<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:
[ ] Preliminary Proxy Statement. [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Materials Pursuant to Rule 14a-12.
SONIC SYSTEMS CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to the Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
1
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------
2
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 5, 2000
10:00 A.M.
The Annual Meeting of Stockholders of Sonic Systems Corporation, a Delaware
corporation (the "Company"), will be held on Wednesday, July 5, 2000, at 10:00
a.m. local time, at the offices of DuMoulin Black, Barristers & Solicitors,
located at 595 Howe Street, 10th Floor, Vancouver, British Columbia, Canada, for
the following purposes:
1. To elect directors to serve until the next annual meeting of stockholders
or until their successors are elected.
2. To approve the adoption of the 1999 Stock Option Plan and authorize the
issuance of up to 20% of the outstanding shares of the Company's Common
Stock under the plan.
3. To approve an amendment to the Company's Certificate of Incorporation to
change the name of the Company to "Unity Wireless Corporation".
4. To approve an amendment to the Company's Certificate of Incorporation to
remove the requirement that certain "Extraordinary Actions" be approved by
a two-thirds vote of the outstanding voting stock of the Company.
5. To approve an amendment to the Company's Certificate of Incorporation to
increase from seven to 11 the maximum allowable number of directors of the
Company.
6. To approve an amendment to the Company's Certificate of Incorporation to
provide for the issuance of up to 5,000,000 shares of one or more series of
preferred stock.
7. To ratify the appointment of Ernst & Young as independent accountants for
the Company for the fiscal year ending December 31, 2000.
8. To transact such other business as may properly come before the meeting or
any adjournment(s) of the annual meeting.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. Stockholders who owned shares of the Company at the
close of business on May 18, 2000 are entitled to notice of, and to vote at, the
annual meeting.
All stockholders are cordially invited to attend the annual meeting in person.
To assure your representation at the annual meeting, however, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the enclosed postage prepaid envelope. If you attend the meeting in person, you
may vote even if you have returned a proxy card.
For the Board of Directors
SONIC SYSTEMS CORPORATION
Bryan Wilson
Secretary
Bellevue, Washington
June 5, 2000
YOUR VOTE IS VERY IMPORTANT.
SEVERAL ISSUES TO BE VOTED UPON AT THE ANNUAL MEETING REQUIRE A
3
<PAGE>
TWO-THIRDS AFFIRMATIVE VOTE
OF THE OUTSTANDING SHARES OF COMMON STOCK.
YOUR VOTE IS NEEDED.
PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
4
<PAGE>
SONIC SYSTEMS CORPORATION
----------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JULY 5, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Sonic
Systems Corporation, a Delaware corporation, for use at Sonic System's Annual
Meeting of Stockholders to be held on July 5, 2000, or at any adjournment(s) or
postponement(s) of the meeting.
A number of abbreviations are used in this Proxy Statement. Sonic Systems
Corporation is referred to as "Sonic Systems" or "the Company." The term "proxy
solicitation materials" includes this Proxy Statement, as well as the enclosed
proxy card and the 1999 Annual Report (Form 10-KSB), which is incorporated by
reference. References to "fiscal 1999" mean the Company's 1999 fiscal year which
began on January 1, 1999 and ended on December 31, 1999. The Company's 2000
Annual Meeting of Stockholders is sometimes simply referred to as "the annual
meeting."
The Company's executive offices are located at 1090 NE 4th Street, Suite 2300,
Bellevue, Washington. The Company's telephone number is (800) 337-6642.
These proxy solicitation materials were mailed on or about June 5, 2000 to all
stockholders entitled to vote at the annual meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders who owned shares of the Company's stock at the close of business on
May 18, 2000 (the "Record Date") are entitled to notice of, and to vote at, the
annual meeting. At the Record Date, the Company had 24,788,725 shares of Common
Stock issued and outstanding.
REVOCABILITY OF PROXIES
You may revoke your proxy at any time before its use by delivering to the
Company a written notice of revocation, by delivering to the Company an executed
proxy bearing a later date, or by attending the annual meeting and voting in
person.
VOTING
Each share of Common Stock outstanding on the Record Date is entitled to one
vote. Cumulative voting is not permitted. The Company's transfer agent tabulates
the votes. A quorum, which is a majority of the outstanding shares as of the
Record Date, must be present in order to hold the meeting and to conduct
business. Your shares will be counted as being present at the meeting if you
appear in person at the meeting, if you vote your shares by telephone, or if you
submit a properly executed proxy card. Votes against a particular proposal will
be counted both to determine the presence or absence of a quorum and to
determine whether the requisite majority of voting shares has been obtained.
While there is no definitive statutory or case law authority in Delaware as to
the proper treatment of abstentions and broker non-votes, the Company believes
that both abstentions and broker non-votes should be counted for purposes of
determining whether a quorum is present at the annual meeting, but not to
determine whether the requisite majority of the shares has been obtained on the
various proposals. In the absence of controlling precedent to the contrary, the
Company intends to treat abstentions and broker non-votes in this manner.
5
<PAGE>
SOLICITATION OF PROXIES
The Company may retain the services of D.F. King & Co., Inc. ("D.F. King") to
help solicit proxies from brokers, bank nominees, and other institutional and
beneficial owners. The Company estimates that D.F. King will charge a fee of up
to $5,000 for its services and certain out-of-pocket expenses. The Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding soliciting materials to such beneficial
owners. Proxies may also be solicited by certain of the directors, officers, and
regular employees of the Company, without additional compensation, personally or
by telephone, telegram or facsimile.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you intend to present a stockholder proposal at the Company's 2001 annual
meeting of stockholders, the Company must receive your proposal no later than
February 10, 2001 in order to include it in the proxy statement and form of
proxy related to that meeting.
PROPOSAL ONE - ELECTION OF DIRECTORS
NOMINEES
The Board of Directors has nominated the persons named below for election as
directors at the annual meeting. Unless otherwise directed, the proxy holders
will vote the proxies received by them for the seven nominees named below. If
any of the seven nominees is unable or declines to serve as a director at the
time of the annual meeting, the proxies will be voted for any nominee who is
designated by the present Board of Directors to fill the vacancy. It is not
expected that any nominee will be unable or will decline to serve as a director.
The directors elected will hold office until the next annual meeting of
stockholders and until their successors are elected and qualified.
The names of the nominees and certain information about them are set forth
below. Positions with the Company's two operating subsidiaries, Unity Wireless
Systems Corporation, a British Columbia, Canada corporation ("UW Systems") and
Unity Wireless Integration, Inc., a Washington corporation ("UW Integration"),
are also noted.
<TABLE>
<CAPTION>
Name of Nominee Position(s) with Sonic Systems and subsidiaries Director Since
<S> <C> <C>
Mark Godsy Director, Chairman of Board of Directors 2000
and Chief Executive Officer, Sonic Systems;
Director and Chairman of Board of Directors, UW Systems;
Director and Chairman of Board of Directors, UW Integration
Thomas Dodd Director, President and Chief Operating Officer, 2000
Sonic Systems;
Director, President and Chief Executive Officer,
UW Systems
Siavash Vojdani Director and Vice President of Corporate Development, 2000
Sonic Systems;
Director, President and Secretary, UW Integration
Ken Maddison Director, Sonic Systems 1998
R. Lewis Sabounghi Director, Sonic Systems; 1998
Director and Senior Vice President, Strategic
Business Development, UW Systems
6
<PAGE>
Robert J. Kubbernus Nominee for Director, Sonic Systems
Bryan Wilson Secretary and Nominee for Director, Sonic Systems;
Director, Secretary, Chief Financial Officer, UW Systems;
Secretary, UW Integration
</TABLE>
There is no family relationship between any of the directors or executive
officers of Sonic Systems.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The seven nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected as directors of the Company. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum but have no other legal effect under Delaware law. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF MARK GODSY, THOMAS DODD,
SIAVASH VOJDANI, KEN MADDISON, R. LEWIS SABOUNGHI, ROBERT J. KUBBERNUS AND BRYAN
WILSON AS DIRECTORS OF THE COMPANY TO HOLD OFFICE UNTIL THE 2001 ANNUAL MEETING
OF STOCKHOLDERS OR UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIED OR UNTIL
HIS EARLIER DEATH, RESIGNATION OR REMOVAL.
DIRECTOR CANDIDATE BIOGRAPHIES
Mark Godsy - Age 44. Mr. Godsy is the CEO and a director and Chairman of the
Board of Directors of the Company, and a director and the Chairman of the
Boards of Directors of UW Systems and UW Integration. He previously served as
a director and Chairman of the Board of Directors of UW Systems from May,
1993 to November, 1998, and as the secretary of UW Systems from May, 1993 to
July, 1995, and from May, 1997 to November, 1998. Mr. Godsy is an experienced
entrepreneur working in the areas of corporate development and venture
capital. He practiced law for approximately five years before entering
business and co-founding two successful companies, ID Biomedical Corporation
and Angiotech Pharmaceuticals Ltd., both leading Canadian biotechnology
firms. Mr. Godsy's responsibilities included building executive management
teams, coordinating corporate finance activities and strategic positioning.
Mr. Godsy is a graduate of the University of British Columbia and received
his law degree from McGill University. He is currently a member of the Law
Society of British Columbia.
Thomas Dodd - Age 49. Mr. Dodd has held the contract position of General Manager
of UW Systems since July, 1999, and was appointed President, Chief Operating
Officer and a director of the Company and President, Chief Executive Officer,
and a Director of UW Systems on February 22, 2000. Mr. Dodd is a senior
marketer/manager with over 25 years experience as an end user, OEM, consultant,
and manufacturer, in roles ranging from field technical support to executive
management. He has held senior executive positions with Dynapro Systems Inc. and
Campbell Technologies, Inc., with primary responsibilities in sales and
marketing. Currently, Mr. Dodd serves on the Board of Directors of FutureFund
(VCC) Capital Corp. and Kelsan Technologies Inc.
