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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 the use of the Commission only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EPICEDGE INC.
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(Name of Registrant As Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.
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3) Filing party:
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4) Date filed:
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*Set forth the amount on which the filing fee is calculated and state how it was
determined.
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EPICEDGE, INC.
3200 WILCREST, SUITE 370
HOUSTON, TEXAS 77042
(713) 784-2374
www.EpicEdge.com
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME:9:00 a.m. May 25, 2000
PLACE: The Houstonian Hotel, Club and Spa
111 North Post Oak Lane
Houston, Texas 77024
(713) 680-2626
ITEMS OF BUSINESS:
(1) To elect seven members to the Board of Directors for one-year terms.
(2) To approve Deloitte & Touche LLP as our independent auditors for the
2000 fiscal year.
(3) To approve a proposal to amend our Articles of Incorporation to
establish blank check preferred stock with 5,000,000 shares reserved for
issuance.
(4) To approve an amendment to our 1999 Stock Option Plan to increase
the number of shares of common stock authorized to be issued under the Plan
from 3,000,000 shares of common stock to 7,500,000 shares of common stock.
(5) To establish an Employee Stock Purchase Plan.
(6) To transact such other business as may properly come before the
Meeting and any adjournment or postponement.
RECORD DATE:
You can vote if you are a stockholder of record on April 25, 2000.
ANNUAL REPORT:
Our 1999 Annual Report, which is not a part of the proxy soliciting
material, is enclosed.
PROXY VOTING:
It is important that your shares be represented and voted at the meeting.
Please vote in one of these ways:
(1) USE THE TOLL-FREE TELEPHONE NUMBER shown on the proxy card (this
call is free in the U.S.);
(2) VISIT THE WEB SITE noted on your proxy card to vote via the
Internet; or
(3) MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the
postage-paid envelope.
Any proxy may be revoked at any time prior to its exercise at the Meeting.
Robert Nelson
Secretary
May 5, 2000
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EPICEDGE, INC.
3200 WILCREST, SUITE 370
HOUSTON, TEXAS 77042
(713) 784-2374
www.EpicEdge.com
PROXY STATEMENT
The proxy materials are delivered in connection with the solicitation by
the Board of Directors of EpicEdge, Inc. ("EpicEdge," the "company," "we," or
"us"), a Texas corporation, of proxies to be voted at our 1999 Annual Meeting
of Stockholders and at any adjournment or postponement.
You are invited to attend our Annual Meeting of Stockholders on May 25,
2000, beginning at 9:00 a.m. The meeting will be held at The Houstonian Hotel,
Club and Spa, at 111 North Post Oak Lane, Houston, Texas 77024.
This Proxy Statement, form of proxy and voting instructions are being
mailed starting May 5, 2000.
Stockholders Entitled to Vote
Holders of record of our common stock at the close of business on April 25,
2000 are entitled to receive this notice and to vote their shares at the
Annual Meeting. As of that date, there were 25,618,486 shares of common stock
outstanding. Each share of common stock is entitled to one vote on each matter
properly brought before the Meeting.
Proxies
Your Vote Is Important. Stockholders of record may vote their proxies by
telephone, Internet or mail. A toll-free telephone number and web site address
are included on your proxy card. If you choose to vote by mail, a postage-paid
envelope is provided.
Proxies may be revoked at any time before they are exercised by:
. written notice to the Secretary of the company,
. timely delivery of a valid, later-dated proxy or
. voting by ballot at the Annual Meeting.
You May Save Us The Expense Of A Second Mailing By Voting Promptly.
Choose ONE of the following voting methods to cast your vote.
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HOW TO VOTE
Vote by Telephone
You can vote your shares by telephone by calling the toll-free telephone
number (at no cost to you) on your proxy card. Telephone voting is available
24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and
confirm that your instructions have been properly recorded. Our telephone
voting procedures are designed to authenticate stockholders by using
individual control numbers. If you vote by telephone you can also give us
instructions to discontinue future duplicate Annual Reports. IF YOU VOTE BY
TELEPHONE YOU DO NOT NEED TO RETURN YOUR PROXY CARD.
Vote by Internet
You can also choose to vote via the Internet. The web site for Internet
voting is on your proxy card. Internet voting is available 24 hours a day, AND
WILL BE ACCESSIBLE UNTIL 8:00 A.M. ON MAY 25, 2000. As with telephone voting,
you will be given the opportunity to confirm that your instructions have been
properly recorded. IF YOU VOTE VIA THE INTERNET YOU DO NOT NEED TO RETURN YOUR
PROXY CARD.
Vote by Mail
If you choose to vote by mail, simply mark your proxy, date and sign it,
and return it to American Stock Transfer & Trust Company in the postage-paid
envelope provided. If the envelope is missing, please address your completed
proxy card to EpicEdge Inc. c/o American Stock Transfer & Trust Company, 40
Wall Street, New York, New York 10005.
Voting at the Annual Meeting
The method by which you vote now will not limit your right to vote at the
Annual Meeting if you decide to attend in person. If your shares are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
Meeting.
All shares that have been properly voted--whether by telephone, Internet or
mail, and not revoked--will be voted at the Annual Meeting. If you sign and
return your proxy card but do not give voting instructions, the shares
represented by that proxy will be voted as recommended by the Board of
Directors.
Voting on other Matters
If any other matters are properly presented at the Annual Meeting for
consideration, the persons named in the proxy will have the discretion to vote
on those matters for you. At the date this Proxy Statement went to press, we
did not know of any other matter to be raised at the Annual Meeting.
Consolidation of Your Vote
You will receive only one proxy card for all the shares you hold in your
name.
Please note that if you own shares in joint name, and other shares in your
own name, you will receive a separate proxy card for the joint ownership. We
can only consolidate identically named accounts.
List of Stockholders
A list of stockholders entitled to vote at the Annual Meeting will be
available at the Annual Meeting and for ten days prior to the Meeting, between
the hours of 8:45 a.m. and 4:30 p.m., at our offices at 3200 Wilcrest Suite
370, Houston, Texas, by contacting the Secretary of the company.
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Required Vote
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the stockholders entitled to vote at the Annual
Meeting is necessary to constitute a quorum. Abstentions and broker "non-
votes" are counted as present and entitled to vote for purposes of determining
a quorum. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power for that particular item and has not
received instructions from the beneficial owner.
A plurality of the votes cast is required for the election of Directors.
Abstentions and broker "non-votes" are not counted for purposes of the
election of Directors.
The affirmative vote of a majority of the votes cast is required to approve
the appointment of Deloitte & Touche. Abstentions and broker "non-votes" are
not counted for purposes of approving this matter.
The affirmative vote of a majority of outstanding shares of common stock
entitled to vote is required to approve:
. the amendment to our 1999 Stock Option Plan to increase the number of
shares authorized to be issued under the plan from 3,000,000 to
7,500,000, and
. the establishment of our Stock Purchase Plan for employees.
The affirmative vote of two-thirds of the outstanding shares of common
stock entitled to vote is required to approve:
. the amendment to our Articles of Incorporation establishing preferred
stock and reserving 5,000,000 shares for issuance.
Abstentions and broker "non-votes" will have the same effect as a vote cast
"against" each of these proposals.
ITEM 1
ELECTION OF DIRECTORS
Role and Composition of the Board of Directors
Our business, property and affairs are managed under the direction of our
Board of Directors. Members of our Board are kept informed of our business
through discussions with our Chairman and Chief Executive Officer and other
officers, by reviewing materials provided to them, by visiting our offices,
and by participating in meetings of the Board and its committees.
Our directors are elected annually by our Stockholders. Our bylaws provide
that the number of our directors will be determined by the Board of Directors
but shall not be less than three. The Stockholders will elect seven directors
for the coming year. Five of the nominees presently serve as directors.
Although we do not anticipate that any of the nominees will be unable to
serve, if such a situation arises prior to the Annual Meeting, the persons
named in the enclosed Proxy will vote for the election of such person(s) as
may be nominated by the Board of Directors.
Director Nominees
Carl R. Rose (age 45). Mr. Rose has served as our Chairman since December
1998. Mr. Rose served as our Chief Executive Officer from January 1999 until
February 2000. Mr. Rose founded Design Automation Systems, Inc., a privately
held Texas company ("DASI"), in 1985 and served as its Chairman from its
inception until April 1999. From inception until January 1999, Mr. Rose served
as President of DASI. From January 1999 until April 1999, Mr. Rose served as
Chief Executive Officer of DASI.
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Charles H. Leaver, Jr. (age 43). Mr. Leaver has served as one of our
directors since December 1998. Mr. Leaver has served as our Chief Executive
Officer since February 2000, and our Vice Chairman since January 2000. Mr.
Leaver served as our President from January 1999 until February 2000. Mr.
Leaver served as President and a director of DASI from January 1999 to April
1999. Prior thereto, Mr. Leaver served as Vice President of Operations from
September 1997 until December 1998 and Vice President of Sales from September
1991 until September 1997.
Jeffrey S. Sexton (age 31). Mr. Sexton has served as one of our directors
since June 1999, as our President since February 2000 and as our Chief
Operating Officer since November 1999. Previously, Mr. Sexton was a co-founder
and President of COAD Solutions, Inc., which was acquired by the company in
March 1999.
Bahram Nour-Omid (age 44). Mr. Nour-Omid has served as one of our directors
since November 1999. Mr. Nour-Omid has served as Chief Executive Officer of
Ifilm Corp. from September 1999 until the present. Mr. Nour-Omid served as
Executive Vice President of Essentns from August 1996 until March 1999. Prior
thereto, Mr. Nour-Omid served as Executive Vice President of Scopns Technology
from March 1993 until August 1996.
John P. Streeten (age 41). Mr. Streeten has served as one of our directors
since November 1999. From September 1999 to the present, Mr. Streeten served
as the Chief Executive Officer of NewWorldApps, Inc. From July 1998 until
September 1999, Mr. Streeten served as the Vice President of Finance at
USinternetworking, Inc. From October 1996 until July 1998, Mr. Streeten served
as the Finance Manager for Acquisitions and Alliances for IBM Corporation.
From January 1991 until September 1996, Mr. Streeten was the District Sales
Manager for Lotus/IBM Corporation.
Nicholas L. Reding (age 64). Mr. Reding is Chairman of the Nidus Center for
Scientific Enterprise, a position he has held since 1999. From 1992 until
1998, Mr. Reding was Vice Chairman of Monsanto Company. Mr. Reding is also a
Director of International Multifoods Corporation, Meredith Corporation and CPI
Corporation.
Douglas S. Luke (age 58). Mr. Luke is President and Chief Executive Officer
of HL Capital, Inc., a position he has held since May 1999. From July 1998
until April 1999, Mr. Luke was retired. From 1991 until July 1998, Mr. Luke
served as President and Chief Executive Officer of WLD Enterprises, Inc. Mr.
Luke is a Director of Orbital Sciences Corporation, a New York Stock Exchange-
listed space products and services company; Regency Realty Corporation, a New
York Stock Exchange-listed leading national grocery-anchored community
shopping center company; and Westvaco Corporation, a New York Stock Exchange-
listed major paper manufacturing, converting and specialty chemicals company.
He is on the Advisory Boards of Saratoga Partners IV, L.P., Torrey Global
Fund, Paul Capital Royalty Acquisition Fund and Trident Capital Funds.
Directors serve until the expiration of their term at the annual meeting of
stockholders. All officers serve at the discretion of the Board of Directors.
There is no family relationship between or among any executive officers and
directors.
The Board of Directors held 18 meetings in 1999, and each director attended
the Board meetings.
Interlocking Relationships with Executive Officers or Directors
None of the directors has a relationship that would constitute an
interlocking relationship with executive officers or directors of another
entity.
Board Committees
In November 1999, we established audit and compensation committees of the
Board. The audit committee was established to review, in consultation with the
independent auditors, our financial statements, accounting and other policies,
accounting systems and system of internal controls. The audit committee also
recommends the
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engagement of our independent auditors and reviews other matters relating to
our relationship with our auditors. The audit committee is comprised of
Messrs. Nour-Omid and Streeten. The compensation committee was established to
review and act on matters relating to compensation levels and benefit plans
for key executives of the company, among other things and is comprised solely
of outside directors. The compensation committee is comprised of Messrs. Nour-
Omid and Streeten. There were no meetings of the audit or compensation
committees during fiscal 1999. The Board currently has no nominating committee
or a committee performing a similar function.
Board Compensation
In November 1999, Mr. Nour-Omid received 28,750 shares of company common
stock in consideration of his service on the Board, and Mr. Streeten received
18,750 shares of company common stock in consideration of his service on the
Board.
Section 16(a) Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires our
directors and executive officers, and persons who own beneficially more than
ten percent (10%) of our common stock, to file reports of ownership and
changes of ownership with the Securities and Exchange Commission. Copies of
all filed reports are required to be furnished to us pursuant to Section
16(a). Based solely on the reports received by us and on written
representations from reporting persons, we believe that the directors,
executive officers, and greater than ten percent (10%) beneficial owners
complied with all applicable filing requirements during the fiscal year ended
December 31, 1999, except as follows. Messrs. Rose, Leaver and Nelson filed
their Form 3s in February 1999, which should have been filed in January 1999.
