SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CENTENARY INTERNATIONAL CORP.
-----------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
CENTENARY INTERNATIONAL CORP.
692 MADISON AVENUE, THIRD FLOOR
NEW YORK, NY 10021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 29, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of Centenary
International Corp. (the "Company") will be held at the Loews New York Hotel,
569 Lexington Avenue, New York, New York 10022, on July 29, 1999 at 10:00 AM
(EST) for the following purposes:
(1) To elect five (5) directors by the voting of Common Stock.
(2) To consider and act upon the 1999 Stock Option Plan.
(3) To ratify the selection of Grant Thornton (Argentina) as the Company's
independent auditor for the fiscal year ending December 31, 1999.
(4) To act upon such other business as may properly come before the Annual
Meeting.
Only holders of Common Stock of record at the close of business on June 14,
1999, will be entitled to vote at the Annual Meeting or any adjournment thereof.
You are cordially invited to attend the Annual Meeting. Whether or not you plan
to attend the Annual Meeting, please sign, date and return your proxy to us
promptly. Your cooperation in signing and returning the proxy will help avoid
further solicitation expense.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Hector A. Patron Costas
Chairman of the Board
June 30, 1999
New York, New York
<PAGE>
CENTENARY INTERNATIONAL CORP.
692 MADISON AVENUE, THIRD FLOOR
NEW YORK, NY 10021
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 29, 1999
This proxy statement (the "Proxy Statement") is being furnished to
stockholders (the "Stockholders") in connection with the solicitation of proxies
by and on behalf of the Board of Directors of Centenary International Corp., a
Nevada corporation (the "Company") for their use at the Annual Meeting (the
"Annual Meeting") of Stockholders of the Company to be held at the Loews New
York Hotel, 569 Lexington Avenue, New York, New York 10022, on July 29, 1999 at
10:00 AM (EST) and at any adjournments thereof, for the purpose of considering
and voting upon the matters set forth in the accompanying Notice of Annual
Meeting of Stockholders (the "Notice"). This Proxy Statement and the
accompanying form of proxy (the "Proxy") are first being mailed to Stockholders
on or about June 30, 1999. The cost of solicitation of proxies is being borne
by the Company.
The close of business on June 14, 1999, has been fixed as the record date
for the determination of Stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. As of record date, there were
18,963,500 shares of the Company's common stock, par value $0.001 per share (the
"Common Stock") issued and outstanding. The presence, in person or by proxy, of
51% of the outstanding shares of Common Stock on the record date is necessary to
constitute a quorum at the Annual Meeting. Each share is entitled to one vote
on all issues requiring a Stockholder vote at the Annual Meeting. Each nominee
for Director named in Number 1 must receive a majority of the Common Stock votes
cast in person or by proxy in order to be elected. Stockholders may not
cumulate their votes for the election of Directors. The affirmative vote of a
majority of the shares of Common Stock present or represented by proxy and
entitled to vote at the Annual Meeting is required for the approval of Numbers
2, 3 and 4 set forth in the accompanying Notice.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted (I) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN, (II) FOR THE
1999 STOCK OPTION PLAN, AND (III) FOR THE RATIFICATION OF GRANT THORNTON
(ARGENTINA) AS THE COMPANY'S INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999. The Board of Directors is not aware of any other matters to
be presented for action at the Annual Meeting. However, if any other matter is
properly presented at the Annual Meeting, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment on
such matters.
The enclosed Proxy, even though executed and returned, may be revoked at
any time prior to the voting of the Proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company, or (c) by
voting in person at the Annual Meeting.
1
<PAGE>
_________________________________________________________
(1) TO ELECT FIVE (5) DIRECTORS FOR THE ENSUING YEAR
_________________________________________________________
NOMINEES FOR DIRECTORS
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as proxies (the "Proxies") and will vote the shares
represented by valid proxies at the Annual Meeting of Stockholders and
adjournments thereof. They have indicated that, unless otherwise specified in
the Proxy, they intend to elect as Directors by the voting of Common Stock the
nominees listed below. Two of the nominees are presently members of the Board
of Directors. Each duly elected Director will hold office until his successor
shall have been elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed Proxy will be voted for the election of the nominees listed below.
Although the Board of Directors of the Company does not contemplate 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 other person(s) as may be nominated by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES LISTED BELOW.
Hector A. Patron Costas, age 46, was appointed Director, Chairman,
Secretary and Chief Financial Officer of the Company in November, 1998. Mr.
Patron Costas has been a Director of Centenary S.A. since its founding, and he
has been a senior manager of Centenary S.A. since that time. Mr. Patron Costas
attended the School of Economics at the University of Buenos Aires.
Eduardo Sagarnaga, age 42, was appointed Director of the Company in
November, 1998. Mr. Sagarnaga is the founder and has been the principal owner
and President of Industrial Technologia SRL since 1990, which is an engineering
services firm specializing in aircraft. Since the beginning of 1998, Mr.
Sagarnaga has also been the President of Global Tech, SA, which is a trading
firm and industrial engineering firm specializing in the sale and leasing of and
installation of industrial equipment, trucks, and supplies. Mr. Sagarnaga has
a B.S. degree in industrial engineering from the Catholic University of Salta
Argentina.
John H. Tonelli, age 34, was appointed President and CEO in March, 1999.
Mr. Tonelli is presently a principal of International Venture Partners, LLC, an
investment banking firm specializing in Latin American corporate and real estate
transactions. From 1992 to 1999, Mr. Tonelli was an Associate and later a
Special Counsel at the law firm of Cadwalader, Wickersham & Taft, where he
established and managed the firm's Latin American law practice. Mr. Tonelli
has a B.A. degree, 1987, from Colombia University, and a law degree and an
M.B.A. degree, 1992, from Fordham University. Mr. Tonelli is licensed to
practice law in New York and Florida. Mr. Tonelli is fluent in Spanish and
Italian.
2
<PAGE>
Donald Kirsch, age 67, is the Chairman and President of the Wall Street
Group, Inc. and President and CEO of Wall Street Consultants, Inc., financial
consulting and financial public relations firms, positions he now holds and has
held for more than five years. He has been a Director of Interstate National
Dealer Services, Inc. since December, 1996.
Julio Alberto Descals Seall, age 54, has been a Director of Centenary S.A.
since 1990. Mr. Descals has been a representative for Centenary S.A. in Peru.