Siavash Vojdani - Age 58. Dr. Vojdani has held the position of President and
Secretary of UW Integration since July 1999. He has also served as Vice
President of Sales and Marketing of UW Systems since January, 1998, and was
appointed as a director and Vice President of Corporate Development of the
Company on February 22, 2000. Dr. Vojdani has over 25 years experience in sales,
marketing and senior management in the hi-tech industry in North America, Europe
and Asia. He has held senior executive positions with Offshore Systems
International Ltd., AEG Corporation, and most recently Dynapro Systems Inc.
where he was responsible for setting up and managing sales distribution channels
on a global scale. Dr. Vojdani has a Ph.D. in Electrical Engineering from
Imperial College of Science and Technology, London University.
7
<PAGE>
Ken Maddison - Age 59. Mr. Maddison was appointed a Director of the Company in
December, 1998. Mr. Maddison, a Chartered Accountant since 1966 and elected a
Fellow of the Institute of Chartered Accountants of BC in 1975, recently retired
after a lengthy career as a senior partner with the accounting firm KPMG. In
public practice over the past 32 years, Mr. Maddison provided auditing,
accounting and business advisory services to a wide range of clients in the
hospitality, real estate, construction, non-profit and insurance industries. Mr.
Maddison currently serves on the boards of International Wayside Gold Mines
Ltd., Island Mountain Gold Mines Ltd., Northern Continental Resources Ltd., and
Minaterra Minerals Ltd., all of Vancouver, B.C. Canada.
R. Lewis Sabounghi - Age 54. Dr. Sabounghi has held the position of director of
the Company since December, 1998. He has served as Senior Vice President,
Strategic Business Development, of UW Systems since April, 1998 and as a
director of that company since June, 1998. Dr. Sabounghi has over 25 years'
experience in transportation, including the surface transportation research and
development project of the Transportation Development Center - Canadian Federal
Department of Transport. He has developed ITS applications including "Weigh In
Motion" and "Automatic Vehicle Identification." Dr. Sabounghi has presented
numerous technical papers and consulted on ITS to governments worldwide. He
holds a degree in Aerospace Engineering, an MBA from McGill University, and a
Ph.D. in Intelligent Transportation Systems Engineering from the University of
Manitoba.
Robert J. Kubbernus - Age 40. Mr. Kubbernus has over 16 years of financial
experience working with high tech firms and currently serves as CEO and Chairman
of the Board of JAWS Technologies Inc., a Calgary, Alberta based provider of
information risk management strategies and products. At JAWS Technologies, his
primary responsibilities are to oversee the company's security product
developers, provide executive direction and develop key contacts with government
authorities, financiers, clients, insurance underwriters and the investment
community. From October, 1992 until joining JAWS Technologies in 1997, Mr.
Kubbernus held the position of President and Chief Executive Officer of Bankton
Financial Corporation, a company which provided business and lending advisory
services, where he led a team of corporate financial consultants who specialized
in the placement of debt instruments with institutional and private lenders. Mr.
Kubbernus serves on the Board of Directors of JAWS Technologies, Inc.,
Electronic Substrate Systems Inc. and Yournet, Inc.
Bryan Wilson - Age 54. Mr. Wilson served as a director of the Company from
December, 1998 to February 22, 2000, and was appointed Secretary of the Company
in November, 1998. He has also served as Secretary and Chief Financial Officer
of UW Systems since August, 1997 and as a director of that company since June,
1998. He has further served as Secretary of UW Integration since April, 2000.
Before joining the Company, Mr. Wilson held the position of VP, Finance and
Planning, for a Canadian pharmaceutical company and was a key member of the
management team with responsibilities including corporate development and
raising financing. Mr. Wilson has operated a management consulting firm
specializing in technology commercialization, corporate strategies, management
structures, business planning and market assessments. He has also served as VP,
Marketing and Client Services at a provincial crown corporation with revenues of
Cdn$ 250 million. Mr. Wilson holds an M.B.A. from the University of Toronto and
a B.A.Sc. in Electrical Engineering from the University of British Columbia.
EXECUTIVE OFFICERS
The following individuals are executive officers or key employees of the Company
or UW Systems who are not on the Board of Directors.
Bryan Wilson - See above.
Peter McConnell - Age 49. Mr. McConnell was appointed to the position of
Principal Engineer of UW Systems in July, 1995. Previously, as Principal
Engineer for Mobile Data International Inc. and Sierra Wireless, Inc., and
Project Engineer with MacDonald Dettwiler & Associates and MPR Teltech, Mr.
McConnell has been responsible for delivering innovative products. He was a key
designer of the packet switched data communication system (CDPD) that is now
operated throughout the world on existing cellular radio
8
<PAGE>
networks. Mr. McConnell holds seven patents, has published numerous technical
papers, has a Masters Degree (Nuclear Physics) from the University of B.C., and
is a senior member of the Institute of Electrical & Electronic Engineers.
Urszula Szkopek - Age 47. Ms. Szkopek was appointed to the position of Director
of Operations of Sonic Systems in March, 2000. During the previous five years,
Ms. Szkopek held the position of Production Manager at Glenayre Manufacturing
Ltd, and was responsible for manufacturing wireless data and voice messaging
infrastructure equipment. She managed a production staff of 120, a $5 million
yearly operating budget, and monthly shipments valued at $15 million, all in US
currency. She oversaw planning, manufacturing, testing, and new product
introduction for Radio Frequency Base Stations, Paging Switches and Voice
Messaging Systems. Ms Szkopek has nearly 20 years of experience in the
telecommunications industry which she acquired in Glenayre Manufacturing Ltd.
and Amdahl Communications Inc.
During 1999, Mr. William Brogdon, then the President of the Company and of UW
Systems, proposed a restructuring of the management team of the two companies in
response to the operational and financial needs of the Company and its chief
subsidiary. Mr. Brogdon, who resided in New Hampshire, proposed that some
executive officer positions be eliminated, and that all executive management of
UW Systems and the Company be resident full time in the greater Seattle or
greater Vancouver areas. The Company's directors adopted Mr. Brogdon's proposals
and, as Mr. Brogdon did not wish to relocate, he resigned his positions with the
Company effective February 22, 2000.
Officers are appointed by and serve at the discretion of the Board of Directors
or until their resignation or removal.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During fiscal 1999, the Company did not have any committees. In February, 2000,
the Board of Directors established a Compensation and Audit Committee consisting
of Ken Maddison and Norm Elliot, each of whom is an outside director on the
Board of Directors and Mark Godsy, Chief Executive Officer and a director of the
Company. The committee makes recommendations to the Board of Directors
concerning the engagement of independent public accountants, it reviews with the
independent public accountants the scope and results of the audit engagement, it
approves professional services provided by the independent public accountants,
it reviews the independence of the independent public accountants, it considers
the range of audit and non-audit fees, and it reviews the adequacy of the
Company's internal accounting controls. The committee also determines and
establishes compensation levels on an annual basis for the Company's executive
officers. The Company does not have a nominating committee or a committee
serving a similar function. Nominations are made by and through the full Board
of Directors.
The Board of Directors held four meetings during fiscal 1999. Dr. Franz Heinrich
Shain did not attend any of these meetings. He has not been nominated for
re-election. All other Directors attended 75% or more of the meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, the Company borrowed approximately $1,350,000 from Integrated
Global Financial Corporation (IGF). IGF is affiliated with Integrated Equity
Management (IEM). IEM has a contract for services with Apel Financial, a company
owned by Norm Elliot, a director of the Company. The loan from IGF was on terms
favorable to the Company and has been repaid in full.
There are no other material related transactions or related contracts with a
value of over $60,000.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth all compensation earned during the fiscal years
ended December 31, 1999 and 1998 by H. William Brogdon (the "Named Executive
Officer"), who
9
<PAGE>
served as the President and Chief Executive Officer of the Company from
February, 1998 to February, 2000. No other officer of the Company or its
subsidiaries earned greater than $100,000 in total salary and bonus during
fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation Long Term Compensation
------------------ -------------------------------------
Restricted Stock Securities
Name and Position Year Salary Bonus Awards Underlying Options
----------------- ---- ------ ----- ---------------- ------------------
($) (#)
<S> <C> <C> <C> <C> <C>
H. William Brogdon 1999 $38,756 $0 $ 0 0
H. William Brogdon 1998 $64,167 $0 $61,480 (1) 200,000
</TABLE>
NOTES:
(1) At the end of 1998 Mr. Brogdon held a total of 750,000 restricted common
shares. The stock of the Company had not traded publicly prior to December 31,
1998 and the December 11, 1998 valuation of $0.1537 per share is used, for an
aggregate value of $115,275 for these holdings (including restricted stock
awarded in 1998). Dividends have not been declared on any restricted stock nor
are any dividends planned for restricted stock.
OPTION GRANTS IN 1999
The Company made no grants of options or stock appreciation rights ("SAR's") to
the Named Executive Officer appearing in the Summary Compensation Table in this
section during fiscal 1999.
For a description of the Company's 1999 Stock Option Plan and the options that
have been granted under that plan since its inception, see Proposal 2 below.
FISCAL YEAR-END OPTION VALUE
The following table presents the value of unexercised options held as of
December 31, 1999 by the Named Executive Officer appearing in the Summary
Compensation Table in this section. The Named Executive Officer did not exercise
any of his options in 1999.
<TABLE>
<CAPTION>
Aggregate Option Exercises in Last Fiscal Year and FY-End Option Values
-----------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at FY-End ($)
Shares Acquired Value
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
H. William Brogdon 0 $0 116,667 / 83,333 29,167 / 20,833
</TABLE>
Compensation of Directors
The directors of the Company do not receive salaries or fees for serving as
directors of the Company, nor do they receive any compensation for attending
meetings or serving on committees of the Board of Directors. The Company may,
however, determine to compensate its directors in the future. Directors are
entitled to reimbursement of expenses incurred in attending meetings. In
addition, the directors of the Company are entitled to participate in the
Company's 1999 Stock Option Plan. See the description of the stock option plan
under proposal number 2 below.