Mr. Sexton filed his Form 3 in August 1999, which should have been filed in
June 1999. Messrs. Nour-Omid and Streeten filed their Form 3s in December
1999, which should have been filed in November 1999. Mr. Sexton failed to
timely report on Form 4 one transaction in June 1999 and one transaction in
November 1999, which were reported on Form 5 in April 2000. Mr. Nelson failed
to timely report on Form 4 one transaction in June 1999 and one transaction in
November 1999, which were reported on Form 5 in April 2000. Mr. Leaver failed
to timely report on Form 4 one transaction in November 1999, which was
reported on Form 5 in April 2000. Mr. Fisher failed to timely report his
holdings in October 1999 on Form 3, which was reported on Form 5 in April
2000.
THE BOARD OF DIRECTORS HAS NOMINATED THE ABOVE-REFERENCED DIRECTORS FOR
ELECTION BY THE STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED ABOVE. THE ELECTION OF THESE DIRECTORS
REQUIRES A PLURALITY OF THE VOTES CAST BY THE HOLDERS OF THE SHARES OF COMMON
STOCK PRESENT OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND ENTITLED TO
VOTE IN THE ELECTION OF DIRECTORS.
ITEM 2
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our Board wishes to obtain from you a ratification of the Board's action in
appointing Deloitte & Touche LLP, as our independent public accountants for
the fiscal year ending December 31, 2000. The engagement of Deloitte & Touche
LLP has been approved by the Board. Representatives from the firm are expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire, and are expected to be available to respond to
appropriate questions.
In the event the appointment of Deloitte & Touche LLP as our independent
public accountants is not ratified by our Stockholders, the adverse vote will
be considered as a direction to the Board to select other auditors for the
following year. However, because of the difficulty in making any substitution
of auditors so long after the beginning of the current year, the appointment
for the fiscal year 2000 will be permitted to stand unless the Board finds
other good reason for making a change.
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THE BOARD OF DIRECTORS HAS APPROVED THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL YEAR 2000 AND UNANIMOUSLY
RECOMMENDS A VOTE FOR RATIFICATION OF SUCH APPOINTMENT. SUCH RATIFICATION
REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF
COMMON STOCK PRESENT OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE
ANNUAL MEETING.
ITEM 3
AMENDING OUR ARTICLES OF INCORPORATION TO ESTABLISH
PREFERRED STOCK
The Board believes it to be in our best interests to amend our Articles of
Incorporation to authorize the issuance of preferred stock. In April 2000, the
Board voted to amend Article IV of our Articles of Incorporation to reserve
5,000,000 shares of preferred stock to be authorized for issuance, and
directed that the amendment be submitted to a vote of the Stockholders at the
Annual Meeting. The form of proposed amendment is attached to this proxy
statement as Exhibit "A."
The Board believes it would be desirable to establish preferred stock in
order to make available additional shares for possible stock splits,
acquisitions, financings, employee benefit plan issuance and for such other
corporate purposes as may arise. We do not currently have any plans,
arrangements, negotiations, or understanding with regard to the issuance of
any preferred stock.
The amendment is written so that preferred stock may be issued from time-
to-time in one or more classes or series, each of which shall have a
distinctive designation or title as determined by the Board prior to the
issuance of the shares. Each class or series of preferred stock may have such
voting powers, full or limited, or no voting powers, and such preferences and
relative, participating, optional or other special rights and such
qualifications, limitations or restrictions as set forth in the resolution or
resolutions providing for the class or series of preferred stock as may be
adopted from time-to-time by the Board prior to the issuance of any preferred
stock. While the issuance of preferred stock in certain instances may have the
effect of stalling a hostile takeover, the Board does not intend or view the
authorization of preferred stock as an anti-takeover measure, nor are we aware
of any proposed or contemplated transaction of this type.
THE BOARD OF DIRECTORS HAS APPROVED THE AMENDMENT TO THE ARTICLES OF
INCORPORATION AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF SUCH
AMENDMENT. SUCH ADOPTION REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF TWO-
THIRDS OF THE COMMON STOCK PRESENT OR REPRESENTED BY PROXY AND ENTITLED TO
VOTE AT THE ANNUAL MEETING.
ITEM 4
APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES AVAILABLE FOR
ISSUANCE UNDER THE 1999 STOCK OPTION PLAN
The 1999 Employee Stock Option Plan was adopted by the Board and approved
by the majority stockholder in February 1999. The plan allows stock option
grants, performance stock awards, restricted stock awards, and stock
appreciation rights ("SAR") as determined by our compensation committee. In
November 1999, the Board voted to increase the number of shares of common
stock reserved for issuance under the plan from 3,000,000 shares of common
stock to 7,500,000 shares of common stock. The purpose of the plan is to
foster and promote the financial success of the company and increase
stockholder value by enabling eligible key employees and others to participate
in the long-term growth and financial success of the company. A summary of the
plan is set forth below, and the full text of the plan is attached hereto as
Exhibit "B."
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Eligibility. The plan is open to key employees, including officers,
directors and consultants of the company and its affiliates ("Eligible
Persons").
Transferability. The grants are not transferable.
Changes in the Company's Capital Structure. The plan will not affect the
right of the company to authorize adjustments, recapitalizations,
reorganizations or other changes in the company's capital structure. In the
event of an adjustment, recapitalization or reorganization the award shall be
adjusted accordingly. In the event of a merger, consolidation, or liquidation,
the Eligible Person will be eligible to receive a like number of shares of
stock in the new entity he would have been entitled to if immediately prior to
the merger he had exercised his option. The Board may waive any limitations
imposed under the plan so that all options are immediately exercisable. All
outstanding options may be cancelled by the Board upon written notice to the
Eligible Person and by granting a period in which the options may be
exercised.
Options and SARs. The company may grant incentive or non-qualified stock
options.
Option Price. Incentive options shall be not less than the greater of (i)
100% of fair market value on the date of grant, or (ii) the aggregate par
value of the shares of stock on the date of grant. The compensation committee,
at its option, may provide for a price greater than 100% of fair market value.
The price for 10% or more stockholders shall be not less than 110% of fair
market value.
Duration. No option or SAR may be exercisable after the period of 10 years.
In the case of 10% or more stockholder no incentive option may be exercisable
after the expiration of five years.
Amount Exercisable--Incentive Options. No option may be exercisable within
six months from its date of grant unless a shorter time is designated by the
Board. In the event an Eligible Person exercises incentive options during the
calendar year whose aggregate fair market value exceeds $100,000, the exercise
of options over $100,000 will be considered non-qualified stock options.
Exercise of Options. Options may be exercised by written notice to the
compensation committee with:
. Cash, certified check, bank draft, or postal or express money order
payable to the order of the company for an amount equal to the option
price of the shares;
. Stock at its fair market value on the date of exercise;
. An election to make a cashless exercise through a registered broker-
dealer (if approved in advance by the compensation committee).
. Any other form of payment, which is acceptable to the compensation
committee, including with limitation, payment in the form of a
promissory note, and specifying the address to which the certificates
for the shares are to be mailed.
SARS. SARs may, at the discretion of the compensation committee, be
included in each option granted under the plan to permit the Eligible Person
to surrender that option, or a portion of the part which is then exercisable,
and receive in exchange an amount equal to the excess of the fair market
value, in cash, or partly in cash and partly in shares of stock, as the
compensation committee determines. SARs may be exercised only when the fair
market value of the stock covered by the option surrendered exceeds the
exercise price of the stock. In the event of the surrender of an option, or a
portion of it, to exercise the SARs, the shares represented by the option or
that part of it which is surrendered, shall not be available for re-issuance
under the plan. Each SAR issued in tandem with an option (a) will expire no
later than the expiration of the underlying option, (b) may be for no more
than 100% of the difference between the exercise price of the underlying
option and the fair market value of a share of stock at the time the SAR is
exercised, (c) is transferable only when the underlying option is
transferable, and under the same conditions, and (d) may be exercised only
when the underlying option is eligible to be exercised.
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Termination of Options or SARS. Unless expressly provided in the option or
SAR agreement, options or SARs shall terminate one day less than three months
after an employees severance of employee with the company other than death,
disability or retirement.
Death. Unless the option or SAR expires sooner, the option or SAR will
expire one year after the death of the Eligible Person.
Disability. Unless the option or SAR expires sooner, the option or SAR will
expire one day less than one year after the disability of the Eligible Person.
Retirement. Unless it is expressly provided otherwise in the option
agreement, before the expiration of an incentive option, the employee shall be
retired in good standing from the employ of the company under the then
established rules of the company, the incentive option shall terminate on the
earlier of the options expiration date or one day less than one year after his
retirement; provided, if an incentive option is not exercised within specified
time limits prescribed by the Internal Revenue Code, it will become a non-
qualified option by operation of law. Unless it is expressly provided
otherwise in the option agreement, if before the expiration of a nonqualified
option, the employee shall be retired in good standing from the employ of the
company under the then established rules of the company, the non-qualified
option shall terminate on the earlier of the nonqualified option's expiration
date or one day less than one year after his retirement. In the event of
retirement, the employee shall have the right prior to the termination of the
non-qualified option to the extent to which he was entitled to exercise it
immediately prior to his retirement, unless it is expressly provided otherwise
in the option agreement. Upon retirement, a SAR shall continue to be
exercisable for the remainder of the term of the SAR agreement.
Reload Options. The Board or compensation committee shall have the
authority (but not an obligation) to include as part of any option agreement a
provision entitling the Eligible Person to further option (a "Reload Option")
in the event the Eligible Person exercises the option in accordance with the
plan and the terms and conditions of the option agreement. Any such Reload
Option (a) shall be for a number of shares equal to the number of shares
surrendered as part, or all, of the exercise price of such option, (b) shall
have an expiration date which gave rise to such Reload Option, and (c) shall
have an exercise price which is equal to one hundred percent (100%) of the
fair exercise of the original option. Notwithstanding the foregoing, a Reload
Option which is an incentive option and which is granted to a 10% Stockholder,
shall have an exercise price which is equal to one hundred ten percent (110%)
of the fair market value of the stock subject to the Reload Option on the date
of exercise of the original option and shall have a term which is no longer
than five (5) years.
Restricted Stock Awards. The compensation committee may issue shares of
stock to an Eligible Person subject to the terms of a restricted stock
agreement. The restricted stock may be issued for no payment by the Eligible
Person or for a payment below the fair market value on the date of grant.
Restricted stock shall be subject to restrictions as to sale, transfer,
alienation, pledge or other encumbrance and generally will be subject to
vesting over a period of time specified in the restricted stock agreement. The
compensation committee shall determine the period of vesting, the number of
shares, the price, if any, of stock included in a restricted stock award, and
the other terms and provisions which are included in restricted stock
agreement.
Award of Performance Stock. The compensation committee may award shares of
stock, without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the compensation committee are
satisfied. The terms and provisions herein relating to these performance-based
awards are intended to satisfy Section 162(m) of the Code and regulations
issued thereunder. The designation of an employee eligible for a specific
performance stock award shall be made by the compensation committee in writing
prior to the beginning of the period for which the performance is measured (or
within such period as permitted by IRS regulations).
Amendment or Termination of the Plan. The Board may amend, terminate or
suspend the plan at any time, in its sole and absolute discretion; provided,
however, that to the extent required to qualify the plan under Rule 16b-3
promulgated under Section 16 of the Exchange Act, no amendment that would (a)
materially increase the number of shares of stock that may be issued under the
plan, (b) materially modify the requirements as to
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eligibility for the participation in the plan, or (c) otherwise materially
increase the benefits accruing to participants under the plan, shall be made
without the approval of the company's stockholders; provided further, however,
that to the extent required to maintain the status of any incentive option
under the Code, no amendment that would (a) change the aggregate number of
shares of stock which may be used under incentive options, or (c) decreases
the option price for incentive options below the fair market value of the
stock at the time it is granted, shall be made without the approval of the
stockholders. Subject to the preceding sentence, the Board shall have the
power to make any changes in the plan and in the regulations and
administrative provisions under it or in any outstanding incentive option as
in the opinion of counsel for the company may be necessary or appropriate from
time-to-time to enable any incentive option granted under this plan to
continue to qualify as an incentive stock option or such other stock option as
may be defined under the Code so as to receive preferential federal income tax
treatment.
Federal Income Tax Consequences. Under present federal income tax laws,
awards under the plan will have the following consequences:
. The grant of an award will not, by itself, result in the recognition of
taxable income to the participant nor entitle the company to a deduction
at the time of such grant.
. The exercise of a stock option which is an incentive option within the
meaning of Section 422 of the Code will generally not, by itself, result
in the recognition of taxable income to the participant nor entitle the
company to a deduction at the time of such exercise. However, a
participant must generally include in alternative minimum taxable income
the amount by which the fair market value on the date of exercise exceeds
the exercise price. The basis of the stock for alternative minimum tax
purposes is adjusted to reflect the gain realized so that the participant
will receive a corresponding deduction for alternative minimum tax
purposes in the year the stock is sold. No alternative minimum tax
consequences result for the company.
