SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE TRACKER CORPORATION OF AMERICA
----------------------------------
(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:
<PAGE>
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:
--------------------------------------------------------
2
<PAGE>
THE TRACKER CORPORATION OF AMERICA
NOTICE OF ANNUAL MEETINGOF STOCKHOLDERS AUGUST 27, 1999
TO THE STOCKHOLDERS OF THE TRACKER CORPORATION OF AMERICA:
Notice is hereby given that the Annual Meeting of Stockholders of The
Tracker Corporation of America will be held at 1:00 p.m. (EDT) on Friday, August
27, 1999, in the Northwest World Club in Concourse F, at the Detroit Metro
Airport, Detroit, Michigan, for the following purposes:
1. To elect one director to serve on the Board of Directors of the Company
for a term of three years.
2. To ratify the re-election of Hirsch Silberstein & Subelsky, P.C. as the
independent auditors of the Company for the fiscal year ending March 31, 2000.
3. To consider and vote upon a proposal to amend the Certificate of
Incorporation of the Company to increase the number of authorized shares of
Common Stock shares to 93,400,000 Shares.
4. To consider and vote upon a proposal to adopt the Company's Amended and
Restated 1994 Stock Incentive Plan.
5. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on August 17, 1999
as the record date for the determination of stockholders entitled to receive
notice of and vote at the meeting.
We encourage you to take part in the affairs of your Company either in
person or by executing and returning the enclosed proxy.
By Order of the Board of Directors,
Bruce I. Lewis
Chief Executive Officer
Dated: August 15, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU LATER
DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
<PAGE>
THE TRACKER CORPORATION OF AMERICA
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 27, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Tracker Corporation of America (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held at 1:00 p.m., local time, on Friday, August 27, 1999, at the Northwest
World Club in Concourse F of the Detroit Metro Airport, Detroit, Michigan, and
at any adjournment thereof. A stockholder giving the enclosed proxy may revoke
it at any time before the vote is cast at the annual meeting by delivering to an
officer of the Company either a written notice terminating the proxy's authority
or a proxy bearing a later date, or by appearing in person and voting at the
meeting. Shares of the Company's common stock, $.001 par value (the "Common
Stock"), represented by a proxy will be voted in the manner directed by a
stockholder. If no direction is made, the proxy will be voted for the election
of the nominees for director named in this Proxy Statement and for the other
proposals set forth in this Proxy Statement. This Proxy Statement and the
accompanying form of proxy are being sent or given to stockholders beginning on
or about August 15, 1999, along with the Company's Annual Report to Stockholders
for the year ended March 31, 1999.
Only stockholders of record at the close of business on July 18, 1999 are
entitled to receive notice of and vote at the meeting or at any adjournment
thereof. On July 17, 1999, there were 50,388,579 shares of Common Stock of the
Company outstanding. Each share is entitled to one vote. Cumulative voting is
not permitted. Shares voted as abstentions on any matter (or a "withhold vote
for" as to a director) will be counted as shares that are present and entitled
to vote for purposes of determining the presence of a quorum at the meeting and
as unvoted, although present and entitled to vote, for purposes of determining
the approval of each matter as to which the stockholder has abstained. If a
broker submits a proxy that indicates the broker does not have discretionary
authority as to certain shares to vote on one or more matters, those shares will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting, but will not be considered
as present and entitled to vote with respect to such matters.
The Board of Directors knows of no matters other than those that are
described in this Proxy Statement that may be brought before the meeting.
However, if any other matters are properly brought before the meeting, persons
named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters.
All expenses in connection with the solicitation of proxies will be paid by
the Company. In addition to solicitation by mail, officers, directors and
regular employees of the Company, who will receive no extra compensation for
their services, may solicit proxies by telephone, facsimile or personal calls.
<PAGE>
The Company's principal executive offices are located at 180 Dundas Street
West, Suite 1505, Toronto, Ontario M5G 1Z8 Canada.
ELECTION OF DIRECTORS
(PROPOSAL #1)
The Bylaws of the Company provide that directors of the Company shall be
divided into three classes, as nearly equal in number as reasonably possible.
Vacancies and newly created directorships resulting from an increase in the
number of directors may be filled by the vote of a majority of the directors
then in office. The directors so chosen will hold office until the next
election of the class for which such directors shall have been chosen.
Except for elections to fill vacancies created by the resignations of
directors not otherwise filled by the vote of a majority of the directors then
in office, directors elected at each annual meeting of stockholders will be of
the same class as the directors whose terms expire at such annual meeting of
stockholders, and shall be elected to hold office for a term expiring at the
third succeeding annual meeting of stockholders or until their successors are
elected and shall qualify.
H. Joseph Greenburg, M.D., currently a director of the Company, has been
nominated for reelection to the Board of Directors for a three-year term that
will expire at the annual meeting of stockholders in 2002. The person named as
proxy in the enclosed form of proxy intends to vote the proxies received by the
Company for the reelection of Dr. Greenberg, unless otherwise directed. Dr.
Greenberg has indicated a willingness to serve. If, however, Dr. Greenberg is
not a candidate at the meeting, which is not presently anticipated, the proxy
named in the enclosed form of proxy may vote for a substitute nominee in his
discretion.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON
STOCK REPRESENTED AT THE MEETING IS REQUIRED FOR THE REELECTION OF DR.
GREENBERG. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR DR. GREENBERG.
Information regarding the Board of Directors of the Company, including Dr.
Greenburg, is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Bruce I. Lewis 59 Chief Executive Officer and Chairman of the Board of Directors
Jay S. Stulberg 49 President, Chief Operating Officer, Chief Financial Officer and
Director
Dr. H. Joseph Greenberg* 76 Director
Carl J. Corcoran 72 Director
David G.R. Butler 63 Director
</TABLE>
- ------------------------------------
+Nominee.
2
<PAGE>
BRUCE I. LEWIS has been the Chairman of the Board of Directors (for a term
expiring at the 2000 annual meeting of Stockholders) and Chief Executive Officer
of the Company since June 30, 1994, and President of the Company from August 12,
1995 to December 22, 1998. For the period from 1980 through May 1990, Mr. Lewis
was President and a Director of Albert Berg Limited and its subsidiaries.
Albert Berg was petitioned into bankruptcy by its creditors in May 1990. From
June 1988 to August 1990, he served as the Chief Executive Officer of Cape
Breton Chemical Corporation, a start-up PVC flexible stretch wrap manufacturer.