10
<PAGE>
Employment Agreements
There are no employment agreements between the Company or any of its
subsidiaries with any of the named directors or executive officers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of the Record Date, by (i) each
person who is known by the Company to beneficially own more than 5% of the
issued and outstanding Common Stock of the Company; (ii) each of the Company's
directors and nominees for director and the Named Executive Officer; and (iii)
all of the Company's executive officers, directors, nominees for director and
the Named Executive Officer as a group. Unless otherwise indicated, the persons
named below have sole voting and investment power with respect to all shares
beneficially owned by them, subject to community property law where applicable.
As of the Record Date there were 24,788,725 shares of Common Stock of the
Company issued and outstanding. Each common share entitles the holder thereof to
one vote in respect of any matters that may properly come before the
shareholders of the Company. To the best of the knowledge of the Company, there
exist no arrangements that could cause a change in voting control of the
Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF RELATIONSHIP SHARES BENEFICIALLY
TITLE OF CLASS OF OWNER TO COMPANY OWNED(1) PERCENT
-------------- ------------------- ------------ ---------------- -------
<S> <C> <C> <C> <C>
COMMON STOCK MARK A. GODSY Director
9000 N.E. 14th Street and 5% shareholder 2,583,984 10.3%
Bellevue, WA 98004
COMMON STOCK TOM DODD Director
808 SEYMOUR BLVD. 166,667 0.7%
NORTH VANCOUVER, B.C.
CANADA V7J 2J6
COMMON STOCK SIAVASH VOJDANI Director
4790 MEADFIELD ROAD 283,333 1.1%
WEST VANCOUVER, B.C.
CANADA V7W 2Y3
COMMON STOCK KEN MADDISON Director
2591 LUND AVENUE 54,167 0.2%
COQUITLAM, B.C.
CANADA V3K 6J8
COMMON STOCK NORM ELLIOT Director
505 - 8840 210 STREET,
SUITE 394 50,000 0.2%
LANGLEY, B.C. CANADA V1M 2Y2
COMMON STOCK R. LEWIS SABOUNGHI Director
1608 PROULX DRIVE 181,250 0.7%
ORLEANS, ONTARIO,
CANADA K4A 1T5
COMMON STOCK DR. FRANZ HEINRICH SCHAIN Director
D- 30169 HANNOVER, 100,000 0.4%
BRUHLSTRASSE 19
GERMANY
COMMON STOCK BRYAN WILSON Nominee for Director
4223 LYNNFIELD CRESCENT 225,000 0.9%
VICTORIA, B.C. CANADA V8N 5C8
COMMON STOCK ROBERT J. KUBBERNUS Nominee for Director
702 - 8 SULTAN PLACE 0 0%
TORONTO, ONT. CANADA M5S 2C1
COMMON STOCK H. WILLIAM BROGDON CEO during 1999
18 WILLIAMS WAY 550,000 2.2%
DURHAM, NH 03824
COMMON STOCK All Executive Officers
and Directors as a 4,581,901 17.7%
group (12 individuals) (2)
</TABLE>
11
<PAGE>
(1) Includes the following numbers of shares of Common Stock that may be
acquired by the exercise of stock options that are now exercisable or will
become exercisable within the next 60 days: Mark Godsy - 312,500 shares; Tom
Dodd - 166,667 shares; Siavash Vojdani - 133,333 shares; Ken Maddison - 54,167
shares; Norm Elliot - 50,000 shares; Lewis Sabounghi - 56,250 shares; Franz
Schain - 100,000 shares; Bryan Wilson - 75,000 shares; all Executive Officers
and Directors as a group (12 individuals) - 1,086,667 shares.
(2) Includes two individuals who are not directors or nominees for director of
the Company but who hold key positions in general management, production, and
engineering, and Mr. Brogdon.
PROPOSAL TWO - APPROVAL OF THE 1999 STOCK OPTION PLAN
At the annual meeting, the stockholders are being requested to approve the 1999
Stock Option Plan (the "99 Plan"). The Plan authorizes the issuance of up to 20%
of outstanding shares of the Company's Common Stock. Shares of unissued Common
Stock sufficient to honor all such options shall be reserved for issuance under
the 99 Plan.
The purposes of the 99 Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees and consultants of the Company to promote the success of
the Company's business, and to clearly align the interests of eligible employees
and other eligible recipients directly with those of the stockholders. The Board
of Directors believes that the use of stock options as authorized under the 99
Plan is essential to accomplish these purposes.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of the Company's
Common Stock present or represented and voting at the annual meeting will be
required to approve the 99 Plan. In order to provide incentives to eligible
employees and others providing support to the Company and to align their
interests directly with those of the stockholders, the Company's Board of
Directors has approved the 99 Plan and recommends that stockholders vote "FOR"
the 99 Plan.
DESCRIPTION OF THE PLAN
The 99 Plan was adopted by the Board of Directors on December 6, 1999 and then
amended and restated by the Board of Directors on February 22, 2000 and May 16,
2000. The 99 Plan provides for the granting of stock options, including
Incentive Stock Options ("ISO's") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and Non-Qualified Stock
Options ("NQSO's"). The aggregate number of shares which may be issued pursuant
to exercise of options granted under the 99 Plan is limited to 20% of all
outstanding shares of Common Stock, including shares previously issued under the
99 Plan and shares previously issued by the Company that have been repurchased
and are held by the Company as treasury shares.
The 99 Plan authorizes the Board of Directors to grant stock options to eligible
employees and consultants of the Company. It is structured to allow the Board of
Directors broad discretion in creating equity incentives in order to assist the
Company in attracting, retaining and motivating the best available personnel for
the successful conduct of the Company's business.
As of the Record Date, options to purchase an aggregate of 4,077,000 shares were
outstanding. Options to purchase up to an additional 2,120,181 may be issued
based upon the currently outstanding shares of Common Stock. In addition to
currently outstanding shares of Common Stock, the Company has warrants
outstanding for the purchase of up to 4,000,000 shares of Common Stock. If
all these warrants are exercised, options for an additional 1,000,000 shares
of Common Stock could be granted. No shares had been issued pursuant to the
exercise of stock options granted under the 99 Plan.
12
<PAGE>
The essential features of the 99 Plan are summarized as follows. The discussion
set forth below is qualified in its entirety by reference to the 99 Plan, a copy
of which is attached hereto as Appendix A.
GENERAL
The 99 Plan permits grants to employees, officers, agents, consultants and
directors of the Company or any subsidiary thereof of stock options ("Options"),
which may be ISO'S or NQSO'S, at the discretion of the Board of Directors.
ADMINISTRATION
The 99 Plan shall be administered by the Board of Directors or by a committee or
committees designated by the Board of Directors. Once appointed, committee
members shall continue to serve until otherwise directed by the Board of
Directors. The entity administering the 99 Plan (either the Board of Directors
or committee) is known as the "Plan Administrator."
The Plan Administrator may grant awards to eligible recipients, determine the
terms and conditions of award agreements, including the vesting schedule and
exercise price of such awards, and make all other determinations deemed
necessary or advisable for the administration of the 99 Plan. The
administration, interpretation, or application of the 99 Plan by the Board of
Directors or committee shall be final, conclusive and binding upon all
participants.
The Board of Directors has designated a committee to administer the 99 Plan and
has appointed Ken Maddison, an outside director on the Board of Directors, as
the sole committee member.
Members of the Board of Directors and any committee administering the 99 Plan
will receive no additional compensation for their services in connection with
the administration of the 99 Plan.
ELIGIBILITY
The persons who are eligible to receive awards pursuant to the 99 Plan are those
directors, officers, consultants, agents and other employees of the Company as
the Plan Administrator selects ("Participants" or "Optionholders"). The Plan
Administrator determines the number of shares subject to each grant. ISO's may
only be granted to employees. All employees of the Company (including officers)
are eligible to participate in the 99 Plan.
NUMBER OF SHARES RESERVED FOR ISSUANCE
The maximum number of shares of the Company's Common Stock reserved for issuance
under the 99 Plan is 20% of the outstanding shares of Common Stock(subject to
adjustment as provided therein), including shares previously issued under the 99
Plan and outstanding shares of Common Stock held in the Company's treasury (if
any). Any options for which there were sufficient shares reserved at the time of
grant shall remain valid notwithstanding a subsequent reduction in the number of
outstanding shares of Common Stock. Shares to be issued upon exercise of options
may be issued from authorized but unissued Common Stock or authorized and issued
Common Stock held in the Company's treasury.
TERMS AND CONDITIONS OF OPTIONS
Each Option granted pursuant to the 99 Plan is to be evidenced by a written
stock option (or award) agreement between the Company and the Participant and is
subject to the following terms and conditions:
(a) Exercise of the Option. The Plan Administrator determines on the date
of grant when the Options granted may be exercisable under the 99 Plan. The
exercisability of
13
<PAGE>
Options may be based on a predetermined vesting schedule or may be subject to
the attainment by the Company or the recipient of performance goals
pre-established by the Plan Administrator. For a description of vesting
provisions for currently outstanding Options, see "Participation in the 99 Plan"
below.
An Option is exercised by delivering to the Company a written notice of
exercise that specifies the number of full shares of Common Stock to be
purchased (not less than 100 shares or the remaining shares then purchasable
under the Option) and by tendering payment of the purchase price to the Company
and any applicable withholding taxes. An Option may not be exercised for a
fraction of a share.
Payment for shares issued upon exercise of an Option may consist of cash or
bank certified or cashier's check or through irrevocable instructions to a stock
broker to deliver the amount of sales proceeds necessary to pay the appropriate
exercise price and withholding tax obligations (i.e. a cashless exercise), or
such other consideration as determined by the Plan Administrator and as
permitted under the Delaware General Corporation Law.