He is a former Vice-President of the Chamber of Commerce in Tacna, Peru and a
former President and the founder of La Arboleda Club of Tacna, Peru.
EXECUTIVE OFFICERS
Other than Messrs. Patron Costas and Tonelli, there are no executive
officers of the Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Messrs. Patron Costas and Tonelli are the only directors of the Company who
are also officers of the Company. The Company does not have any committees. The
Board of Directors took action by the unanimous consent of Directors three times
during the year ended December 31, 1998. The nominees were selected by the
entire Board.
The Company believes that all reports required by Section 16(a) of the
Exchange Act for the most recent fiscal year have been timely filed.
There is no family relationship between or among any of the directors and
executive officers of the Company.
DIRECTOR COMPENSATION
The Company does not currently pay any cash director's fees, but it pays
the expenses, if any, of its directors in attending board meetings. In 1999, the
Board adopted a stock option plan which included participation in the Plan by
directors. See below, Proxy Statement Item Number (2) "TO CONSIDER AND ACT
UPON THE 1999 STOCK OPTION PLAN."
EXECUTIVE COMPENSATION
Until John H. Tonelli became CEO in 1999, Hector A. Patron Costas held the
CEO position and Mr. Costas' compensation during the last three years is set
forth below. No other executive officer received compensation greater than
$100,000 during that period.
3
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1)
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
NAME AND RESTRICTED SECURITIES PAYOUTS
PRINCIPAL STOCK UNDERLYING LTIPS ALL OTHER
POSITION YEAR SALARY BONUS OTHER AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
Chairman
Hector A. Patron Costas
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - 1998 $ 72,333 $105,000 -0- -0- -0- -0- -0-
- - 1997 $ 71,619 $110,000 -0- -0- -0- -0- -0-
- - 1996 $ 63,100 $ 90,000 -0- -0- -0- -0- -0-
_________________________
<FN>
(1) This compensation was received from Centenary S.A., a subsidiary of the Company.
</TABLE>
EMPLOYMENT AGREEMENTS
Prior to being appointed President, John H. Tonelli was a consultant to the
Company under a six month consulting agreement which commenced in February,
1999. Although Mr. Tonelli is now the President of the Company, he continues to
be compensated pursuant to the consulting agreement. The consulting agreement
provides that Mr. Tonelli will receive $15,000 for the first month of the
consulting agreement and $10,000 per month thereafter. Mr. Tonelli could
receive additional compensation under the consulting agreement if certain goals
are achieved. In connection with the consulting agreement, Mr. Tonelli provides
the Company with executive office space in New York City.
The Company does not have any employment agreements or compensation plans
with any other employee or director, except as set forth in the 1999 Stock
Option Plan.
EMPLOYEE STOCK OPTION PLAN--1999 STOCK OPTION PLAN
While the Company has been successful in attracting and retaining qualified
personnel, the Company believes that its future success will depend in part on
its continued ability to attract and retain highly qualified personnel. The
Company pays wages and salaries which it believes are competitive. The Company
also believes that equity ownership is an important factor in its ability to
attract and retain skilled personnel, and the Board of Directors of the Company
has approved the 1999 Stock Option Plan for the Company. See below, Proxy
Statement Item Number (2) "TO CONSIDER AND ACT UPON THE 1999 STOCK OPTION
PLAN."
4
<PAGE>
[STOCK PRICE PERFORMANCE GRAPH}
The performance graph as set forth above compares the cumulative total
stockholder return of Centenary International Corp. Common Stock from December
31, 1997 through December 31, 1998, with Standard & Poors 500 Index (the
Company's Broad Market Index) and with Standard & Poors Consumer Staples--Food
Composite Index (the Company's Peer Group Index). The graph assumes that the
value of the investment in Centenary International Corp.'s Common Stock and each
index was $100 on December 31, 1997, and that all dividends, if any, were
reinvested. The comparisons in this table are not intended to forecast or be
indicative of possible future price performance.
Comparison of Cumulative Total Return
-------------------------------------
December 31,
1997 1998
---- ----
Centenary International Corp. $100 $104
Broad Market Index $100 $127
Peer Group Index $100 $107
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 14, 1999,
with respect to the beneficial ownership of shares of Common Stock by (i) each
person who is known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each executive officer of the Company and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated, each
stockholder has sole voting and investment power with respect to the shares
shown.
5
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENT CLASS OF
NAME SHARES OWNED OF CLASS SECURITIES
- -------------------------------- -------------- ------------------------ ------------
<S> <C> <C> <C>
Hector A. Patron Costas 5,816,758 (1) 30.6% (1) Common Stock
Reconquista 656 - 3 Piso (1003)
Buenos Aires, Argentina
Eduardo Sagarnaga 100,000 0.5 % Common Stock
Reconquista 656 - 3 Piso (1003)
Buenos Aires, Argentina
John H. Tonelli 873,175 (2) 4.5% (2) Common Stock
692 Madison Avenue, Third Floor
New York, NY 10021
Donald Kirsch -0- 0.0% Common Stock
32 E. 57th Street, 18th Floor
New York, NY 10022
Julio Alberto Descals Seall 60,000 (3) 0.3% Common Stock
Reconquista 656 - 3 Piso (1003)
Buenos Aires, Argentina
Claudio Roman -0- 0.0% Common Stock
12000 Westheimer, Suite 215
Houston, Texas 77077
Centenary Group S.A. 14,541,895 76.7 % Common Stock
Juncal 1327 D-P. 18 Ap. 1801
Montevideo, Uruguay
Guillermo A. Aguilar Penalva 5,816,758 (1) 30.6%(1) Common Stock
Reconquista 656 - 3 Piso (1003)
Buenos Aires, Argentina
All Directors, Officers,
and Nominees
as a group
(Six (6) persons) 6,849,933 34.6% Common Stock
__________________________
<FN>
(1) Mr. Patron Costas and Mr. Penalva each own 40% of, and are control persons
of, Centenary Group S.A. and the number of shares and the percentage of
class of securities reflected herein are shares which are indirectly owned.
(2) Includes an option to purchase up to 873,175 shares of common stock of the
Company which is presently vested and exercisable. Does not include an
option to purchase up to 873,175 shares of common stock of the Company
which is not presently vested or exercisable. The exercise price of these
options is $.90625 per share. These options expire in April 2009.
