SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[ ] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
AUTEO MEDIA, INC.
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules
14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------- Common stock ----------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------12,600,000---------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD LOGO OF AUTEO MEDIA, INC.APPEARS HERE]
22125 17th Ave SE Bothell, WA 98021
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 18, 2000
The Annual Meeting of Shareholders of Auteo Media, Inc.. (the "Company") will be
held at 10:00 a.m. on August 18, 2000 at the offices of the Corporation, 22125
17th Ave SE Bothell, WA 98021 for the following purposes:
1. To elect a Board of Directors consisting of three persons to serve a term of
one year (until the next annual Shareholder's Meeting) or until their respective
successors are elected and have been qualified.
2. To ratify the selection of Grant Thornton as independent auditors to the
Company for the year ended December 31, 2000.
3. To approve the Company's 2000 Stock Option and Stock Incentive Compensation
Plan, as amended, which is attached as Appendix A and B to the Proxy Statement.
4. To transact such other business as may properly come before the Annual
Meeting and any postponement or adjournment thereof.
The Board of Directors is not aware of any other business to come before the
Annual Meeting.
The Board of Directors has fixed July 15, 2000 as the date of record for
determining the shareholders of the Company entitled to notice of and to vote at
the meeting and any adjournment of the meeting. The transfer books of the
Company will not be closed, but only shareholders of the Company of record on
such date will be entitled to notice of and to vote at the meeting or
adjournment.
Shareholders are cordially invited to attend the meeting in person. Whether or
not you plan to attend the meeting in person, please complete, sign and date the
accompanying proxy and return it promptly in the enclosed envelope. No
additional postage is required if the envelope is mailed in the United States.
If you attend the meeting, you may revoke the proxy and vote personally on all
matters brought before the meeting. A list of shareholders will be available for
inspection by the shareholders at the Company's offices.
By Order of the Board of Directors
/s/ KATHLEEN VAN LEEUWEN
------------------------
Kathleen Van Leeuwen, Secretary
July 29, 2000
<PAGE>
AUTEO MEDIA, INC., 22125 17th Ave SE Bothell, WA 98021
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
----------------
To be held on August 18, 2000
INTRODUCTION
The enclosed Proxy is solicited by and on behalf of the Board of Directors Of
Auteo Media, Inc., a Nevada corporation (the "Company"), to be voted at the
Annual Meeting of Shareholders to be held at 22125 17th Ave SE Bothell, WA
98021, at 10:00 a.m. on August 18, 2000 and at any and all adjournments of the
meeting. The enclosed materials will be mailed to Shareholders on or about July
30, 2000.
The matters listed below will be considered and voted upon at the meeting:
1. To elect a Board of Directors consisting of three persons to serve a term of
one year (until the next annual Shareholder's Meeting) or until their respective
successors are elected and have been qualified;
2. To ratify the selection of Grant Thornton to conduct the annual audit of the
Company for the year ended December 31, 2000
3. To approve the Company's 2000 Stock Option and Stock Incentive Compensation
Plan as amended, which is attached as Appendix A to the Proxy Statement;
4. To transact such other business as may properly come before the Annual
Meeting and any postponement or adjournment thereof.
PROXIES
The Board of Directors is soliciting the enclosed proxy for use at the Annual
Meeting and any adjournments of that meeting and will not vote the proxy at any
other meeting. Shares of common stock as to which Proxies have been executed,
and not properly revoked by the shareholder in accordance with the next
paragraph, will be voted as specified in the Proxies. If no specifications are
made, the shares will be voted "For" Management's nominees for Director, "For"
ratifying the selection of Grant Thornton as independent auditors, "For" the
approval of the Company's 2000 Stock Option and Stock Incentive Compensation
Plan, and will be voted at the discretion of the proxy with respect to other
matters which may properly come before the meeting pursuant to item 4 above.
A Proxy may be revoked at any time before it is voted by filing with the
Secretary of the Company either a written revocation or a duly executed Proxy
bearing a later date. Additionally, attendance at the meeting and voting shares
in person will revoke any prior proxy relating to such shares. However,
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy. Any notice revoking a proxy should be sent to the Secretary of the
Company, Kathleen Van Leeuwen, at Auteo Media, Inc., 22125 17th Ave SE Bothell,
WA 98021
QUORUM
The presence, in person or by proxy, of the holders of a majority of the
outstanding Common Stock of the Company is necessary to constitute a quorum at
the meeting.
VOTING
Votes cast by proxy or in person at the Annual Meeting will be counted by a
person appointed by the Company to act as the election inspector for the
meeting. The election inspector will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum.
1
<PAGE>
All of the officers and directors and their affiliates (who own in the aggregate
approximately 2,100,000 of the shares outstanding) have informed the Company
that they intend to vote in favor of management's nominees for directors as set
forth herein.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed July 15, 2000, as the record date (the "Record
Date") for determining the holders of the Company's Common Stock who are
entitled to receive notice of, and to vote at, the Annual Meeting. The total
number of outstanding shares of the Company's Common Stock entitled to vote at
the meeting, based upon the shares of record at the close of business on the
Record Date was 12,600,000. As of the Record Date, the only outstanding voting
securities of the Company were shares of Common Stock, each of which is entitled
to one vote on each matter to come before the meeting. Holders of the voting
securities will be entitled to one vote per share held and will not be entitled
to cumulative voting rights in the election of directors.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company will consist of three directors, who will
be elected at the Annual Meeting to serve until their successors are elected at
the next annual meeting of shareholders. The current Board of Directors of the
Company consists of Steve Van Leeuwen, Kathleen Van Leeuwen and Jamil Kassam.
Mr. and Mrs. Van Leeuwen have agreed to be renominated to stand for election to
the position of director at the annual shareholders meeting. In addition, Mr.
Mitch Brooks has also agreed to serve as a director. If one or more of the
nominees is unable to serve or for good cause will not serve at the time of the
meeting, the shares represented by the proxies solicited by the Board of
Directors will be voted for the other nominees and for any substitute nominee(s)
designated by the Board of Directors.
A quorum being present, the three nominees for election to the Board of
Directors who receive the largest number of the votes cast for the election of
directors by the holders of voting shares present in person or represented by
proxy will be elected directors. Each shareholder will be entitled to one vote
for each voting share held by that shareholder, and will not be entitled to
cumulate votes in the election of directors. Under applicable Nevada law, in
tabulating the vote, abstentions and broker non-votes will be disregarded and
will have no effect on the outcome of the vote.
Nominees for Election to the Board of Directors
Name Age Principal Occupation Director Since
---- --- -------------------- --------------
Steve Van Leeuwen 41 Director and President 2000
Kathleen Van Leeuwen 47 Director and Secretary 2000
Mitch Brooks 40 Director -----
Set forth below is information regarding these nominees for director:
STEVE VAN LEEUWEN. Mr. Van Leeuwen has been president, chief executive officer
and a director of the Company since March 1, 2000. During the past five years,
Mr. Van Leeuwen has served as President and Chairman of the Board of TYSA
Corporation. Previous to this he was the Vice President of Marketing and
Business Development for Bard Diagnostic Sciences of Washington.