. If the shares acquired upon exercise of an incentive option are not held
for at least one year after transfer of such shares to the participant or
two years after the grant of the incentive option, whichever is later
(disqualifying disposition), the participant will recognize ordinary
income upon the disposition of the shares in an amount equal to excess of
fair market value on the date of exercise over the exercise price.
However, the amount reportable as compensation is limited to the actual
gain realized on the sale in cases where the sales prices is less than
the fair market value of the stock on the date of exercise. In addition,
where a loss is realized on the sale, no income is reported as
compensation. Where the sales price is in excess of the exercise price,
the participant will also recognize capital gain or loss in an amount
equal to the difference between the sales price and the basis in the
stock increased by any income reported as compensation. In cases where
the exercise price is in excess of the sales price, the participant will
recognize capital loss in an amount equal to the difference between the
sales price and the exercise price. Capital gains or losses will be
characterized as short-term if the shares were not held for more than one
year after the exercise date of the incentive option and as long-term if
the shares were held for more than one year after the exercise date of
the incentive option.
. Where a disqualifying disposition occurs and the participant recognizes
income, the company will generally be entitled to a corresponding
deduction. The company will not be entitled to a corresponding deduction
for any capital gain or loss recognized by the participant.
. If the shares acquired upon exercise of an incentive option are held by
the participant for one year after the incentive option is exercised and
two years after the incentive option was granted, the participant will
recognize a capital gain or loss upon disposition of the shares in an
amount equal to the difference between the sale price and the exercise
price; such capital gain or loss will be characterized as short-term if
the shares were not held for more than one year after the exercise of the
incentive option and long-term if the shares were held for more than one
year after the exercise of the incentive option. The company will not be
entitled to a corresponding deduction for such capital gain or loss.
. The exercise of a non-qualified stock option will result in the
recognition of ordinary income by the participant on the date of exercise
in an amount equal to the difference between the exercise price and the
fair market value on the date of exercise of the option shares acquired
pursuant to the stock option.
<PAGE>
. The company will be allowed a deduction at the time, and in the amount of
any ordinary income recognized by the participant upon the exercise of a
non-qualified stock option, provided the company meets its federal
withholding tax obligations.
Upon sale of the shares acquired upon exercise of a non-qualified stock
option, any appreciation or depreciation in the value of such shares from the
time of exercise will result in the recognition of a capital gain or loss by
the participant. Such capital gain or loss will be short-term if the shares
were not held by the participant for more than one year after the exercise of
the non-qualified stock option and long-term if the participant held the
shares for more than one year following exercise of the non-qualified stock
option.
We do not currently have any plans, arrangements, negotiations, or
understandings with regard to the issuance of stock options, performance stock
awards, restricted stock awards or SARs.
THE BOARD OF DIRECTORS HAS APPROVED THE AMENDMENT TO THE 1999 STOCK OPTION
PLAN FOR EMPLOYEES AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION OF SUCH
AMENDMENT. SUCH ADOPTION REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF SHARES OF COMMON STOCK PRESENT OR REPRESENTED BY PROXY AND
ENTITLED TO VOTE AT THE ANNUAL MEETING.
ITEM 5
APPROVAL OF THE 1999 EMPLOYEE STOCK PURCHASE PLAN
General. The Board adopted the 1999 Employee Stock Purchase Plan ("1999
ESPP") in November 1999, subject to the approval of the stockholders. The 1999
ESPP is intended to encourage ownership of common stock by employees and to
encourage employees to remain with us, or our subsidiaries, through an
opportunity to share in the increased value of the common stock to which the
employees contribute. The 1999 ESPP is for the benefit of all of our eligible
full-time employees, both officers and non-officers. A summary of the 1999
ESPP is set forth below, and the full text of the 1999 ESPP is attached hereto
as Exhibit "C."
Eligibility and Participation--Administration. The 1999 ESPP authorizes us
to issue options to eligible employees to purchase shares of our common stock
at 85% of the fair market value of the common stock on the first business day
of each offering period, which commences on January 1 and July 1 of each year.
The 1999 ESPP will be administered by the Board, or a committee named by the
Board. All of our employees (excluding employees whose scheduled employment is
less than 20 hours per week or less than five months per year) who complete
one or more years of continuous service as of July 1, 2000 are eligible for
participation. Participants in the 1999 ESPP shall elect to have payroll
deductions made on each payday during the offering period in an amount not
less than 1% and not more than 15% of such participant's compensation on such
payday. At the beginning of each offering period, each eligible employee
participating in the 1999 ESPP shall be granted an option to purchase a number
of shares of our common stock determined by dividing such employee's
contribution accumulated prior to the purchase date by the lower of (i) 85% of
the fair market value of a share of our common stock on the offering day, or
(ii) 85% of the fair market value of our common stock on the purchase date;
provided however, that the maximum number of shares the employee may purchase
during the offering period is 5,000.
Purchase rights are not transferable except by will or by the laws of
descent and distribution. Shares offered under the 1999 ESPP will be subject
to adjustment in the case of stock dividends, stock splits and certain other
stock changes. In addition, no option granted under the 1999 ESPP will permit
a participant to purchase in any single calendar year shares of stock,
together with all other shares which the participant may be entitled to
purchase under all employee stock purchase plans in such year, at a rate in
excess of $25,000 in fair market value (such fair market value determined at
the time the option is granted) for each calendar year in which such option is
outstanding.
<PAGE>
Certain Federal Tax Consequences
The 1999 ESPP is intended to comply with the requirements governing
employee stock purchase plans set forth in the Code. Certain favorable tax
consequences are afforded to purchasers of stock pursuant to an employee stock
purchase plan meeting those requirements. If a participant acquires stock
under such a plan and holds it for a period of more than two years from the
date the option is granted and more than one year from the date the option is
exercised, he would not realize any ordinary income on exercise but would
realize ordinary income upon disposition of such stock to extent of the excess
of the fair market value of such stock at the time the option was granted the
amount of ordinary income is limited to the excess of the fair market value at
the time of disposition over the option price. Neither the grant of an option
under an employee stock purchase plan meeting the requirements in the Code nor
the exercise of such an option has tax consequences to the company. If a
participant disposes of stock acquired pursuant to such an option within two
years from the date the option is granted or one year from the date the option
is exercised, he must report as ordinary income the differences between the
option price and the fair market value of stock at the time the option was
exercised, and the company may take an income tax deduction in that amount.
THE BOARD OF DIRECTORS HAS APPROVED THE 1999 ESPP AND UNANIMOUSLY
RECOMMENDS A VOTE FOR THE PROPOSED PLAN. SUCH APPROVAL REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OF COMMON STOCK
PRESENT OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL MEETING.
EXECUTIVE OFFICERS
Our executive officers are as follows:
<TABLE>
<CAPTION>
Name Age Capacity
---- --- --------
<S> <C> <C>
Charles H. Leaver.......... 45 Chief Executive Officer
Jeffrey S. Sexton.......... 31 President and Chief Operating Officer
Robert E. Nelson........... 49 Chief Financial Officer and Secretary
Richard Fisher............. 52 Executive Vice President of Business Development
Gary C. Young.............. 55 Executive Vice President of Enterprise Solutions
Peter B. Davis............. 41 Executive Vice President Marketing and Strategy
</TABLE>
The biographies of Messrs. Leaver and Sexton are previously described in
Item 1.
Robert E. Nelson has served as our Chief Financial Officer since November
1999 and as our Secretary since January 1999. Mr. Nelson served as one of our
directors from January 1999 until November 1999. Mr. Nelson served as
Secretary and Controller of DASI from March 1995 until April 1999. Prior
thereto, Mr. Nelson served as an accountant to the Montrose Clinic from August
1994 until February 1995.
Richard Fisher has served as our Executive Vice President of Business
Development since November 1999. From May 1998 until November 1999, Mr. Fisher
was Vice President of Sales and Marketing for ManageIT. From May 1996 until
May 1998, Mr. Fisher was Area Manager for Optima Software. From January 1991
until May 1996, Mr. Fisher was Regional Manager of Legent Corporation.
Gary C. Young has served as our Executive Vice President of Enterprise
Solutions since December 1999. From January 1999 until November 1999, Mr.
Young was Director of Business Development, State and Local Government for
Electronic Data Services Corporation. From March 1996 until March 1999, Mr.
Young was president of Heart of Texas General Contractors, Inc. From December
1994 until February 1996, Mr. Young was Director of National Marketing for GC
Services.
Peter B. Davis has served as our Executive Vice President of Marketing and
Strategy since March 2000. In April 1997, Mr. Davis co-founded the Growth
Strategy Group, Inc., a marketing and communications consulting firm, which we
acquired in March 2000. Mr. Davis was Director of Marketing and Corporate
Communications for AJ Contracting from January 1996 until March 1997. Prior
thereto, Mr. Davis was the owner and sole proprietor of Davis Media, Inc.
There are no family relationships between or among any of the executive
officers and directors.
<PAGE>
STOCK OWNERSHIP
The following table sets forth, as of April 16, 2000, certain information
with respect to the beneficial ownership of our common stock by:
. each person known by us who beneficially owns more than 5% of our
outstanding common stock
. each director and director nominee
. each named executive officer
. all directors and officers as a group
<TABLE>
<CAPTION>
Shares of
Common Percent of
Name and Address Stock Voting Power
---------------- ---------- ------------
<S> <C> <C>
Carl R. Rose............................................ 14,389,650 62.3%
3200 Wilcrest, Suite 370
Houston, Texas 77042
Charles H. Leaver....................................... 1,432,310 6.2%
3200 Wilcrest, Suite 370
Houston, Texas 77042
Jeffrey S. Sexton....................................... 350,000 1.3%
1150 Lakeway Drive, Suite 218
Austin, Texas 78734
Bahram Nour-Omid........................................ 57,500 Less than 1%
4630 Admiralty Way
Suite 423
Marina Del Ray, Calif. 90292
John P. Streeten........................................ 18,750 Less than 1%
9483 Shouse Drive
Vienna, Virginia 22182
Nicholas L. Reding...................................... 40,000 Less than 1%
19 Bellerive Country Club Grounds
St. Louis, MO 63141
Douglas S. Luke......................................... -- Less than 1%
Robert E. Nelson........................................ 60,000 Less than 1%
3200 Wilcrest, Suite 370
Houston, Texas 77042
All directors and officers as
a group (11)........................................... 16,520,043 64%
</TABLE>
Of the 14,389,650 shares of common stock held by Mr. Rose, 5,000,000 are
held in trust for which he is the trustee and maintains voting control. The
shares of common stock held by Mr. Sexton include 50,000 shares of common
stock underlying options, which vest within the next sixty days. The shares of
common stock held by Mr. Nelson include 60,000 shares of common stock
underlying options, which vest within the next sixty days. The shares of
common stock held by all directors and officers as a group include 143,333
shares of common stock underlying options, which vest in the next sixty days.
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid by
the company to the Chief Executive Officer and for all other executive
officers whose total annual salary and bonus exceeded $100,000 during 1999.
For the fiscal years ended 1998 and 1997, disclosure is provided for only the
Chief Executive Officer as no other officer received total annual salary and
bonus exceeding $100,000. The table below does not include perquisites and
other personal benefits in amounts of less than 10% of the total annual salary
and bonus of the named executive officer.
<PAGE>
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
AWARDS PAYOUTS
-------------------------------------------------- ------------------------------------------
Other Restricted Securities
Name and Principal Annual Stock Underlying LTIP All Other
Position Year Salary($) Bonus($) Compensation($) Awards($) Options/Sars(#) Payouts($) Compensation($)
- ------------------ ---- --------- -------- --------------- ---------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl R. Rose............ 1999 $300,000 $ 10,000 -- -- -- -- --
Chief Executive Officer
Glenn L. Loch........... 1998 $ 53,500 -- -- -- -- -- --
Former Chief 1997 $ 36,600 -- -- -- -- -- --
Executive Officer
Charles H. Leaver....... 1999 $243,334 $140,000 -- -- 260,000 -- --
President
Jeffrey S. Sexton....... 1999 $126,667 $ 80,000 -- -- 450,000 -- --
Chief Operating
Officer
Robert E. Nelson........ 1999 $119,167 $ 35,000 -- -- 300,000 -- --
Chief Financial
Officer
</TABLE>
Material Employment Agreements
In January 1999, the company entered into an employment agreement with Mr.
Rose for the position of Chief Executive Officer. The initial term of the
agreement is five years, with successive one-year renewals at the expiration
of the term, unless the agreement is terminated earlier.
Pursuant to the terms of the agreement, Mr. Rose is entitled to receive an
annual salary of $300,000 and an annual incentive bonus equal to fifty percent
(50%) of the base salary which is payable in equal quarterly installments. The
agreement provides for an annual review by the Board of the compensation
payable to Mr. Rose for adjustment, if appropriate. Mr. Rose is entitled to
the following perquisites: (1) participation in the company employee benefit
plans, (2) reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Mr. Rose in the performance of his duties, and
(3) other executive perquisites as determined by the Board.