(3) Mr. Seall owns 10% of Centenary Group, S.A.
</TABLE>
6
<PAGE>
The Company knows of no arrangement or understanding, the operation of
which may at a subsequent date result in a change of control of the Company.
RELATED TRANSACTIONS
The Board of Directors of the Company has adopted a policy that Company
affairs will be conducted in all respects by standards applicable to
publicly-held corporations and that the Company will not enter into any
transactions and/or loans between the Company and its officers, directors and 5%
stockholders unless the terms are no less favorable than could be obtained from
independent, third parties and will be approved by a majority of the
independent, disinterested directors of the Company.
On November 12, 1998, the Company acquired 100% of the outstanding shares
of Centenary S.A., an Argentine corporation from the stockholders of Centenary
S.A. in exchange for 15,053,500 shares of the Company's common stock, which were
all issued to Centenary Group S.A. All of the former Directors of the Company
resigned, and the current Directors were appointed. Centenary Group S.A.
became a control person of the Company. The terms and conditions of the
acquisition were determined by the parties through arms length negotiations.
Subsequently, and pursuant to Argentina law which requires at least two entities
as owners of an Argentine corporation, the Company sold 1% of its equity in
Centenary S.A. to Centenary Group S.A., a Uruguayan corporation, for a note
receivable of $176,000.
Concurrent with the acquisition of Centenary S.A., the Company entered into
a Rescission Agreement ("Pilares Rescission Agreement") pursuant to which the
Company rescinded its prior Acquisition Agreement and Assignment with Pilares
Oil & Gas, Inc. ("Pilares"). Pursuant to this Acquisition Agreement and
Assignment, Pilares had conveyed 300,000 shares of Paint Rock Energy, Inc.
("Paint Rock") to the Company in exchange for 3,185,000 shares of common stock
of the Company. Paint Rock is in the oil and gas business. Pursuant to the
Pilares Rescission Agreement, Pilares tendered the 3,185,230 shares of the
Company's common stock to the Company, and the Company tendered the 300,000
shares of Paint Rock stock to Pilares. The 3,185,000 shares of the Company's
common stock were then canceled. At the time of this rescission, Pilares Oil &
Gas was a holder of approximately 13% of the common stock of the Company. The
terms and conditions of the rescission were determined by the parties through
arms length negotiations. However, no appraisal was conducted.
Also concurrent with the acquisition of Centenary S.A., the Company entered
into a Rescission Agreement ("Gassiot Rescission Agreement") pursuant to which
the Company rescinded its prior Acquisition Agreement and Assignment with Jimmy
M. Gassiot ("Gassiot"). Pursuant to this Acquisition Agreement and Assignment,
Gassiot had conveyed 50 shares of Subsurface Energy Corp. ("Subsurface") to the
Company which represented all of the shares of Subsurface then outstanding in
exchange for 2,060,000 shares of common stock of the Company. Subsurface is in
the oil and gas business. Pursuant to the Gassiot Rescission Agreement, Gassiot
tendered the 2,060,000 shares of the Company's stock to the Company, and the
Company tendered the 50 shares of Subsurface stock to Gassiot. The 2,060,000
shares of the Company's common stock were then canceled. At the time of this
rescission, Mr. Gassiot was a holder of approximately 10% of the common stock of
the Company. The terms and conditions of the rescission were determined by the
parties through arms length negotiations. However, no appraisal was conducted.
7
<PAGE>
The Pilares Rescission Agreement and the Gassiot Rescission Agreement were
entered into concurrent with the acquisition of 100% of the stock of Centenary
S.A. and were conditions to the acquisition. The Board of Directors of the
Company determined that in view of the change of business operations of the
Company once the Centenary S.A. transaction was consummated that it would be in
the best interest of the Company to divest itself of its oil and gas businesses.
Centenary Group S.A. owns 76.7 % of the Company. Centenary Group S.A. is
also the control person of some vendors to the Company who provide services in
the ordinary course of business. The cost of these services are negotiated and
provided to the Company at competitive rates. The Company purchased $26,834,867
in 1998, and $9,659,315 in 1997 of products, and $6,566,049 of services in
1998, and $9,231,815 in 1997 of services from affiliated companies. The Company
provides certain administrative services and pays certain expenses for an
affiliated company, which reimbursed the Company for these expenses in the
amounts of $2,105,540 in 1998, and $634,590 in 1997.
Claudio Roman, a Director, may receive compensation as a consultant to the
Company on certain legal and other matters.
Prior to being appointed President, John H. Tonelli was a consultant to the
Company under a six month consulting agreement which commenced in February,
1999. Although Mr. Tonelli is now the President of the Company, he continues to
be compensated pursuant to the consulting agreement. The consulting agreement
provides that Mr. Tonelli will receive $15,000 for the first month of the
consulting agreement and $10,000 per month thereafter. Mr. Tonelli could
receive additional compensation under the consulting agreement if certain goals
are achieved. In connection with the consulting agreement, Mr. Tonelli provides
the Company with executive office space in New York City.
In March, 1999, the Company began using the services of Wall Street
Consultants, Inc., a financial consulting and financial public relations firm.
Donald Kirsch, a nominee for Director, is the Chairman and President of Wall
Street Consultants, Inc. The Company pays Wall Street Consultants, Inc. $6,000
per month. This arrangement is for 12 months and may be renewed.
_________________________________________________________
(2) TO CONSIDER AND ACT UPON THE 1999 STOCK OPTION PLAN
_________________________________________________________
The 1999 Stock Option Plan (the "Plan") was adopted by the Board of
Directors on April 28, 1999, at which time the Board also voted to submit the
Plan to the Stockholders for approval. If approved by the Stockholders, the
Plan will allow Incentive Stock Option grants as determined by the Compensation
Committee, or the Board of Directors if there is no compensation committee (the
"Committee"). The Board of Directors has reserved 3,000,000 shares of Common
Stock for issuance pursuant to the Plan. 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, directors and consultants to participate in
the long-term growth and financial success of the Company.
8
<PAGE>
ELIGIBILITY. The Plan is open to key employees (including officers and
directors) and consultants of the Company and its affiliates ("Eligible
Persons") as determined by the Committee.
TRANSFERABILITY. The grants are generally not transferrable.
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 Option granted under this Plan would pertain to the securities and other
property to which a holder of shares of stock covered by the Option would have
been entitled to receive. The Board may waive any limitations imposed under the
Plan so that all options are immediately exercisable.