KATHLEEN VAN LEEUWEN. Ms. Van Leeuwen became a Director, Treasurer and Secretary
of the Company on March 1, 2000. During the past 5 years, Ms. Van Leeuwen has
served Vice President, Secretary and Director of TYSA Corporation and held
various positions as a Registered Nurse.
MITCH BROOKS. Mr. Brooks is Executive Vice President of the Trader Publishing
Company and President of Trader Ventures. Previous to this he held executive
positions with Cox Enterprises.
Steve Van Leeuwen and Kathleen Van Leeuwen are husband and wife. There are no
arrangements or understandings between any directors and any other person
pursuant to which that director was elected.
2
<PAGE>
Board Committees
The Company currently has no standing audit committee of its Board of Directors,
but intends to form one during the next 6 months. When formed, the audit
committee will review the Company's accounting policies, practices, internal
accounting controls and financial reporting. The audit committee will also
oversee the engagement of the Company's independent auditors, reviews the audit
findings and recommendations of the independent auditors, and monitors the
extent to which management has implemented the findings and recommendations of
the independent auditors.
The Company has no compensation committee of its Board of Directors, but intends
to form one during the next 6 months. When formed, the compensation committee
will establish salaries, incentives, and other forms of compensation for the
chief executive officer, the chief financial officer, and certain other key
employees of the Company and its subsidiaries. The compensation committee will
also administer policies relating to compensation and benefits, including the
2000 Stock Option and Stock Incentive Compensation Plan set forth in
Proposal 3 of this Proxy Statement.
During the year ended December 31, 1999, the Company's Board of Directors held 2
meetings. All persons who were directors during the year ended December 31, 1999
attended, in person or by telephone, at least seventy-five percent of all of the
meetings held while they were directors. The Board of Directors also approved
certain actions by unanimous written consent.
Board Compensation
The Company has not paid director's fees to its directors. The Company does,
however, reimburse actual expenses incurred by directors in attending Board
meetings.
Vacancies
Replacement directors for vacancies resulting from an increase in the size of
the Board of Directors or the resignation or removal of a director may be
appointed by the Board of Directors, or may be elected by the shareholders at a
special meeting. Directors so appointed or elected hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of July 15, 2000 by (i) by
each director, each director nominee, each Named Executive named in the tables
under "Executive Compensation" and by all executive officers and directors as a
group:
<TABLE>
<CAPTION>
Amount and Nature of Percent of Class
Positions and Beneficial Common Based Beneficial
Name and Address Offices Held on Stock Ownership(1) Ownership(1)
---------------- ------------- ---------------------- ------------
<S> <C> <C> <C>
Steve Van Leeuwen President and CEO, Director 1,050,000(2) 19.8%
16700- 198thAve., N.E.
Woodinville, WA 98072
Kathleen Van Leeuwen Director, Treasurer 1,050,000(3) 19.8%
16700- 198thAve., N.E. and Secretary
Woodinville, WA 98072
All Directors and
Officers as a group
(two persons) 2,100,000 39.6%
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<FN>
(1) Calculated pursuant to rule 13d-3(d) of the Securities Exchange Act of 1934.
Unless otherwise stated below, each such person has sole voting and investment
power with respect to all such shares. Under Rule 13d-3(d), shares not
outstanding which are subject to options, warrants, rights or conversion
privileges exercisable within 60 days are deemed outstanding for the purpose of
calculating the number and percentage owned by such person, but are not deemed
outstanding for the purpose of calculating the percentage owned by each other
person listed.
(2) Includes 1,050,000 shares of restricted Common Stock. There are no options
to purchase shares of Common Stock outstanding.
(3) Includes 1,050,000 shares of restricted Common Stock. There are no options
to purchase shares of Common Stock outstanding.
</FN>
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
Employment Contracts
On February 29,2000, the Company entered into an employment agreement and a
confidentiality, non-disclosure, invention assignment and nonsolicitation
agreement with Steve Van Leeuwen. The term of this agreement is twelve months.
The salary was set at a minimum of $120,000 per year, to be reviewed for
increase by the board of directors on a quarterly basis. In the event that the
Company terminates Mr. Van Leeuwen's employment without cause, 180 days'
severance will be paid.
On March 5, 2000, the Company entered into an employment agreement and a
confidentiality, non-disclosure, invention assignment and nonsolicitation
agreement with Kathleen Van Leeuwen. The term of this agreement is twelve
months. The salary was set at a minimum of $30,000 per year. In the event that
the Company terminates Ms.Van Leeuwen's employment without cause, 180 days'
severance will be paid.
Compensation
The following table shows all cash compensation paid or to be paid by the
Company as well as other compensation paid or accrued during the fiscal years
indicated to the chief executive officer (the "Named Executive"). No executive
officers of the Company as of the end of the Company's last fiscal year had
received salary and bonus for such period which exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------------
Annual Compensation Awards Payouts
------------------------- --------------------- ---------
Long Term
Restricted Securities Incentive
Other Annual Stock Underlying Plan All Other
Name and Principal Salary Bonus Compensation Award(s) Options Payouts Compensation
Position Year ($) ($) ($) ($) (#)(1) ($) ($)(2)
------------------ ---- ------ ----- ----- ---- ---------- ------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Steve Van Leeuwen 2000 $120000 $ 0 $ 0 $ 0 0 $ 0 $7500 $127,500
CEO and President
-------------------------------------------------------------------------------
<FN>
(1) Common Stock Purchase Options
(2) Company Vehicle
</FN>
</TABLE>
5
<PAGE>
Option Exercises and Holdings
The following table sets forth information with respect to the Named Executive,
concerning the exercise of options during the last fiscal year and unexercised
options held as of the end of the fiscal year December 31, 1999.
Aggregated Options in Last Fiscal Year and Fiscal Year-End Options Values:
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-The-Money Options/SARs
Fiscal Year-End(#) At Fiscal Year-End($)
------------------------- -------------------------
Shares Acquired Value
Name on Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
----------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Steve Van Leeuwen 0 $ 0 0 0 0 $ 0
--------------------------------------------------------------------------------
<FN>
(1) No options were exercisable at the 1999 fiscal year-end.
(2) All options are granted subject to the terms and conditions of the 2000
Stock Incentive and Stock Option Plan.
</FN>
</TABLE>
Benefit Plans
The Company has no compensation, pension, profit sharing or similar plans in
effect, other than a simple IRA plan. It provides medical insurance coverage to
employees and officers and may provide other benefits in the future. The Company
reimburses actual expenses incurred in attending Board meetings. The Company's
2000 Stock Option And Stock Incentive Compensation Plan as amended is described
in Proposal 3, below.
Certain Relationships And Related Transactions
On February 29,2000, the Company entered into an employment agreement (the "Van
Leeuwen Agreement") with Steve Van Leeuwen ("Van Leeuwen"), under which Van
Leeuwen agreed to become an employee of the Company and to become its Chief
Executive Officer.
