge, a copy of our
General Form For Registration Of Securities on Form 10-SB/A-3, and a copy of
our Quarterly Report on Form 10-QSB for
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<PAGE>
the quarter ended September 30, 1999, to any stockholders of record, or to any
stockholder who owns common stock listed in the name of a bank or broker as
nominee, at the close of business on March __, 2000. Any request for a copy of
our on Form 10-SB/A-3 or 10-QSB should be mailed to the Secretary,
ClearWorks.net, Inc., 2450 Fondren, Suite 200, Houston, Texas 77063.
FORWARD-LOOKING STATEMENTS
This proxy statement includes "forward-looking" statements within the
meaning of Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this proxy statement, including
without limitation statements under "Recent Developments Concerning The
Company" regarding our financial position, business strategy, and plans and
objectives of management for future operations and capital expenditures, are
forward-looking statements. Although we believe that the expectations
reflected in the forward-looking statements and the assumptions upon which the
forward-looking statements are based are reasonable, we can give no assurance
that such expectations and assumptions will prove to have been correct.
Additional statements concerning important factors that could cause actual
results to differ materially from our expectations ("Cautionary Statements")
are disclosed in the "Forward-Looking Statements--Cautionary Statements"
section of our General Form For Registration Of Securities on Form 10-SB/A-3
as filed with the Securities and Exchange Commission on October 20, 1999. All
written and oral forward-looking statements attributable to us or persons
acting on our behalf subsequent to the date of this proxy statement are
expressly qualified in their entirety by the Cautionary Statements.
This notice and proxy statement are sent by order of the Board Of
Directors.
Dated: March __, 2000 Michael T. McClere
Chief Executive Officer
* * * * *
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<PAGE>
CLEARWORKS TECHNOLOGIES, INC. LONG-TERM INCENTIVE PLAN
(Established Effective ______________, 1999)
1. OBJECTIVES. The ClearWorks Technologies, Inc. Long-Term
Incentive Plan (the "Plan") is designed to retain selected employees of
ClearWorks Technologies, Inc. (the "Company") and its Subsidiaries and reward
them for making significant contributions to the success of the Company and
its Subsidiaries. These objectives are to be accomplished by making awards
under the Plan and thereby providing Participants with a proprietary interest
in the growth and performance of the Company and its Subsidiaries.
2. DEFINITIONS. As used herein, the terms set forth below shall
have the following respective meanings:
"AWARD" means the grant of any form of stock option, stock
appreciation right, restricted stock, deferred stock, stock award or cash
award, whether granted singly, in combination or in tandem, to a Participant
pursuant to any applicable terms, conditions and limitations as the Committee
may establish in order to fulfill the objectives of the Plan.
"AWARD AGREEMENT" means a written agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable
to an Award. Stock options shall be evidenced by award agreements, the terms
and provisions of which need not be the same with respect to each Optionee.
"BOARD" means the Board of Directors of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means the Compensation Committee or such committee of the
Board as is designated by the Board to administer the Plan. The Committee
shall be constituted to permit the Plan to comply with Rule 16b-3.
"COMMON STOCK" means the Common Stock, par value $.0001 per share, of
the Company.
"COMPANY" means ClearWorks Technologies, Inc., a Delaware Corporation.
"DIRECTOR" means an individual serving as a member of the Board.
"DISABILITY" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
"DISINTERESTED PERSON" shall have the meaning set forth in Rule
16b-3(d)(3), as promulgated by the Commission under the Exchange Act, as
amended from time to time.
"EFFECTIVE DATE" means the date specified by the Board at the time
the Plan is approved by the Board"
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"FAIR MARKET VALUE" means, as of a particular date, (a) if the shares
of Common Stock are listed on a national securities exchange, the mean between
the highest and lowest sales price per share of Common Stock on the
consolidated transaction reporting system for the principal such national
securities
<PAGE>
exchange on that date, or, if there shall have been no such sale so reported
on that date, on the last preceding date on which such a sale was so reported,
(b) if the shares of Common Stock are not so listed but are quoted on the
Nasdaq National Market, the mean between the highest and lowest sales price
per share of Common Stock on the Nasdaq National Market on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (c) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price
on that date, or, if there are no quotations available for such date, on the
last preceding date on which such quotations shall be available, as reported
by Nasdaq, or, if not reported by Nasdaq, by the National Quotation Bureau,
Inc. or (d) if none of the above is applicable, such amount as may be
determined by the Board (or an Independent Third Party, should the Board elect
in its sole discretion to instead utilize an Independent Third Party for this
purpose), in good faith, to be the fair market value per share of Common Stock.