The agreement may be terminated by any of the following methods:
(a) Death. In the event of the termination of the agreement by the employee's
death, the estate shall be entitled to all base salary earned through the
date of the employee's death, the pro rata portion of the incentive bonus
and a representative of employee's estate shall be entitled to exercise
vested options, if any, for a period of 120 days from employee's death.
(b) Disability. In the event of the termination of the agreement by employee's
disability, the employee shall be entitled to receive 60% of base salary
for the remaining term of the agreement or one year, whichever is less.
(c) Good Cause. The company may terminate the agreement ten (10) days after
written notice to employee for good cause, which shall be: (1) employee's
gross negligence in the performance or intentional non-performance (either
of which continuing for 10 days after receipt of written notice of need to
cure) of any of employee's material duties and responsibilities hereunder;
(2) employee's willful, material and irreparable breach of the agreement,
(3) employee's willful dishonesty, fraud or misconduct with respect to the
business or affairs of the Company which materially and adversely affects
the operations or reputation of the company; (4) the employee's conviction
of a felony crime; or (5) chronic alcohol abuse or illegal drug abuse by
employee. In the event of a termination for good cause, employee shall
have no right to any severance compensation.
<PAGE>
(d) Without Cause. The company or employee may, without cause, terminate the
agreement, effective thirty (30) days after written notice is provided to
the company. Should employee be terminated by the company without cause
during the term, employee shall receive from the company, at his option,
either six (6) months base salary (at the rate then in effect) payable in
a lump-sum payment due on the effective date of termination or one year's
base salary payable from time-to-time at regular intervals. Further, any
termination without cause by the company operates to invalidate the terms
of any non-compete clause. If employee resigns or otherwise terminates
employee's employment without cause, employee shall receive no severance
compensation and the terms of the non-compete section shall be fully
In January 1999, the company entered into an employment agreement with Mr.
Leaver for the position of President. The terms of Mr. Leaver's employment
agreement are substantially similar to Mr. Rose's employment agreement except:
(1) base salary is $240,000 per year, and (2) termination by death only
provides for the payment to the estate of accrued base salary through the date
of death.
In February 1999, the company entered into an employment agreement with Mr.
Nelson for the position of Secretary. The terms of Mr. Nelson's employment
agreement are substantially similar to Mr. Leaver's employment agreement
except the base salary is $115,000 per year.
In April 1999, the company entered into an employment agreement with Mr.
Sexton for the position of President. The terms of Mr. Sexton's employment
agreement are substantially similar to Mr. Leaver's employment agreement
except base salary is $160,000 per year.
In February 2000, the employment agreements for Messrs. Leaver, Sexton and
Nelson were amended to provide that the options granted to them during the
year ended December 31, 1999 be terminable only if their employment is
terminated with cause, or by the expiration of the option's term.
Stock Options
Our 1999 Stock Option Plan for Employees provides for the issuance of an
aggregate 3,000,000 shares of our common stock upon exercise of options
granted under the plan. As of December 31, 1999, options to purchase an
aggregate 2,605,100 shares of our common stock were outstanding under the
plan.
1999 Stock Option Grants
<TABLE>
<CAPTION>
Percent of
Number of Total Options
Securities SARs Granted
Underlying to Employees Exercise or
Options/SARs in Fiscal Base Expiration
Name Granted(#) Year Price ($/Sh) Date
---- ------------ ------------- ------------ ----------
<S> <C> <C> <C> <C>
Charles H Leaver............. 260,000 9.85% $5.00 11/10/09
President
Jeffrey S Sexton............. 150,000 17.05% 2.00 6/2/09
Chief Operating Officer 300,000 5.00 11/10/09
Robert E Nelson.............. 180,000 11.36% 2.00 6/2/09
Chief Financial Officer 120,000 5.00 11/10/09
</TABLE>
14
<PAGE>
Aggregated Option Exercises in 1999 and Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Fiscal Year End(#) Fiscal Year End($)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Leaver....... -- -- -- 260,000 $-0- $2,323,750
President
Jeffrey S. Sexton....... -- -- -- 450,000 $-0- $4,471,875
Chief Operating Officer
Robert E. Nelson........ -- -- -- 300,000 $-0- $3,221,250
Chief Financial Officer
</TABLE>
Certain Transactions
In connection with the formation of DASI, Mr. Rose was issued 1,440 shares
of DASI common stock for nominal consideration. In December 1998, Mr. Leaver
was awarded 144 shares of DASI common stock for services rendered having a
value of $12,770. In December 1998, DASI effected a 10,000 for 1 stock split.
In connection with the acquisition of DASI more particularly described in Item
1 hereof, Messrs. Rose and Leaver exchanged their shares of DASI common stock
and the company issued Mr. Rose 14,400,000 shares of company common stock, and
Mr. Leaver 1,440,000 shares of company common stock.
DASI had $119,497 in management fee income for the year ended December 31,
1998, from a company that is wholly owned by Mr. Rose.
Mr. Rose advanced DASI an aggregate $422,347, during the years ended 1998,
1997, and 1996. The advances were unsecured, due on demand and bore interest
at a rate of 14% per annum. The interest was paid semi-monthly. Interest on
the advances was $56,000, $33,000 and $39,000 for the years ended 1998, 1997,
and 1996, respectively. In 1998, Mr. Rose forgave the advances in exchange for
cancellation of an account receivable to DASI from a company wholly owned by
Mr. Rose.
In June 1999, Mr. Sexton received 300,000 shares of company common stock as
consideration for the acquisition of COAD Solutions, Inc., and a five-year
option to purchase 150,000 shares of company common stock at an exercise price
of $2.00 per share.
In November 1999, Mr. Leaver received a five-year option to purchase
260,000 shares of company common stock at an exercise of $5.00 per share, and
Mr. Sexton received a five-year option to purchase 300,000 shares of company
common stock at an exercise of $5.00 per share. In November 1999, Mr. Nour-
Omid received 28,750 shares of company common stock in consideration of his
service on the Board, and Mr. Streeten received 18,750 shares of company
common stock in consideration of his service on the Board.
COST OF SOLICITATION
We will pay the expenses of soliciting proxies. Proxies may be solicited on
our behalf by directors, officers or employees in person or by telephone,
electronic transmission, facsimile transmission or other means of
communication. Our directors, officers and employees will not be compensated
additionally for the solicitation, but may be reimbursed for out-of-pocket
expenses in connection with this solicitation. Arrangements are being made
with brokerage houses and any other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of our common
stock, and we will reimburse such brokers, custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses.
15
<PAGE>
STOCKHOLDER PROPOSALS FOR THE NEXT MEETING
Under Rule 14a-8 of the Exchange Act, proposals that stockholders intend to
have included in the company's proxy statement and form of proxy for the 2001
Annual Meeting of Stockholders must be received by the company no later than
January 6, 2001. However, if the date of the 2001 Annual Meeting of
Stockholders changes by more than 30 days from the date of the 2000 Annual
Meeting of Stockholders, the deadline is a reasonable time before the company
begins to print and mail its proxy materials, which deadline will be set forth
in a quarterly report on Form 10-QSB or will otherwise be communicated to
stockholders. Stockholder proposals must also be otherwise eligible for
inclusion.
Moreover, with respect to any proposal by a stockholder not seeking to have
the proposal included in the proxy statement but seeking to have the proposal
considered at the 2001 Annual Meeting of Stockholders, such stockholder must
provide written notice of such proposal to the Secretary of the company at the
principal executive offices of the company by March 22, 2001. With respect to
a proposal not to be included in the proxy statement, in the event notice is
not timely given to the company, the persons who are appointed as proxies may
exercise their discretionary voting authority with respect to such proposals,
if the proposal is considered at the 2001 Annual Meeting of Stockholders, even
if the stockholders have not been advised of the proposal. In addition,
stockholders must comply in all respects with the rules and regulations of the
Securities and Exchange Commission then in effect and the procedural
requirements of the company's bylaws.
The chairman of the meeting may refuse to allow the transaction of any
business not presented beforehand, or to acknowledge the nomination of any
person not made, in compliance with the foregoing procedures.
Whether or not you plan to attend the Meeting, please vote by telephone or
Internet or mark, sign, date and promptly return the enclosed proxy in the
enclosed envelope. The toll-free number to vote by telephone is at no cost to
you. No postage is required for mailing in the United States.
By order of the Board of Directors,
Carl R. Rose
Chairman
16
<PAGE>
EXHIBIT A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
EPICEDGE, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporations Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE
The name of the corporation is EpicEdge, Inc.
ARTICLE TWO
The following amendments and additions were adopted by the shareholders of
the corporation on May 25, 2000.
The amendment alters in full Article IV of the original Articles of
Incorporation to read as follows:
ARTICLE IV.
The total number of shares of stock which the Corporation shall have
authority to issue is 155,000,000 consisting of 150,000,000 shares of common
stock, par value $.01 per share (the "Common Stock"), and 5,000,000 shares of
preferred stock par value $.01 per share (the "Preferred Stock").
Shares of Preferred Stock of the Corporation may be issued from time to time
in one or more classes or series, each of which class or series shall have such
distinctive designation or title as shall be determined by the Board of
directors of the Corporation (the "Board of Directors") prior to the issuance
of any shares thereof. Each such class or series of Preferred Stock shall have
such voting powers, full or limited, or no voting powers, and such preferences
and relative, participating, optional or other special rights and such
qualifications, limitations or restrictions thereof, and shall be stated in
such resolution or resolutions providing for the issue of such class or series
of Preferred Stock as may be adopted from time to time by the Board of
Directors prior to the issuance of any shares thereof pursuant to the authority
hereby expressly vested in it, all in accordance with the laws of the State of
Texas.
ARTICLE THREE
Each statement made by these Amended Articles of Incorporation has been
effected in conformity with the provisions of the Texas Business Corporations
Act. These Articles of Amendment to the Articles of Incorporation were adopted
by the Shareholders of the corporation on May 25, 2000.
ARTICLE FOUR
The number of shares of the Company outstanding at the time of the adoption
was and the number of shares entitled to vote on the amendment was
.
1
<PAGE>
ARTICLE FIVE
The holders of shares outstanding entitled to vote on the
amendment voted for its approval.
EPICEDGE, INC.
By:
Name: Charles H. Leaver, Jr.
Title: Chief Executive Officer
2
<PAGE>
STATE OF TEXAS(S)
COUNTY OF HARRIS(S)
Before me, a notary public, on this day personally appeared, Charles H.
Leaver, Jr., known to me to be the person whose name is subscribed to the
foregoing document and, being by me first duly sworn, declared that the
statements therein contained are true and correct.
Given under my hand and seal this day of , 2000.
------------------------------------------------
Notary Public, State of Texas
My commission expires:
, 2000
3
<PAGE>
DESIGN AUTOMATION SYSTEMS INCORPORATED
1999 STOCK OPTION PLAN
ARTICLE I--PLAN
1.1 Purpose. This Plan is a plan for key Employees (including officers and
employee directors) and Consultants of the Company and its Affiliates and is
intended to advance the best interests of the Company, its Affiliates, and its
stockholders by providing those persons who have substantial responsibility
for the management and growth of the Company and its Affiliates with
additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in
the employ of the Company or any of its Affiliates.
1.2 Rule 16b-3 Plan. The Company is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
therefore the Plan is intended to comply with all applicable conditions of
Rule 16b-3 (and all subsequent revisions thereof) promulgated under the 1934
Act. To the extent any provision of the Plan or action by the Board of
Directors or Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee. In
addition, the Board of Directors may amend the Plan from time to time as it
deems necessary in order to meet the requirements of any amendments to Rule
16b-3 without the consent of the shareholders of the Company.
1.3 Effective Date of Plan. The Plan shall be effective April 1999 (the
"Effective Date"), provided that within one year of the Effective Date, the
Plan shall have been approved by at least a majority vote of stockholders
voting in person or by proxy at a duly held stockholders' meeting, or if the
provisions of the corporate charter, by-laws or applicable state law
prescribes a greater degree of stockholder approval for this action, the
approval by the holders of that percentage, at a duly held meeting of
stockholders. No Incentive Option, Nonqualified Option, Stock Appreciation
Right, Restricted Stock Award or Performance Stock Award shall be granted
pursuant to the Plan ten years after the Effective Date.
ARTICLE II--DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "Affiliate" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company if,
at the time of the action or transaction, each of the corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
The term "subsidiary corporation" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
at the time of the action or transaction, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of the other
corporations in the chain.
2.2 "Award" means each of the following granted under this Plan: Incentive
Option, Nonqualified Option, Stock Appreciation Right, Restricted Stock Award
or Performance Stock Award.
2.3 "Board of Directors" means the board of directors of the Company.