The Company leases an office in Woodinville, WA from an unrelated third party
for a monthly rental of approximately $8000.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR EACH OF THE
THREE DIRECTORS NOMINATED ABOVE.
6
<PAGE>
PROPOSAL 2
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification
Subject to ratification by the shareholders at the Meeting, the Board of
Directors has appointed GRANT THORNTON as independent auditors for the fiscal
year ending December 31, 2000 and until their successors are selected. GRANT
THORNTON has served as auditors of the consolidated financial statements of the
Company for the fiscal year ended December 31, 1999. A representative of GRANT
THORNTON will be present at the Meeting and will have the opportunity to make a
statement if he or she desires to do so and will be available to answer
appropriate questions.
The affirmative vote of the majority of the shares represented at the meeting
and entitled to vote on the matter is required to ratify the appointment of
GRANT THORNTON as independent public accountants. Abstentions and broker
non-votes will have the effect of a vote against ratification.
Resignation of Independent Accountants
On May 8, 2000, Barry L Friedman PC resigned as the Company's auditor at the
request of the Board of Directors. During the two previous fiscal years, the
auditor expressed no adverse opinion, nor was any audit qualified or modified.
There were no disagreements of any kind between the Company and Barry L.
Friedman PC. The Board of Directors decided that it wanted to use a major
accounting firm to perform its audit and therefore asked Barry L Friedman to
resign.
On April 3, 2000, the Company engaged GRANT THORNTON ("GRANT THORNTON") as its
certifying accountant. Management has not previously consulted with GRANT
THORNTON on any accounting or financial reporting matters.
Other than the disclosures above, there are no other matters required pursuant
to Form 8-K, or Item 304 of Regulation S-K, to be disclosed herein.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR RATIFICATION OF
GRANT THORNTON, AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2000.
PROPOSAL 3
APPROVAL OF THE COMPANY'S 2000 STOCK OPTION AND STOCK INCENTIVE COMPENSATION
PLAN, AS AMENDED
Description of the Plan
The 2000 Stock Option and Stock Incentive Compensation Plan, as amended (the
"Plan") was established to encourage selected key employees, consultants, and
directors of the Company to enhance the ability of the Company to attract and
retain qualified individuals. The Plan was adopted by the Board of Directors on
April 4, 2000 subject to shareholder approval. All employees (approximately 15
individuals as of the date of this proxy), consultants, and directors are
eligible to participate in the Plan. The Plan provides for the granting of stock
options that are qualified under Section 422 of the Internal Revenue Code,
options which are non-qualified under Section 422 and grants of stock. The
following description of the Plan is qualified in its entirety by reference to
Exhibits A and B to this Proxy Statement.
The Plan is administered by the Board of Directors, functioning as a Committee
("Committee"). This Committee, solely in its discretion, selects participants
and determines the amount and terms of awards under the Plan.
7
<PAGE>
Subject to adjustment under certain circumstances to prevent dilution or
enlargement of the benefits or potential benefits intended to be made under the
Plan, the number of shares of Common Stock available for awards (whether options
or restricted stock) under the Plan is 1,000,000. These shares may be issued in
connection with grants of options for Common Stock or as grants of restricted
Common Stock. The exercise price for all options will be not less than the fair
market value of the Common Stock on the date of the grant, except that options
granted to greater than 10% shareholders will be not less than 110% of the fair
value of the Common Stock on the date of the grant. The option award provides
that all options expire ten years after the date of grant, except that options
granted to greater than 10% shareholders will expire five years after the date
of grant. No awards may be granted under the Plan after December 1, 2009.
The Plan may be amended, altered, suspended, discontinued, or terminated by the
Company's Board of Directors except to the extent prohibited by applicable law
and as expressly provided in an award agreement or in the Plan.
An affirmative vote of a majority of the shares present or represented in person
or by proxy at the Annual Meeting is required for approval of the Plan.
Abstentions and broker non-votes will have the effect of a vote against
approval.
THE COMPENSATION COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND THE SHAREHOLDERS
VOTE FOR THIS PROPOSAL.
OTHER MATTERS TO BE VOTED UPON
Management does not know of any other matters to be brought before the meeting.
If any other matters not mentioned in the proxy statement are properly brought
before the meeting, the individuals named in the enclosed proxy intend to vote
such proxy in accordance with their best judgment on such matters.
8
<PAGE>
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2001 annual meeting of
Stockholders must be received by the Company on or before December 31, 2000, in
order to be eligible for inclusion in the Company's proxy statement and form of
proxy. To be so included, a proposal must also comply with all applicable
provisions of Rule 14a-8 under the Securities Exchange Act of 1934.
SOLICITATION OF PROXIES
The costs of soliciting proxies will be paid by the Company. In addition to the
use of the mails, proxies may be personally solicited by directors, officers or
regular employees of the Company (who will not be compensated separately for
their services), by mail, telephone, telegraph, cable or personal discussion.
The Company will also request banks, brokers and other custodians, nominees and
fiduciaries to forward proxy materials to the beneficial owners of stock held of
record by such persons and request authority for the execution of proxies. The
Company will reimburse such entities for reasonable out-of-pocket expenses
incurred in handling proxy materials for the beneficial owners of the Company's
Common Stock.
COMPANY REPORT AND FINANCIAL STATEMENTS
A copy of the Company's March 31, 2000 Report Form 10-QSB, which includes the
Company's Financial Statements for the period then ended, accompanies this Proxy
Statement. The Report is not to be treated as part of or incorporated by
reference into the proxy solicitation material.
9
<PAGE>
Please complete, date, sign and return the accompanying proxy promptly in the
enclosed envelope. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE
YOU TO FILL IN, SIGN AND RETURN THE ACCOMPANYING PROXY, NO MATTER HOW LARGE OR
SMALL YOUR HOLDINGS MAY BE.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ STEVE VAN LEEUWEN
---------------------
Steve Van Leeuwen, Chief Executive Officer & President
July 18, 2000
10
<PAGE>
Appendix A
AUTEO MEDIA, INC.
2000 STOCK OPTION & STOCK INCENTIVE COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Auteo Media, Inc. 2000 Stock Incentive Compensation Plan (the
"Plan") is to enhance the long-term shareholder value of Auteo Media, Inc., a
Nevada corporation (the "Company"), by offering opportunities to selected
persons to participate in the Company's growth and success, and to encourage
them to remain in the service of the Company and its Related Corporations (as
defined in Section 2) and to acquire and maintain stock ownership in the
Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below:
"Award" means an award or grant made pursuant to the Plan, including, without
limitation, awards or grants of Stock Awards and Options, or any combination of
the foregoing.
"Board" means the Board of Directors of the Company.
"Cause" means dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, or conviction or confession of a
crime punishable by law (except minor violations), in each case as determined by
the Plan Administrator, and its determination shall be conclusive and binding.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Common Stock" means the common stock, par value $0.001 per share, of the
Company.