From May 1990 through May 1993, Mr. Lewis was also a consultant to various
companies in the areas of management and acquisition financing. From May 1993
until its dissolution in February 1998, Mr. Lewis served as the Chief Executive
Officer and Chairman of the Board of Directors of Tracker Canada. From November
1997 to December 22, 1998, Mr. Lewis served as interim Chief Financial Officer
of The Company.
JAY S. STULBERG has been President, Chief Operating Officer and Chief
Financial Officer of the Company and a Director of the Company since December
22, 1998 for the term expiring at the 2001 annual meeting of stockholders.
Since February 1998, Mr. Stulberg has been the sole shareholder, director and
officer of Global Tracker Corp. Since approximately 1984, Mr. Stulberg has
served on the Board of Directors of two privately held family holding companies.
From 1992 to 1994, Mr. Stulberg served as the Controller (i.e., the Senior
Financial Officer) of Enershare Technology Corp. From 1994 to mid-1996, Mr.
Stulberg served as the Group Controller of Algorithmics, Inc.
H. JOSEPH GREENBERG has been a Director of the Company since December 22,
1998 for a term expiring at the 1999 annual meeting of stockholders and has been
nominated for reelection to the Board of Directors for a term expiring at the
2002 annual meeting of Stockholders. Dr. Greenberg has engaged in the practice
of medicine since his graduation from medical school in 1952. He has been a
director of Genevest, Inc. since 1993.
CARL J. CORCORAN has been a Director of the Company since December 22,
1998 for a term expiring at the 2000 annual meeting of stockholders. Mr.
Corcoran was employed by IBM Corporation in various capacities from 1951 to
1988, including General Manager of Operations of IBM Japan and President of IBM
Canada. Mr. Corcoran is currently an officer and director of several
family-held businesses, including Corcair Farms, Ltd., CorProperties, Inc., Cor
Source Water Corporation, Corcorvest Corporation and CJC Bottling, Ltd. He is
also a director of the Accessible Software Corporation, a publicly traded
corporation, and A.A.B. Building Systems, Inc., a private company.
DAVID G. R. BUTLER has been a Director since December 22, 1998 for a term
expiring at the 2001 annual meeting of stockholders. Mr. Butler is the chief
executive officer and sole shareholder of Holiday Breaks International, Inc.,
which offers stay-free hotel accommodations to companies as sales and marketing
incentives; MF Incentives, Inc., which offers travel coupons as sales incentives
for manufacturers' products; and Newfound Communications, Inc., which offers
premium incentive promotions. From 1978 until its sale in 1994, Mr. Butler was
the sole shareholder and chief executive officer of Marshall Fenn Limited, a
public relations and advertising agency. At Marshall Fenn, Mr. Butler
established several affiliated enterprises referred to as the Marshall Fenn
Group of Companies, including Holiday Breaks International, Inc., MF Incentives,
Inc., and Newfound Communications, Inc.
3
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During the fiscal year ended March 31, 1999, the Board of Directors met one
time. Messrs. Lewis, Stulberg and Butler attended this meeting of the Board of
Directors.
The Board of Directors of the Company has established Executive, Audit,
Ethics and Compensation Committees. The Board does not have a Nominating
Committee, and the entire Board is responsible for the size and composition of
the Board and for recommending nominees to serve on the Board. The Executive
Committee is comprised of Messrs. Lewis and Stulberg. The Audit Committee,
comprised of Messrs. Butler (as Chairman) and Stulberg, is responsible for: (i)
reviewing and recommending the engagement each year of the Company's independent
auditors; (ii) consulting with the independent auditors on the adequacy of the
Company's internal controls; (iii) reviewing, with the independent auditors, the
auditors' reports on the Company's financial statements; and (iv) taking such
other steps as the Audit Committee deems necessary to carry out the normal
functions of an audit committee. The Ethics Committee is comprised of Mr.
Corcoran (as Chairman) and Dr. Greenberg. The Compensation Committee, comprised
of Messrs. Butler (as Chairman) and Corcoran, is responsible for: (i)
determining the compensation of the Company's senior officers; (ii) reviewing
recommendations by management as to the compensation of other officers and key
personnel; and (iii) reviewing management's succession program. Further, the
Compensation Committee administers the Company's 1994 Stock Incentive Plan (the
"1994 Plan"). During the fiscal year ended March 31, 1999, the aforementioned
committees each met one time.
COMPENSATION OF DIRECTORS
No compensation was paid to non-employee directors during the fiscal year
ended March 31, 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors and persons who beneficially own more than ten percent
(10%) of the Company's Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("SEC"). Executive officers, directors, and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
The Company does not have a class of equity securities registered pursuant
to Section 12 of the Exchange Act. Accordingly, its directors, officers and 10%
beneficial owners are not required to file reports pursuant to Section 16(a) of
the Exchange Act.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Common Stock, as of July 17, 1999, by: (i) each person who is
known by the Company to beneficially own more than 5% of the Common Stock, (ii)
each of the Company's directors, (iii) each of the Named Executive Officers and
(iv) all directors and executive officers of the Company as a group.
4
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares of Total Number Percentage of
Beneficial Owner Common Stock Of Shares (1) Total Number
<S> <C> <C> <C>
Bruce I. Lewis . . . . . . . . . . 3,415,303 3,415,303 6.65%
180 Dundas Street W., Suite 1505
Toronto, Ontario
Canada M5G 1Z8
Jay S, Stulberg. . . . . . . . . . 956,383 956,383 1.86%
180 Dundas Street W., Suite 1505
Toronto, Ontario
Canada M5G 1Z8
H. Joseph Greenberg, M.D.. . . . . 207,122 207,122 0.4%
180 Dundas Street W., Suite 1505
Toronto, Ontario
Canada M5G 1Z8
Executive Officers and Directors . 4,578,808 4,578,808 8.91%
as a group, including those named
above (five persons)
<FN>
(1) Percentage of ownership is based upon 50,378,579 issued and outstanding
shares of Common Stock beneficially owned on June 30, 1999, including
currently exercisable warrants to purchase 750,000 shares of Common Stock,
currently exercisable options to purchase 40,000 shares of Common Stock, and
200,000 shares reserved for issuance under the Toda Option.