(b) Exercise Price. The exercise price of Options granted under the 99
Plan is determined by the Plan Administrator when a grant is made. The exercise
price for ISO's may not be less than 100% of the fair market value of the Common
Stock on the date the Option is granted.
(c) Termination of Employment. If an Optionholder's employment or other
service with the Company is terminated for any reason (other than death, total
and permanent disability, termination for cause, or resignation), a vested
Option may be exercised within three months, or such other period of time (not
exceeding three months in the case of ISO's) as is determined by the Plan
Administrator at the time of grant of such Option, after such termination (but
in no event later than the date of expiration of the original term of such
Option) as to all or part of the shares as to which the Optionholder was
entitled to exercise at the date of such termination. An Optionholder may be
exempt from this rule if the Optionholder is on an approved leave of absence, or
if transferred to a subsidiary or parent of the Company.
(d) Death or Disability. If an Optionholder is unable to continue his or
her employment or other service with the Company as a result of death, his or
her Options may be exercised at any time within 12 months from the date of death
(but in no event later than the date of expiration of the original term of such
Option). If an Optionholder is unable to continue his or her employment or other
service with the Company as a result of total and permanent disability, his or
her Options may be exercised at any time within 12 months after termination (but
in no event later than the date of expiration of the original term of such
Option).
(e) Extension of Period of Excersisability. The Plan Administrator may
extend a period of exercisability and vesting, but such period may not extend
beyond the original expiration date of the Option and such extension is subject
to written acknowledgement by the Optionholder that such extension disqualifies
the option as an ISO.
(f) Term and Termination of Options. Options granted under the 99 Plan
expire at the time fixed at time of grant, but, in the case of ISO's, in no
event longer than ten years from the date of grant. No Option may be exercised
by any person after the expiration of its term. For a description of terms for
currently outstanding options, see "Participation in the 99 Plan" below.
(g) Nontransferability of Options. An Option is not transferable by the
Optionholder, other than by will or the laws of descent and distribution. In the
event of the Optionholder's death, Options may be exercised by a person who
acquires the right to exercise the Option by bequest or inheritance.
(h) Adjustments Upon Changes in Capitalization or Merger. The Board of
Directors may make all equitable changes or adjustments it deems necessary or
appropriate if any
14
<PAGE>
dividend or other distribution (whether in the form of cash, Common Stock, or
other property), recapitalization, Common Stock split, reverse Common Stock
split, reorganization, merger, consolidation, spin-off, combination, repurchase,
or share exchange, or other similar corporate transaction or event, affects the
Common Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Optionholders under the 99 Plan.
(i) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board of Directors provides a period before the
consummation of the transaction during which outstanding options shall be
exercisable to the extent vested and, on the expiration of such period, all
unexercised Options immediately terminate. The Board of Directors, in its sole
discretion, may accelerate the vesting of such Options so that they are
exercisable in full during such period.
(j) Amendment and Termination of the 99 Plan. The Board of Directors may
suspend, terminate or amend the 99 Plan at any time, provided, however, that
shareholder approval is required if and to the extent the Board of Directors
determines that such approval is appropriate for purposes of satisfying Section
422 of the Code or Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") or any other applicable rule or statute.
No such action by the Board of Directors or stockholders may alter or impair any
option or stock purchase right previously granted under the 99 Plan without the
written consent of the Optionholder. Unless terminated earlier, the 99 Plan
shall terminate December 6, 2009, ten years from the date of its adoption by the
Board of Directors.
(k) Other Provisions. The Option agreement may contain such other terms,
provisions, and conditions not inconsistent with the 99 Plan as may be
determined by the Plan Administrator.
PARTICIPATION IN THE 99 PLAN
As of the Record Date, options to purchase an aggregate of 4,077,000 shares were
outstanding and options to purchase 2,120,181 shares were available for future
grant. No shares had been issued pursuant to the exercise of stock options
granted under the 99 Plan.
The 4,077,000 options outstanding as of the Record Date are exercisable as
follows:
<TABLE>
<CAPTION>
<S> <C>
2,217,000 at $1.00
1,770,000 at $2.06
10,000 at $2.53
80,000 at $3.90
---------
4,077,000
</TABLE>
Of the 4,077,000 options outstanding, 1,000,000 options vested immediately upon
award and 200,000 options vested or will vest on a performance basis. The
remainder vest according to a schedule which provides that one twelfth of the
award would be vested for the recipient after each full calendar quarter of
service. The vesting status of all options, and options awarded to directors and
managers included under "Security Ownership of Certain Beneficial Owners and
Management" is as follows:
<TABLE>
<CAPTION>
Total outstanding Vested March 31, 2000 Vested June 30, 2000
<S> <C> <C> <C>
All recipients: 4,077,000 2,227,000 2,450,042
Directors and managers: 2,115,000 960,417 1,086,667
</TABLE>
As of the Record Date, 3,577,000 options are scheduled to expire five years
after award, or such sooner expiry dates as determined by the 99 Plan under
circumstances of termination or death of the option holder, unless specifically
extended by the Board of Directors. 500,000 options expire ten years after
award.
15
<PAGE>
For the complete text of the 99 Plan, see Appendix A attached hereto.
PROPOSAL THREE - CHANGE OF NAME
At the annual meeting the stockholders are being requested to approve the
amendment of Article 1 of the Company's Certificate of Incorporation to replace
"Sonic Systems Corporation" with "Unity Wireless Corporation".
If the amendment is approved, Article 1 of the Company's Certificate of
Incorporation will be amended to read as follows:
FIRST: The name of this corporation shall be UNITY WIRELESS CORPORATION.
The Company and its operating subsidiaries are already operating under the name
"Unity Wireless" (with the Company using the name as a "dba"). This amendment
will merely conform the formal corporate name of the parent company to its dba
and the names of its operating subsidiaries.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of two-thirds of the shares of the Company's
outstanding Common Stock will be required to approve the amendment. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PROPOSAL FOUR - TO AMEND THE CERTIFICATE OF INCORPORATION TO REMOVE THE
REQUIREMENT THAT CERTAIN "EXTRAORDINARY ACTIONS" BE APPROVED BY A
TWO-THIRDS VOTE OF THE OUTSTANDING VOTING STOCK OF THE COMPANY.
At the annual meeting, the stockholders are being requested to approve the
amendment of Article 8 of the Company's Certificate of Incorporation, deleting
language presently requiring a two-thirds vote of the stockholders for certain
actions. This requirement exceeds the vote normally required by the Delaware
General Corporation Law (the "DGCL"). Deletion of this two-thirds vote
requirement would leave voting subject to applicable law, including the voting
requirements provided in the DGCL. These are the requirements that presently
apply to all stockholder votes except those now listed in Article 8 of the
Company's Certificate of Incorporation.
The two-thirds vote presently required for some actions enables holders of a
minority of the Company's outstanding stock to block an amendment to the
Company's Certificate of Incorporation, a merger, or certain other actions that
may be desired and approved by the majority, and increases the difficulty and
expense that is encountered by the Company when it believes that the Company's
Certificate of Incorporation should be amended or other action taken in the
Company's and the stockholders' best interest.
Article 8 of the Certificate of Incorporation currently reads as follows:
EIGHTH: Any "Extraordinary Corporate Action" shall require approval by a
two-thirds vote of the corporation. Extraordinary Corporate Actions
requiring the two-thirds vote shall include the following:
(a) Any increase or decrease in the aggregate number of authorized shares;
(b) Any action that would effect an exchange, cancellation or
reclassification of all or part of the shares of any one class of
shares into shares of another class;
(c) Any change in the designation, rights, preferences or limitations of
all or part of the shares of any one class;
16
<PAGE>
(d) The creation of a new class of shares having rights or preferences
with respect to distributions or to dissolution that are prior,
superior or substantially equal to the shares of any one existing
class;
(e) Any cancellation, denial or change that would affect rights to
distribution or dividends that have accumulated but not yet been
declared on all of part of the shares of any one class;
(f) Any share merger or share exchange with another corporation;
(g) Any sale or transfer or other disposition of all or substantially all
of the corporation's assets, other than in the regular course of
business;
(h) Any proposed dissolution of the corporation;
(i) Any amendment to the Certificate of Incorporation, except for the
following, which may be done by the Board of Directors without
shareholder approval:
(1) If the corporation has only one class of shares outstanding, to
provide, change or eliminate any provision with respect to the
par value of any class of shares;
(2) To delete the names and addresses of the initial directors;
(3) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the
secretary of state; and/or
(4) If the corporation has only one class of shares outstanding,
solely to change the number of authorized shares to effectuate a
split of, or stock dividend in the corporation's own shares, or
solely to do so and to change the number of authorized shares in
proportion thereto.
If the proposed amendment is authorized, Article 8 of the Company's Certificate
of Incorporation will be amended and restated to read as follows:
"EIGHTH: The following amendments to the Certificate of Incorporation may
be made by the Board of Directors without shareholder approval:
(a) If the corporation has only one class of shares outstanding, to
provide, change or eliminate any provision with respect to the par
value of such class of shares;
(b) To delete the names and addresses of the initial directors;
(c) To delete the name and address of the initial registered agent or
registered office, if a statement of change is on file with the
secretary of state; and/or
(d) If the corporation has only one class of shares outstanding, solely to
change the number of authorized shares to effectuate a split of, or
stock dividend in the corporation's own shares, or solely to do so
and to change the number of authorized shares in proportion thereto."
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of two-thirds of the shares of the Company's
outstanding Common Stock will be required to approve the amendment. If the
amendment is not approved by the shareholders, Article 8 of the Company's
Certificate of Incorporation, which requires a two-thirds vote for amendments to
the Certificate of Incorporation and for certain other "Extraordinary Corporate
Actions" will continue in effect. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE PROPOSAL.
PROPOSAL FIVE - INCREASING NUMBER OF DIRECTORS FROM SEVEN TO 11
At the annual general meeting the stockholders are being requested to approve
the amendment of Article 7 of the Company's Certificate of Incorporation to
raise from seven to 11 the maximum allowable number of directors of the Company.