"Corporate Transaction" has the meaning set forth in Section 12.3.1.
"Disability," unless otherwise defined by the Plan Administrator, means a mental
or physical impairment of the Participant that is expected to result in death or
that has lasted or is expected to last for a continuous period of 12 months or
more and that causes the Participant to be unable, in the opinion of the
Company, to perform his or her duties for the Company or a Related Corporation
and to be engaged in any substantial gainful activity.
"Early Retirement" means early retirement as that term is defined by the Plan
Administrator from time to time for purposes of the Plan.
"Effective Date" has the meaning set forth in Section 16.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market for a single trading day or (b)
if the Common Stock is listed on the New York Stock Exchange or the American
Stock Exchange, the average of the high and low per share sales prices for the
Common Stock as such price is officially quoted in the composite tape of
transactions on such exchange for a single trading day. If the Common Stock is
not listed on the Nasdaq National Market, the New York Stock Exchange or the
American Stock Exchange and the Common Stock is listed on the NASD OTC Bulletin
Board, then the average of the high and low per share sales prices for the
Common Stock as reported by the NASD OTC Bulletin Board for a single trading
day. If there is no such reported price for the
A-1
<PAGE>
Common Stock for the date in question, then such price on the last preceding
date for which such price exists shall be determinative of Fair Market Value.
"Good Reason" means the occurrence of any of the following events or conditions
and the failure of the Successor Corporation to cure such event or condition
within 30 days after receipt of written notice from the Participant:
(a) a change in the Participant's status, title, position or responsibilities
(including reporting responsibilities) that, in the Participant's reasonable
judgment, represents a substantial reduction in the status, title, position or
responsibilities as in effect immediately prior thereto; the assignment to the
Participant of any duties or responsibilities that, in the Participant's
reasonable judgment, are materially inconsistent with such status, title,
position or responsibilities; or any removal of the Participant from or failure
to reappoint or reelect the Participant to any of such positions, except in
connection with the termination of the Participant's employment for Cause, for
Disability or as a result of his or her death, or by the Participant other than
for Good Reason;
(b) a reduction in the Participant's annual base salary;
(c) the Successor Corporation's requiring the Participant (without the
Participant's consent) to be based at any place outside a 35-mile radius of his
or her place of employment prior to a Corporate Transaction, except for
reasonably required travel on the Successor Corporation's business that is not
materially greater than such travel requirements prior to the Corporate
Transaction;
(d) the Successor Corporation's failure to (i) continue in effect any material
compensation or benefit plan (or the substantial equivalent thereof) in which
the Participant was participating at the time of a Corporate Transaction,
including, but not limited to, the Plan, or (ii) provide the Participant with
compensation and benefits substantially equivalent (in terms of benefit levels
and/or reward opportunities) to those provided for under each material employee
benefit plan, program and practice as in effect immediately prior to the
Corporate Transaction;
(e) any material breach by the Successor Corporation of its obligations to the
Participant under the Plan or any substantially equivalent plan of the Successor
Corporation; or
(f) any purported termination of the Participant's employment or service
relationship for Cause by the Successor Corporation that is not in accordance
with the definition of Cause under the Plan.
"Grant Date" means the date on which the Plan Administrator completes the
corporate action relating to the grant of an Award and all conditions precedent
to the grant have been satisfied, provided that conditions to the exercisability
or vesting of Awards shall not defer the Grant Date.
"Incentive Stock Option" means an Option to purchase Common Stock granted under
Section 7 with the intention that it qualify as an "incentive stock option" as
that term is defined in Section 422 of the Code.
"Nonqualified Stock Option" means an Option to purchase Common Stock granted
under Section 7 other than an Incentive Stock Option.
"Option" means the right to purchase Common Stock granted under Section 7.
"Option Term" has the meaning set forth in Section 7.3.
"Parent," except as otherwise provided in Section 8.3 in connection with
Incentive Stock Options, means any entity, whether now or hereafter existing,
that directly or indirectly controls the Company.
"Participant" means (a) the person to whom an Award is granted; (b) for a
Participant who has died, the personal representative of the Participant's
estate, the person(s) to whom the Participant's rights under the Award have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in
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accordance with Section 11; or (c) the person(s) to whom an Award has been
transferred in accordance with Section 11.
"Plan Administrator" means the Board or any committee or committees designated
by the Board to administer the Plan under Section 3.1.
"Related Corporation" means any Parent or Subsidiary of the Company.
"Retirement" means retirement as of the individual's normal retirement date
under the Company's 401(k) Plan or other similar successor plan applicable to
salaried employees, unless otherwise defined by the Plan Administrator from time
to time for purposes of the Plan.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Award" means shares of Common Stock or units denominated in Common Stock
granted under Section 9, the rights of ownership of which may be subject to
restrictions prescribed by the Plan Administrator.
"Subsidiary," except as otherwise provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company.
"Successor Corporation" has the meaning set forth in Section 12.3.
"Termination Date" has the meaning set forth in Section 7.6.
SECTION 3. ADMINISTRATION
3.1 Plan Administrator
The Plan shall be administered by the Board and/or a committee or committees
(which term includes subcommittees) appointed by, and consisting of two or more
members of, the Board (a "Plan Administrator"). If and so long as the Common
Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board
shall consider in selecting the members of any committee acting as Plan
Administrator, with respect to any persons subject or likely to become subject
to Section 16 of the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Code and (b) "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act. Notwithstanding
the foregoing, the Board may delegate the responsibility for administering the
Plan with respect to designated classes of eligible persons to different
committees consisting of two or more members of the Board, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time.
3.2 Administration and Interpretation by Plan Administrator
Except for the terms and conditions explicitly set forth in the Plan, the Plan
Administrator shall have exclusive authority, in its discretion, to determine
all matters relating to Awards under the Plan, including the selection of
individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and the terms of any instrument evidencing the Award and may
from time to time adopt and change rules and regulations of general application
for the Plan's administration. The Plan Administrator's interpretation of the
Plan and its rules and regulations, and all actions taken and determinations
made by the Plan Administrator pursuant to the Plan, shall be conclusive and
binding on all parties involved or affected. The Plan Administrator may delegate
administrative duties to such of the Company's officers as it so determines.
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SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 12.1, a maximum
of 1,000,000 shares of Common Stock shall be available for issuance under the
Plan.
Shares issued under the Plan shall be drawn from authorized and unissued shares
or shares now held or subsequently acquired by the Company.
4.2 Limitations
(a) Subject to adjustment from time to time as provided in Section 12.1, not
more than an aggregate of 300,000 shares shall be available for issuance
pursuant to grants of Stock Awards under the Plan.
(b) Subject to adjustment from time to time as provided in Section 12.1, not
more than 100,000 shares of Common Stock may be made subject to Stock Awards
under the Plan to any individual in the aggregate in any one fiscal year of the
Company, except that the Company may make additional one-time grants of up to
500,000 shares to newly hired individuals, such limitation to be applied in a
manner consistent with the requirements of, and only to the extent required for
compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.