"INDEPENDENT THIRD PARTY" means an individual or entity independent
of the Company (and any transferor or transferee of Common Stock acquired upon
the exercise of an option under the Plan, if applicable) with experience in
providing investment banking appraisal or valuation services and with
expertise generally in the valuation of securities or other property of the
type at issue, that is chosen by the Board, in its sole discretion, to value
securities or other property for purposes of this Plan. The Company's
independent accountants shall be deemed to satisfy the criteria for an
Independent Third Party if selected by the Board for that purpose. The Board
may utilize one or more Independent Third Parties.
"PARTICIPANT" means an employee of the Company or any of its
Subsidiaries to whom an Award has been made under this Plan.
"PLAN" means the ClearWorks Technologies, Inc. Long Term Incentive
Plan, as set forth herein and as hereinafter amended from time to time.
"RESTRICTED STOCK" means Common Stock that is restricted or subject
to forfeiture provisions.
"RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor rule.
"SUBSIDIARY" means any corporation of which the Company directly or
indirectly owns shares representing more than 50% of the voting power of all
classes or series of capital stock of such corporation which have the right to
vote generally on matters submitted to a vote of the shareholders of such
corporation.
"TERMINATION OF EMPLOYMENT" means the termination of the
participant's employment with the Company or any Subsidiary. A Participant
employed by a Subsidiary of the Company shall also be deemed to incur a
Termination of Employment if the Subsidiary ceased to be a Subsidiary and the
participant does not immediately thereafter become an employee of the Company
or another Subsidiary.
3. ELIGIBILITY. All employees of the Company and its Subsidiaries
(but excluding members of the Committee) who are responsible for or contribute
to the management, growth and profitability of the business of the Company are
eligible for Awards under this Plan. The Committee shall select the
Participants in the Plan from time to time by the grant of Awards under the
Plan.
The granting of Awards under this Plan shall be entirely
discretionary and nothing in this Plan shall be deemed to give any employee of
the Company or its Subsidiaries any right to participate in this Plan or to be
granted an Award.
4. COMMON STOCK AVAILABLE FOR AWARDS. There shall be available for
Awards granted wholly or partly in Common Stock (including rights or options
which may be exercised for or settled in Common Stock) during the term of this
Plan an aggregate of 10,000,000 shares of Common Stock. The
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<PAGE>
Board and the appropriate officers of the Company shall from time to time take
whatever actions are necessary to file required documents with governmental
authorities and stock exchanges and transaction reporting systems to make
shares of Common Stock available for issuance pursuant to Awards. Such shares
may consist, in whole or in part, of authorized and unissued shares or
treasury shares.
Common Stock related to Awards that are forfeited or terminated,
expire unexercised, are settled in cash in lieu of Common Stock or in a manner
such that all or some of the shares covered by an Award are not issued to a
Participant, or are exchanged for Awards that do not involve Common Stock,
shall immediately become available for Awards hereunder; provided, the person
holding such Award receives no benefits of ownership (within the meaning of
Rule 16b-3) while holding such Award. The Committee may from time to time
adopt and observe such procedures concerning the counting of shares against
the Plan maximum as it may deem appropriate under Rule 16b-3.
In the event of any merger, reorganization, consolidation,
recapitalization, spin-off, stock dividend, stock split, extraordinary
distribution with respect to the Common Stock or other similar change in
corporate structure affecting the Common Stock, such substitution or
adjustments shall be made in the aggregate number of shares reserved for
issuance under the Plan, in the number and option price of shares subject to
outstanding Stock Options and Stock Appreciation Rights, and in the number of
shares subject to other outstanding Awards granted under the Plan as may be
determined to be appropriate by the Board, in its sole discretion; provided,
however, that the number of shares subject to any award shall always be a
whole number. Such adjusted option price shall also be used to determine the
amount payable by the Company upon the exercise of any Stock Appreciation
Right associated with any stock option.