If the amendment is authorized, Article 7 of the Company's Certificate of
Incorporation will be amended to read as follows:
17
<PAGE>
SEVENTH: The number of directors of the corporation shall be no less than
one and not more than 11.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of two-thirds of the shares of the Company's
outstanding Common Stock will be required to approve this proposal. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSAL.
PROPOSAL SIX - AUTHORIZING ISSUANCE OF PREFERRED STOCK
On May 16, 2000, the Board of Directors approved an amendment to the Company's
Certificate of Incorporation that would authorize the Company to issue, from
time to time, as determined by the Board of Directors, up to 5,000,000 shares of
preferred stock, $.001 par value per share ("Preferred Shares").
If the proposed amendment is approved, the Board of Directors would be
empowered, without the necessity of further action or authorization by the
Company's shareholders (unless such action or authorization is required in a
specific case by applicable laws or regulations or stock exchange rules), to
authorize the issuance of the Preferred Shares from time to time in one or more
series or classes, and to fix by resolution the designations, preferences,
limitations, and relative rights of each such series or class and the price of
each issuance. Each series or class of Preferred Shares could, as determined by
the Board of Directors at the time of issuance, rank, with respect to dividends
and redemption and liquidation rights, senior to the Company's shares of Common
Stock. No preferred stock is presently authorized by the Company's Certificate
of Incorporation.
The Preferred Shares will provide authorized and unissued shares of preferred
stock which may be used by the Company for any proper corporate purpose. Such
purpose might include, without limitation, issuance as part or all of the
consideration required to be paid by the Company in the acquisition of other
businesses or properties, or issuance in public or private sales for cash as a
means of obtaining additional capital for use in the Company's business and
operations. There are no transactions presently under review by the Board of
Directors which contemplate the issuance of Preferred Shares.
It is not possible to state the precise effects of the authorization of the
Preferred Shares upon the rights of the holders of the Company's Common Stock
until the Board of Directors determines the respective preferences, limitations,
and relative rights of the holders of each class or series of the Preferred
Shares. However, such effects might include the following: (a) reduction of the
amount otherwise available for payment of dividends on Common Stock, to the
extent dividends are payable on any issued Preferred Shares; (b) restrictions on
dividends on the Common Stock; (c) dilution of the voting power of the Common
Stock to the extent that the Preferred Shares had voting rights; (d) conversion
of the Preferred Shares into Common Stock at such prices as the Board of
Directors determines, which could include issuance at below the fair market
value or original issue price of the Common Stock; and (e) the holders of Common
Stock not being entitled to share in the Company's assets upon liquidation until
satisfaction of any liquidation preference granted to holders of the Preferred
Shares.
Although the Board of Directors would authorize the issuance of additional
Preferred Shares based on its judgment as to the best interests of the Company
and its shareholders, the issuance of authorized Preferred Shares could have the
effect of diluting the voting power per share and could have the effect of
diluting the book value per share of the outstanding Common Shares.
The Preferred Shares could, in certain instances, render more difficult or
discourage a merger, tender offer, or proxy contest and thus potentially have an
"anti-takeover" effect, especially if Preferred Shares were issued in response
to a potential takeover. In
18
<PAGE>
addition, issuances of authorized Preferred Shares can be implemented, and have
been implemented by some companies in recent years, with voting or conversion
privileges intended to make acquisition of the Company more difficult or more
costly. Such an issuance could deter the types of transactions which may be
proposed or could discourage or limit the shareholders' participation in certain
types of transactions that might be proposed (such as a tender offer), whether
or not such transactions were favored by the majority of the shareholders, and
could enhance the ability of officers and directors to retain their positions.
There are currently 100,000,000 shares of Common Stock authorized under the
Company's Certificate of Incorporation. The proposed amendment would not change
the number of shares of Common Stock currently authorized.
Article 4 of the Company's Certificate of Incorporation currently reads:
FOURTH: The total number of shares of stock which this corporation is
authorized to issue is: 100,000,000 shares of common stock, $0.001 par
value.
If the proposed amendment is authorized, Article 4 of the Company's Certificate
of Incorporation will be amended and restated to read as follows:
FOURTH: The total number of shares of stock which this corporation is
authorized to issue is: 105,000,000 shares, which shall consist of
100,000,000 shares of common stock, $.001 par value per share ("Common
Stock") and 5,000,000 shares of preferred stock, $.001 par value per share
("Preferred Stock").
4.1 Except as otherwise provided in accordance with this Certificate
of Incorporation, the Common Stock shall have unlimited voting rights, with
each share being entitled to one vote, and the rights to receive the net
assets of the Corporation upon dissolution, with each share participating
on a pro rata basis.
4.2 The Board of Directors is hereby authorized from time to time,
without shareholder action, to provide for the issuance of Preferred Stock
in one or more series not exceeding in the aggregate the number of
Preferred Stock authorized by this Certificate of Incorporation, as amended
from time to time; and to determine with respect to each such series the
voting powers, if any (which voting powers, if granted, may be full or
limited), designations, preferences, and relative, participating, option,
or other special rights, and the qualifications, limitations, or
restrictions relating thereto, including without limiting the generality of
the foregoing, the voting rights relating to Preferred Stock of any series
(which may be one or more votes per share or a fraction of a vote per
share, which may vary over time, and which may be applicable generally or
only upon the happening and continuance of stated events or conditions),
the rate of dividend to which holders of Preferred Stock of any series may
be entitled (which may be cumulative or non-cumulative), the rights of
holders of Preferred Stock of any series in the event of liquidation,
dissolution, or winding up of the affairs of the Corporation, the rights,
if any, of holders of Preferred Stock of any series to convert or exchange
such Preferred Stock of such series for shares of any other class or series
of capital stock or for any other securities, property, or assets of the
Corporation or any subsidiary (including the determination of the price or
prices or the rate or rates applicable to such rights to convert or
exchange and the adjustment thereof, the time or times during which the
right to convert or exchange shall be applicable, and the time or times
during which a particular price or rate shall be applicable), whether or
not the shares of that series
19
<PAGE>
shall be redeemable, and if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall be
redeemable, and the amount per share payable in case of redemption, which
amount may vary under different conditions and at different redemption
dates, and whether any shares of that series shall be redeemed pursuant to
a retirement or sinking fund or otherwise and the terms and conditions of
such obligation.
4.3 Before the Corporation shall issue any Preferred Stock of any
series, a Certificate of Amendment or a Restated Certificate of
Incorporation, fixing the voting powers, designations, preferences, the
relative, participating, option, or other rights, if any, and the
qualifications, limitations, and restrictions, if any, relating to the
Preferred Stock of such series, and the number of Preferred Stock of such
series authorized by the Board of Directors to be issued shall be filed
with the secretary of state in accordance with the General Corporation Law
of the State of Delaware and shall become effective without any shareholder
action. The Board of Directors is further authorized to increase or
decrease (but not below the number of such shares of such series then
outstanding) the number of shares of any series subsequent to the issuance
of shares of that series.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of holders of two-thirds of the Company's outstanding
Common Stock is required to approve the proposed amendment. If the amendment is
not approved by the shareholders, the Company's Certificate of Incorporation,
which does not authorize the issuance of any Preferred Stock, will continue in
effect. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PROPOSAL SEVEN - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP, independent accountants,
to audit the financial statements of the Company for the current fiscal year
ending December 31, 2000. The Company expects that a representative of Ernst &
Young LLP will be present at the Annual meeting, will have the opportunity to
make a statement if he or she desires to do so, and will be available to answer
any appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of the Company's
Common Stock present or represented and voting at the annual meeting will be
required to approve this proposal. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE PROPOSAL.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
It is important that your shares be represented at the meeting, regardless of
the number of shares that you hold. You are, therefore, urged to mark, sign,
date and return the accompanying proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose.
For the Board of Directors
SONIC SYSTEMS CORPORATION
20
<PAGE>
Bryan Wilson,
Secretary
Dated: June 5, 2000
Appendix A - 1999 Stock Option Plan
21
<PAGE>
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of the 1999 Stock Option Plan (the "Plan") is to
provide a means by which SONIC SYSTEMS CORPORATION, a Delaware corporation,
(the "Company") may attract, reward, and retain services or advice of current
or future employees, officers, directors, and agents of the Company and its
subsidiaries and to provide added incentives to them by encouraging stock
ownership in the Company.
2. ADMINISTRATION. This Plan shall be administered by the Board of
Directors of the Company (the "Board" or "Board of Directors") or, if the
Board shall authorize a committee or committees to administer this Plan, by
such committee or committees to the extent so authorized; provided, however,
that only the Board may suspend, amend or terminate this Plan as provided in
Section 13, and provided further that a committee that includes officers of
the Company shall not be permitted to grant options to persons who are
officers of the Company or its subsidiaries. The administrator of this Plan
is referred to as the "Plan Administrator."
2.1 PROCEDURES. The Board of Directors shall designate one member
of the Plan Administrator as chairman. The Plan Administrator may hold
meetings at such times and places as it shall determine. The acts of a
majority of the members of the Plan Administrator present at meetings at
which a quorum exits, or acts approved in writing by all Plan Administrator
members, shall constitute valid acts of the Plan Administrator.