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value At Alternative to
Assumed Annual Rates of Stock (f) and (g)
Price Appreciation For Option Grant Date
INDIVIDUAL GRANTS Term Value
- -------------------------------------------------------------------------------------------------------------------------------
Percent Of
Number of Total
Securities Options/
Underlying SARs Granted Exercise of Grant Date
Option/SARs To Employees Base Price Expiration Present Value
NAME Granted (#) In Fiscal Year ($/Sh) Date 5% ($) 10% ($) $
(A) (b) (c) (d) (e) (f) (g) (h)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce I. Lewis(1). 2,488,578 50% .075 2003 51,566 62,909
- -------------------------------------------------------------------------------------------------------------------------------
Jay S. Stulberg(2) 2,488,578 50% .075 2008 117,379 131,856
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Incentive stock option granted for a five year term exercisable sequentially in two annual installments
beginning January 2000, and fully vesting beginning January 2001.
(2) Incentive stock option granted for a ten year term exercisable sequentially in two annual installments
beginning January 2000, and fully vesting beginning January 2001.
</TABLE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission, the Company
is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief Executive Officer and
other executive officers (collectively, the "Executive Officers"). The SEC
rules require the Compensation Committee of the Board of Directors to issue a
report explaining the rationale and considerations that led to fundamental
executive compensation decisions affecting the Executive Officers.
5
<PAGE>
The Committee is responsible for setting salaries for officers and for
granting incentive awards and stock-based compensation to the Company's
executive officers, including the Chief Executive Officer, on behalf of the
Board of Directors and the stockholders. The Committee also oversees the
operation of the Company's executive compensation benefits.
The Committee consists entirely of outside directors of the Company. Since
December 22, 1998, two directors have served on the Committee.
Compensation Policies
- ----------------------
The Company is committed to attracting, hiring and retaining an experienced
management team that can successfully develop and produce the Company's products
in commercial quantities, penetrate target markets and develop new products.
With these goals in mind, the Committee closely aligns its compensation plan for
executive management to the milestones achieved and the influence that each
executive has as the Company grows and matures. The Committee annually reviews
and evaluates the Company's corporate performance, compensation levels and
equity ownership of its executive officers. The Committee strives to establish
competitive levels of compensation that are consistent with the Company's annual
long-term performance goals, are appropriate for each officer's scale of
responsibility and performance, recognize individual initiative and achievements
will attract and retain the highest quality personnel possible consistent with
the Company's resources, and provide an incentive to such executives to focus on
the Company's long-term strategic goals by aligning their financial interests
closely with long-term stockholder interests. The Committee intends to make the
executive compensation program competitive with the marketplace while
emphasizing compensation in the form of equity ownership, the value of which is
contingent on the Company's long-term market performance. It is intended that,
in judging appropriate levels of compensation, the Committee will take into
account internally set performance goals and comparisons with the performance of
a self-selected group of development stage companies with similar business
characteristics and strategies.
Because the Company is reestablishing its product development and marketing
programs, it is difficult to select objective criteria by which to measure
individual and Company performance. As a result, the Committee's efforts to tie
compensation to performance involve a subjective element and take into account
each officer's performance during the past year based on qualitative standards
and the achievement of nonfinancial goals such as reaching certain milestones in
the development and production of the Company's Tracker System and development
of the Company's sales and marketing force. In evaluating compensation relative
to Company performance, the Committee also considers the Company's stock
performance and progress toward profitability. In the future, the Committee
intends to place more emphasis on objective factors in determining executive
compensation. Factors that the Committee anticipates that it will consider
include maintaining the compensation of the Company's officers at industry
levels, as reflected in surveys of compensation practices in corporations of
comparable size and technology. The Committee also intends to implement a bonus
program that will be tied to specific financial goals, including operating
revenues and earnings.
The Company's compensation program has three primary components: base
salary, short-term incentives and long-term incentives. The ultimate composition
of executive compensation reflects the Company's goals of attracting and
retaining highly qualified personnel and supporting a performance-oriented
environment that rewards both corporate and personal performance over the long
term. In general, stock option grants are used to enhance the competitiveness of
compensation packages, reward exceptional performance and provide incentive for
reaching further performance goals. The Compensation Committee also believes
that the use of stock options is important to align the interests of the
officers with the interests of the stockholders.
Base Salaries
- --------------
The Committee establishes annual base salaries after an analysis of each
executive officer's individual performance during the prior year, the overall
performance of the Company during the prior year and historical compensation
levels within the executive officer group. The Committee believes that
executive salaries must be sufficiently competitive to attract and retain key
individuals. In this regard, salaries for officers are based on experience
levels and are intended to be competitive with median salaries paid to
comparable executives in similar positions at other comparable development stage
companies. Development stage companies continue to be used for comparison
purposes because of the problems and interruptions the Company experienced
during the 1998-99 fiscal year. In the absence of substantial revenue and
profitable operations, the Company does not have the financial resources to
match salaries offered by larger or profitable companies. By augmenting base
salary with equity-based compensation, the Company seeks to continue to attract
and retain quality management personnel despite limited financial resources.
Short-Term Incentives
- ----------------------
The Committee believes that executive compensation should be based in part
on the achievement of milestones that are important to the short-term success of
the Company. Accordingly, the Committee, when appropriate, intends to set
short-term milestones and then compare the Company's progress against these
targets. Members of the executive team, along with all Company employees, will
periodically be granted options to purchase shares of the Common Stock with
vesting tied to the achievement of specified operating and personal objectives.
The number of options granted with these vesting provisions will be determined
based on the individual's experience and position within the Company.
Long-Term Incentives
- ---------------------
The Committee believes that long-term stockholder interests and executive
compensation should be closely aligned. The Committee believes that stock
ownership by management and stock-based performance compensation arrangements
are beneficial in aligning management's and stockholders' interests in enhancing
stockholder value. Stock options are generally granted to executive officers at
the time they are elected. In determining the number of options to be granted
at such time, the Committee takes into consideration job responsibilities,
experience and contributions of the individual and recommendations of the Chief
Executive Officer. The stock options give the holder the right to purchase
shares of the Common Stock over a ten-year period. Because the options are
granted at the fair market value on the date of grant, they will provide value
only when the price of the Common Stock increases above the share price on the
date of the grant. Options are also subject to vesting provisions designed to
encourage executives to remain employed by the Company. Additional options are
granted from time to time based on individual performance, increased job
responsibilities and the prior level of grants.