4.3 Reuse of Shares
Any shares of Common Stock that have been made subject to an Award that cease to
be subject to the Award (other than by reason of exercise or payment of the
Award to the extent it is exercised for or settled in shares) shall again be
available for issuance in connection with future grants of Awards under the
Plan; provided, however, that for purposes of Section 4.2, any such shares shall
be counted in accordance with the requirements of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and employees
of the Company and its Related Corporations as the Plan Administrator from time
to time selects. Awards may also be made to consultants, agents, advisors and
independent contractors who provide services to the Company and its Related
Corporations; provided, however, that such Participants render bona fide
services that are not in connection with the offer and sale of the Company's
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities.
SECTION 6. AWARDS
6.1 Form and Grant of Awards
The Plan Administrator shall have the authority, in its sole discretion, to
determine the type or types of Awards to be made under the Plan. Such Awards may
include, but are not limited to, Incentive Stock Options, Nonqualified Stock
Options and Stock Awards. Awards may be granted singly or in combination.
6.2 Settlement of Awards
The Company may settle Awards through the delivery of shares of Common Stock,
cash payments, the granting of replacement Awards or any combination thereof as
the Plan Administrator shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred stock
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equivalents. The Plan Administrator may at any time offer to buy out, for a
payment in cash or Common Stock, an Award previously granted based on such terms
and conditions as the Plan Administrator shall establish and communicate to the
Participant at the time such offer is made.
6.3 Acquired Company Awards
Notwithstanding anything in the Plan to the contrary, the Plan Administrator may
grant Awards under the Plan in substitution for awards issued under other plans,
or assume under the Plan awards issued under other plans, if the other plans are
or were plans of other acquired entities ("Acquired Entities") (or the parent of
the Acquired Entity) and the new Award is substituted, or the old award is
assumed, by reason of a merger, consolidation, acquisition of property or stock,
reorganization or liquidation (the "Acquisition Transaction"). In the event that
a written agreement pursuant to which the Acquisition Transaction is completed
is approved by the Board and said agreement sets forth the terms and conditions
of the substitution for or assumption of outstanding awards of the Acquired
Entity, said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as
may be required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such awards shall be deemed to be Participants.
SECTION 7. AWARDS OF OPTIONS
7.1 Grant of Options
The Plan Administrator is authorized under the Plan, in its sole discretion, to
issue Options as Incentive Stock Options or as Nonqualified Stock Options, which
shall be appropriately designated.
7.2 Option Exercise Price
The exercise price for shares purchased under an Option shall be as determined
by the Plan Administrator, but shall not be less than 100% of the Fair Market
Value of the Common Stock on the Grant Date with respect to Incentive Stock
Options and with respect to Nonqualified Stock Options. For Incentive Stock
Options granted to a more than 10% shareholder, the Option exercise price shall
be as specified in Section 8.2.
7.3 Term of Options
The term of each Option (the "Option Term") shall be as established by the Plan
Administrator or, if not so established, shall be ten years from the Grant Date.
For Incentive Stock Options, the maximum Option Term shall be as specified in
Sections 8.2 and 8.4.
7.4 Exercise of Options
The Plan Administrator shall establish and set forth in each instrument that
evidences an Option the time at which, or the installments in which, the Option
shall vest and become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time. If not so established in the instrument
evidencing the Option, the Option shall vest and become exercisable according to
the following schedule, which may be waived or modified by the Plan
Administrator at any time:
<TABLE>
<CAPTION>
Period of Participant's Continuous
Employment or
Service With the Company or Its Related Percent of Total Option
Corporations From the Option Grant Date That Is Vested and Exercisable
--------------------------------------- ------------------------------
<S> <C>
After 1 Year of fulltime employment.... 25%
Each additional one-month period of
Continuous employment completed thereafter. An additional 1/36
After 4 years............................ 100%
</TABLE>
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The Plan Administrator may adjust the vesting schedule of an Option held by a
Participant who works less than "full-time" as that term is defined by the Plan
Administrator.
To the extent that an Option has vested and become exercisable, the Option may
be exercised from time to time by delivery to the Company of a written stock
option exercise agreement or notice, in a form and in accordance with procedures
established by the Plan Administrator, setting forth the number of shares with
respect to which the Option is being exercised, the restrictions imposed on the
shares purchased under such exercise agreement, if any, and such representations
and agreements as may be required by the Plan Administrator, accompanied by
payment in full as described in Section 7.5. An Option may not be exercised for
less than a reasonable number of shares at any one time, as determined by the
Plan Administrator.
7.5 Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid in full to
the Company by delivery of consideration equal to the product of the Option
exercise price and the number of shares purchased. Such consideration must be
paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, in any combination of
(a) cash or check;
(b) tendering (either actually or, if and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, by attestation)
shares of Common Stock already owned by the Participant for at least six months
(or any shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal to the aggregate Option exercise price;
(c) if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, delivery of a properly executed exercise notice,
together with irrevocable instructions, to (i) a brokerage firm designated by
the Company to deliver promptly to the Company the aggregate amount of sale or
loan proceeds to pay the Option exercise price and any withholding tax
obligations that may arise in connection with the exercise and (ii) the Company
to deliver the certificates for such purchased shares directly to such brokerage
firm, all in accordance with the regulations of the Federal Reserve Board; or
(d) such other consideration as the Plan Administrator may permit.
In addition, to assist a Participant (including a Participant who is an officer
or a director of the Company) in acquiring shares of Common Stock pursuant to an
Award granted under the Plan, the Plan Administrator, in its sole discretion,
may authorize, either at the Grant Date or at any time before the acquisition of
Common Stock pursuant to the Award, (i) the payment by a Participant of a
full-recourse promissory note, (ii) the payment by the Participant of the
purchase price, if any, of the Common Stock in installments, or (iii) the
guarantee by the Company of a loan obtained by the Participant from a third
party. Subject to the foregoing, the Plan Administrator shall in its sole
discretion specify the terms of any loans, installment payments or loan
guarantees, including the interest rate and terms of and security for repayment.
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7.6 Post-Termination Exercises
The Plan Administrator shall establish and set forth in each instrument that
evidences an Option whether the Option shall continue to be exercisable, and the
terms and conditions of such exercise, if a Participant ceases to be employed
by, or to provide services to, the Company or its Related Corporations, which
provisions may be waived or modified by the Plan Administrator at any time. If
not so established in the instrument evidencing the Option, the Option shall be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time:
(a) Any portion of an Option that is not vested and exercisable on the date of
termination of the Participant's employment or service relationship (the
"Termination Date") shall expire on such date.
(b) Any portion of an Option that is vested and exercisable on the Termination
Date shall expire upon the earliest to occur of
(i) the last day of the Option Term;
(ii) if the Participant's Termination Date occurs for reasons other than Cause,
death, Disability, or Retirement, the three-month anniversary of such
Termination Date;
(iii) if the Participant's Termination Date occurs by reason of Retirement, the
one-year anniversary of such Termination Date; and
(iv) if the Participant's Termination Date occurs by reason of Disability or
death, the one-year anniversary of such Termination Date.