2.2 POWERS. Subject to the specific provisions of this Plan, the
Plan Administrator shall have the authority, in its discretion: (a) to grant
the stock options described in Section 5 and to designate each option granted
as an Incentive Stock Option or a Non-Qualified Stock Option; (b) to
determine, in accordance with Section 5.1(f) of this Plan, the fair market
value of the shares of Common Stock subject to options; (c) to determine the
exercise price per share of options; (d) to determine the Optionees to whom,
and the time or times at which, options shall be granted and the number of
shares of Common Stock to be represented by each option; (e) to interpret
this Plan; (f) to prescribe, amend and rescind rules and regulations relating
to this Plan; (g) to determine the terms and provisions of each option
granted (which need not be identical) and, with the consent of the Optionee,
to modify or amend each option; (h) to reduce the exercise price per share of
outstanding and unexercised options; (i) to defer, with the consent of the
Optionee, or to accelerate the exercise date of any option; (j) to waive or
modify any term or provisions contained in any option applicable to the
underlying shares of Common Stock; (k) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
option previously granted by the Plan
<PAGE>
Administrator; and (l) to make all other determinations deemed necessary or
advisable for the administration of this Plan. The interpretation and
construction by the Plan Administrator of any terms or provisions of this
Plan, any option issued hereunder or any rule or regulation promulgated in
connection herewith and all actions taken by the Plan Administrator shall be
conclusive and binding on all interested parties. The Plan Administrator may
delegate administrative functions to individuals who are officers or
employees of the Company.
2.3 LIMITED LIABILITY. No member of the Board of Directors or the
Plan Administrator or officer of the Company shall be liable for any action
or inaction by him or herself, the entity or body, or another person, except
in circumstances involving his or her bad faith. Subject only to compliance
with the explicit provisions hereof, the Board of Directors and Plan
Administrator may act in their absolute discretion in all matters related to
the Plan.
2.4 SECURITIES EXCHANGE ACT OF 1934. At any time that the Company
has a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), this Plan shall be
administered in accordance with Rule 16b-3 adopted under the Exchange Act
("Rule 16b-3").
(a) Multiple Administrative Bodies. To the extent permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
directors, officers who are not directors, and employees, consultant or
agents who are neither directors nor officers.
(b) Administration With Respect to Directors and Officers
Subject to Section 16 of the Exchange Act. With respect to option grants made
to employees who are also officers or directors subject to Section 16 of the
Exchange Act, the Plan shall be administered by (i) the Board, if the Board
may administer the Plan in a manner complying with the rules under Rule 16b-3
relating to the disinterested administration of employee benefit plans under
which Section 16 exempt discretionary grants and awards of equity securities
are to be made, or (ii) a committee or committees designated by the Board to
administer the Plan, which committee shall be constituted to comply with the
rules under Rule 16b-3 relating to the disinterested administration of
employee benefit plans under which Section 16 exempt discretionary grants and
awards of equity securities are to be made. Once appointed, such Committee
shall continue to serve in its designated capacity until otherwise directed
by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules under Rule 16b-3 relating to
the disinterested administration of employee benefit plans under which
Section 16 exempt discretionary grants and awards of equity securities are to
be made.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 2 -
<PAGE>
(c) Administration With Respect to Other Persons. With respect
to Option grants made to employees, consultants or agents who are neither
directors nor officers of the Company, the Plan shall be administered by (i)
the Board or (ii) a committee or committees designated by the Board, which
committee shall be constituted to satisfy the legal requirements relating to
the administration of stock option plans under U. S. state corporate laws,
U.S. federal and state securities laws, the Internal Revenue Code of 1986, as
amended (the "Code"), and the applicable laws of any foreign country or
jurisdiction where Options are, or will be, granted under the Plan
(collectively, "Applicable Laws"). Once appointed, such Committee shall serve
in its designated capacity until otherwise directed by the Board. The Board
may increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by Applicable Laws.
(d) Plan Administrator. If more than one committee has been
created by the Board to administer options, the committee that has the
authority to administer grants for the Optionees designated in 2.4(b) or (c)
above, shall be deemed the "Plan Administrator" with respect to any options
granted to or held by such Optionees.
3. STOCK SUBJECT TO THIS PLAN. Subject to adjustment as provided below and
in Section 11 hereof, the stock subject to this Plan shall be the Company's
common stock (the "Common Stock"), and the total number of shares of Common
Stock to be delivered on the exercise of all options granted under this Plan
shall not exceed 20% of all outstanding shares of such Common Stock, including
shares of Common Stock previously issued under this Plan.
If any option granted under this Plan expires, is surrendered, exchanged for
another option, canceled or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for the purposes of this Plan, including for replacement options that
may be granted in exchange for such surrendered, canceled or terminated options.
Shares issued on exercise of options granted under this Plan may be subject to
restrictions on transfer, repurchase rights or other restrictions as determined
by the Plan Administrator.
4. ELIGIBILITY.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 3 -
<PAGE>
4.1 OPTIONEES. The Plan Administrator may award options to any current
or future employee, officer, agent, consultant or director of the Company or
its subsidiaries. Any party to whom an option is granted under this Plan is
referred to as an "Optionee."
4.2 SUBSIDIARIES. As used in this Plan, the term "subsidiary" of a
company shall include any corporation in which such company owns, directly or
indirectly, at the time of the grant of an option hereunder, stock having 50%
or more of the total combined voting power of all classes of stock thereof.
5. AWARDS. The Plan Administrator, from time to time, may take the
following actions, separately or in combination, under this Plan: (a) grant
incentive stock options ("Incentive Stock Options"), as defined in Section
422 of the Code, to any employee of the Company or its subsidiaries, as
provided in Section 5.1 of this Plan; (b) grant options other than Incentive
Stock Options ("Non-Qualified Stock Options"), as provided in Section 5.2 of
this Plan; (c) grant options to officers, employees and others in foreign
jurisdictions, as provided in Section 7 of this Plan; and (d) grant options
in certain acquisition transactions, as provided in Section 8 of this Plan.
5.1 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be subject to
the following terms and conditions:
(a) Incentive Stock Options may be granted under this Plan only to
employees of the Company or its subsidiaries, including employees who are
directors.
(b) No employee may be granted Incentive Stock Options under this
Plan to the extent that the aggregate fair market value, on the date of
grant, of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by that employee during any calendar year,
under this Plan and under any other incentive stock option plan (within the
meaning of Section 422 of the Code) of the Company or any subsidiary, exceeds
$100,000. To the extent that any option designated as an Incentive Stock
Option exceeds the $100,000 limit, such option shall be treated as a
Non-Qualified Stock Option. In making this determination, options shall be
taken into account in the order in which they were granted, and the fair
market value of the shares of Common Stock shall be determined as of the time
that the option with respect to such shares was granted.
(c) An Incentive Stock Option may be granted under this Plan to an
employee possessing more than 10% of the total combined voting power of all
classes of stock of the Company (as determined pursuant to the attribution
rules contained in Section 424(d) of the Code) only if the exercise price is
at least 110% of the fair market value of the Common Stock subject to the
option on the date the option is granted, as described in Section 5.1(f) of
this Plan, and only if the option by its terms is not exercisable after the
expiration of five years from the date it is granted.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 4 -
<PAGE>
(d) Except as provided in Section 5.5 of this Plan, no Incentive
Stock Option granted under this Plan may be exercised unless at the time of
such exercise the Optionee is employed by the Company or any subsidiary of
the Company and the Optionee has been so employed continuously since the date
such option was granted.
(e) Subject to Sections 5.1(c) and 5.1(d) of this Plan, Incentive
Stock Options granted under this Plan shall continue in effect for the period
fixed by the Plan Administrator, except that no Incentive Stock Option shall
be exercisable after ten years from the date it is granted.
(f) The exercise price shall not be less than 100% of the fair
market value of the shares of Common Stock covered by the Incentive Stock
Option at the date the option is granted. For the purposes of this Plan, "fair
market value" at any date shall mean the closing price per share of the Common
Stock on the last trading day preceding such date as reported on a securities
quotation system or stock exchange. If such shares are not so reported or
listed, the Plan Administrator shall determine the fair market value of the
shares of Common Stock in its discretion.
(g) The provisions of clauses (b) and (c) of this Section shall not
apply if either the applicable sections of the Code or the regulations
thereunder are amended so as to change or eliminate such limitations or to
permit appropriate modifications of those requirements by the Plan
Administrator.
5.2 NON-QUALIFIED STOCK OPTIONS. Non-Qualified Stock Options shall be
granted only to persons or entities listed in Section 4.1 and shall be
subject to the following terms and conditions:
(a) The exercise price may be more or less than or equal to the
fair market value of the shares of Common Stock covered by the Non-Qualified
Stock Option on the date the option is granted, and the exercise price may
fluctuate based on criteria determined by the Plan Administrator. The fair
market value of shares of Common Stock covered by a Non-Qualified Stock
Option shall be determined by the Plan Administrator, as described in Section
5.1(f).
(b) Unless otherwise established by the Plan Administrator, any
Non-Qualified Stock Option shall terminate ten years after the date it is
granted.
5.3 VESTING. To ensure that the Company and its subsidiaries will
achieve the purposes of and receive the benefits contemplated in this Plan,
any option granted to any Optionee hereunder shall be exercisable according
to a vesting schedule or no vesting schedule as established or determined by
the Plan Administrator.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 5 -
<PAGE>
5.4 NONTRANSFERABILITY. Options granted under this Plan and the rights
and privileges conferred hereby may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other
than by will or by the applicable laws of descent and distribution, shall not
be subject to execution, attachment or similar process, and shall be
exercisable during the Optionee's lifetime only by the Optionee. Any
purported transfer or assignment in violation of this provision shall be void.
5.5 TERMINATION OF OPTIONS.
(a) GENERALLY. Unless otherwise determined by the Plan
Administrator or specified in the Optionee's Option Agreement, if the
Optionee's employment or service with the Company, including with any
subsidiary, terminates for any reason other than for cause, resignation,
retirement, disability or death, then the Optionee may exercise the option at
any time before the earlier of (a) the expiration date of the option or (b)
the expiration of three months after the date of such termination of
employment or service, for that portion of the Optionee's option that was
exercisable at the time of such termination of employment or service
(provided the conditions of Section 6.4 and any other conditions specified in
the Option Agreement shall have been met by the date of exercise of such
option).
(b) FOR CAUSE; RESIGNATION.