5. ADMINISTRATION. This Plan shall be administered by the
Compensation Committee of the Board or such other committee of the Board,
composed of not less than two (2) disinterested persons, each of whom shall
be appointed by and serve at the pleasure of the Board. If at any time no
Committee shall be in office, the functions of the Committee specified in the
Plan shall be exercised by the Board. The Committee shall have full and
exclusive power to interpret this Plan and to adopt such rules, regulations
and guidelines for carrying out this Plan as it may deem necessary or proper,
all of which powers shall be exercised in the best interests of the Company
and in keeping with the objectives of this Plan. The Committee may, in its
discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make less
restrictive any restrictions contained in an Award, waive any restriction or
other provision of this Plan or an Award or otherwise amend or modify an Award
in any manner that is either (a) not adverse to the Participant holding such
Award or (b) consented to by such Participant, including (in either case),
with respect to Awards of incentive stock options (an "ISO"), an amendment or
modification that may result in an ISO's losing its status as an ISO. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision
of the Committee in the interpretation and administration of this Plan shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. No member of the Committee or officer of the
Company to whom it has delegated authority in accordance with the provisions
of Paragraph 6 of this Plan shall be liable for anything done or omitted to be
done by him or her, by any member of the Committee or by any officer of the
Company in connection with the performance of any duties under this Plan,
except for his or her own willful misconduct or as expressly provided by
statute.
Among other things, the Committee shall have the authority, subject
to the terms of the Plan:
(a) to select the employees to whom Awards may from time to time be
granted;
(b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Restricted Stock and Deferred Stock or any combination
thereof are to be granted hereunder;
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<PAGE>
(c) to determine the number of shares of Common Stock to be covered
by each Award granted hereunder;
(d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the share price, any vesting
restriction or limitation and any vesting acceleration of forfeiture waiver
regarding any Award and the shares of Common Stock relating thereto, based on
such factors as the Committee shall determine);
(e) to adjust the terms and conditions, at any time or from time to
time, of any Awards, including with respect to performance goals and
measurements applicable to performance-based awards pursuant to the terms of
the Plan;
(f) to determine under what circumstances an Award may be settled in
cash or Common Stock;
(g) to determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an award shall be deferred.
6. DELEGATION OF AUTHORITY. The Committee may delegate to the
President and to other senior officers of the Company its duties under this
Plan pursuant to such conditions or limitations as the Committee may
establish, except that the Committee may not delegate to any person the
authority to grant Awards to, or take other action with respect to,
Participants who are subject to Section 16 of the Exchange Act.
7. AWARDS. The Committee shall determine the type or types of
Awards to be made to each Participant under this Plan. Each Award made
hereunder shall be embodied in an Award Agreement, which shall contain such
terms, conditions and limitations as shall be determined by the Committee in
its sole discretion and shall be signed by the Participant and by the
President of the Company for and on behalf of the Company. An Award Agreement
may include provisions for the repurchase by the Company of Common Stock
acquired pursuant to the Plan and the repurchase of a Participant's option
rights under the Plan. Awards may consist of those listed in this Paragraph 7
and may be granted singly, in combination or in tandem. Awards may also be
made in combination or in tandem with, in replacement of, or as alternatives
to grants or rights (a) under this Plan or any other employee plan of the
Company or any of its Subsidiaries, including the plan of any acquired entity,
or (b) made to any Company or Subsidiary employee by the Company or any
Subsidiary. An Award may provide for the granting or issuance of additional,
replacement or alternative Awards upon the occurrence of specified events,
including the exercise of the original Award. Notwithstanding anything herein
to the contrary, no Participant may be granted Awards to acquire, in the
aggregate, more than 40% of the shares of Common Stock originally authorized
for Awards under this Plan, subject to adjustment as provided in Paragraph 14.
In the event of an increase in the number of shares authorized under the Plan,
the 40% limitation will apply to the increased number of shares authorized.
(i) STOCK OPTION. An Award may consist of a right to purchase a
specified number of shares of Common Stock at a price specified by the
Committee in the Award Agreement or otherwise. A stock option may be in the
form of an ISO which, in addition to being subject to applicable terms,
conditions and limitations established by the Committee, complies with Section
422 of the Code. Pursuant to the ISO requirements of Code Section 422,
notwithstanding anything herein to the contrary, (a) no ISO can be granted
under the Plan more than ten years following the Effective Date of the Plan,
(b) no Participant may be granted an ISO to the extent that, upon the grant of
the ISO, the aggregate Fair Market Value (determined as of the date the Award
is granted) of the Common Stock with respect to which ISOs (including Awards
hereunder) are exercisable for the first time by the Participant during any
calendar year (under all plans of the Company and any parent and subsidiary
corporations) would exceed $100,000, and (c) the exercise price of the ISO
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may not be less than 100% of the Fair Market Value of the Common Stock at the
time of grant (or not less than 110% of such Fair Market Value if the ISO is
awarded to any person who, at the time of grant, owns stock representing more
than 10% of the combined voting power of all classes of stock of the Company
or any parent or Subsidiary).