Notwithstanding the foregoing, if the Participant dies after the Termination
Date while the Option is otherwise exercisable, the portion of the Option that
is vested and exercisable on such Termination Date shall expire upon the earlier
to occur of (y) the last day of the Option Term and (z) the first anniversary of
the date of death, unless the Plan Administrator determines otherwise.
Also notwithstanding the foregoing, in case of termination of the Participant's
employment or service relationship for Cause, the Option shall automatically
expire upon first notification to the Participant of such termination, unless
the Plan Administrator determines otherwise. If a Participant's employment or
service relationship with the Company is suspended pending an investigation of
whether the Participant shall be terminated for Cause, all the Participant's
rights under any Option likewise shall be suspended during the period of
investigation.
A Participant's transfer of employment or service relationship between or among
the Company and its Related Corporations, or a change in status from an employee
to a consultant, agent, advisor or independent contractor, shall not be
considered a termination of employment or service relationship for purposes of
this Section 7. Employment or service relationship shall be deemed to continue
while the Participant is on a bona fide leave of absence, if such leave was
approved by the Company or a Related Corporation in writing and if continued
crediting of service for purposes of this Section 7 is expressly required by the
terms of such leave or by applicable law (as determined by the Company). The
effect of a Company-approved leave of absence on the terms and conditions of an
Option shall be determined by the Plan Administrator, in its sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock Options shall
be subject to the following additional terms and conditions:
8.1 Dollar Limitation
To the extent the aggregate Fair Market Value (determined as of the Grant Date)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time during any calendar year (under the
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Plan and all other stock option plans of the Company) exceeds $100,000, such
portion in excess of $100,000 shall be treated as a Nonqualified Stock Option.
In the event the Participant holds two or more such Options that become
exercisable for the first time in the same calendar year, such limitation shall
be applied on the basis of the order in which such Options are granted.
8.2 More Than 10% Shareholders
If an individual owns more than 10% of the total voting power of all classes of
the Company's stock, then the exercise price per share of an Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Grant Date and the Option Term shall not exceed five years. The
determination of more than 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 Eligible Employees
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.
8.4 Term
Except as provided in Section 8.2, the Option Term shall not exceed 10 years.
8.5 Exercisability
An Option designated as an Incentive Stock Option shall cease to qualify for
favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
after the Termination Date for reasons other than death or Disability, (b) more
than one year after the Termination Date by reason of Disability, or (c) after
the Participant has been on leave of absence for more than 90 days, unless the
Participant's reemployment rights are guaranteed by statute or contract.
For purposes of this Section 8.5, Disability shall mean "disability" as that
term is defined for purposes of Section 422 of the Code.
8.6 Taxation of Incentive Stock Options
In order to obtain certain tax benefits afforded to Incentive Stock Options
under Section 422 of the Code, the Participant must hold the shares issued upon
the exercise of an Incentive Stock Option for two years after the Grant Date and
one year from the date of exercise. A Participant may be subject to the
alternative minimum tax at the time of exercise of an Incentive Stock Option.
The Participant shall give the Company prompt notice of any disposition of
shares acquired by the exercise of an Incentive Stock Option prior to the
expiration of such holding periods.
8.7 Promissory Notes
The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.
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SECTION 9. STOCK AWARDS
9.1 Grant of Stock Awards
The Plan Administrator is authorized to make Awards of Common Stock or Awards
denominated in units of Common Stock on such terms and conditions and subject to
such restrictions, if any (which may be based on continuous service with the
Company or the achievement of performance goals related to profits, profit
growth, profit-related return ratios, cash flow or total shareholder return,
where such goals may be stated in absolute terms or relative to comparison
companies), as the Plan Administrator shall determine, in its sole discretion,
which terms, conditions and restrictions shall be set forth in the instrument
evidencing the Award. The terms, conditions and restrictions that the Plan
Administrator shall have the power to determine shall include, without
limitation, the manner in which shares subject to Stock Awards are held during
the periods they are subject to restrictions and the circumstances under which
forfeiture of the Stock Award shall occur by reason of termination of the
Participant's employment or service relationship.
9.2 Issuance of Shares
Upon the satisfaction of any terms, conditions and restrictions prescribed in
respect to a Stock Award, or upon the Participant's release from any terms,
conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant's death, to the personal
representative of the Participant's estate or as the appropriate court directs,
the appropriate number of shares of Common Stock.
9.3 Waiver of Restrictions
Notwithstanding any other provisions of the Plan, the Plan Administrator may, in
its sole discretion, waive the forfeiture period and any other terms, conditions
or restrictions on any Stock Award under such circumstances and subject to such
terms and conditions as the Plan Administrator shall deem appropriate
provisions; provided, however, that the Plan Administrator may not adjust
performance goals for any Stock Award intended to be exempt under Section 162(m)
of the Code for the year in which the Stock Award is settled in such a manner as
would increase the amount of compensation otherwise payable to a Participant.
SECTION 10. WITHHOLDING
The Company may require the Participant to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant, vesting or exercise of any Award. Subject to the Plan and applicable law,
the Plan Administrator may, in its sole discretion, permit the Participant to
satisfy withholding obligations , in whole or in part, (a) by paying cash, (b)
by electing to have the Company withhold shares of Common Stock (up to the
minimum required federal tax withholding rate) or (c) by transferring to the
Company shares of Common Stock (already owned by the Participant for the period
necessary to avoid a charge to the Company's earnings for financial reporting
purposes), in such amounts as are equivalent to the Fair Market Value of the
withholding obligation. The Company shall have the right to withhold from any
Award or any shares of Common Stock issuable pursuant to an Award or from any
cash amounts otherwise due or to become due from the Company to the Participant
an amount equal to such taxes. The Company may also deduct from any Award any
other amounts due from the Participant to the Company or a Related Corporation.
SECTION 11. ASSIGNABILITY
Awards granted under the Plan and any interest therein may not be assigned,
pledged or transferred by the Participant and may not be made subject to
attachment or similar proceedings otherwise than by will or by the applicable
laws of descent and distribution, and, during the Participant's lifetime, such
Awards may be exercised only by the Participant. Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Code, the Plan Administrator,
in its sole discretion, may permit such assignment, transfer and exercisability
and may
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permit a Participant to designate a beneficiary who may exercise the Award or
receive compensation under the Award after the Participant's death; provided,
however, that any Award so assigned or transferred shall be subject to all the
same terms and conditions contained in the instrument evidencing the Award.