6
<PAGE>
Compensation Limitations
- -------------------------
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally limits the corporate deduction for compensation paid to
executive officers to $1.0 million, unless the compensation qualifies as
"performance-based compensation" under the Code. Section 162(m) did not affect
the deductibility of compensation paid to the Company's executive officers in
1999-99 and will not affect the deductibility of such compensation expected to
be paid in 1999-2000. The Committee will continue to monitor this matter and may
propose changes to the executive compensation program if warranted.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
On December 22, 1998, the Company entered into an employment agreement with
Mr. Lewis, pursuant to which Mr. Lewis serves as Chief Executive Officer of the
Company. The agreement provides for an annual base salary of $175,000, with
increases of $37,500 each year based upon certain performance criteria beginning
April 1, 2000, a maximum automobile allowance of $10,000 and eligibility for
discretionary bonuses.
The agreement for Mr. Lewis has an initial term of three years with one
year renewal terms thereafter, and provides for the payment of a relocation
allowance equal to the lesser of the actual relocation expenses or $25,000 per
each occurrence. The agreement provides that Mr. Lewis is entitled to
participate in any stock option, stock purchase, annual bonus, pension, profit
sharing, life insurance and medical benefit plans and such other fringe benefits
that may be applicable to the Company's senior executive employees.
If Mr. Lewis' employment is terminated by the Company for cause (as
defined in the employment agreement) or by Mr. Lewis for any reason (other
than for good reason (also as defined)), Mr. Lewis will be entitled to his
compensation through the date of termination. If, prior to a change of control
of the Company (as defined), employment is terminated due to Mr. Lewis' death or
disability, by the Company other than for cause or by Mr. Lewis for good reason,
Mr. Lewis would be entitled to receive all compensation through the date of
termination, plus the continuation of base salary for the greater of one year or
the remainder of the term of the agreement. In addition, the Company will
maintain for Mr. Lewis for 12 months, or, if earlier, through the date he
obtains alternative employment, his participation in the employee benefit plans
of the Company in which he was eligible to participate immediately before
termination, to the extent permissible under such plans. Mr. Lewis (or his
legal representative) also will have the right to exercise all vested stock
options outstanding at the termination date in accordance with the plans
governing those options. The Company will use its best efforts to remove the
restrictions from any restricted stock held by Mr. Lewis at termination. If Mr.
Lewis' employment is terminated after a change of control, either by the
executive for good reason or by the Company without cause, he will receive all
the benefits he would have received for such a termination prior to a change of
control, and all unvested stock options held by him shall become immediately
fully vested. Payments made in conjunction with a change of control are limited
to an amount that will not result in either a loss of the income tax deduction
of the Company under Internal Revenue Code Section 280G or an excise tax under
Code Section 4999.
7
<PAGE>
On December 22, 1998, the Company entered into an employment agreement with
Mr. Stulberg, pursuant to which Mr. Stulberg serves as President, Chief
Operating Officer, Chief Financial Officer and Secretary of the Company. The
agreement provides for an annual base salary of $125,000, with increases of
$37,500 each year based upon certain performance criteria beginning April 1,
2000, a maximum automobile allowance of $10,000 and eligibility for
discretionary bonuses.
The agreement for Mr. Stulberg has an initial term of three years with one
year renewal terms thereafter, and provides for the payment of a relocation
allowance equal to the lesser of the actual relocation expenses or $25,000 per
each occurrence. The agreement provides that Mr. Stulberg is entitled to
participate in any stock option, stock purchase, annual bonus, pension, profit
sharing, life insurance and medical benefit plans and such other fringe benefits
that may be applicable to the Company's senior executive employees.
If Mr. Stulberg's employment is terminated by the Company for cause (as
defined in the employment agreement) or by Mr. Stulberg for any reason (other
than for good reason (also as defined)), Mr. Stulberg will be entitled to his
compensation through the date of termination. If, prior to a change of control
of the Company (as defined), employment is terminated due to Mr. Stulberg's
death or disability, by the Company other than for cause or by Mr. Stulberg for
good reason, Mr. Stulberg would be entitled to receive all compensation through
the date of termination, plus the continuation of base salary for the greater of
one year or the remainder of the term of the agreement. In addition, the
Company will maintain for Mr. Stulberg for 12 months, or, if earlier, through
the date he obtains alternative employment, his participation in the employee
benefit plans of the Company in which he was eligible to participate immediately
before termination, to the extent permissible under such plans. Mr. Stulberg
(or his legal representative) also will have the right to exercise all vested
stock options outstanding at the termination date in accordance with the plans
governing those options. The Company will use its best efforts to remove the
restrictions from any restricted stock held by Mr. Stulberg at termination. If
Mr. Stulberg's employment is terminated after a change of control, either by the
executive for good reason or by the Company without cause, he will receive all
the benefits he would have received for such a termination prior to a change of
control, and all unvested stock options held by him shall become immediately
fully vested. Payments made in conjunction with a change of control are limited
to an amount that will not result in either a loss of the income tax deduction
of the Company under Internal Revenue Code Section 280G or an excise tax under
Code Section 4999.
SUMMARY COMPENSATION
The following table sets forth the cash and noncash compensation for fiscal
years 1997, 1998 and 1999 earned by or awarded to the Chief Executive Officer
and to the other executive officer who received compensation in excess of
$100,000 for services rendered in all capacities to the Company for fiscal
1998-99 (the "Named Executive Officers").
8
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------------- -------------------------------
Awards Payouts
------ -------
Other Securities All
Annual Restricted Underlying Other
Name and Compens- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation (1) Awards SARs Payouts sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bruce I. Lewis, CEO 1999 $ 0 -0- -0- -0- 175,000 2,488,578 -0-
1998 $ 43,000 -0- -0- 10,000 131,250 -0- -0-
1997 $175,000 -0- -0- 10,000 -0- -0- -0-
Jay S. Stulberg.
President, COO & CFO 1999 $ 40,000 -0- -0- -0- 85,000 2,488,578 -0-
</TABLE>
OPTIONS
Under the 1994 Amended and Restated Stock Incentive Plan (the "1994 Plan"),
the Committee may grant options to purchase shares of Common Stock, including
options qualifying as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to employees as
additional compensation for their services to the Company. Options may be
granted prior to termination of the 1994 Plan, which will occur on the earlier
of June 29, 2004 or the date on which all awards available for issuance in the
last year of the 1994 Plan will have been issued or canceled. Options granted
are subject to adjustment in the event of a stock split, stock dividend or other
change in the Common Stock or the capital structure of the Company.