(ii) STOCK APPRECIATION RIGHT. An Award may consist of a right to
receive a payment, in cash or Common Stock, equal to the excess of the Fair
Market Value or other specified valuation of a specified number of shares of
Common Stock on the date the stock appreciation right ("SAR") is exercised
over a specified strike price as set forth in the applicable Award Agreement.
(iii) STOCK AWARD. An Award may consist of Common Stock or may be
denominated in units of Common Stock. All or part of any stock Award may be
subject to conditions established by the Committee and set forth in the Award
Agreement, which conditions may include, but are not limited to, continuous
service with the Company and its Subsidiaries, achievement of specific
business objectives, increases in specified indices, attaining specified
growth rates and other comparable measurements of performance. Such Awards may
be based on Fair Market Value or other specified valuations. The certificates
evidencing shares of Common Stock issued in connection with a stock Award
shall contain appropriate legends and restrictions describing the terms and
conditions of the restrictions applicable thereto.
(iv) CASH AWARD. An Award may be denominated in cash with the amount
of the eventual payment subject to future service and such other restrictions
and conditions as may be established by the Committee and set forth in the
Award Agreement, including, but not limited to, continuous service with the
Company and its Subsidiaries, achievement of specific business objectives,
increases in specified indices, attaining specified growth rates and other
comparable measurements of performance.
8. PAYMENT OF AWARDS.
(a) GENERAL. Payment of Awards may be made in the form of cash or
Common Stock or combinations thereof and may include such restrictions as the
Committee shall determine including, in the case of Common Stock, restrictions
on transfer and forfeiture provisions.
(b) DEFERRAL. The Committee may, in its discretion, (i) permit
selected Participants to elect to defer payments of some or all types of
Awards in accordance with procedures established by the Committee or (ii)
provide for the deferral of an Award in an Award Agreement or otherwise. Any
such deferral may be in the form of installment payments or a future lump sum
payment. Any deferred payment, whether elected by the Participant or specified
by the Award Agreement or by the Committee, may be forfeited if and to the
extent that the Award Agreement so provides.
(c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent rights
may be extended to and made part of any Award denominated in Common Stock or
units of Common Stock, subject to such terms, conditions and restrictions as
the Committee may establish. The Committee may also establish rules and
procedures for the crediting of interest on deferred cash payments and
dividend equivalents for deferred payment denominated in Common Stock or units
of Common Stock.
(d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another
Award or Awards of the same or different type.
9. CHANGE IN CONTROL. If so provided in the Award Agreement, an
Award shall become fully exercisable and restrictions on Restricted Stock
shall lapse upon a Change in Control (as hereinafter defined) of the Company.
For purposes of this Plan, a "Change in Control" shall mean the happening of
any of the following events:
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(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of thirty percent (30%) or more of either (1) the then
outstanding shares of Common Stock of the Company or (2) the combined voting
power of the then outstanding voting securities of the Company entitled to
vote generally in the election of directors; provided, however, that the
following acquisitions shall not constitute a Change in Control: (1) any
acquisition directly from Company; (2) any acquisition by the Company; (3) any
acquisition by a Person including the participant or with whom or with which
the participant is affiliated; (4) any acquisition by a Person or Persons one
or more of which is a member of the Board or an officer of the Company or an
affiliate of any of the foregoing on the Effective Date; (5) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (6) any acquisition
by any corporation pursuant to a transaction described in clauses (A), (B) and
(C) of paragraph (iii) herein; or
(ii) During any period of twenty-four (24) consecutive months,
individuals who, as of the beginning of such period, constituted the entire
Board cease for any reason to constitute at least a majority of the Board,
unless the election, or nomination for election, by the Company's
stockholders, of each new director was approved by a vote of at least
two-thirds (2/3) of the Continuing Directors, as hereinafter defined, in
office on the date of such election or nomination for election for the new
director. For purposes hereof, "Continuing Director" shall mean (a) any member
of the Board at the close of business on the Effective Date; or (b) any member
of the Board who succeeded any Continuing Director describe in clause (1)
above if such successor's election, or nomination for election, by the
Company's stockholders, was approved by a vote of at least two-thirds (2/3) of
the Continuing Directors then still in office. The term "Continuing Director"
shall not, however, include any individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such
term is used in Rule 14a-11 of Regulation 14A of the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Board.