OPTIONS. The Plan provides for both Incentive and Nonqualified 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 Incentive Stock Options for Stockholders owning 10% or more of the
Company's shares ("10% Stockholders") shall be not less than 110% of fair market
value.
Amount exercisable-incentive options. 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.
Duration. No option may be exercisable after the expiration date as set
forth in the option agreement.
Exercise of Options. Options may be exercised by written notice to the
President of the Company with:
(i) 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; or
(ii) stock at its fair market value on the date of exercise;
TERMINATION OF OPTIONS.
Termination of Employment. Any Option which has not vested at the time the
Optionee ceases continuous employment for any reason other than death,
disability or retirement shall terminate upon the last day that the Optionee is
employed by the Company. Incentive Stock Options must be exercised within three
months of cessation of Continuous Service for reasons other than death,
disability or retirement in order to qualify for Incentive Stock Option tax
treatment. Nonqualified Options may be exercised any time during the Option
Period regardless of employment status.
9
<PAGE>
Death. Unless the Option expires sooner, the Option will expire one year
after the death of the Eligible Person.
Disability. Unless the Option expires sooner, the Option will expire one
year after the disability of the Eligible Person.
Retirement. Any Option which has not vested at the time the Optionee
ceases continuous employment due to retirement shall terminate upon the last day
that the Optionee is employed by the Company. Upon retirement Incentive Stock
Options must be exercised within three months of cessation of Continuous Service
in order to qualify for Incentive Stock Option tax treatment. Nonqualified
Options may be exercised any time during the Option Period regardless of
employment status.
AMENDMENT OR TERMINATION OF THE PLAN. The Committee 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 eligibility for 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 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 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. No amendment, suspension or termination of the
Plan shall act to impair or extinguish rights in Options already granted at the
date of such amendment, suspension or termination.
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
-----------------
1999 STOCK OPTION PLAN
----------------------
Name and Position Dollar Value(1) Number of Options
- ---------------------------------- ---------------- -----------------
<S> <C> <C>
John H. Tonelli, CEO and President $ 1,582,630 1,746,350
Jason Miller, Vice-President
of Finance $ 226,563 250,000
Executive Group $ 1,809,193 1,996,350
Non-executive Director Group $ -0- -0-
Non-executive Officer
Employee Group $ -0- -0-
<FN>
_______________
(1) Dollar value was calculated based on the exercise price of $0.90625, which
was also the market value per share on the date of the grants.
</TABLE>
10
<PAGE>
THE BOARD OF DIRECTORS HAS APPROVED THE ADOPTION OF THE PLAN AND UNANIMOUSLY
RECOMMENDS A VOTE FOR THE PROPOSED PLAN. SUCH ADOPTION REQUIRES THE AFFIRMATIVE
VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OF COMMON STOCK AND COMMON STOCK
EQUIVALENTS PRESENT OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL
MEETING.
A copy of the Plan is attached hereto as Appendix "A".
_________________________________________________________
(3) TO RATIFY THE SELECTION OF GRANT THORNTON (ARGENTINA)
AS THE COMPANY'S INDEPENDENT AUDITOR
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
_________________________________________________________
The Board of Directors has selected Grant Thornton (Argentina) as the
Company's independent auditor for the current fiscal year. The Board of
Directors wishes to obtain from the Stockholders a ratification of their action
in appointing Grant Thornton (Argentina) as independent auditor of the Company
for the fiscal year ending December 31, 1999. Such ratification requires the
affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
In the event the appointment of Grant Thornton (Argentina) as independent
auditor is not ratified by the Stockholders, the adverse vote will be considered
as a direction to the Board of Directors to select other independent auditors
for the fiscal year ending December 31, 1999.
A representative of Grant Thornton (Argentina) is expected to be present at
the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF GRANT THORNTON (ARGENTINA) AS INDEPENDENT AUDITOR FOR FISCAL YEAR ENDING
DECEMBER 31, 1999.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Mr. Kurt D. Saliger, C.P.A. ("Saliger"), conducted the audits of Centenary
International Corp., formerly R&R Resources, Inc. (the "Company") for the nine
month period ended September 30, 1998, and for the year ended December 31,1997.
Saliger was dismissed on January 7, 1999. There were no disagreements between
the Company and Saliger on accounting matters or financial disclosures. Kurt D.
Saliger, C.P.A. has provided the Company with a letter to that effect which has
previously been filed with the Securities and Exchange Commission.
11
<PAGE>
(a) On January 7, 1999, the Company engaged Grant Thornton ("Grant
Thornton") as its independent accountant. The decision to engage Grant
Thornton as the Company's independent accountant was approved by the
Company's Board of Directors. Grant Thornton has been the independent
auditor of Centenary S.A., a subsidiary of the Company, and Grant
Thornton has substantial experience in global accounting matters.
(b) In a report dated November 4, 1998, Saliger reported on the Company's
financial statements as of September 30, 1998, and the related
statements of operations, stockholders' equity and cash flows for the
nine months then ended. In a report dated August 20, 1998, Saliger
reported on the Company's financial statements as of June 30, 1998,
and the related statements of operations, stockholders' equity and
cash flows for the six months then ended. In a report dated January
12, 1998, Saliger reported on the Company's financial statements of
December 31, 1997, and the related statements of operations,
stockholders' equity and cash flows for the period from inception
(June 10, 1997) to December 31, 1997. None of these reports contained
an adverse opinion or disclaimer of opinion, nor was such report
qualified or modified as to uncertainty, audit scope, or accounting
principles.
(c) Since inception (June 10, 1997) and through the present, there were no
reportable events requiring disclosure.
(d) Effective January 7, 1999, the Company engaged Grant Thornton as its
independent accountant. During the two years ended December 31, 1998
and 1997, neither the Company nor anyone on the Company's behalf
consulted Grant Thornton regarding either the application of
accounting principles to a specified transaction, either completed or
proposed, or the type of audit opinion that might be rendered on the
Company's financial statements, nor has Grant Thornton provided to the
Company a written report or oral advice regarding such principles or
audit opinion.
_________________________________________________________
(4) OTHER MATTERS
_________________________________________________________
The Board of Directors is not aware of any other matters to be presented
for action at the Annual Meeting. However, if any other matter is properly
presented at the Annual Meeting, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgement on such matters.