2.4 "Change in Control" shall mean and include the following transactions
or situations:
(a) A sale, transfer, or other disposition by the Company through a
single transaction or a series of transactions of securities of the
Company representing thirty (30%) percent or more of the combined
voting power of the Company's then outstanding securities to any
"Unrelated Person" or "Unrelated Persons" acting in concert with one
another. For purposes of this definition, the term "Person" shall mean
and include any individual, partnership, joint venture, association,
trust corporation, or other entity (including a "group" as referred to
in Section 13(d)(3) of the 1934 Act). For purposes of this definition,
the term "Unrelated Person" shall mean and include any Person other
than the Company, a wholly-owned subsidiary of the Company, or an
employee benefit plan of the Company; provided however, a sale to
underwriters in connection with a public offering of the Company's
securities pursuant to a firm commitment shall not be a Change of
Control.
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(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of
the assets of the Company to an Unrelated Person or Unrelated Persons
acting in concert with one another.
(c) A change in the ownership of the Company through a single
transaction or a series of transactions such that any Unrelated Person
or Unrelated Persons acting in concert with one another become the
"Beneficial Owner," directly or indirectly, of securities of the
Company representing at least thirty (30%) percent of the combined
voting power of the Company's then outstanding securities. For purposes
of this definition, the term "Beneficial Owner" shall have the same
meaning as given to that term in Rule 13d-3 promulgated under the 1934
Act, provided that any pledgee of voting securities is not deemed to be
the Beneficial Owner thereof prior to its acquisition of voting rights
with respect to such securities.
(d) Any consolidation or merger of the Company with or into an
Unrelated Person, unless immediately after the consolidation or merger
the holders of the common stock of the Company immediately prior to the
consolidation or merger are the beneficial owners of securities of the
surviving corporation representing at least fifty (50%) percent of the
combined voting power of the surviving corporation's then outstanding
securities.
(e) During any period of two years, individuals who, at the
beginning of such period, constituted the Board of Directors of the
Company cease, for any reason, to constitute at least a majority
thereof, unless the election or nomination for election of each new
director was approved by the vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period.
(f) A change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or any successor
regulation of similar importance, regardless of whether the Company is
subject to such reporting requirement.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Committee" means the Compensation Committee of the Board of Directors
or such other committee designated by the Board of Directors.
2.7 "Company" means Design Automation Systems Incorporated.
2.8 "Consultant" means any person, including an advisor, engaged by the
Company or Affiliate to render services and who is compensated for such
services.
2.9 "Disinterested Person" means a "disinterested person" as that term is
defined in Rule 16b-3 under the 1934 Act.
2.10 "Eligible Persons" shall mean, with respect to the Plan, those persons
who, at the time that an Award is granted, are (i) key personnel (including
officers and directors) of the Company or Affiliate, or (ii) Consultants or
independent contractors who provide valuable services to the Company or
Affiliate as determined by the Committee.
2.11 "Employee" means a person employed by the Company or any Affiliate to
whom an Award is granted.
2.12 "Fair Market Value" of the Stock as of any date means (a) the average
of the high and low sale prices of the Stock on that date on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the average of the high and low sale prices
of the Stock on that date as reported on the NASDAQ National Market System; or
(c) if the Stock is not listed on the NASDAQ National Market System, the
average of the high and low bid quotations for the Stock on that date as
reported by the National Quotation Bureau Incorporated; or (d) if none of the
foregoing is applicable, an amount at the election of the Committee equal to
(x), the average between the closing bid and ask prices per share of Stock on
the last preceding date on which those prices were reported or (y) that amount
as determined by the Committee in good faith.
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2.13 "Incentive Option" means an option to purchase Stock granted under
this Plan which is designated as an "Incentive Option" and satisfies the
requirements of Section 422 of the Code.
2.14 "Nonqualified Option" means an option to purchase Stock granted under
this Plan other than an Incentive Option.
2.15 "Option" means both an Incentive Option and a Nonqualified Option
granted under this Plan to purchase shares of Stock.
2.16 "Option Agreement" means the written agreement by and between the
Company and an Eligible Person which sets out the terms of an Option.
2.17 "Plan" means the Design Automation Systems Incorporated 1999 Stock
Option Plan, as set out in this document and as it may be amended from time to
time.
2.18 "Plan Year" means the Company's fiscal year.
2.19 "Performance Stock Award" means an award of shares of Stock to be
issued to an Eligible Person if specified predetermined performance goals are
satisfied as described in Article VI.
2.20 "Restricted Stock" means Stock awarded or purchased under a Restricted
Stock Agreement entered into pursuant to this Plan, together with (i) all
rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall be
determined by the Committee consistent with the terms of the Plan.
2.21 "Restricted Stock Agreement" means an agreement between the Company or
any Affiliate and the Eligible Person pursuant to which the Eligible Person
receives a Restricted Stock Award subject to Article VI.
2.22 "Restricted Stock Award" means an Award of Restricted Stock.
2.23 "Restricted Stock Purchase Price" means the purchase price, if any,
per share of Restricted Stock subject to an Award. The Restricted Stock
Purchase Price shall be determined by the Committee. It may be greater than or
less than the Fair Market Value of the Stock on the date of the Stock Award.
2.24 "Stock" means the common stock of the Company, $.001 par value or, in
the event that the outstanding shares of common stock are later changed into
or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.
2.25 "Stock Appreciation Right" and "SAR" means the right to receive the
difference between the Fair Market Value of a share of Stock on the grant date
and the Fair Market Value of the share of Stock on the exercise date.
2.26 "10% Stockholder" means an individual who, at the time the Option is
granted, owns Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Affiliate. An
individual shall be considered as owning the Stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and Stock owned, directly
or indirectly, by or for a corporation, partnership, estate, or trust, shall
be considered as being owned proportionately by or for its stockholders,
partners, or beneficiaries.
ARTICLE III--ELIGIBILITY
The individuals who shall be eligible to receive Awards shall be those
Eligible Persons of the Company or any of its Affiliates as the Committee
shall determine from time to time. The Board of Directors may designate one or
more individuals who shall not be eligible to receive any Award under this
Plan or under other similar plans of the Company.
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ARTICLE IV--GENERAL PROVISIONS RELATING TO AWARDS
4.1 Authority to Grant Awards. The Committee may grant to those Eligible
Persons of the Company or any of its Affiliates as it shall from time to time
determine, Awards under the terms and conditions of this Plan. Subject only to
any applicable limitations set out in this Plan, the number of shares of Stock
to be covered by any Award to be granted to an Eligible Person shall be
determined by the Committee.
4.2 Dedicated Shares. The total number of shares of Stock with respect to
which Awards may be granted under the Plan shall be 7,500,000 shares. The
shares may be treasury shares or authorized but unissued shares. [THE MAXIMUM
NUMBER OF SHARES SUBJECT TO OPTIONS OR STOCK APPRECIATION RIGHTS WHICH MAY BE
ISSUED TO ANY ELIGIBLE PERSON UNDER THE PLAN DURING EACH PLAN YEAR SHALL BE
DETERMINED BY THE COMPENSATION COMMITTEE. THE MAXIMUM NUMBER OF SHARES SUBJECT
TO RESTRICTED STOCK AWARDS WHICH MAY BE GRANTED TO ANY ELIGIBLE PERSON UNDER
THE PLAN DURING EACH PLAN YEAR SHALL BE DETERMINED BY THE COMPENSATION
COMMITTEE. THE MAXIMUM NUMBER OF SHARES SUBJECT TO PERFORMANCE STOCK AWARDS
WHICH MAY BE GRANTED TO ANY ELIGIBLE PERSON DURING EACH PLAN YEAR SHALL BE
DETERMINED BY THE COMPENSATION COMMITTEE.] The number of shares stated in this
Section 4.2 shall be subject to adjustment in accordance with the provisions
of Section 4.5. In the event that any outstanding Award shall expire or
terminate for any reason or any Award is surrendered, the shares of Stock
allocable to the unexercised portion of that Award may again be subject to an
Award under the Plan.
4.3 Non-transferability. Awards shall not be transferable by the Eligible
Person otherwise than by will or under the laws of descent and distribution,
and shall be exercisable, during the Eligible Person's lifetime, only by him.
Restricted Stock shall be purchased by and/or become vested under a Restricted
Stock Agreement during the Eligible Person's lifetime, only by him. Any
attempt to transfer an Award other than under the terms of the Plan and the
Agreement shall terminate the Award and all rights of the Eligible Person to
that Award.
4.4 Requirements of Law. The Company shall not be required to sell or issue
any Stock under any Award if issuing that Stock would constitute or result in
a violation by the Eligible Person or the Company of any provision of any law,
statute, or regulation of any governmental authority. Specifically, in
connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any
Award, the Company shall not be required to issue any Stock unless the
Committee has received evidence satisfactory to it to the effect that the
holder of that Option or Award will not transfer the Stock except in
accordance with applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed transfer complies
with applicable law. The determination by the Committee on this matter shall
be final, binding and conclusive. The Company may, but shall in no event be
obligated to, register any Stock covered by this Plan pursuant to applicable
securities laws of any country or any political subdivision. In the event the
Stock issuable on exercise of an Option or pursuant to an Award is not
registered, the Company may imprint on the certificate evidencing the Stock
any legend that counsel for the Company considers necessary or advisable to
comply with applicable law. The Company shall not be obligated to take any
other affirmative action in order to cause the exercise of an Option or
vesting under an Award, or the issuance of shares pursuant thereto, to comply
with any law or regulation of any governmental authority.
4.5 Changes in the Company's Capital Structure.
(a) The existence of outstanding Options or Awards shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Stock or its rights, or the
dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a
subdivision or consolidation of shares or other capital readjustment, the
payment of a Stock dividend, or other
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increase or reduction of the number of shares of the Stock outstanding,
without receiving compensation for it in money, services or property, then (a)
the number, class, and per share price of shares of Stock subject to
outstanding Options under this Plan shall be appropriately adjusted in such a
manner as to entitle an Eligible Person to receive upon exercise of an Option,
for the same aggregate cash consideration, the equivalent total number and
class of shares he would have received had he exercised his Option in full
immediately prior to the event requiring the adjustment; and (b) the number
and class of shares of Stock then reserved to be issued under the Plan shall
be adjusted by substituting for the total number and class of shares of Stock
then reserved, that number and class of shares of Stock that would have been
received by the owner of an equal number of outstanding shares of each class
of Stock as the result of the event requiring the adjustment.
(b) If the Company is merged or consolidated with another corporation and
the Company is not the surviving corporation, or if the Company is liquidated
or sells or otherwise disposes of substantially all its assets while
unexercised Options remain outstanding under this Plan:
(i) subject to the provisions of clause (c) below, after the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, each holder of an outstanding Option
shall be entitled, upon exercise of the Option, to receive, in lieu of
shares of Stock, the number and class or classes of shares of stock or
other securities or property to which the holder would have been
entitled if, immediately prior to the merger, consolidation,
liquidation, sale or other disposition, the holder had been the holder
of record of a number of shares of Stock equal to the number of shares
as to which the Option shall be so exercised;
(ii) the Board of Directors may waive any limitations set out in or
imposed under this Plan so that all Options, from and after a date
prior to the effective date of the merger, consolidation, liquidation,
sale or other disposition, as the case may be, specified by the Board
of Directors, shall be exercisable in full; and
(iii) all outstanding Options may be canceled by the Board of
Directors as of the effective date of any merger, consolidation,
liquidation, sale or other disposition, if (i) notice of cancellation
shall be given to each holder of an Option and (ii) each holder of an
Option shall have the right to exercise that Option in full (without
regard to any limitations set out in or imposed under this Plan or the
Option Agreement granting that Option) during a period set by the Board
of Directors preceding the effective date of the merger, consolidation,
liquidation, sale or other disposition and, if in the event all
outstanding Options may not be exercised in full under applicable
securities laws without registration of the shares of Stock issuable on
exercise of the Options, the Board of Directors may limit the exercise
of the Options to the number of shares of Stock, if any, as may be
issued without registration. The method of choosing which Options may
be exercised, and the number of shares of Stock for which Options may
be exercised, shall be solely within the discretion of the Board of
Directors.
(c) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Eligible Person shall be entitled to
have his Restricted Stock and shares earned under a Performance Stock Award
appropriately adjusted based on the manner the Stock was adjusted under the
terms of the agreement of merger or consolidation.
(d) In each situation described in this Section 4.5, the Committee will
make similar adjustments, as appropriate, in outstanding Stock Appreciation
Rights.
(e) The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe for them, or upon conversion of
shares or obligations of the Company convertible into shares or other
securities, shall not affect, and no adjustment by reason of such issuance
shall be made with respect to, the number, class, or price of shares of Stock
then subject to outstanding Awards.
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4.6 Election under Section 83(b) of the Code. No Employee shall exercise
the election permitted under Section 83(b) of the Code without written
approval of the Committee. Any Employee doing so shall forfeit all Awards
issued to him under this Plan.
ARTICLE V--OPTIONS AND STOCK APPRECIATION RIGHTS
5.1 Type of Option. The Committee shall specify at the time of grant
whether a given Option shall constitute an Incentive Option or a Nonqualified
Option. Incentive Stock Options may only be granted to Employees.