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (A) more than 60% of the then
outstanding securities having the right to vote in the election of directors
of the corporation resulting from such reorganization, merger or consolidation
is then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were beneficial owners of the
outstanding securities having the right to vote in the election of directors
of the Company immediately prior to such reorganization, merger or
consolidation, (B) no Person (excluding the Company, any employee benefit plan
(or related trust) of the Company or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 30% or more of the then outstanding securities having the right to
vote in the election of directors of the Company) beneficially owns, directly
or indirectly, 30% or more of the then outstanding securities having the right
to vote in the election of the corporation resulting from such reorganization,
merger or consolidation, and (C) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization,
merger are Continuing Directors at the time of the execution of the initial
agreement providing for such reorganization or consolidation; or
(iv) Approval by the stockholders of the Company of (A) a complete
liquidation or dissolution of the Company or (B) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition,
(1) more than 60% of the then outstanding securities having the right to vote
in the election of directors of such corporation is then beneficially owned,
directly or indirectly by all or substantially all of the individuals and
entities who were the beneficial owners of the outstanding securities having
the right to vote in the election of directors of the Company immediately
prior to such sale or other disposition of such outstanding securities, (2) no
Person (excluding the Company and any employee benefit plan (or related trust)
of the Company or such corporation
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and any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 30% or more of the outstanding securities
having the right to vote in the election of directors of the Company)
beneficially owns, directly or indirectly, 30% or more of the then outstanding
securities having the right to vote in the election of directors of such
corporation and (3) at least a majority of the members of the board of
directors of such a corporation are Continuing Directors at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
10. STOCK OPTION EXERCISE. The price at which shares of Common Stock
may be purchased under a stock option shall be paid in full at the time of
exercise in cash or, if permitted by the Committee, by means of tendering
Common Stock or surrendering all or part of that or any other Award, including
Restricted Stock, valued at Fair Market Value on the date of exercise, or any
combination thereof. The Committee shall determine acceptable methods for
tendering Common Stock or Awards to exercise a stock option as it deems
appropriate. If permitted by the Committee, payment may be made by successive
exercises by the Participant. The Committee may provide for procedures to
permit the exercise or purchase of Awards by (a) loans from the Company or (b)
use of the proceeds to be received from the sale of Common Stock issuable
pursuant to an Award. Unless otherwise provided in the applicable Award
Agreement, in the event shares of Restricted Stock are tendered as
consideration for the exercise of a stock option, a number of the shares
issued upon the exercise of the stock option, equal to the number of shares of
Restricted Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock so submitted as well as any additional
restrictions that may be imposed by the Committee.
11. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery
of cash or shares of Common Stock under this Plan, an appropriate amount of
cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for withholding of such
taxes. The Committee may also permit withholding to be satisfied by the
transfer to the Company of shares of Common Stock theretofore owned by the
holder of the Award with respect to which withholding is required. If shares
of Common Stock are used to satisfy tax withholding, such shares shall be
valued based on the Fair Market Value when the tax withholding is required to
be made.
12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board
may amend, modify, suspend or terminate this Plan for the purpose of meeting
or addressing any changes in legal requirements or for any other purpose
permitted by law except that (a) no amendment or alteration that would impair
the rights of any Participant under any Award previously granted to such
Participant shall be made without such Participant's consent and (b) no
amendment or alteration shall be effective prior to approval by the Company's
shareholders to the extent such approval is then required pursuant to Rule
16b-3 in order to preserve the applicability of any exemption provided by such
rule to any Award then outstanding (unless the holder of such Award consents)
or to the extent shareholder approval is otherwise required by applicable
legal requirements. Notwithstanding the foregoing, no amendment or
modification shall be made, without the approval of the shareholders of the
Company, which would:
(i) Increase the total number of shares reserved for the purposes of
the Plan under Paragraph 4, except as provided in Paragraph 15; or
(ii) Materially modify the requirements as to eligibility for
participation in the Plan.
13. TERMINATION OF EMPLOYMENT. Upon the termination of employment by
a Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award.