Options are exercisable over such period as determined by the Committee,
but no incentive stock option may be exercised after ten years from the date of
grant. However, the option term of incentive stock options which are granted to
holders of ten percent or more of the Company's combined voting power shall not
exceed five years from the date of grant. Options may be exercisable in
installments as determined by the Committee and are evidenced by option
agreements. No option may be transferred other than by will or by the laws of
descent and distribution. Options generally cannot be exercised after the
termination of service, except under certain circumstances where such
termination of service is with the consent of the Committee or due to
retirement, disability or death, in which event the Committee (subject in any
case to the foregoing limitation on the maximum term of incentive stock options)
may take any action it deems equitable or in the best interests of the Company.
The purchase price of Common Stock subject to an incentive stock option cannot
be less than 100% of the fair market value of such Common Stock on the date of
grant. The purchase price of Common Stock subject to a nonqualified option may
be less than, equal to or greater than the fair market value of such Common
Stock on the date of grant. However, if any individual to whom an incentive
stock option is granted is the owner of stock (as determined under Section
424(d) of the Code) possessing 10% or more of the total combined voting power of
all classes of Stock of the Company or any subsidiary of the Company, then the
purchase price per share shall not be less than 110% of the fair market value of
such Common Stock on the date of grant. The option price may be due upon
exercise of the option and may be paid in cash, check, shares of Common Stock or
other consideration acceptable to the Committee (including restricted stock), or
may be deferred through a sale and remittance procedure with a
Company-designated brokerage firm. Grants may also provide for reload option
rights upon the exercise of options, provided that the term of any such reload
option will not extend beyond the term of the option originally exercised.
9
<PAGE>
During the fiscal year ended March 31, 1999, options for 4,977,156 shares,
vesting over a two-year period, were granted at fair market value. Since the
commencement of the current fiscal year, options for 1,699,999 shares were
granted at fair market value. Of these, options vesting over a two-year period
were granted to Mr. Lewis for 583,333 shares and to Mr. Stulberg for 416,666
shares. Options for an additional 700,000 shares vesting over a four-year
period were granted to two other key employees.
1999 STOCK WAGE AND FEE PAYMENT PLAN
The Company's Board of Directors adopted a 1999 Stock Wage and Fee Payment
Plan (the "1999 Wage Plan") on December 22, 1999. The purpose of the 1999 Wage
Plan was to retain and motivate participants in the 1999 Wage Plan and to
provide them with incentives and rewards more directly linked to the
profitability of the Company's business and increases in stockholder value.
Nine employees and three consultants of the Company were eligible to, and
elected to, participate in the 1999 Wage Plan. Under the 1999 Wage Plan, the
participants agreed to receive an aggregate of 13,175,996 shares of the
Company's Common Stock in lieu of certain wage payments or fees. The number of
shares granted to the participants was based upon a price per share of Common
Stock of $.06. The Company registered the shares issued under the 1999 Wage
Plan under the Securities Act.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT
The Company has entered into employment agreements containing severance
arrangements with certain of its executive officers, which provide for payment
under certain circumstances to each officer of compensation through the
remainder of the terms of the agreements. The Company's Certificate of
Incorporation and By-laws provide for indemnification of all Directors and
officers. In addition, each Director nominee of the Company, when elected, will
enter into a separate indemnification agreement with the Company.
The Company has agreed with certain state regulatory authorities that so
long as the Company's securities are registered in such states, the Company will
not make loans to its officers, directors, employees, or principal stockholders,
except for loans made in the ordinary course of business, such as travel
advances, expense account advances, relocation advances, or reasonable salary
advances.
Further, all future transactions between the Company and its executive
officers, Directors, employees, 5% stockholders and affiliates (including for
example future loans and any forgiveness of loans, none of which is
contemplated) will be subject to the approval of a majority of the independent,
disinterested members of the Board of Directors. In addition, such future
transactions will be for bona fide business purposes and will be on terms that
are no less favorable to the Company than those that could be negotiated with
unaffiliated parties.
10
<PAGE>
GLOBAL TRACKER
In February 1998, Global Tracker Corporation, a newly organized Ontario,
Canada corporation, acquired substantially all of the assets of Tracker Canada
in a bankruptcy proceeding. Jay S. Stulberg, the Company's President, Chief
Operating Officer, Chief Financial Officer and Director, is the sole
shareholder, officer and Director of Global Tracker. Following the bankruptcy
proceeding, Global Tracker made available to the Company the assets formerly
owned by Tracker Canada to permit the Company to carry on Tracker Canada's
business. Since February 1998, Global Tracker has expended approximately
$750,000 to support the Company's business operations. Bruce I. Lewis, the
Company's Chief Executive Officer, has provided Global Tracker with
approximately $600,000 with which to purchase Tracker Canada's assets and
operate Global Tracker. Under a license agreement with Global Tracker, the
Company will pay Global Tracker a 12% gross royalty on its sales.
RATIFICATION OF INDEPENDENT AUDITORS
(PROPOSAL #2)
At the Annual Stockholders meeting held on December 18, 1998, the
stockholders ratified the retention of Hirsch Silberstein & Subelsky, P.C. to
serve as the Company's independent auditors for the year ending March 31, 1999.
Hirsch Silberstein & Subelsky, P.C. has agreed to stand for re-election as the
Company's independent auditors for the fiscal year ending March 31, 2000, and
the Board recommends that this appointment be ratified. Hirsch Silberstein &
Subelsky, P.C. has no relationship with the Company other than that arising from
its employment as independent auditors. Representatives of Hirsch Silberstein &
Subelsky, P.C. will be present at the 1999 Annual Meeting. They will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions from stockholders.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF THE COMMON STOCK
REPRESENTED AT THE 1999 ANNUAL MEETING IS REQUIRED TO RATIFY THE APPOINTMENT OF
HIRSCH, SILBERSTEIN & SUBELSKY, P.C. AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING MARCH 31, 2000. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THIS PROPOSAL.
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
(PROPOSAL #3)
The Board of Directors has recommended to the Stockholders the adoption of
an amendment to the Company's Certificate of Incorporation in the form attached
to this Proxy Statement as Appendix A (the "Amendment") to increase the number
of authorized shares of the Company's Common Stock to 93,400,000. The
Amendment would not change the relative rights and limitations of the Company's
capital stock.