SECTION 12. ADJUSTMENTS
12.1 Adjustment of Shares
In the event that, at any time or from time to time, a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefore or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Common Stock of the Company, then the Plan Administrator
shall make proportional adjustments in (i) the maximum number and kind of
securities subject to the Plan as set forth in Section 4.1 and the maximum
number and kind of securities that may be made subject to Stock Awards and to
Awards to any individual as set forth in Section 4.2, and (ii) the number and
kind of securities that are subject to any outstanding Award and the per share
price of such securities, without any change in the aggregate price to be paid
therefore. The determination by the Plan Administrator as to the terms of any of
the foregoing adjustments shall be conclusive and binding. Notwithstanding the
foregoing, a dissolution or liquidation of the Company or a Corporate
Transaction shall not be governed by this Section 12.1 but shall be governed by
Sections 12.2 and 12.3, respectively.
12.2 Dissolution or Liquidation
In the event of the proposed dissolution or liquidation of the Company, the Plan
Administrator shall notify each Participant as soon as practicable prior to the
effective date of such proposed transaction. The Plan Administrator in its
discretion may permit a Participant to exercise an Option until ten days prior
to such transaction with respect to all vested and exercisable shares of Common
Stock covered thereby and with respect to such number of unvested shares as the
Plan Administrator shall determine. In addition, the Plan Administrator may
provide that any forfeiture provision or Company repurchase option applicable to
any Award shall lapse as to such number of shares as the Plan Administrator
shall determine, contingent upon the occurrence of the proposed dissolution or
liquidation at the time and in the manner contemplated. To the extent an Option
has not been previously exercised, the Option shall terminate automatically
immediately prior to the consummation of the proposed action. To the extent a
forfeiture provision applicable to a Stock Award has not been waived by the Plan
Administrator, the Stock Award shall be forfeited automatically immediately
prior to the consummation of the proposed action.
12.3 Corporate Transaction
12.3.1 Definitions
The following terms shall be defined as set forth below:
"Corporate Transaction" means any of the following events:
(a) Consummation of any merger or consolidation of the Company with or into
another corporation; or
(b) Consummation of any sale, lease, exchange or other transfer in one
transaction or a series of related transactions of all or substantially all the
Company's outstanding securities or substantially all the Company's assets other
than a transfer of the Company's assets to a majority-owned subsidiary
corporation (as defined in Section 8.3) of the Company; or
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(c) Acquisition by a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date of adoption of the Plan) of the Exchange Act
of a majority or more of the Company's outstanding voting securities (whether
directly or indirectly, beneficially or of record). Ownership of voting
securities shall take into account and shall include ownership as determined by
applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption of the Plan)
under the Exchange Act.
Any such Awards that are assumed or replaced in the Corporate Transaction, other
than a Related Party Transaction, and do not otherwise accelerate at that time
shall be accelerated in the event that the Participant's employment or service
relationship should subsequently terminate within two years following such
Corporate Transaction, unless such employment or service relationship is
terminated by the Successor Corporation for Cause or by the Participant
voluntarily without Good Reason.
"Related Party Transaction" means (a) a merger of the Company in which the
holders of shares of Common Stock immediately prior to the merger hold at least
a majority of the shares of Common Stock in the surviving corporation
immediately after the merger, (b) a mere reincorporation of the Company or (c) a
transaction undertaken for the sole purpose of creating a holding company.
12.3.2 Options
In the event of a Corporate Transaction, except as otherwise provided in the
instrument evidencing the Award, each outstanding Option shall be assumed or
continued or an equivalent option or right substituted by the surviving
corporation, the successor corporation or its parent corporation, as applicable
(the "Successor Corporation"). In the event that the Successor Corporation
refuses to assume, continue or substitute for the Option, the Participant shall
fully vest in and have the right to exercise the Option as to all of the shares
of Common Stock subject thereto, including shares as to which the Option would
not otherwise be vested or exercisable. If an Option will become fully vested
and exercisable in lieu of assumption or substitution in the event of a
Corporate Transaction, the Plan Administrator shall notify the Participant in
writing or electronically that the Option shall be fully vested and exercisable
for a specified time period after the date of such notice, and the Option shall
terminate upon the expiration of such period, in each case conditioned on the
consummation of the Corporate Transaction. For the purposes of this Section
12.3, the Option shall be considered assumed if, following the Corporate
Transaction, the option or right confers the right to purchase or receive, for
each share of Common Stock subject to the Option, immediately prior to the
Corporate Transaction, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the Corporate Transaction is not
solely common stock of the Successor Corporation, the Plan Administrator may,
with the consent of the Successor Corporation, provide for the consideration to
be received upon the exercise of the Option, for each share of Common Stock
subject thereto, to be solely common stock of the Successor Corporation equal in
fair market value to the per share consideration received by holders of Common
Stock in the Corporate Transaction. All Options shall terminate and cease to
remain outstanding immediately following the consummation of the Corporate
Transaction, except to the extent assumed by the Successor Corporation.
12.3.3 Stock Awards
In the event of a Corporate Transaction, the vesting of shares subject to Stock
Awards shall accelerate, and the forfeiture provisions to which such shares are
subject shall lapse, if and to the same extent that the vesting of outstanding
Options accelerates in connection with the Corporate Transaction. If unvested
Options are to be assumed, continued or substituted by a Successor Corporation
without acceleration upon the occurrence of a Corporate Transaction, the
forfeiture provisions to which such shares are subject will continue with
respect to shares of the Successor Corporation that may be issued in exchange
for such Shares.
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12.4 Further Adjustment of Awards
Subject to Sections 12.2 and 12.3, the Plan Administrator shall have the
discretion, exercisable at any time before a sale, merger, consolidation,
reorganization, liquidation or change in control of the Company, as defined by
the Plan Administrator, to take such further action as it determines to be
necessary or advisable, and fair and equitable to the Participants, with respect
to Awards. Such authorized action may include (but shall not be limited to)
establishing, amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, lifting restrictions and other modifications, and
the Plan Administrator may take such actions with respect to all Participants,
to certain categories of Participants or only to individual Participants. The
Plan Administrator may take such action before or after granting Awards to which
the action relates and before or after any public announcement with respect to
such sale, merger, consolidation, reorganization, liquidation or change in
control that is the reason for such action.
12.5 Limitations
The grant of Awards shall in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 13. MARKET STANDOFF
In connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, a person shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
of or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to any shares issued pursuant to an Award granted
under the Plan without the prior written consent of the Company or its
underwriters. Such limitations shall be in effect for such period of time as may
be requested by the Company or such underwriters and agreed to by the Company's
officers and directors with respect to their shares; provided, however, that in
no event shall such period exceed 180 days. The limitations of this paragraph
shall in all events terminate two years after the effective date of the
Company's initial public offering. Holders of shares issued pursuant to an Award
granted under the Plan shall be subject to the market standoff provisions of
this paragraph only if the officers and directors of the Company are also
subject to similar arrangements.
In the event of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the Company's
outstanding Common Stock effected as a class without the Company's receipt of
consideration, any new, substituted or additional securities distributed with
respect to the purchased shares shall be immediately subject to the provisions
of this Section 13, to the same extent the purchased shares are at such time
covered by such provisions.