12
<PAGE>
FUTURE PROPOSALS OF STOCKHOLDERS
The deadline for stockholders to submit proposals to be considered for
inclusion in the Proxy Statement for the year 2000 Annual Meeting of
Stockholders is October 31, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Hector A. Patron Costas
Chairman of the Board
13
<PAGE>
PROXY
FOR VOTING BY HOLDERS OF COMMON STOCK
CENTENARY INTERNATIONAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 29, 1999
The undersigned hereby appoints Hector A. Patron Costas and John H.
Tonelli, and each of them as the true and lawful attorneys, agents and proxies
of the undersigned, with full power of substitution, to represent and to vote
all shares of Common Stock of Centenary International Corp. held of record by
the undersigned on June 14, 1999 at the Annual Meeting of Stockholders to be
held at the Loews New York Hotel, 569 Lexington Avenue, New York, New York
10022, on July 29, 1999 at 10:00 AM (EST) and at any adjournments thereof. Any
and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN NUMBER 1, FOR THE 1999 STOCK OPTION PLAN IN NUMBER 2, AND FOR
THE RATIFICATION IN NUMBER 3.
1. ELECTION OF DIRECTORS OF THE COMPANY. (INSTRUCTION: TO WITHHOLD
--------------------------
AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH, OR
- --------------------------------------------------------------------------------
OTHERWISE STRIKE, THAT NOMINEE'S NAME IN THE LIST BELOW.)
- ----------------------------------------------------------------
[ ] FOR all nominees listed [ ] WITHHOLD authority to
below except as marked vote for all nominees
to the contrary below
Hector A. Patron Costas Eduardo Sagarnaga John H. Tonelli
Donald Kirsch Julio Alberto Descals Seall
2. TO ACT UPON THE 1999 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF GRANT THORNTON (ARGENTINA) AS THE
COMPANY'S INDEPENDENT AUDITOR FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
_____________________ ___________________________________
Number of Shares of Signature
Common Stock
Stock Owned
___________________________________
(Typed or Printed Name)
___________________________________
Signature if held jointly
___________________________________
(Typed or Printed Name)
DATED: ___________________________
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED
AT THE MEETING. PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY.
<PAGE>
Appendix "A"
CENTENARY INTERNATIONAL CORP.
1999 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Centenary International Corp. 1999 Stock
-------
Option Plan ("the Plan") is to promote the financial interests of the
Company, its subsidiaries and its shareholders by providing incentives
in the form of stock options to key employees and directors who
contribute materially to the success and profitability of the Company.
The grants will recognize and reward outstanding individual
performances and contributions and will give such persons a
proprietary interest in the Company, thus enhancing their personal
interest in the Company's continued success and progress. This Plan
will also assist the Company and its subsidiaries in attracting,
retaining and motivating key employees and directors. The options
granted under this Plan may be either Incentive Stock Options, as that
term is defined in Section 422 of the Internal Revenue Code of 1986,
as amended, or Nonqualified options taxed under Section 83 of the
Internal Revenue Code of 1986, as amended.
RULE 16B-3 PLAN. The Company is subject to the reporting requirements
----------------
of the Securities Exchange Act of 1934, as amended (the "Exchange
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 Exchange Act. To the extent any
provision of the Plan or action by the Committee or 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 Committee or 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.
EFFECTIVE DATE OF PLAN. The effective date of this Plan shall be April
------------------------
28, 1999, (the "Effective Date"). The Board of Directors shall, within
one year of the Effective Date, submit the Plan for approval to the
shareholders of the Company. The plan shall be approved by at least a
majority of shareholders voting in person or by proxy at a duly held
shareholders' meeting, or if the provisions of the corporate charter,
by-laws or applicable state law prescribes a greater degree of
shareholder approval for this action, the approval by the holders of
that percentage, at a duly held meeting of shareholders. No Incentive
Option or Nonqualified Stock Option shall be granted pursuant to the
Plan ten years after the Effective Date. In the event that the Plan is
not approved by the shareholders of the Company, the Plan shall be
deemed to be a non-qualified stock option plan.
2. DEFINITIONS. The following definitions shall apply to this Plan:
-----------
<PAGE>
(a) "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.
(b) "Agreement" means, individually or collectively, any agreement
entered into pursuant to the Plan pursuant to which Options are
granted to a participant.
(c) "Award" means each of the following granted under this Plan:
Incentive Stock Options or Nonqualified Stock Options.
(d) "Board" means the board of directors of the Company.
(e) "Cause" shall mean, for purposes of whether and when a
participant has incurred a Termination of Employment for Cause:
(i) any act or omission which permits the Company to terminate
the written agreement or arrangement between the participant and
the Company or a Subsidiary or Parent for Cause as defined in
such agreement or arrangement; or (ii) in the event there is no
such agreement or arrangement or the agreement or arrangement
does not define the term "cause," then Cause shall mean an act or
acts of dishonesty by the participant resulting or intending to
result directly or indirectly in gain to or personal enrichment
of the participant at the Company's expense and/or gross
negligence or willful misconduct on the part of the participant.
(f) "Change in Control" means, for purposes of this Plans
i. there shall be consummated (i) any consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the
Company's common stock would be converted into cash,
securities or other property, other than a merger of the
Company in which the holders of the Company's common stock
immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving
corporation immedi-ately after the merger; or (ii) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all
of the assets of the Company; or
ii. the shareholders of the Company shall approve any plan or
proposal for the liquidation or dissolution of the Company;
or
(g) "Code" means the Internal Revenue Code of 1986, as amended, final
Treasury Regulations thereunder and any subsequent Internal
Revenue Code.
(h) "Committee" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of
Directors. The Committee shall be comprised solely of at least
two members who are both Disinterested Persons and Outside
Directors.
<PAGE>
(i) "Common Stock" means the Common Stock, par value per share of the
Company whether presently or hereafter issued, or such other
class of shares or securities as to which the Plan may be
applicable, pursuant to Section 11 herein.
(j) "Company" means Centenary International Corp., a Nevada
Corporation and includes any successor or assignee company
corporations into which the Company may be merged, changed or
consolidated; any company for whose securities the securities of
the Company shall be exchanged; and any assignee of or successor
to substantially all of the assets of the Company.