The current Certificate of Incorporation authorizes the Board of Directors
to issue 50,000,000 shares of the Company's Common Stock, $.001 par value;
100,000 shares of Class B voting common stock, par value $0.00000007 per share
and 6,500,000 shares of preferred stock, par value $0.001 per share. As of July
17, 1999, the Company had 50,388,579 shares of Company Common Stock issued and
outstanding.
11
<PAGE>
The purpose of the proposed increase in the number of authorized shares of
the Company's Common Stock is to assure that an adequate supply of authorized
but unissued shares is available for issuance in connection with general
corporate needs, including without limitation making acquisitions through the
issuance of the Company's Common Stock or permitting issuances under the
Company's Plan, or any successor or other employee benefit or stock option plan.
The additional authorized shares of the Company's Common Stock could also be
used for raising additional capital for the operations of the Company and
financing acquisitions. The Company does not currently have any final plans or
arrangements to issue any additional shares of its Common Stock other than those
described above as reserved for issuance. However, the Company anticipates that
it will require additional capital in order to meet the needs for its strategic
Canadian and United States roll-outs and otherwise implement its business plan
in the manner contemplated. Accordingly, during the upcoming twelve months, the
Company plans to seek additional equity financing to conduct such activities and
management is attempting to obtain such financing. Although no assurance can be
given that the necessary financing will be available to the Company when needed,
in sufficient amounts, on acceptable terms, or at all, management believes it is
likely that the Company will be able to obtain sufficient financing to support
its operations during the next twelve months.
If the stockholders approve the Amendment, the additional shares of the
Company's Common Stock would be available for issuance generally without further
action by the Stockholders. The availability of additional shares of the
Company's Common Stock for issuance without the delay and expense of obtaining
approval of the Stockholders at a special meeting would afford the Company
greater flexibility in acting upon corporate matters and any proposed
transactions. If the Amendment is approved by the Stockholders, any additional
shares of the Company's Common Stock which are issued in the future will have
the same rights and limitations as the Company's Common Stock currently
outstanding or reserved for issuance.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF THE COMMON STOCK
REPRESENTED AT THE 1999 ANNUAL MEETING IS REQUIRED TO RATIFY THE AMENDMENT OF
THE CERTIFICATE OF INCORPORATION. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THIS PROPOSAL.
APPROVAL OF AMENDED AND RESTATED 1994 STOCK INCENTIVE PLAN
(PROPOSAL #4)
The Board of Directors has recommended to the Stockholders the adoption of
the Amended and Restated 1994 Stock Incentive Plan (the "1994 Plan") in the form
attached to this Proxy Statement as Appendix B to, among other things, (i)
increase the number of shares of Common Stock reserved thereunder from 5,000,000
to 10,000,000, and (ii) afford to the Compensation Committee the discretion
regarding the size of incentive awards.
The purpose of the proposed increase in the number of shares of the
Company's Common Stock reserved for issuance under the 1994 Plan is to assure
that an adequate supply of shares are available for issuance to provide
employees additional compensation for their services to the Company. The
issuance of stock options will be used to attract and retain highly qualified
personnel, support a performance-oriented environment, enhance the
competitiveness of compensation packages and provide incentives for reaching
further performance goals.
12
<PAGE>
If the Stockholders approve the 1994 Plan, the additional shares of the
Company's Common Stock reserved for issuance thereunder would enable the Company
to issue options, and the shares reserved therefor, without further action by
the Stockholders, thus affording the Company greater flexibility. If the
foregoing amendment and restatement is approved by the Stockholders, any
additional shares issued upon the exercise of options will have the same rights
and limitations as the Company's Common Stock currently outstanding or reserved
for issuance.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF THE COMMON STOCK
REPRESENTED AT THE 1999 ANNUAL MEETING IS REQUIRED TO RATIFY THE AMENDED AND
RESTATED 1994 PLAN. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a stockholder to be presented at the next annual meeting
must be received at the Company's principal executive offices, 180 Dundas Street
West, Suite 1505, Toronto, Ontario CANADA M5G 1Z8, not later than March 31,
2000.
By Order of the Board of Directors,
Bruce I. Lewis, Chief Executive Officer
Dated: August 15, 1999
13
<PAGE>
THE TRACKER CORPORATION OF AMERICA, INC.
180 DUNDAS STREET WEST, SUITE 1505
TORONTO, ONTARIO M5G 1Z8
CANADA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned stockholder of
The Tracker Corporation of America, Inc. , a Delaware corporation, do hereby
nominate, constitute and appoint Bruce I. Lewis, my true and lawful attorney
with full power of substitution for me and in my name, place and stead, to vote
all of the capital stock of the Company, standing in my name on its books on
July 17, 1999, at the Annual Meeting of its Stockholders to be held in the
Northwest World Club in Concourse F of the Detroit Metro Airport, Detroit,
Michigan on Friday, August 27, 1999 at 2:00 p.m. Eastern Daylight Time, or at
any adjournment thereof.
1. THE REELECTION OF DR. H. JOSEPH GREENBURG AS A DIRECTOR.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. RATIFICATION OF INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AMENDMENT OF CERTIFICATE OF INCORPORATION.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. ADOPTION OF THE COMPANY'S AMENDED AND RESTATED 1994 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
IF NO BOX IS MARKED WITH RESPECT TO ANY OF THE PROPOSALS ABOVE, THE UNDERSIGNED
WILL BE DEEMED TO HAVE VOTED "FOR" THE PROPOSALS.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. Please sign exactly as your name appears
hereon. When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person. Make sure that the name on your stock
certificate(s) is exactly as you indicate below.
<PAGE>
Number of Shares owned:
- ------------------------- --------------------------------------------
Signature
Print Name:
---------------------------------
(As registered on Stock Certificate)
--------------------------------------------
Signature if jointly held
Print Name:
---------------------------------
(As registered on Stock Certificate)
Date: , 1999
--------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY ON OR BEFORE
AUGUST 20, 1999 BY USING THE ENCLOSED SELF-ADDRESSED ENVELOPE
OR VIA FACSIMILE TO (416) 593-8456, ATTENTION: BRUCE I. LEWIS
[ ] Please check if you plan on attending the Annual Meeting.