(i) If an Optionee is terminated for cause or resigns in lieu
of dismissal, any option granted hereunder shall be deemed to have terminated
as of the time of the first act that led or would have led to the termination
for cause or resignation in lieu of dismissal and such Optionee shall
thereupon have no right to purchase any shares of Common Stock pursuant to
the exercise of such option, and any such exercise shall be null and void.
Termination for "cause" shall include (i) the violation by the Optionee of
any reasonable rule or policy of the Board of Directors or the Optionee's
superiors or the chief executive officer or the chief operating officer of
the Company that results in damage to the Company or which, after notice to
do so, the Optionee fails to correct within a reasonable time; (ii) any
willful misconduct or gross negligence by the Optionee in the
responsibilities assigned to him or her; (iii) any willful failure to perform
his or her job as required to meet the objectives of the Company; (iv) any
wrongful conduct of an Optionee that has an adverse impact on the Company or
that constitutes a misappropriation of the assets of the Company; (v)
unauthorized disclosure of confidential information; or (vi) the Optionee's
performing services for any other company or person that competes with the
Company while he or she is employed by or provides services to the Company,
without the written approval of the chief executive officer of the Company.
"Resignation in lieu of dismissal" shall mean a resignation by an Optionee of
employment with or service to the Company if (i) the Company has given prior
notice to such Optionee of its intent to dismiss the Optionee for
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 6 -
<PAGE>
circumstances that constitute cause, or (ii) within two months of the
Optionee's resignation, the chief operating officer or the chief executive
officer of the Company or the Board of Directors determines, which
determination shall be final and binding, that such resignation was related
to an act that would have led to a termination for cause.
(ii) If an Optionee resigns from the Company, the right of the
Optionee to exercise his or her option shall be suspended for a period of two
months from the date of resignation, unless the chief executive officer of
the Company or the Board of Directors determines otherwise in writing.
Thereafter, unless there is a determination that the Optionee resigned in
lieu of dismissal, the option may be exercised at any time before the earlier
of (i) the expiration date of the option (which shall have been similarly
suspended) or (ii) the expiration of three months after the date of
resignation, for that portion of the Optionee's option that was exercisable
at the time of such resignation (provided the conditions of Section 6.4 and
any other conditions specified in the Option Agreement shall have been met at
the date of exercise of such option).
(c) RETIREMENT. Unless otherwise determined by the Plan
Administrator, if an Optionee's employment or service with the Company is
terminated with the Company's approval for reasons of age, the Option may be
exercised at any time before the earlier of (a) the expiration date of the
option or (b) the expiration of three months after the date of such
termination of employment or service, for that portion of the Optionee's
option that was exercisable at the time of such termination of employment or
service (provided the conditions of Section 6.4 and any other conditions
specified in the Option Agreement shall have been met at the date of exercise
of such option).
(d) DISABILITY. Unless otherwise determined by the Plan
Administrator, if an Optionee's employment or relationship with the Company
terminates because of a permanent or total disability (as defined in Section
22(e)(3) of the Code), the option may be exercised at any time before the
earlier of (a) the expiration date of the option or (b) the expiration of 12
months after the date of such termination, for up to the full number of
shares of Common Stock covered thereby, including any portion not yet vested
(provided the conditions of Section 6.4 and any other conditions specified in
the Option Agreement shall have been met by the date of exercise of such
option).
(e) DEATH. Unless otherwise determined by the Plan Administrator,
in the event of the death of an Optionee while employed by or providing
service to the Company, the option may be exercised at any time before the
earlier of (a) the expiration date of the option or (b) the expiration of 12
months after the date of death by the person or persons to whom such
Optionee's rights under the option shall pass by the Optionee's will or by
the applicable laws of descent and distribution, for up to the full number of
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 7 -
<PAGE>
shares of Common Stock covered thereby, including any portion not yet vested
(provided the conditions of Section 6.5 and any other conditions specified in
the Option Agreement shall have been met by the date of exercise of such
option).
(f) EXTENSION OF EXERCISE PERIOD APPLICABLE TO TERMINATION. The
Plan Administrator, at the time of grant or at any time thereafter, may
extend the one-month, three-month and 12-month exercise periods to any length
of time not longer than the original expiration date of the option, and may
increase the portion of an option that is exercisable, subject to such terms
and conditions as the Plan Administrator may determine; provided, that any
extension of the exercise period or other modification of an Incentive Stock
Option shall be subject to the written agreement and acknowledgment by the
Optionee that the extension or modification disqualifies the option as an
Incentive Stock Option.
(g) FAILURE TO EXERCISE OPTION. To the extent that the option of
any deceased Optionee or of any optionee whose employment or service
terminates is not exercised within the applicable period, all rights to
purchase shares of Common Stock pursuant to such options shall cease and
terminate.
(h) TRANSFERS; LEAVES. For purposes of this Section 5.5, a transfer
of employment or other relationship between or among the Company and/or any
subsidiaries shall not be deemed to constitute a termination of employment or
other cessation of relationship with the Company or any of its subsidiaries.
For purposes of this Section 5.5, with respect to Incentive Stock Options,
employment shall be deemed to continue while the Optionee is on military
leave, sick leave or other bona fide leave of absence (as determined by the
Plan Administrator) in accordance with the policies of the Company.
6. EXERCISE.
6.1 PROCEDURE. Subject to the provisions of Section 5.3 above, each
option may be exercised in whole or in part; provided, however, that no fewer
than 100 shares (or the remaining shares then purchasable under the option,
if less than 100 shares) may be purchased on any exercise of any option
granted hereunder and that only whole shares will be issued pursuant to the
exercise of any option (the number of 100 shares shall not be changed by any
transaction or action described in Section 8 or Section 11 unless the Plan
Administrator determines that such a change is appropriate). Options shall be
exercised by delivery to the Secretary of the Company or his or her
designated agent of notice of the number of shares with respect to which the
option is exercised, together with payment in full of the exercise price and
any applicable withholding taxes.
6.2 PAYMENT. Payment of the option exercise price shall be made in full
when the notice of exercise of the option is delivered to the Secretary of
the Company or his or
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 8 -
<PAGE>
her designated agent and shall be in cash or bank certified or cashier's
check or through irrevocable instructions to a stock broker to deliver the
amount of sales proceeds necessary to pay the appropriate exercise price and
withholding tax obligations, all in accordance with applicable governmental
regulations, for the shares of Common Stock being purchased. The Plan
Administrator may determine at the time the option is granted for Incentive
Stock Options, or at an time before exercise for Non-Qualified Stock Options,
that additional forms of payment will be permitted.
6.3 WITHHOLDING. Before the issuance of shares of Common Stock on the
exercise of an option, the Optionee shall pay to the Company the amount of
any applicable federal, state or local tax withholding obligations. The
Company may withhold any distribution in whole or in part until the Company
is so paid. The Company shall have the right to withhold such amount from any
other amounts due or to become due from the Company to the Optionee,
including salary (subject to applicable law) or to retain and withhold a
number of shares having a market value not less than the amount of such taxes
required to be withheld by the Company to reimburse it for any such taxes and
cancel (in whole or in part) any such shares so withheld.
6.4 CONDITIONS PRECEDENT TO EXERCISE. The Plan Administrator may
establish conditions precedent to the exercise of any option, which shall be
described in the relevant Option Agreement.
7. FOREIGN QUALIFIED GRANTS. Options under this Plan may be granted to
officers and employees of the Company and its subsidiaries and other persons
described in Section 4 who reside in foreign jurisdictions as the Plan
Administrator may determine form time to time. The Board of Directors may
adopt supplements to the Plan as needed to comply with the applicable laws of
such foreign jurisdictions and to give options favorable treatment under such
laws; provided, however, that no award shall be granted under any such
supplement on terms more beneficial to such Optionees than those permitted by
this Plan.
8. CORPORATE MERGERS, ACQUISITIONS, ETC. The Plan Administrator may also
grant options under this Plan having terms, conditions and provisions that
vary from those specified in this Plan provided that such options are granted
in substitution for, or in connection with the assumption of, existing
options granted, awarded or issued by another corporation and assumed or
otherwise agreed to be provided for by the Company pursuant to or by reason
of a transaction involving a corporate merger, consolidation, acquisition of
property or stock, reorganization or liquidation to which the Company is a
party.
9. HOLDING PERIOD. Unless otherwise determined by the Plan Administrator,
if a person subject to Section 16 of the Exchange Act exercises an option
within six months
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 9 -
<PAGE>
of the date of grant of the option, the shares of Common Stock acquired on
exercise of the option may not be sold until six months after the date of
grant of the option.
10. OPTION AGREEMENTS. Options granted under this Plan shall be evidenced by
written stock option agreements (the "Option Agreements") that shall contain
such terms, conditions, limitations and restrictions as the Plan
Administrator shall deem advisable and that are consistent with this Plan.
All Option Agreements shall include or incorporate by reference the
applicable terms and conditions contained in this Plan.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 10 -
<PAGE>
11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION.
11.1 STOCK SPLITS, CAPITAL STOCK ADJUSTMENTS. The aggregate number and
class of shares for which options may be granted under this Plan, the number
and class of shares covered by each outstanding option and the exercise price
per share thereof (but not the total price), and each such option, shall all
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a stock split,
stock dividend or consolidation of shares or any like capital stock
adjustment.