In order to enforce the limitations of this Section 13, the Company may impose
stop-transfer instructions with respect to the purchased shares until the end of
the applicable standoff period.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
14.1 Amendment of Plan
The Plan may be amended only by the Board in such respects as it shall deem
advisable; provided, however, that to the extent required for compliance with
Section 422 of the Code or any applicable law or regulation, shareholder
approval shall be required for any amendment that would (a) increase the total
number of shares available for issuance under the Plan, (b) modify the class of
persons eligible to receive Options, or (c) otherwise require shareholder
approval under any applicable law or regulation. Any amendment made to the Plan
that would constitute a "modification" to Incentive Stock Options outstanding on
the date of such amendment shall not, without the consent of the Participant, be
applicable to such outstanding Incentive Stock Options but shall have
prospective effect only.
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<PAGE>
14.2 Termination of Plan
The Board may suspend or terminate the Plan at any time. The Plan shall have no
fixed expiration date; provided, however, that no Incentive Stock Options may be
granted more than ten years after the later of (a) the Plan's adoption by the
Board and (b) the adoption by the Board of any amendment to the Plan that
constitutes the adoption of a new plan for purposes of Section 422 of the Code.
14.3 Consent of Participant
The amendment or termination of the Plan or the amendment of an outstanding
Award shall not, without the Participant's consent, impair or diminish any
rights or obligations under any Award theretofore granted to the Participant
under the Plan. Any change or adjustment to an outstanding Incentive Stock
Option shall not, without the consent of the Participant, be made in a manner so
as to constitute a "modification" that would cause such Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option. Notwithstanding the
foregoing, any adjustments made pursuant to Section 12 shall not be subject to
these restrictions.
SECTION 15. GENERAL
15.1 Evidence of Awards
Awards granted under the Plan shall be evidenced by a written instrument that
shall contain such terms, conditions, limitations and restrictions as the Plan
Administrator shall deem advisable and that are not inconsistent with the Plan.
15.2 No Individual Rights
Nothing in the Plan or any Award granted under the Plan shall be deemed to
constitute an employment contract or confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Corporation or limit in any way
the right of the Company or any Related Corporation to terminate a Participant's
employment or other relationship at any time, with or without Cause.
15.3 Registration
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to issue or deliver any shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan unless such issuance, delivery
or distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity.
The Company shall be under no obligation to any Participant to register for
offering or resale or to qualify for exemption under the Securities Act, or to
register or qualify under state securities laws, any shares of Common Stock,
security or interest in a security paid or issued under, or created by, the
Plan, or to continue in effect any such registrations or qualifications if made.
The Company may issue certificates for shares with such legends and subject to
such restrictions on transfer and stop-transfer instructions as counsel for the
Company deems necessary or desirable for compliance by the Company with federal
and state securities laws.
To the extent that the Plan or any instrument evidencing an Award provides for
issuance of stock certificates to reflect the issuance of shares of Common
Stock, the issuance may be affected on a noncertificated basis, to the extent
not prohibited by applicable law or the applicable rules of any stock exchange.
15.4 No Rights as a Shareholder
No Option or Stock Award denominated in units shall entitle the Participant to
any cash dividend, voting or other right of a shareholder unless and until the
date of issuance under the Plan of the shares that are the subject of such
Award.
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<PAGE>
15.5 Compliance With Laws and Regulations
Notwithstanding anything in the Plan to the contrary, the Plan Administrator, in
its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to Participants who are officers
or directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
15.6 Participants in Foreign Countries
The Plan Administrator shall have the authority to adopt such modifications,
procedures and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company or its Related
Corporations may operate to assure the viability of the benefits from Awards
granted to Participants employed in such countries and to meet the objectives of
the Plan.
15.7 No Trust or Fund
The Plan is intended to constitute an "unfunded" plan. Nothing contained herein
shall require the Company to segregate any monies or other property, or shares
of Common Stock, or to create any trusts, or to make any special deposits for
any immediate or deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general unsecured
creditor of the Company.
15.8 Severability
If any provision of the Plan or any Award is determined to be invalid, illegal
or unenforceable in any jurisdiction, or as to any person, or would disqualify
the Plan or any Award under any law deemed applicable by the Plan Administrator,
such provision shall be construed or deemed amended to conform to applicable
laws, or, if it cannot be so construed or deemed amended without, in the Plan
Administrator's determination, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such jurisdiction, person or
Award, and the remainder of the Plan and any such Award shall remain in full
force and effect.
15.9 Choice of Law
The Plan and all determinations made and actions taken pursuant hereto, to the
extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Nevada without giving effect to principles
of conflicts of laws.
SECTION 16. EFFECTIVE DATE
The Effective Date is the date on which the Plan is adopted by the Board, so
long as it is approved by the Company's shareholders at any time within 12
months of such adoption.
Adopted by the Board on April 4, 2000 and approved by the Company's shareholders
on ___________, 2000.
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<PAGE>
PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
SUMMARY PAGE
<TABLE>
<CAPTION>
Section/Effect of
Date of Board Action Action Amendment Date of Shareholder Approval
-------------------- ------ --------- ----------------------------
<S> <C> <C>
April 4, 2000 Initial Plan Adoption ___________, 2000
</TABLE>
A-15
<PAGE>
Auteo Media, Inc. Annual Meeting, August 18, 2000 PROXY THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steve Van Leeuwen and Kathleen Van Leeuwen, as
Proxies, each with full power to appoint a substitute, and hereby authorizes
each of them to appear and vote as designated below, all shares of Common Stock
of Auteo Media, Inc. held on record by the undersigned on July 15, 2000, at the
Annual Meeting of Stockholders to be held on August 18, 2000, and any
adjournments thereof.
The undersigned hereby directs this Proxy to be voted:
1. Election of Directors:
[_] FOR the election as directors [_] WITHHOLD AUTHORITY to vote of all nominees
listed below for all nominees listed below (except as marked to the contrary
below)
STEVE VAN LEEUWEN
KATHLEEN VAN LEEUWEN
----------------------------
(INSTRUCTION: To withhold authority to vote for any of the above listed
nominees, please strike a line through that individual's name)
2. Proposal to ratify the appointment of GRANT THORNTON as independent auditors
for the Company for the fiscal year ending December 31, 2000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to approve the Company's 2000 Stock Option and Stock Incentive
Compensation Plan as amended, which is attached as Appendix A and B to the Proxy
Statement. [_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion, the named proxies may vote on such other business as may
properly come before the Annual Meeting, or any adjournments or postponements
thereof. (Continued and to be signed on other side)
(Continued from other side)
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR Proposals 1, 2 and 3.
Shares represented by this Proxy will be voted at the meeting in accordance with
the shareholder's specifications above. The proxy confers discretionary
authority in respect to matters not known or determined at the time of the
mailing of the Notice of the Annual Meeting of Shareholders to the undersigned.
Date: ------------------------------
----------------------------------- Signature of stockholder
----------------------------------- Signature if held jointly