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<PAGE>
14. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under
the Exchange Act shall be assignable or otherwise transferable during the
Participant's lifetime and, after the death of the Participant, except to his
executor or the personal representative of the participant's estate; provided,
however, that the Committee may allow for assignments (i) pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder (a "QDRO")
and (ii) if the Award Agreement, as approved by the Committee, expressly so
provides, to a Permitted Assignee, provided that no consideration is received
in connection with any such assignment. No ISO Award under this Plan shall be
assignable or otherwise transferable, except by will or the laws of descent
and distribution or pursuant to a QDRO. An Award that has been transferred
pursuant to the preceding two sentences may not be further transferred unless
the transfer is made in accordance with the preceding sentence or the transfer
is made to the Participant. "Permitted Assignee" means a Family Partnership or
a Family Trust. A "Family Partnership" shall mean any partnership, general or
limited, in which at the time of transfer the Participant is a partner and
each of the remaining members of the partnership are either (x) members of the
Participant's immediate family, (y) a Family Trust, or (z) a charitable
organization that is described under Section 170(c) of the Code (a "Charity");
provided, however, that Charities may not have more than an aggregate of a
five percent capital or profits interest in the partnership. A "Family Trust"
shall mean any trust in which, at the time of transfer, the beneficiaries
under the trust are limited to one or more of (a) the Participant, (b) a
member or members of the Participant's immediate family, and (c) one or more
Charities, provided that all such Charities have no more than an aggregate of
a five percent actuarial interest in the trust. The Committee may prescribe
and include in applicable Award Agreements other restrictions on transfer. Any
attempted assignment of an Award or any other benefit under this Plan in
violation of this Paragraph 14 shall be null and void.
15. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in any
manner the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock (whether or not such issue is prior to, on a parity
with or junior to the Common Stock) or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding of any kind, whether or not of a
character similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock or declaration of a dividend payable in shares of
Common Stock or capital reorganization or reclassification or other
transaction involving an increase or reduction in the number of outstanding
shares of Common Stock, the Committee may adjust proportionally (i) the number
of shares of Common Stock reserved under this Plan and covered by outstanding
Awards denominated in Common Stock or units of Common Stock; (ii) the exercise
or other price in respect of such Awards; and (iii) the appropriate Fair
Market Value and other price determinations for such Awards. In the event of
any consolidation or merger of the Company with another corporation or entity
or the adoption by the Company of a plan of exchange affecting the Common
Stock or any distribution to holders of Common Stock of securities or property
(other than normal cash dividends or dividends payable in Common Stock), the
Committee shall make such adjustments or other provisions as it may deem
equitable, including adjustments to avoid fractional shares, to give proper
effect to such event. In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation,
the Committee shall be authorized, in its discretion, (i) to issue or assume
stock options, regardless of whether in a transaction to which Section 424(a)
of the Code applies, by means of substitution of new options for previously
issued options or an assumption of previously issued options, (ii) to make
provision, prior to the transaction, for the acceleration of the vesting and
exercisability of, or lapse of restrictions with respect to, Awards and the
termination of options that remain unexercised at the time of such
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<PAGE>
transaction or (iii) to provide for the acceleration of the vesting and
exercisability of the options and the cancellation thereof in exchange for
such payment as shall be mutually agreeable to the Participant and the
Committee.
16. RESTRICTIONS. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based
on the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. It is the intent of the Company
that this Plan comply with Rule 16b-3 with respect to persons subject to
Section 16 of the Exchange Act unless otherwise provided herein or in an Award
Agreement, that any ambiguities or inconsistencies in the construction of this
Plan be interpreted to give effect to such intention and that, if any
provision of this Plan is found not to be in compliance with Rule 16b-3, such
provision shall be null and void to the extent required to permit this Plan to
comply with Rule 16b-3. Certificates evidencing shares of Common Stock
delivered under this Plan may be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any securities exchange or transaction reporting system upon which the Common
Stock is then listed and any applicable federal and state securities law. The
Committee may cause a legend or legends to be placed upon any such
certificates to make appropriate reference to such restrictions.