11.2 EFFECT OF MERGER, SALE OF ASSETS, LIQUIDATION OR DISSOLUTION.
(a) MERGERS, SALE OF ASSETS, OTHER TRANSACTIONS. In the event of a
merger, consolidation or plan of exchange to which the Company is a party or
a sale of all or substantially all of the Company's assets (each, a
"Transaction"), the Board of Directors, in its sole discretion and to the
extent possible under the structure of the Transaction, shall select one of
the following alternatives for treating outstanding options under this Plan:
(i) Outstanding options shall remain in effect in accordance
with their terms;
(ii) Outstanding options shall be converted into options to
purchase stock in the corporation that is the surviving or acquiring
corporation in the Transaction. The amount, type of securities subject
thereto and exercise price of the converted options shall be determined by
the Board of Directors of the Company, taking into account the relative
values of the companies involved in the Transaction and the exchange rate, if
any, used in determining shares of the surviving corporation to be issued to
holders of shares of the Company. Unless otherwise determined by the Board of
Directors, the converted options shall be vested only to the extent that the
vesting requirements relating to options granted hereunder have been
satisfied;
(iii) The Board of Directors shall provide a period before the
consummation of the Transaction during which outstanding options shall be
exercisable to the extent vested and, on the expiration of such period, all
unexercised options shall immediately terminate. The Board of Directors, in
its sole discretion, may accelerate the vesting of such options so that they
are exercisable in full during such period; or
(iv) The Board of Directors shall take such other action with
respect to outstanding options as the Board deems to be in the best interests
of the Company.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 11 -
<PAGE>
(b) LIQUIDATION; DISSOLUTION. If the Company is liquidated or
dissolved, options shall be treated in accordance with Section 11.2(a)(iii).
11.3 FRACTIONAL SHARES. If the number of shares covered by any option is
adjusted, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
11.4 DETERMINATION OF BOARD TO BE FINAL. All adjustments under this
Section 11 shall be made by the Board of Directors and its determination as
to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. Unless an Optionee agrees otherwise, any change or
adjustment to an Incentive Stock Option shall be made, if possible, in such a
manner so as not to constitute a "modification," as defined in Section 424(h)
of the Code, and so as not to cause the Optionee's Incentive Stock Option to
fail to continue to qualify as an Incentive Stock Option.
12. SECURITIES REGULATIONS.
12.1 COMPLIANCE WITH SECURITIES LAWS. Shares of Common Stock shall not
be issued with respect to an option granted under this Plan unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated
thereunder, applicable laws of foreign countries and other jurisdictions and
the requirements of any quotation service or stock exchange on which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance, including the
availability of an exemption from registration for the issuance and sale of
any shares hereunder. The inability of the Company to obtain, from any
regulatory body having jurisdiction, the authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares
hereunder or the unavailability of an exemption from registration for the
issuance and sale of any shares hereunder shall relieve the Company of any
liability with respect of the nonissuance or sale of such shares as to which
such requisite authority shall not have been obtained.
12.2 CONDITIONS OF EXERCISE. As a condition to the exercise of an
option, the company may require the Optionee to represent and warrant at the
time of any such exercise that the shares of Common Stock are being purchased
only for investment and without any present intention to sell or distribute
such shares if, in the opinion of counsel for the Company, such a
representation is required by any relevant provision of the aforementioned
laws. The Company may place a stop-transfer order against any shares of
Common Stock on the official stock books and the records of the Company, and
a legend may be stamped on stock certificates to the effect that the shares
of Common
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 12 -
<PAGE>
Stock may not be pledged, sold or otherwise transferred unless an opinion of
counsel is provided (concurred in by counsel for the Company) stating that
such transfer is not in violation of any applicable law or regulation. The
Plan Administrator may also require such other action or agreement by the
Optionees as may from time to time be necessary to comply with the federal
and state securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO
UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK THEREUNDER.
12.3 SECURITIES EXCHANGE LISTING. If any of the Company's capital stock
of the same class as the Common Stock subject to options granted hereunder is
listed on a national securities exchange, all shares of Common Stock issued
hereunder if not previously listed on such exchange shall be authorized by
that exchange for listing thereon before the issuance thereof.
13. AMENDMENT AND TERMINATION.
13.1 PLAN. The Board of Directors may at any time suspend, amend or
terminate this Plan, provided that, except as set forth in Section 8, the
approval of the Company's shareholders is necessary within 12 months before
or after the adoption by the Board of Directors of any amendment that will:
(a) increase the number of shares of Common Stock to be reserved
for the issuance of options under this Plan;
(b) permit the granting of stock options to a class of persons
other than those now permitted to receive stock options under this Plan; or
(c) require shareholder approval under applicable law, including
Section 16(b) of the Exchange Act.
13.2 OPTIONS. Subject to the requirements of Section 422 of the Code
with respect to Incentive Stock Options and to the terms and conditions and
within the limitations of this Plan, the Plan Administrator may modify or
amend outstanding options granted under this Plan. The modification or
amendment of an outstanding option shall no, without the consent of the
Optionee, impair or diminish any of his or her rights or any of the
obligations of the Company under such option. Except as otherwise provided in
this Plan, no outstanding option shall be terminated without the consent of
the Optionee. Unless the Optionee agrees otherwise, any changes or
adjustments made to outstanding Incentive Stock Options granted under this
Plan shall be made in such a manner so as not to constitute a "modification,"
as defined in Section 425(h) of the Code, and so as not to cause any
Incentive Stock Option issued hereunder to fail to continue to qualify as an
Incentive Stock Option as defined in Section 422(b) of the Code.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 13 -
<PAGE>
13.3 AUTOMATIC TERMINATION. Unless sooner terminated by the Board of
Directors, this Plan shall terminate ten years from the date on which this
Plan is adopted by the Board. No option may be granted after such termination
or during any suspension of this Plan. The amendment or termination of this
Plan shall not, without the consent of the Optionee, alter or impair any
rights or obligations under any option already granted under this Plan.
14. MISCELLANEOUS.
14.1 TIME OF GRANTING OPTIONS. The date of grant of an option shall, for
all purposes, be the date on which the Company completes the required
corporate action relating to the grant of an option; the execution of an
Option Agreement and the conditions to the exercise of an option shall not
defer the date of grant.
14.2 NO STATUS AS SHAREHOLDER. Neither the Optionee nor any party to
which the Optionee's rights and privileges under the option may pass shall
be, or have any of the rights or privileges of, a shareholder of the Company
with respect to any of the shares of Common Stock issuable on the exercise of
any option granted under this Plan unless and until such option has been
exercised and the issuance (as evidenced by the appropriate entry on the
books of the Company or duly authorized transfer agent of the Company) of the
stock certificate evidencing such shares.
14.3 STATUS AS AN EMPLOYEE. Nothing in this Plan or any option granted
pursuant to this Plan shall confer on any Optionee any right to continue in
the employ of the Company or any or its subsidiaries, or to interfere in any
way with the right of the Company to terminate his or her employment or other
relationship with the Company or any of its subsidiaries at any time.
14.4 RESERVATION OF SHARES. The Company, during the term of this Plan,
at all times will reserve and keep available such number of shares of Common
Stock as shall be sufficient to satisfy the requirements of this Plan.
15. EFFECTIVENESS OF THIS PLAN. This Plan shall become effective on the date
on which it is adopted by the Board of Directors of the Company (the
"Effective Date"). No option granted under this Plan to any officer or
director of the Company shall become exercisable until the Plan is approved
by the shareholders, and any option granted before such approval shall be
conditioned on and is subject to such approval.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 14 -
<PAGE>
Adopted by the Board of Directors on December 6, 1999, amended and
restated by the Board of Directors on February 22, 2000 and May 16, 2000, and
approved by the shareholders on July , 2000.
SONIC SYSTEMS CORPORATION
(A DELAWARE CORPORATION)
STOCK OPTION PLAN, 1999
PAGE - 15 -
<PAGE>
SONIC SYSTEMS CORPORATION
PROXY FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SONIC SYSTEMS CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated June 5, 2000, and hereby appoints
Mark Godsy and Bryan Wilson and each of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the 2000 Annual Meeting of
Stockholders of SONIC SYSTEMS CORPORATION, to be held on Wednesday, July 5, 2000
at 10:00 a.m., local time at the offices of DuMoulin Black, Barristers &
Solicitors, located at 595 Howe Street, 10th Floor, Vancouver, British Columbia,
Canada, and any adjournment(s) thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side.
----------------
SEE REVERSE SIDE
--------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
----------------
<PAGE>
Sonic Systems Corporation Annual Meeting to be held on July 5, 2000 at 10:00
A.M. PDT for stockholders as of 05/18/2000
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR ITEMS 1 through 7.
<TABLE>
<S> <C>
1. Election of directors: Mark Godsy; Thomas Dodd; FOR ALL WITHHOLD VOTE
Siavash Vojdani; Ken Maddison; R. Lewis Sabounghi; NOMINEES FROM ALL NOMINEES
Robert J. Kubbernus; Bryan Wilson [ ] [ ]
[ ]____________________________________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To approve the adoption of the 1999 Stock Option [ ] [ ] [ ]
Plan and authorize the issuance of up to 20% of the
outstanding shares of the Company's Common Stock
under the plan.
FOR AGAINST ABSTAIN
3. To approve an amendment to the Company's Certificate of [ ] [ ] [ ]
Incorporation to change the name of the Company to
"Unity Wireless Corporation".
FOR AGAINST ABSTAIN
4. To approve an amendment to the Company's Certificate of [ ] [ ] [ ]
Incorporation to remove the requirement that certain
"Extraordinary Actions" be approved by a two-thirds vote
of the outstanding voting stock of the Company.
FOR AGAINST ABSTAIN
5. To approve an amendment to the Company's Certificate of [ ] [ ] [ ]
Incorporation to increase from seven to 11 the maximum
allowable number of directors of the Company.
FOR AGAINST ABSTAIN
6. To approve an amendment to the Company's Certificate of [ ] [ ] [ ]
Incorporation to provide for the issuance of up to
5,000,000 shares of one or more series of preferred stock.
FOR AGAINST ABSTAIN
7. To ratify the appointment of Ernst & Young as independent [ ] [ ] [ ]
accountants for the Company for the fiscal year ending
December 31, 2000.
8. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting any adjournment thereof.
</TABLE>
IMPORTANT - PLEASE SIGN AND RETURN PROMPTLY. This Proxy should be marked, dated,
signed by the stockholder(s) exactly as his or her name appears hereon . When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
Signature: ___________________________________
Date: ___________________
Signature if held jointly: _________________________
Date: ___________________
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