2
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
OF THE TRACKER CORPORATION OF AMERICA
The Tracker Corporation of America, a Delaware corporation (the
"Corporation"), hereby amends its Certificate of Incorporation, as amended to
date, as follows:
1. Article FOURTH, Paragraph 1 is hereby amended by deleting the paragraph
in its entirety and inserting the following therefor:
1. The total number of shares which the Corporation shall have
authority to issue is 100,000,000 shares consisting of (a) 93,400,000 shares of
common stock, par value $0.001 per share (the "Common Stock"), (b) 100,000
shares of Class B voting common stock, par value $0.00000007 per share (the
"Class B Voting Stock") and (c) 6,500,000 shares of preferred stock, par value
$0.001 per share (the "Preferred Stock").
2. The above amendment was duly adopted in accordance with Sections 242 of
the Delaware General Corporation Law.
3. Except as expressly set forth above, all other terms and conditions of
the Certificate of Incorporation, as amended, remain in full force and effect.
IN WITNESS WHEREOF, The Tracker Corporation of America has caused this
Certificate of Amendment to the Certificate of Incorporation to be duly executed
in its corporate name this day of August, 1999.
--------
THE TRACKER CORPORATION OF
AMERICA
By:
-----------------------------------
Bruce I. Lewis
Its: Chief Executive Officer
<PAGE>
APPENDIX B
- --------------------------------------------------------------------------------
THE TRACKER CORPORATION OF AMERICA
1994 AMENDED AND RESTATED STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
<PAGE>
THE TRACKER CORPORATION OF AMERICA
1994 AMENDED AND RESTATED STOCK INCENTIVE PLAN
This 1994 Amended and Restated Stock Incentive Plan is adopted by the
Board of Directors of the Company as of December 22, 1998, subject to
stockholder approval.
ARTICLE I
---------
CERTAIN DEFINITIONS
-------------------
The terms set forth below have the following meanings (such meanings to be
applicable to both the singular and plural forms, except where otherwise
expressly indicated):
1.1 "Alternate Rights" - see Section 3.7.
-----------------
1.2 "Award" means an Option, which may be designated as a Nonqualified
-----
Stock Option or an Incentive Stock Option granted under this Plan.
1.3 "Award Agreement" means either the Incentive Stock Option Award
----------------
Agreement substantially in the form of Exhibit A attached hereto and made a part
---------
herewith, setting forth the terms of an Award, or the Non-Qualified Stock Option
Award Agreement substantially in the form of Exhibit B attached hereto and made
---------
a part herewith setting forth the terms of an Award, as the case may be.
1.4 "Award Date" means the date upon which the Committee took the
-----------
action granting an Award or such later date as is prescribed by the Committee.
1.5 "Award Period" means the period beginning on an Award Date and
-------------
ending on the expiration date of such Award.
1.6 "Beneficiary" means the person, persons, trust or trusts entitled
-----------
by will or the laws of descent and distribution to receive the benefits
specified under this Plan in the event of a Participant's death.
1.7 "Board" means the Board of Directors of the Corporation.
-----
1.8 "Change in Control" means an occasion in which the individuals who
------------------
were directors of the Corporation immediately prior to a "Control Transaction"
cease, within one year of such Control Transaction, to constitute a majority of
the Board of Directors of any successor to the Corporation, or to the purchaser
of all or substantially all of its assets.
1.9 "Control Transaction" means either: (i) any tender offer for or
--------------------
acquisition of capital stock of the Corporation; or (ii) any merger,
consolidation or sale of all or substantially all of the assets of the
Corporation which has been approved by the stockholders.
1.10 "Code" means the Internal Revenue Code of 1986, as amended from
----
time to time.
<PAGE>
1.11 "Common Stock" means the Common Stock, $.001 par value, of the
-------------
Corporation.
1.12 "Commission" means the Securities and Exchange Commission.
----------
1.13 "Committee" means the committee appointed by the Board to manage
---------
the Plan.
1.14 "Corporation" means The Tracker Corporation of America, a Delaware
-----------
corporation, and its successors. Sometimes also referred to as the "Company."
1.15 "Eligible Employee" means an officer or key employee of the
------------------
Company.
1.16 "Event" means the approval by the stockholders of the Corporation
-----
of: (i) the dissolution or liquidation of the Corporation; (ii) an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more entities
which are not Subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are, or are
to be, owned by former stockholders of the Corporation; (iii) the sale of
substantially all of the Corporation's business and/or assets to a person or
entity which is not a Subsidiary; (iv) the sale by a controlling shareholder or
group thereof to a third party of voting securities of the Corporation that
results in the transfer of a controlling interest in the Corporation,
effectuates a Change of Control or constitutes a Control Transaction; or (v) a
tender offer pursuant to which the offeror acquires a controlling interest in
the Corporation.
1.17 "Fair Market Value" means the arithmetic mean of the Closing Bid
-------------------
Prices of the stock for each trading day in a five (5) trading day period
immediately preceding the Award Date. "Closing Bid Price" means, the last
closing bid price of the stock on the NASDAQ National Market (the "NASDAQ-NM")
as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the NASDAQ-NM
is not the principal trading market for the Common Stock, the last closing bid
price of the Common Stock on the principal securities exchange or trading market
where the Common Stock is listed or traded as reported by Bloomberg, or if the
foregoing do not apply, the last closing bid price of the Common Stock in the
over-the-counter market on the pink sheets or bulletin board for the Common
Stock as reported by Bloomberg, or, if no closing bid price is reported for the
Common Stock by Bloomberg, the last closing trade price of the Common Stock as
reported by Bloomberg. If the Closing Bid Price cannot be calculated for the
Common Stock on such date on any of the foregoing bases, the Closing Bid Price
of the Common Stock on such date shall be the fair market value as reasonably
determined in good faith by the Committee (all as appropriately adjusted for any
stock dividend, stock split, or other similar transaction during such period);
1.18 "Group" means persons who act in concert as described in Sections
-----
13(d)(3) and/or 14(d)(2) of the Securities Exchange Act of 1934, as amended.
1.19 "Incentive Stock Option" means an option which is designated as an
----------------------
incentive stock option within the meaning of Section 422 of the Code, the award
of which contains such provisions as are necessary to comply with that section.
2
<PAGE>
1.20 "Just Cause" means conviction of or failure to contest prosecution
----------
for a felony or excessive absenteeism (unrelated to illness or to an approve
leave of absence).
1.21 "Limited Rights" -- see Section 3.8.