17. PARACHUTE PAYMENT LIMITATION. Notwithstanding any provision of
this Plan to the contrary, the Committee may provide in the Award Agreement
for a limitation on the acceleration of vesting and exercisability of
unmatured Awards to the extent necessary to avoid or mitigate the impact on
the Participant of the golden parachute excise tax under Section 4999 of the
Code. In the event the Award Agreement does not contain any contrary provision
regarding the method of avoiding or mitigating the impact of the golden
parachute excise tax under Section 4999 of the Code on the Participant, then,
the aggregate present value of all parachute payments payable to or for the
benefit of the Participant, whether payable pursuant to the Award or
otherwise, shall be limited to three times the Participant's base amount less
one dollar and, to the extent necessary, the exercise of this Award shall be
limited by the Administrator, in its discretion, in order that this limitation
not be exceeded. For purposes of this Paragraph 17, the terms "parachute
payment," "base amount" and "present value" shall have the meanings assigned
thereto under Section 280G of the Code. It is the intention of this Paragraph
17 to avoid excise taxes on the Participant under Section 4999 of the Code or
the disallowance of a deduction to the Company pursuant to Section 280G of the
Code.
18. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall
be used merely as a bookkeeping convenience. The Company shall not be required
to segregate any assets that may at any time be represented by cash, Common
Stock or rights thereto, nor shall this Plan be construed as providing for
such segregation, nor shall the Company, the Board or the Committee be deemed
to be a trustee of any cash, Common Stock or rights thereto to be granted
under this Plan. Any liability or obligation of the Company to any Participant
with respect to a grant of cash, Common Stock or rights thereto under this
Plan shall be based solely upon any contractual obligations that may be
created by this Plan and any Award Agreement with such Participant, and no
such liability or obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property of the Company. None of the
Company, the Board or the Committee shall be required to give any security or
bond for the performance of any obligation that may be created by this Plan.
19. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.
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20. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of the
date (the "Effective Date") it is approved by the Board of Directors of the
Company. Notwithstanding the foregoing, the adoption of this Plan is expressly
conditioned upon the approval by written consent of the holders of a majority
of shares of outstanding shares of Common Stock within one year of the
Effective Date. If the shareholders of the Company should fail so to approve
this Plan prior to such date, this Plan shall terminate and cease to be of any
further force or effect and all grants of Awards hereunder shall be null and
void.
21. NO EMPLOYMENT GUARANTEED. No provision of this Plan or any Award
Agreement hereunder shall confer any right upon any employee to continued
employment with the Company or any Subsidiary.
22. RIGHTS AS SHAREHOLDER. Unless otherwise provided under the terms
of an Award Agreement, a Participant shall have no rights as a holder of
Common Stock with respect to Awards granted hereunder, unless and until
certificates for Common Stock are issued to such Participant.
Attested to by the Secretary of ClearWorks
Technologies, Inc. as adopted by the Board of
Directors and Shareholders of ClearWorks
Technologies, Inc. effective as of the _____day
of _______________, 1999 (the "Effective Date").
------------------------------------
Celia Figueroa
Corporate Secretary
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PROXY PROXY
CLEARWORKS TECHNOLOGIES, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Michael T. McClere and Shannon McLeroy,
or either of them, as proxies with full power of substitution to vote all the
shares of the undersigned with all of the powers which the undersigned would
possess if personally present at the Annual Meeting of Stockholders of
ClearWorks Technologies, Inc. (the "Corporation") to be held at ______, on ___
_, 2000, at _______________________________, Houston, Texas, or any adjournments
thereof, on the following matters:
/X/ Please mark votes as in this example.
1. ELECTION OF DIRECTORS
Nominees: Michael T. McClere, Dennis Majeski and Raymond G. Harrell
III.
FOR ALL NOMINEES / /
WITHHELD FROM ALL NOMINEES / /
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE / /
2. Proposal to amend the Corporation's Certificate of Incorporation to
change the name of the Corporation to ClearWorks.net, Inc.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to approve the Corporation's 1999 Long-Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. Proposal to ratify the selection of KPMG LLP as the Company's certified
independent accountants.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
5. In their discretion, the proxies are authorized to vote upon an
adjournment or postponement of the meeting.
/ / YES / / NO / / ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
<PAGE>
Unless contrary instructions are given, the shares represented by this
proxy will be voted in favor of Items 1, 2, 3, 4 and 5. This proxy is solicited
on behalf of the Board of Directors of ClearWorks Technologies, Inc.
Dated:
--------------------------------
Signature:
----------------------------
Signature:
----------------------------
Signature if held jointly
(Please sign exactly as shown on your
stock certificate and on the envelope
in which this proxy was mailed. When
signing as partner, corporate officer,
attorney, executor, administrator,
trustee, guardian, etc., give full
title as such and sign your own name as
well. If stock is held jointly, each
joint owner should sign.)
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN THIS
PROXY IN THE ACCOMPANYING ENVELOPE.