5.2 Option Price. The price at which Stock may be purchased under an
Incentive Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b)
the aggregate par value of the shares of Stock on the date the Option is
granted. The Committee in its discretion may provide that the price at which
shares of Stock may be purchased under an Incentive Option shall be more than
100% of Fair Market Value. In the case of any 10% Stockholder, the price at
which shares of Stock may be purchased under an Incentive Option shall not be
less than 110% of the Fair Market Value of the Stock on the date the Incentive
Option is granted. The price at which shares of Stock may be purchased under a
Nonqualified Option shall be such price as shall be determined by the
Committee in its sole discretion but in no event lower than the par value of
the shares of Stock on the date the Option is granted.
5.3 Duration of Options and SARS. No Option or SAR shall be exercisable
after the expiration of ten (10) years from the date the Option or SAR is
granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.
5.4 Amount Exercisable--Incentive Options. Each Option may be exercised
from time to time, in whole or in part, in the manner and subject to the
conditions the Committee, in its sole discretion, may provide in the Option
Agreement, as long as the Option is valid and outstanding, and further
provided that no Option may be exercisable within six (6) months of the date
of grant unless a shorter period is designated by the Committee. To the extent
that the aggregate Fair Market Value (determined as of the time an Incentive
Option is granted) of the Stock with respect to which Incentive Options first
become exercisable by the optionee during any calendar year (under this Plan
and any other incentive stock option plan(s) of the Company or any Affiliate)
exceeds $100,000, the portion in excess of $100,000 of the Incentive Option
shall be treated as a Nonqualified Option. In making this determination,
Incentive Options shall be taken into account in the order in which they were
granted.
5.5 Exercise of Options. Each Option shall be exercised by the delivery of
written notice to the Committee setting forth the number of shares of Stock
with respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express money order
payable to the order of the Company for an amount equal to the option price
of the shares,
(b) Stock at its Fair Market Value on the date of exercise,
(c) an election to make a cashless exercise through a registered broker-
dealer (if approved in advance by the Committee),
(d) an election to have shares of Stock, which otherwise would be issued
on exercise, withheld in payment of the exercise price (if approved in
advance by the Committee), and/or
(e) any other form of payment which is acceptable to the Committee,
including without limitation, payment in the form of a promissory note, and
specifying the address to which the certificates for the shares are to be
mailed.
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As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Eligible Person certificates for the
number of shares with respect to which the Option has been exercised, issued
in the Eligible Person's name. If shares of Stock are used in payment, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to
or less than the aggregate exercise price of the shares being purchased upon
exercise of the Option, and any difference must be paid by cash, certified
check, bank draft, or postal or express money order payable to the order of
the Company. Delivery of the shares shall be deemed effected for all purposes
when a stock transfer agent of the Company shall have deposited the
certificates in the United States mail, addressed to the Eligible Person, at
the address specified by the Eligible Person.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Eligible Person, the Eligible Person shall deliver to the Company certificates
registered in the name of the Eligible Person representing a number of shares
of Stock legally and beneficially owned by the Eligible Person, free of all
liens, claims, and encumbrances of every kind, accompanied by stock powers
duly endorsed in blank by the record holder of the shares represented by the
certificates (with signature guaranteed by a commercial bank or trust company
or by a brokerage firm having a membership on a registered national stock
exchange). The delivery of certificates upon the exercise of Options is
subject to the condition that the person exercising the Option provide the
Company with the information the Company might reasonably request pertaining
to exercise, sale or other disposition.
5.6 Stock Appreciation Rights. All Eligible Persons shall be eligible to
receive Stock Appreciation Rights. The Committee shall determine the SAR to be
awarded from time to time to any Eligible Person. The grant of an SAR to be
awarded from time to time shall neither entitle such person to, nor disqualify
such person, from participation in any other grant of awards by the Company,
whether under this Plan or any other plan of the Company. If granted as a
stand-alone SAR Award, the terms of the Award shall be provided in a Stock
Appreciation Rights Agreement.
5.7 Stock Appreciation Rights in Tandem with Options. Stock Appreciation
Rights may, at the discretion of the Committee, be included in each Option
granted under the Plan to permit the holder of an Option to surrender that
Option, or a portion of the part which is then exercisable, and receive in
exchange, upon the conditions and limitations set by the Committee, an amount
equal to the excess of the Fair Market Value of the Stock covered by the
Option, or the portion of it that was surrendered, determined as of the date
of surrender, over the aggregate exercise price of the Stock. The payment may
be made in shares of Stock valued at Fair Market Value, in cash, or partly in
cash and partly in shares of Stock, as the Committee shall decide in its sole
discretion. Stock Appreciation Rights may be exercised only when the Fair
Market Value of the Stock covered by the Option surrendered exceeds the
exercise price of the Stock. In the event of the surrender of an Option, or a
portion of it, to exercise the Stock Appreciation Rights, the shares
represented by the Option or that part of it which is surrendered, shall not
be available for reissuance under the Plan. Each Stock Appreciation Right
issued in tandem with an Option (a) will expire not later than the expiration
of the underlying Option, (b) may be for no more than 100% of the difference
between the exercise price of the underlying Option and the Fair Market Value
of a share of Stock at the time the Stock Appreciation Right is exercised, (c)
is transferable only when the underlying Option is transferable, and under the
same conditions, and (d) may be exercised only when the underlying Option is
eligible to be exercised.
5.8 Conditions of Stock Appreciation Rights. All Stock Appreciation Rights
shall be subject to such terms, conditions, restrictions or limitations as the
Committee deems appropriate, including by way of illustration but not by way
of limitation, restrictions on transferability, requirement of continued
employment, individual performance, financial performance of the Company or
payment of any applicable employment or withholding taxes.
5.9 Payment of Stock Appreciation Rights. The amount of payment to which
the Eligible Person who reserves an SAR shall be entitled upon the exercise of
each SAR shall be equal to the amount, if any by which the Fair Market Value
of the specified shares of Stock on the exercise date exceeds the Fair Market
Value of the specified shares of Stock on the date of grant of the SAR. The
SAR shall be paid in either cash or Stock, as determined in the discretion of
the Committee as set forth in the SAR agreement. If the payment is in Stock,
the number of shares to be paid shall be determined by dividing the amount of
such payment by the Fair Market Value of Stock on the exercise date of such
SAR.
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5.10 Exercise on Termination of Employment. Unless it is expressly provided
otherwise in the Option or SAR agreement, Options and SAR granted to Employees
shall terminate one day less than three months after severance of employment
of the Employee from the Company and all Affiliates for any reason, with or
without cause, other than death, retirement under the then established rules
of the Company, or severance for disability. Whether authorized leave of
absence or absence on military or government service shall constitute
severance of the employment of the Employee shall be determined by the
Committee at that time.
5.11 Death. If, before the expiration of an Option or SAR, the Eligible
Person, whether in the employ of the Company or after he has retired or was
severed for disability, or otherwise dies, the Option or SAR shall continue
until the earlier of the Option's or SAR's expiration date or one year
following the date of his death, unless it is expressly provided otherwise in
the Option or SAR agreement. After the death of the Eligible Person, his
executors, administrators or any persons to whom his Option or SAR may be
transferred by will or by the laws of descent and distribution shall have the
right, at any time prior to the Option's or SAR's expiration or termination,
whichever is earlier, to exercise it, to the extent to which he was entitled
to exercise it immediately prior to his death, unless it is expressly provided
otherwise in the Option or SAR's agreement.
5.12 Retirement. Unless it is expressly provided otherwise in the Option
Agreement, before the expiration of an Incentive Option, the Employee shall be
retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one day less than one year after
his retirement; provided, if an Incentive Option is not exercised within
specified time limits prescribed by the Code, it will become a Nonqualified
Option by operation of law. Unless it is expressly provided otherwise in the
Option Agreement, if before the expiration of a Nonqualified Option, the
Employee shall be retired in good standing from the employ of the Company
under the then established rules of the Company, the Nonqualified Option shall
terminate on the earlier of the Nonqualified Option's expiration date or one
day less than one year after his retirement. In the event of retirement, the
Employee shall have the right prior to the termination of the Nonqualified
Option to exercise the Nonqualified Option, to the extent to which he was
entitled to exercise it immediately prior to his retirement, unless it is
expressly provided otherwise in the Option Agreement. Upon retirement, an SAR
shall continue to be exercisable for the remainder of the term of the SAR
agreement.
5.13 Disability. If, before the expiration of an Option or SAR, the
Employee shall be severed from the employ of the Company for disability, the
Option or SAR shall terminate on the earlier of the Option's or SAR's
expiration date or one day less than one year after the date he was severed
because of disability, unless it is expressly provided otherwise in the Option
or SAR agreement. In the event that the Employee shall be severed from the
employ of the Company for disability, the Employee shall have the right prior
to the termination of the Option or SAR to exercise the Option, to the extent
to which he was entitled to exercise it immediately prior to his retirement or
severance of employment for disability, unless it is expressly provided
otherwise in the Option Agreement.
5.14 Substitution Options. Options may be granted under this Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the
Company or any Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or
the acquisition by the Company or any Affiliate of stock of the employing
corporation as the result of which it becomes an Affiliate of the Company. The
terms and conditions of the substitute Options granted may vary from the terms
and conditions set out in this Plan to the extent the Committee, at the time
of grant, may deem appropriate to conform, in whole or in part, to the
provisions of the stock options in substitution for which they are granted.
5.15 Reload Options. Without in any way limiting the authority of the Board
of Directors or Committee to make or not to make grants of Options hereunder,
the Board of Directors or Committee shall have the authority (but not an
obligation) to include as part of any Option Agreement a provision entitling
the Eligible Person to a further Option (a "Reload Option") in the event the
Eligible Person exercises the Option evidenced by the
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Option Agreement, in whole or in part, by surrendering other shares of Stock
in accordance with this Plan and the terms and conditions of the Option
Agreement. Any such Reload Option (a) shall be for a number of shares equal to
the number of shares surrendered as part or all of the exercise price of such
Option; (b) shall have an expiration date which is the greater of (i) the same
expiration date of the Option the exercise of which gave rise to such Reload
Option or (ii) one year from the date of grant of the Reload Option; and (c)
shall have an exercise price which is equal to one hundred percent (100%) of
the Fair Market Value of the Stock subject to the Reload Option on the date of
exercise of the original Option. Notwithstanding the foregoing, a Reload
Option which is an Incentive Option and which is granted to a 10% Stockholder,
shall have an exercise price which is equal to one hundred ten percent (110%)
of the Fair Market Value of the Stock subject to the Reload Option on the date
of exercise of the original Option and shall have a term which is no longer
than five (5) years.
Any such Reload Option may be an Incentive Option or a Nonqualified Option,
as the Board of Directors or Committee may designate at the time of the grant
of the original Option; provided, however, that the designation of any Reload
Option as an Incentive Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on exercisability of Incentive Stock
Options described in the Plan and in Section 422(d) of the Code. There shall
be no Reload Options on a Reload Option. Any such Reload Option shall be
subject to the availability of sufficient shares under Section 4.2 herein and
shall be subject to such other terms and conditions as the Board of Directors
or Committee may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of Options.
5.16 No Rights as Stockholder. No Eligible Person shall have any rights as
a stockholder with respect to Stock covered by his Option until the date a
stock certificate is issued for the Stock.
ARTICLE VI--RESTRICTED STOCK AWARDS
6.1 Restricted Stock Awards. The Committee may issue shares of Stock to an
Eligible Person subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Eligible Person or for a
payment below the Fair Market Value on the date of grant. Restricted Stock
shall be subject to restrictions as to sale, transfer, alienation, pledge or
other encumbrance and generally will be subject to vesting over a period of
time specified in the Restricted Stock Agreement. The Committee shall
determine the period of vesting, the number of shares, the price, if any, of
Stock included in a Restricted Stock Award, and the other terms and provisions
which are included in a Restricted Stock Agreement.
6.2 Restrictions. Restricted Stock shall be subject to the terms and
conditions as determined by the Committee, including without limitation, any
or all of the following:
(a) a prohibition against the sale, transfer, alienation, pledge or
other encumbrance of the shares of Restricted Stock, such prohibition to
lapse (i) at such time or times as the Committee shall determine (whether
in annual or more frequent installments, at the time of the death,
disability or retirement of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of Restricted Stock forfeit,
or in the case of shares sold to an Eligible Person, resell back to the
Company at his cost, all or a part of such shares in the event of
termination of the Eligible Person's employment during any period in which
the shares remain subject to restrictions;
(c) a prohibition against employment of the holder of Restricted Stock
by any competitor of the Company or its Affiliates, or against such
holder's dissemination of any secret or confidential information belonging
to the Company or an Affiliate;
(d) unless stated otherwise in the Restricted Stock Agreement,
(i) if restrictions remain at the time of severance of employment
with the Company and all Affiliates, other than for reason of
disability or death, the Restricted Stock shall be forfeited; and
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(ii) if severance of employment is by reason of disability or death,
the restrictions on the shares shall lapse and the Eligible Person or
his heirs or estate shall be 100% vested in the shares subject to the
Restricted Stock Agreement.