(l) "Continuous Service" means the absence of any interruption or
termination of employment with or service to the Company or any
Parent or Subsidiary of the Company that now exists or hereafter
is organized or acquired by or acquires the Company. Continuous
Service shall not be considered interrupted in the case of sick
leave, military leave, or any other bona fide leave of absence of
less than ninety (90) days (unless the participants right to
reemployment is guaranteed by statute or by contract) or in the
case of transfers between locations of the Company or between the
Company, its Parent, its Subsidiaries or its successors
(m) "Date of Grant" means the date on which the Committee grants an
Option.
(n) "Director" means any member of the Board of Directors of the
Company or any Parent or subsidiary of the Company that now
exists or hereafter is organized or acquired by or acquires the
Company.
(o) "Non Employee Director" means a "Non Employee Director" as that
term is defined in Rule 16b-3 under the Exchange Act.
(p) "Eligible Persons" shall mean, with respect to the Plan, those
persons who, at the time that an Award is granted, are
(i)officers, directors or employees of the Company or Affiliate
or (ii) consultants or subcontractors of the Company or
affiliate.
(q) "Employee" means any person employed on an hourly or salaried
basis by the Company or any Parent or Subsidiary of the Company
that now exists or hereafter is organized or acquired by or
acquires the Company.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and the rules and regulations promulgated thereunder.
<PAGE>
(s) "Fair Market Value" means (i) if the Common Stock is not listed
or admitted to trade on a national securities exchange and if bid
and ask prices for the Common Stock are not furnished through
NASDAQ or a similar organization, the value established by the
Committee, in its sole discretion, for purposes of the Plan; (ii)
if the Common Stock is listed or admitted to trade on a national
securities exchange or a national market system, the closing
price of the Common Stock, as published in the Wall Street
------------
Journal, so listed or admitted to trade on such date or, if there
-------
is no trading of the Common Stock on such date, then the closing
price of the Common Stock on the next preceding day on which
there was trading in such shares; or (iii) if the Common Stock is
not listed or admitted to trade on a national securities exchange
or a national market system, the mean between the bid and ask
price for the Common Stock on such date, as furnished by the
National Association of Securities Dealers, Inc. through NASDAQ
or a similar organization if NASDAQ is no longer reporting such
information. If trading in the stock or a price quotation does
not occur on the Date of Grant, the next preceding date on which
the stock was traded or a price was quoted will determine the
fair market value.
(t) "Incentive Stock Option" means a stock option, granted pursuant
to either this Plan or any other plan of the Company, that
satisfies the requirements of Section 422 of the Code and that
entitles the Optionee to purchase stock of the Company or in a
corporation that at the time of grant of the option was a Parent
or subsidiary of the Company or a predecessor company of any such
company.
(u) "Nonqualified Stock Option" means an Option to purchase Common
Stock in the Company granted under the Plan other than an
Incentive Stock Option within the meaning of Section 422 of the
Code.
(v) "Option" means a stock option granted pursuant to the Plan.
(w) "Option Period" means the period beginning on the Date of Grant
and ending on the day prior to the tenth anniversary of the Date
of Grant or such shorter termination date as set by the
Committee.
(x) "Optionee" means an Employee (or Director or subcontractor) who
receives an Option.
(y) "Parent" means any corporation which owns 50% or more of the
voting securities of the Company.
(z) "Plan" means this Stock Option Plan as may be amended from time
to time.
(aa) "Share" means the Common Stock, as adjusted in accordance with
Paragraph 11 of the Plan.
(bb) "Ten Percent Shareholder" 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 shareholders, partners, or
beneficiaries.
<PAGE>
(cc) "Termination" or "Termination of Employment" means the occurrence
of any act or event whether pursuant to an employment agreement
or otherwise that actually or effectively causes or results in
the person's ceasing, for whatever reason, to be an officer or
employee of the Company or of any Subsidiary or Parent including,
without limitation, death, disability, dismissal, severance at
the election of the participant, retirement, or severance as a
result of the discontinuance, liquidation, sale or transfer by
the Company or its Subsidiaries or Parent of all businesses owned
or operated by the Company or its Subsidiaries. A Termination of
Employment shall occur to an employee who is employed by an
Subsidiary if the Subsidiary shall cease to be a Subsidiary and
the participant shall not immediately thereafter become an
employee of the Company or a Subsidiary.
(dd) "Subsidiary" means any corporation 50% or more of the voting
securities of which are owned directly or indirectly by the
Company at any time during the existence of this Plan.
In addition, certain other terms used in this Plan shall have the
definitions given to them in the first place in which they are used.
3. ADMINISTRATION.
--------------
a. This Plan will be administered by the Committee. A majority of
the full Committee constitutes a quorum for purposes of
administering the Plan, and all determinations of the Committee
shall be made by a majority of the members present at a meeting
at which a quorum is present or by the unanimous written consent
of the Committee.
b. If no Committee has been appointed, members of the Board may vote
on any matters affecting the administration of the Plan or the
grant of any Option pursuant to the Plan, except that no such
member shall act on the granting of an Option to himself, but
such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is taken
with respect to the granting of Options to him.
c. Subject to the terms of this Plan, the Committee has the sole and
exclusive power to:
i. select the participants in this Plan;
ii. establish the terms of the Options granted to each
participant which may not be the same in each case;
iii. determine the total number of options to grant to an
Optionee, which may not be the same in each case;
iv. fix the Option period for any Option granted which may not
be the same in each case; and
v. make all other determinations necessary or advisable under
the Plan.
vi. determine the minimum number of shares with respect to which
Options may be exercised in part at any time.
<PAGE>
vii. The Committee has the sole and absolute discretion to
determine whether the performance of an eligible Employee
warrants an award under this Plan, and to determine the
amount of the award.
viii.The Committee has full and exclusive power to construe and
interpret this Plan, to prescribe and rescind rules and
regulations relating to this Plan, and take all actions
necessary or advisable for the Plan's administration. Any
such determination made by the Committee will be final and
binding on all persons.
d. A member of the Committee will not be liable for performing any
act or making any determination in good faith.
4. SHARES SUBJECT TO OPTION. Subject to the provisions of Paragraph 11 of the
--------------------------
Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan shall be 3,000,000 shares. Such shares may be authorized but
unissued, or may be treasury shares. If an Option shall expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares that were subject to the Option shall, unless the Plan
has then terminated, be available for other Options under the Plan.
a. Eligible Persons. Every Eligible Person, as the Committee in its sole
-----------------
discretion designates, is eligible to participate in this Plan.
Directors who are not employees of the Company or any subsidiary or
Parent shall only be eligible to receive Incentive Stock Options if
and as permitted be applicable law and regulations. The Committee's
award of an Option to a participant in any year does not require the
Committee to award an Option to that participant in any other year.
Furthermore, the Committee may award different Options to different
participants. The Committee may consider such factors as it deems
pertinent in selecting participants and in determining the amount of
their Option, including, without limitation; (i) the financial
condition of the Company or its Subsidiaries;
(i) expected profits for the current or future years;
(ii) the contributions of a prospective participant to the
profitability and success of the Company or its Subsidiaries; and
(iii) the adequacy of the prospective participant's other
compensation.
Participants may include persons to whom stock, stock options, or
other benefits previously were granted under this or another plan of
the Company or any Subsidiary, whether or not the previously granted
benefits have been fully exercised.
b. No Right of Employment. An Optionee's right, if any, to continue to
----------------------
serve the Company and its Subsidiaries as an Employee will not be
enlarged or otherwise affected by his designation as a participant
under this Plan, and such designation will not in any way restrict the
right of the Company or any Subsidiary, as the case may be, to
terminate at any time the employment of any 1.
<PAGE>
5. REQUIREMENTS OF OPTION GRANTS. Each Option granted under this Plan
------------------------------
shall satisfy the following requirements.
a. Written Option. An Option shall be evidenced by a written Option
---------------
Agreement specifying (i) the number of Shares that may be purchased by
its exercise, (ii) the intent of the Committee as to whether the
Option is be an Incentive Stock Option or a Non-qualified Stock
Option, (iii) the Option period for any Option granted. and (iv) such
terms and conditions consistent with the Plan as the Committee shall
determine, all of which may differ between various Optionees and
various Agreements.
b. Duration of Option. Each Option may be exercised only during the
-------------------
Option Period designated for the Option by the Committee. At the end
of the Option Period the Option shall expire.
c. Option Exercisability. The Committee, on the grant of an Option, each
----------------------
Option shall be exercisable only in accordance with its terms.
d. Acceleration of Vesting. Subject to the provisions of Section 5(b),
-------------------------
the Committee may, it its sole discretion, provide for the exercise of
Options either as to an increased percentage of shares per year or as
to all remaining shares. Such acceleration of vesting may be declared
by the Committee at any time before the end of the Option Period,
including, if applicable, after termination of the Optionee's
Continuous Service by reason of death, disability, retirement or
termination of employment.
e. Option Price. Except as provided in Section 6(a) the Option price of
--------------
each Share subject to the Option shall equal the Fair Market Value of
the Share on the Option's Date of Grant.
f. Termination of Employment Any Option which has not vested at the time
---------------------------
the Optionee ceases Continuous Service for any reason other than
death, disability or retirement shall terminate upon the last day that
the Optionee is employed by the Company. Incentive Stock Options must
be exercised within three months of cessation of Continuous Service
for reasons other then death, disability or retirement in order to
qualify for Incentive Stock Option tax treatment. Nonqualified Options
may be exercised any time during the Option Period regardless of
employment status.
g. Death. In the case of death of the Optionee, the beneficiaries
-----
designated by the Optionee shall have one year from the Optionee's
demise or to the end of the Option Period, whichever is earlier, to
exercise the Option, provided, however, the Option may be exercised
only for the number of Shares for which it could have been exercised
at the time the Optionee died, subject to any adjustment under
Sections 5(d) and 11.
<PAGE>
h. Retirement. Any Option which has not vested at the time the Optionee
----------
ceases Continuous Service due to retirement shall terminate upon the
last day that the Optionee is employed by the Company. Upon retirement
Incentive Stock Options must be exercised within three months of
cessation of Continuous Service in order to qualify for Incentive
Stock Option tax treatment. Nonqualified Options may be exercised any
time during the Option Period regardless of employment status
i. Disability. In the event of termination of Continuous Service due to
----------
total and permanent disability (within the meaning of Section 422 of
the Code), the Option shall lapse at the earlier of the end of the
Option Period or twelve months after the date of such termination,
provided, however, the Option can be exercised at the time the
Optionee became disabled, subject to any adjustment under Sections
5(d) and 11.
6. INCENTIVE STOCK OPTIONS. Any Options intended to qualify as an Incentive
-------------------------
Stock Option shall satisfy the following requirements in addition to the
other requirements of the Plan:
a. Ten Percent Shareholders. An Option intended to qualify as an
--------------------------
Incentive Stock Option granted to an individual who, on the Date of
Grant, owns stock possessing more than ten (10) percent of the total
combined voting power of all classes of stock of either the Company or
any Parent or Subsidiary, shall be granted at a price of 110 percent
of Fair Market Value on the Date of Grant and shall be exercised only
during the five-year period immediately following the Date of Grant.
In calculating stock ownership of any person, the attribution rules of
Section 425(d) of the Code will apply. Furthermore, in calculating
stock ownership, any stock that the individual may purchase under
outstanding options will not be considered.
b. Limitation on Incentive Stock Options The aggregate Fair Market Value,
---------------------------------------
determined on the date of Grant, of stock in the Company exercisable
for the first time by any Optionee during any calendar year, under the
Plan and all other plans of the Company or its Parent or Subsidiaries
(within the meaning of Subsection (d) of Section 422 of the Code) in
any calendar year shall not exceed $100,000.00.
c. Approval of Plan. No Option shall qualify as an Incentive Stock Option
-----------------
unless this Plan is approved by the shareholders within one year of
the Plan's adoption by the Board.
7. NONQUALIFIED AND INCENTIVE STOCK OPTIONS. Any Option not intended to
--------------------------------------------
qualify as an Incentive Stock Option shall be a Nonqualified Stock Option.
Nonqualified Stock Options shall satisfy each of the requirements of
Section 5 of the Plan. An Option intended to qualify as an Incentive Stock
Option, but which does not meet all the requirements of an Incentive Stock
Option shall be treated as a Nonqualified Stock Option.