6.3 Stock Certificate. Shares of Restricted Stock shall be registered in
the name of the Eligible Person receiving the Restricted Stock Award and
deposited, together with a stock power endorsed in blank, with the Company.
Each such certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of Stock
represented by it is restricted by and subject to the terms and conditions
(including conditions of forfeiture) contained in the Design Automation
Systems Incorporated 1999 Stock Option Plan, and an agreement entered into
between the registered owner and the Company. A copy of the Plan and
agreement is on file in the office of the Secretary of the Company.
6.4 Rights as Stockholder. Subject to the terms and conditions of the Plan,
each Eligible Person receiving a certificate for Restricted Stock shall have
all the rights of a stockholder with respect to the shares of Stock included
in the Restricted Stock Award during any period in which such shares are
subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to
shares of Restricted Stock in cash or property other than Stock in the Company
or rights to acquire stock in the Company shall be paid to the Eligible Person
currently. Dividends paid in Stock in the Company or rights to acquire Stock
in the Company shall be added to and become a part of the Restricted Stock.
6.5 Lapse of Restrictions. At the end of the time period during which any
shares of Restricted Stock are subject to forfeiture and restrictions on sale,
transfer, alienation, pledge, or other encumbrance, such shares shall vest and
will be delivered in a certificate, free of all restrictions, to the Eligible
Person or to the Eligible Person's legal representative, beneficiary or heir;
provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock
Award and executing a Restricted Stock Agreement, the Eligible Person agrees
to remit when due any federal and state income and employment taxes required
to be withheld.
6.6 Restriction Period. No Restricted Stock Award may provide for
restrictions continuing beyond ten (10) years from the date of grant.
ARTICLE VII--PERFORMANCE STOCK AWARDS
7.1 Award of Performance Stock. The Committee may award shares of Stock,
without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the Committee are satisfied. The
terms and provisions herein relating to these performance based awards are
intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific Performance
Stock Award shall be made by the Committee in writing prior to the beginning
of the period for which the performance is measured (or within such period as
permitted by IRS regulations). The Committee shall establish the maximum
number of shares of Stock to be issued to a designated Employee if the
performance goal or goals are met. The Committee reserves the right to make
downward adjustments in the maximum amount of an Award if in its discretion
unforeseen events make such adjustment appropriate.
7.2 Performance Goals. Performance goals determined by the Committee may be
based on specified increases in cash flow, net profits, Stock price, Company,
segment or Affiliate sales, market share, earnings per share, return on
assets, and/or return on stockholders' equity.
7.3 Eligibility. The employees eligible for Performance Stock Awards are
the senior officers (i.e., chief executive officer, president, vice
presidents, secretary, treasurer, and similar positions) of the Company and
its Affiliates, and such other employees of the Company and its Affiliates as
may be designated by the Committee.
7.4 Certificate of Performance. The Committee must certify in writing that
a performance goal has been attained prior to issuance of any certificate for
a Performance Stock Award to any Employee. If the Committee certifies the
entitlement of an Employee to the Performance Stock Award, the certificate
will be issued to the Employee as soon as administratively practicable, and
subject to other applicable provisions of the Plan,
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including but not limited to, all legal requirements and tax withholding.
However, payment may be made in shares of Stock, in cash, or partly in cash
and partly in shares of Stock, as the Committee shall decide in its sole
discretion. If a cash payment is made in lieu of shares of Stock, the number
of shares represented by such payment shall not be available for subsequent
issuance under this Plan.
ARTICLE VIII--ADMINISTRATION
The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made
by a majority of its members. Any decision or determination reduced to writing
and signed by a majority of the members shall be as effective as if it had
been made by a majority vote at a meeting properly called and held. This Plan
shall be administered in such a manner as to permit the Options which are
designated to be Incentive Options to qualify as Incentive Options. In
carrying out its authority under this Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following
rights, powers and authorities, to:
(a) determine the Eligible Persons to whom and the time or times at
which Options or Awards will be made,
(b) determine the number of shares and the purchase price of Stock
covered in each Option or Award, subject to the terms of the Plan,
(c) determine the terms, provisions and conditions of each Option and
Award, which need not be identical,
(d) accelerate the time at which any outstanding Option or SAR may be
exercised, or Restricted Stock Award will vest,
(e) define the effect, if any, on an Option or Award of the death,
disability, retirement, or termination of employment of the Employee,
(f) prescribe, amend and rescind rules and regulations relating to
administration of the Plan, and
(g) make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of this
Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive
and binding on all parties.
ARTICLE IX--AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend this
Plan at any time, in its sole and absolute discretion; provided, however, that
to the extent required to qualify this Plan under Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, no amendment
that would (a) materially increase the number of shares of Stock that may be
issued under this Plan, (b) materially modify the requirements as to
eligibility for participation in this Plan, or (c) otherwise materially
increase the benefits accruing to participants under this Plan, shall be made
without the approval of the Company's stockholders; provided further, however,
that to the extent required to maintain the status of any Incentive Option
under the Code, no amendment that would (a) change the aggregate number of
shares of Stock which may be issued under Incentive Options, (b) change the
class of employees eligible to receive Incentive Options, or (c) decrease the
Option price for Incentive Options below the Fair Market Value of the Stock at
the time it is granted, shall be made without the approval of the Company's
stockholders. Subject to the preceding sentence, the Board of Directors shall
have the power to make any changes in the Plan and in the regulations and
administrative provisions under it or in any outstanding Incentive Option as
in the opinion of counsel for the Company may be necessary or appropriate from
time to time to enable any Incentive Option granted under this Plan to
continue to qualify as an incentive stock option or such other stock option as
may be defined under the Code so as to receive preferential federal income tax
treatment.
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ARTICLE X--MISCELLANEOUS
10.1 No Establishment of a Trust Fund. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any
Eligible Person under this Plan. All Eligible Persons shall at all times rely
solely upon the general credit of the Company for the payment of any benefit
which becomes payable under this Plan.
10.2 No Employment Obligation. The granting of any Option or Award shall
not constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Eligible Person. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Award has been granted to him.
10.3 Forfeiture. Notwithstanding any other provisions of this Plan, if the
Committee finds by a majority vote after full consideration of the facts that
an Eligible Person, before or after termination of his employment with the
Company or an Affiliate for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty in the
course of his employment by the Company or an Affiliate, which conduct damaged
the Company or Affiliate, or disclosed trade secrets of the Company or an
Affiliate, or (b) participated, engaged in or had a material, financial or
other interest, whether as an employee, officer, director, consultant,
contractor, stockholder, owner, or otherwise, in any commercial endeavor in
the United States which is competitive with the business of the Company or an
Affiliate without the written consent of the Company or Affiliate, the
Eligible Person shall forfeit all outstanding Options and all outstanding
Awards, and including all exercised Options and other situations pursuant to
which the Company has not yet delivered a stock certificate. Clause (b) shall
not be deemed to have been violated solely by reason of the Eligible Person's
ownership of stock or securities of any publicly owned corporation, if that
ownership does not result in effective control of the corporation.
The decision of the Committee as to the cause of an Employee's discharge,
the damage done to the Company or an Affiliate, and the extent of an Eligible
Person's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
10.4 Tax Withholding. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Eligible Person any sums
required by federal, state, or local tax law to be withheld with respect to
the grant or exercise of an Option or SAR, lapse of restrictions on Restricted
Stock, or award of Performance Stock. In the alternative, the Company may
require the Eligible Person (or other person exercising the Option, SAR or
receiving the Stock) to pay the sum directly to the employer corporation. If
the Eligible Person (or other person exercising the Option or SAR or receiving
the Stock) is required to pay the sum directly, payment in cash or by check of
such sums for taxes shall be delivered within 10 days after the date of
exercise or lapse of restrictions. The Company shall have no obligation upon
exercise of any Option or lapse of restrictions on Stock until payment has
been received, unless withholding (or offset against a cash payment) as of or
prior to the date of exercise or lapse of restrictions is sufficient to cover
all sums due with respect to that exercise. The Company and its Affiliates
shall not be obligated to advise an Eligible Person of the existence of the
tax or the amount which the employer corporation will be required to withhold.
10.5 Written Agreement. Each Option and Award shall be embodied in a
written agreement which shall be subject to the terms and conditions of this
Plan and shall be signed by the Eligible Person and by a member of the
Committee on behalf of the Committee and the Company or an executive officer
of the Company, other than the Eligible Person, on behalf of the Company. The
agreement may contain any other provisions that the Committee in its
discretion shall deem advisable which are not inconsistent with the terms of
this Plan.
10.6 Indemnification of the Committee and the Board of Directors. With
respect to administration of this Plan, the Company shall indemnify each
present and future member of the Committee and the Board of
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Directors against, and each member of the Committee and the Board of Directors
shall be entitled without further act on his part to indemnity from the
Company for, all expenses (including attorney's fees, the amount of judgments
and the amount of approved settlements made with a view to the curtailment of
costs of litigation, other than amounts paid to the Company itself) reasonably
incurred by him in connection with or arising out of any action, suit, or
proceeding in which he may be involved by reason of his being or having been a
member of the Committee and/or the Board of Directors, whether or not he
continues to be a member of the Committee and/or the Board of Directors at the
time of incurring the expenses, including, without limitation, matters as to
which he shall be finally adjudged in any action, suit or proceeding to have
been found to have been negligent in the performance of his duty as a member
of the Committee or the Board of Directors. However, this indemnity shall not
include any expenses incurred by any member of the Committee and/or the Board
of Directors in respect of matters as to which he shall be finally adjudged in
any action, suit or proceeding to have been guilty of gross negligence or
willful misconduct in the performance of his duty as a member of the Committee
and the Board of Directors. In addition, no right of indemnification under
this Plan shall be available to or enforceable by any member of the Committee
and the Board of Directors unless, within 60 days after institution of any
action, suit or proceeding, he shall have offered the Company, in writing, the
opportunity to handle and defend same at its own expense. This right of
indemnification shall inure to the benefit of the heirs, executors or
administrators of each member of the Committee and the Board of Directors and
shall be in addition to all other rights to which a member of the Committee
and the Board of Directors may be entitled as a matter of law, contract, or
otherwise.
10.7 Gender. If the context requires, words of one gender when used in this
Plan shall include the others and words used in the singular or plural shall
include the other.
10.8 Headings. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
10.9 Other Compensation Plans. The adoption of this Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation
for employees of the Company or any Affiliate.
10.10 Other Options or Awards. The grant of an Option or Award shall not
confer upon the Eligible Person the right to receive any future or other
Options or Awards under this Plan, whether or not Options or Awards may be
granted to similarly situated Eligible Persons, or the right to receive future
Options or Awards upon the same terms or conditions as previously granted.
10.11 Governing Law. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
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EXHIBIT C
EPICEDGE, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock Purchase
Plan of EpicEdge, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the Company and
its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company. It is the intention of the Company to have the Plan qualify as
an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue
Code of 1986, as amended. The provisions of the Plan shall, accordingly, be
construed so as to extend and limit participation in a manner consistent
with the requirements of that section of the Code.
2. Definitions.
a) "Board" shall mean the Board of Directors of the Company.
b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
c) "Common Stock" shall mean the common stock of the Company.
d) "Company" shall mean EpicEdge, Inc., a Texas corporation.
e) "Compensation" shall mean all regular straight time gross earnings
and commissions, and shall not include payments for overtime, shirt
premium, incentive compensation, incentive payments, bonuses and other
compensation.
f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of a leave of
absence agreed to in writing by the Company, provided that such leave is
for a period of not more than 90 days or re-employment upon the expiration
of such leave is guaranteed by contract or statue.
g) "Contributions" shall mean all amounts credited to the account of a
participant pursuant to the Plan.
h) "Designated Subsidiaries" shall mean the Subsidiaries, which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
i) "Employee" shall mean any person, including an Officer, who is
customarily employed for at least twenty (20) hours per week and more than
five (5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
amended.
k) "Exercise Date" shall mean the last day of each Offering Period of
the Plan.
l) "Purchase Date" shall mean the last day of each purchase period of
the Plan.
m) "Offering Date" shall mean the first business day of each Offering
Period of the Plan.
n) "Offering Period" shall mean a period of six (6) months commencing on
January 1 and July 1 of each year except as otherwise indicated by the
Company.
o) "Officer" shall mean a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
p) "Plan" shall mean this Employee Stock Purchase Plan.
q) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a
subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a subsidiary.