<PAGE>
8. METHOD OF EXERCISE. An Option granted under this Plan shall be deemed
-------------------
exercised when the person entitled to exercise the Option (i) delivers
written notice to the President of the Company of the decision to exercise,
(ii) concurrently tenders to the Company full payment for the Shares to be
purchased pursuant to the exercise, and (iii) complies with such other
reasonable requirements as the Committee establishes pursuant to Section 3
of the Plan. During the lifetime of the Employee to whom an Option is
granted, such Option may be exercised only by him. Payment for Shares with
respect to which an Option is exercised may be in cash, or by certified
check, or wholly or partially in the form of Common Stock of the Company
having a fair market value equal to the Option Price. No person will have
the rights of a shareholder with respect to Shares subject to an Option
granted under this Plan until a certificate or certificates for the Shares
have been delivered to him.
An Option granted under this Plan may be exercised in increments of
not less than 10,000 Shares of the full number of Shares as to which it can
be exercised. A partial exercise of an Option will not effect the holder's
right to exercise the Option from time to time in accordance with this Plan
as to the remaining Shares subject to the Option.
9. TAXES. COMPLIANCE WITH LAW: APPROVAL OF REGULATORY BODIES. The Company, if
-----------------------------------------------------------
necessary or desirable, may pay or withhold the amount of any tax
attributable to any Shares deliverable or amounts payable under this Plan,
and the Company may defer making delivery or payment until it is
indemnified to its satisfaction for the tax. Options are exercisable, and
Shares can be delivered and payments made under this Plan, only in
compliance with all applicable federal and state laws and regulations,
including, without limitation, state and federal securities laws, and the
rules of all stock exchanges on which the Company's stock is listed at any
time. An Option is exercisable only if either (i) a registration statement
pertaining to the Shares to be issued upon exercise of the Option has been
flied with and declared effective by the Securities and Exchange Commission
and remains effective on the date of exercise, or (ii) an exemption from
the registration requirements of applicable securities laws is available.
This plan does not require the Company, however, to file such registration
statement or to assure the availability of such exemptions. Any certificate
issued to evidence Shares issued under the Plan may bear such legends and
statements, and shall be subject to such transfer restrictions, as the
Committee deems advisable to assure compliance with federal and state laws
and regulations and with the requirements of this Section 9 of the Plan. No
Option may be exercised, and no Shares may be issued under this Plan, until
the Company has obtained the consent or approval of every regulatory body,
federal or state, having jurisdiction over such matter as the Committee
deems advisable.
Each Person who acquires the right to exercise an Option by bequest or
inheritance may be required by the Committee to furnish reasonable evidence
of ownership of the Option as a condition to his exercise of the Option. In
addition, the Committee may require such consents and release of taxing
authorities as the Committee deems advisable.
10. ASSIGNABILITY. An Option granted under this Plan is not transferable except
-------------
by will or the laws of descent and distribution. The Option may be
exercised only by the Optionee during the life of the Optionee. More
particularly, but without limitation of the foregoing, the Option may be
not be assigned or transferred except as provided above and shall not be
assignable by operation of law and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer or
distribution contrary to the provisions hereof shall be null and void and
without effect. 1.
<PAGE>
11. ADJUSTMENT UPON CHANGE OF SHARES. If a reorganization, merger,
--------------------------------------
consolidation, reclassification, recapitalization, combination or exchange
of shares, stock split, stock dividend, rights offering, or other expansion
or contraction of the Common Stock of the Company occurs, the number and
class of Shares for which Options are authorized to be granted under this
Plan, the number and class of Shares then subject to Options previously
granted under this Plan, and the price per Share payable upon exercise of
each Option outstanding under this Plan shall be equitably adjusted by the
Committee to reflect such changes. To the extent deemed equitable and
appropriate by the Committee or the Board, subject to any required action
by shareholders, in any merger, consolidation, reorganization, liquidation
or dissolution, any Option granted under the Plan shall pertain to the
securities and other property to which a holder of the number of Shares of
stock covered by the Option would have been entitled to receive in
connection with such event.
12. ACCELERATIONS OF OPTIONS UPON CHANGE IN CONTROL. In the event that a Change
-----------------------------------------------
of Control has occurred with respect to the Company, any and all Options
will become fully vested and immediately exercisable with such acceleration
to occur without the requirement of any further act by either the Company
or the participant, subject to Section 9 hereof.
13. LIABILITY OF THE COMPANY. The Company, its Parent and any Subsidiary that
------------------------
is in existence or hereafter comes into existence shall not be liable to
any person for any tax consequences expected but not realized by an
Optionee or other person due to the exercise of an Option.
14. EXPENSES OF PLAN. The Company shall bear the expenses of administering the
----------------
Plan.
15. DURATION OF PLAN. Options may be granted under this Plan only within 10
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years from the effective date of the Plan.
<PAGE>
16. AMENDMENT, SUSPENSION 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
Exchange Act, 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
shareholders; 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
shareholders. 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. Notwithstanding the foregoing, no amendment,
suspension or termination of the Plan shall act to impair or extinguish
rights in Options already granted at the date of such amendment, suspension
or termination.
17. 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, shareholder, owner, or otherwise, in any commercial
endeavor anywhere 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, 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.
<PAGE>
18. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With respect
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to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of 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 the opportunity to handle
and defend same at its own expense. The failure to notify the Company
within 60 days shall only affect a Director or committee member's right to
indemnification if said failure to notify results in an impairment of the
Company's rights or is detrimental to the Company. 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.
<PAGE>
19. 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.
20. 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.
21. 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.
22. OTHER OPTIONS OR AWARDS. The grant of an Option or Awards 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.
23 GOVERNING LAW. The provisions of this Plan shall be construed,
---------------
administered, and governed under the laws of the State of Nevada.
<PAGE>
Supplemental Information
- -------------------------
Not to be Provided to Stockholders
- ---------------------------------------
The Plan described herein does not require that the Company register the
options or the shares underlying options.
The Company believes that each of the persons receiving these securities
has the knowledge and experience in financial and business matters which allows
them to evaluate the merits and risk of the receipt of these securities of the
Company. In such capacity they are knowledgeable about the Company's operations
and financial condition. These transactions are effectuated by the Company in
reliance upon exemptions from registration under the Securities Act of 1933 as
amended (the "Act") as provided in Section 4(2) thereof. Each certificate
issued for unregistered securities contains a legend stating that the securities
have not been registered under the Act and setting forth the restrictions on the
transferability and the sale of the securities. No underwriter participated in,
nor did the Company pay any commissions or fees to any underwriter in connection
with any of these transactions. None of the transactions involves a public
offering.
<PAGE>