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3. Eligibility.
a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period
under the Plan, subject to the requirements of Section 5 (a) and the
limitations imposed by Section 423 (b) of the Code.
b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i), if, immediately
after the grant, such Employee (or any other person whose stock would be
attributed to such an Employee pursuant to Section 424 (d) of the Code)
would own stock and/or hold outstanding options to purchase stock
possessing give five percent (5%) or more of the total combined working
power or value of all classes of stock of the Company or of any subsidiary
of the Company, or (ii) if such option would permit his or her rights to
purchase stock under all employee stock purchase plans (described in
Section 423 of the Code) of the Company and its Subsidiaries to accrue at a
rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair market
value of such stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
4. Offering Periods.
a) The Plan shall be implemented by a series of Offering Periods of six
(6) months duration, with new Offering Periods commencing on or about
January 1 and July 1 of each year (or at such other time or times as may be
determined by the Board of Directors). The Plan shall continue until
terminated on accordance with Section 19 hereof. The Board of Directors of
the Company shall have the power to change the duration and/or the
frequency of Offering Period with respect to future offerings without
shareholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be
affected. Eligible employees may not participate in more than one Offering
at a time.
5. Participation.
a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable
Offering Date, unless a later time for filing the subscription agreement is
set by the Board for all eligible Employees with respect to a given
offering. The subscription agreement shall set forth the whole number
percentage of the participant's Compensation (which shall be not less than
1% and not more than 15%) to be paid as Contributions pursuant to the Plan.
b) Payroll deductions shall commence on the first payroll following the
Offering Date and shall end last payroll paid prior to the Exercise Date of
the Offering Period to which the subscription agreement is applicable, that
unless sooner terminated by the participant as provided in Section 10,
provided however, that any payroll paid within five (5) business days
preceding the Exercise Date will be included in the subsequent Offering
Period.
6. Method of Payment of Contributions.
a) The participants shall elect to have payroll deductions made on each
payday during the Offering Period in an amount not less than one percent
(1%) and not more than fifteen percent (15%) (in whole number increments)
of such participant's Compensation on each such payday. All payroll
deductions made to a participant shall be credited to his or her account
under the Plan. A participant may not make any additional payments into
such account.
b) A participant may discontinue his or her participation in the Plan as
provided in Section 10, or, on one occasion only during the Offering
Period, may decrease the rate of his or her Contributions during the
Offering Period by completing and filing with the Company a new
subscription agreement. The change in rate shall be effective as of the
beginning of the next calendar month following the date of filing of the
new subscription agreement, if the agreement is filed at least ten (10)
business days prior to such care and, if not, as of the beginning of the
next succeeding calendar month.
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7. Grant of Option.
a) On the Offering Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to
purchase on the Exercise Date a number of shares of the Company's Common
Stock determined by dividing such Employee's Contribution accumulated prior
to such Purchase Date and retained in the participant's account as of the
Purchase Date by the lower of (i) eighty-five (85%) of the fair market
value of a share of the Company's Common Stock on the Offering Date, or
(ii) eighty-five (85%) of the fair market value of the Company's Common
Stock on the Purchase Date; provided however, that the maximum number of
shares an Employee may purchase during each Offering Period shall be 5,000
shares, and provided further that such purchase shall be subject to the
limitations set forth in Section 3(b) and 13. The fair market value of a
share of the Company's Common Stock shall be determined as provided in
Section 7(b).
b) The option price per share of the shares offered in a given Offering
Period shall be the lower of: (i) 85% of the fair market value of a share
of the Common Stock of the Company on the Offering Date; or (ii) 85% of the
fair market value of a share of the Common Stock of the Company on the
Exercise Date. The fair market value of the Company's Common Stock on a
given date shall be determined by the Board in its discretion based on the
closing price of the Common Stock for such date (or, in the event that the
Common Stock is not traded on such date, on the immediately proceeding
trading date on which there was a closing price), as reported by the
American Stock Exchange or, if such price is not reported, the mean of the
bid and asked prices per share of the Common Stock as reported by Nasdaq
or, in the event the Common Stock is listed on a stock exchange on such
date (or, in the event that the Common Stock is not traded on such date, on
the immediately preceding trading date), as reported in the Wall Street
Journal.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date of the Offering Period, and
the maximum number of full shares subject to the option will be purchased
at the applicable option price with the accumulated Contributions in his or
her account. The shares purchased upon exercise of an option hereunder
shall be deemed to be transferred to the participant on the Exercise Date.
During his or her lifetime, a participant's option to purchase shares
hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after the Exercise Date of each
Offering Period, the Company shall arrange the delivery to each
participant, as appropriate, including but not limited to, direct deposit
into a book entry account or brokerage account, the shares purchased upon
exercise of his or her option. Any cash remaining to the credit of a
participant's account under the Plan after a purchase by him or her of
shares on the Exercise Date, other than amounts representing fractional
shares, will be returned to him or her as soon as practicable. Amounts
representing fractional shares will be carried forward for use in
subsequent purchases.
10. Voluntary Withdrawal; Termination of Employment.
a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time
prior to two (2) business days prior to the Exercise Date of each Offering
Period by completing a Company approved notification. All of the
participant's Contributions credited to his or her account will be paid to
him or her as soon as practicable after receipt of his or her notice of
withdrawal and his or her option for the current period will be
automatically terminated, and no further Contributions for the purchase of
shares will be made during the Offering Period.
b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of an Offering Period for any reason,
including retirement or death, the Contributions credited to his or her
account will be returned to him or her in the case of his or her death, to
the person or persons entitled thereto under Section 14, and his or her
option will be automatically terminated.
c) In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is participant, he or she will be
deemed to have elected to withdraw from the Plan and the Contributions
credited to his or her account will be returned to him or her and his or
her option terminated.
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d) A participant's withdrawal from an offering will not have any effect
upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.
11. Interest. No Interest shall accrue on the Contributions of a participant
in the Plan.
12. Stock.
a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 2,500,000 shares, subject to
adjustment upon changes in the capitalization of the Company as provided in
Section 18. If the total number of shares which would otherwise be subject
to options granted pursuant to Section 7 (a) on the Offering Date of an
Offering Period exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are
then outstanding), the Company shall make a pro rata allocation of the
shares remaining available for option grant in as uniform a manner as shall
be practicable and as it shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of
shares subject to the option to each Employee affected thereby and shall
similarly reduce the rate of Contributions, if necessary.
b) The participant will have no interest or voting right in shares
covered by his or her option until such the option has been exercised.
c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the "Street Name" of a
Company approved broker.
13. Administration. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt,
amend and rescind any rules deemed desirable and appropriate for the
administration of the Plan and not inconsistent with the Plan, to construe
and interpret the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The composition of the
committed shall be in accordance with the requirements to obtain or retain
any available exemption from the operation of Section 16(b) of the
Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
14. Designation of Beneficiary.
a) A participant may file a written designation of a beneficiary who is
to receive shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of
an Offering Period but prior to delivery to him or her of such shares and
cash. In addition a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to the Exercise
Date of an Offering Period. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the event
of the death of a participant and the absence of an beneficiary validly
designated under the Plan who is living at the time of such participant's
death, the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents of relatives of the participant, or
if no spouse, dependent or relative is known to the Company, then to such
other person as the Company may designate.
15. Transferability. Neither Contributions credited to a participant's account
nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distributions, or as provided in Section 13) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as election to
withdraw funds in accordance with Section 10.
C-4
<PAGE>
16. Use of Funds. All Contributions received or held by the Company under the
Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.
17. Reports. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of
shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization; Corporate Transactions.
a) Adjustments. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each option
under the Plan which has not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under the Plan but
have not yet been placed under option (collective, the "Reserves"), as well
as the price per share of Common Stock covered by each option under the
Plan which has not yet been exercised, shall be proportionately adjusted
for any increase or decrease in the number issued shares of Common Stock
effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration."
Such adjustments shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the
number of price of shares of Common Stock subject to an option.
b) Corporate Transactions. In the event of the proposed dissolution or
liquidation of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise
provided by the Board. In the event of a proposed sale of all substantially
all of the assets of the Company, or the merger of Company with or into
another corporation, each option under the Plan shall be assumed or an
equivalent option shall be substituted by each successor corporation or a
parent or subsidiary of such successor corporation, unless the Board
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress
by setting a new Exercise Date (the "New Exercise Date"). If the Board
shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of the merger of sales of assets, the Board shall
notify each participant in writing, at least ten (10) days prior to the New
Exercise Date and that his or her option will be exercised automatically on
the New Exercise Date, unless prior to such date he or she has withdrawn
from the Offering Period as provided in Section 10. For purposes of this
paragraph, an option granted under the Plan shall be deemed to be assumed
if, following the sale of assets or merger, the option confers the right to
or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by holders of Common
Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding shares of Common Stock ); provided, however, that if such
consideration received in the sale of assets or merger was not solely
common stock of the successor corporation or its parent (as defined in
Section 424 (e) of the Code), the Board may, with the consent of the
successor corporation and the participant, provide for the consideration to
be received upon exercise of the option to be solely common stock of the
successor corporation or its parent equal in fair market value to the per
share consideration received by holders of Common Stock and the sale of
assets of merger.
19. Amendments or Termination.
a) The Board of Directors of the Company may at any time terminate or
amend the Plan. Except as provided in Section 19, no such termination may
affect options previously granted, nor may an amendment make any change in
any option therefore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Rule 16b-3
under the Exchange Act, or under Section 423 of the Code (or any successor
rule or provision or any applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as so
required.
C-5
<PAGE>
b) Without shareholder consent and without regard to whether any
participant rights may be considered to have be adversely affected, the
Board (or its committee) shall be entitled to change the Offering Periods
and purchase periods, limit the frequency and/or number of changes in the
amount withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in currency other than U.S. dollars, permit
payroll withholding in excess of the amount designated by a participant in
order to adjust for delays or mistakes in the Company's processing of
properly completed withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure
that amounts applied toward the purchase of Common Stock for each
participant properly correspond with amounts withheld form the
participant's compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole
discretion advisable which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location or by the person, designated by the Company for the receipt
thereof.
21. Conditions Upon Issuance of Shares.
a) Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
b) As a consideration to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such a representation
is required by any of the aforementioned applicable provisions of law.
c) Each participant agrees, by entering the Plan, to promptly give the
Company notice of any disposition of shares purchased under the Plan where
such disposition occurs within two (2) years after the date of grant of the
option pursuant to which such shares were purchased.
22. Terms of Plan; Effective Date. The Plan shall become effective upon the
earlier to occur of its adoption by the Board of Directors or its approval
by the shareholders of the Company. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 19.
23. Additional Restriction of Rule 16b-3. The terms and conditions of options
grated hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions
of Rule 16b-3. This Plan shall be deemed to contain, and such options
shall contain, and the shares issued upon exercise thereof shall be
subject to, such additional conditions and restrictions as may be required
by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
C-6
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS OF
EPICEDGE, INC.
THURSDAY, MAY 25, 2000
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
- ---------------
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- --------------------------------------------
Please call toll free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
- -------------------
Please access the web page at www.voteproxy.com and follow the on-screen
instructions. Have your control number available when you access the web page.
YOUR CONTROL NUMBER IS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EPICEDGE, INC.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
CHOICES SPECIFIED BELOW.
The undersigned stockholder of EPICEDGE, INC. (the "Company") hereby appoints
Charles H. Leaver, Jr. and Jeffrey S. Sexton, the true and lawful attorneys,
agents and proxies of the undersigned with full power of substitution for and in
the name of the undersigned, to vote all the shares of Common Stock of the
Company which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at The Houstonian Hotel, Club and Spa,
111 North Post Oak Lane, Houston, Texas 77024 and any and all adjournments
thereof, with all of the powers which the undersigned would possess if
personally present, for the following purposes:
<PAGE>
1. To elect the following individuals to the Company's
Board of Directors
FOR AGAINST ABSTAIN
Carl R. Rose [ ] [ ] [ ]
Charles H. Leaver [ ] [ ] [ ]
Jeffrey S. Sexton [ ] [ ] [ ]
Bahram Nour-Omid [ ] [ ] [ ]
John P. Streeten [ ] [ ] [ ]
Nicholas L. Reding [ ] [ ] [ ]
Douglas S. Luke [ ] [ ] [ ]
2. To approve Deloitte & Touche LLP as our [ ] [ ] [ ]
independent auditors for the 2000 fiscal year.
3. To approve a proposal to amend our Articles of [ ] [ ] [ ]
Incorporation to establish blank check preferred
stock with 5,000,000 shares reserved for issuance.
4. To approve an amendment to our 1999 Stock [ ] [ ] [ ]
Option Plan to increase the number of shares of
common stock authorized to be issued under the
Plan from 3,000,000 shares of common stock to
7,500,000 shares of common stock.
5. To establish an Employee Stock Purchase Plan. [ ] [ ] [ ]
6. The proxies are authorized to vote as they determine in
their discretion upon such other matters as may properly
come before the meeting.
THIS PROXY WILL BE VOTED FOR THE CHOICE SPECIFIED. IF NO CHOICE IS SPECIFIED
FOR ITEMS 1, 2, 3, 4 OR 5 THIS PROXY WILL BE VOTED FOR THOSE ITEMS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated May 3, 2000.
<PAGE>
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
DATED:______________________________
____________________________________
[Signature]
____________________________________
[Signature if jointly held]
____________________________________
[Printed Name]
Please sign exactly as name appears
on stock certificate(s). Joint owners
should each sign. Trustees and others
acting in a representative capacity
should indicate the capacity in which
they sign.