---------------
1.22 "Nonqualified Stock Option" means an option which is designated as
-------------------------
a Nonqualified Stock Option.
1.23 "Option" means an option to purchase Common Stock under this Plan.
------
An Option shall be designated by the Committee as a Nonqualified Stock Option or
an Incentive Stock Option.
1.24 "Participant" shall mean an Eligible Employee who has received an
-----------
Award.
1.25 "Personal Representative" means the person or persons who, upon
------------------------
the disability or incompetence of a Participant, shall have acquired on behalf
of the Participant by legal pro-ceeding or otherwise the power to exercise the
rights and receive the benefits specified in this Plan.
1.26 "Plan" shall mean the The Tracker Corporation of America 1994
----
Amended and Restated Stock Incentive Plan, as amended from time to time in
accordance herewith.
1.27 "Reload Options" -- see Section 3.6.
---------------
1.28 "Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
1.29 "Subsidiary" means any corporation or other entity a majority or
----------
more of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
ARTICLE II
----------
THE PLAN
--------
2.1 Purpose. The purpose of this Plan is to promote the success of the
-------
Corporation by providing an additional means to attract and retain key personnel
through added long-term incentives for high levels of performance and for
significant efforts to improve the financial performance of the Corporation by
granting Awards.
2.2 Administration.
--------------
(a) This Plan shall be administered by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or the written consent of a majority of its members.
In the event action by the Committee is taken by written consent, the action
shall be deemed to have been taken at the time specified in the consent or, if
none is specified, at the time of the last signature. The Committee may
delegate administrative functions to individuals who are officers or employees
of the Corporation.
3
<PAGE>
(b) Subject to the express provisions of this Plan, the Committee shall
have the authority to construe and interpret this Plan and any agreements
defining the rights and obligations of the Corporation and Participants under
this Plan, to further define the terms used in this Plan, to prescribe, amend
and rescind rules and regulations relating to the administration of this Plan,
to determine the duration and purposes of leaves of absence which may be granted
to Participants without constituting a termination of their employment for
purposes of this Plan and to make all other determinations necessary or
advisable for the administration of this Plan. The determinations of the
Committee on the foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Corpora-tion, any Subsidiary,
the Board or the Committee relating to this Plan shall be within the absolute
discretion of that entity or body and shall be conclusive and binding upon all
persons. No member of the Board or Committee, or officer of the Corporation or
Subsid-iary, shall be liable for any such action or inaction of the entity or
body, of another person or, except in circumstances involving bad faith.
Subject only to compliance with the express provisions hereof, the Board and
Committee may act in their absolute discretion in matters related to this Plan.
2.3 Participation. Awards may be granted only to Eligible Employees.
-------------
An Eligible Employee who has been granted an Award may, if otherwise eligible,
be granted additional Awards if the Committee shall so determine. Members of
the Board who are not officers or employees of the Corporation shall not be
eligible to receive Awards. In making selections of Eligible Employees, the
Committee shall consider any factors deemed relevant, including the individual's
functions, responsibilities, value of services to the Corporation and past and
potential contributions to the Corporation's profitability and sound growth.
2.4 Stock Subject to the Plan. The stock to be offered under this Plan
-------------------------
shall be shares of the Corporation's authorized but unissued Common Stock. The
aggregate amount of Common Stock that may be issued or transferred pursuant to
Awards granted under this Plan shall not exceed 10,000,000 shares, subject to
adjustment as set forth in Section 4.2. If any Option shall lapse or terminate
(either by its terms or as a result of the repurchase by the Corporation of such
Option) without having been exercised in full, the unpurchased shares subject
thereto shall again be available for purposes of this Plan.
2.5 Grant of Options. Subject to the express provisions of the Plan,
------------------
the Committee shall determine from the class of Eligible Employees those
individuals to whom Options under the Plan shall be granted, the terms of
Options (which need not be identical) and the number of shares of Common Stock
subject to each Option. Each Option shall be subject to the terms and
conditions set forth in the Plan and such other terms and conditions established
by the Committee as are not inconsistent with the purpose and provisions of the
Plan. The grant of an Option is made on the Award Date.
2.6 Exercise of Options. An Option shall be deemed to be exercised
---------------------
when the Secretary or Assistant Secretary of the Corporation receives written
notice of such exercise from the Participant, together with payment of the
purchase price made in accordance with Section 3.2(a). Participants may elect,
upon reasonable notice to the Corporation, to pay for such Options in the form
of promissory notes as described in Section 3.2. Notwithstanding any other
provision of this Plan, the Committee may impose, by rule or in Award
Agreements, such conditions upon the exercise of Options (including, without
limitation, vesting of exercise rights and conditions limiting the time of
exercise to specified periods) as may be required to satisfy applicable
regulatory requirements or as may be deemed necessary or advisable by the
Committee.
4
<PAGE>
ARTICLE III
-----------
OPTIONS
-------
3.1 Grants. One or more Options may be granted to any Eligible
------
Employee. Each Option so granted shall be designated by the Committee as either
a Nonqualified Stock Option or an Incentive Stock Option. In addition,
Participants may be eligible to exercise Reload options, as described in Section
3.6 or in Alternate Rights as described in Section 3.7 herein.
3.2 Option Price. The purchase price per share of the Common Stock
-------------
covered by each Option shall be determined by the Committee, but in no event
shall be less than 85% of the Fair Market Value of the Common Stock on the date
of grant and in the case of Incentive Stock Options shall not be less than 100%
(110% in the case of a Participant who owns more than 10% of the total combined
voting power of all classes of stock of the Corporation) of the Fair Market
Value of the Common Stock on the date the Incentive Stock Option is granted.
The purchase price of any shares pur-chased shall be paid in full at the time of
each purchase in one or a combination of the following methods: (i) in cash, or
by certified or cashier's check payable to the order of the Corporation, (ii) if
authorized by the Committee or specified in the Option being exercised, by a
promissory note made by the Participant in favor of the Corporation, upon the
terms and conditions determined by the Committee, and secured by the Common
Stock issuable upon exercise in compliance with applicable law (including,
without limitation, state corporate law and federal margin requirements), (iii)
by shares of Common Stock of the Corporation already owned by the Participant;
provided, however, the Committee may in its absolute discretion limit the
Participant's ability to exercise an Option by delivering shares, and any shares
delivered which were initially acquired upon exercise of a stock option must
have been owned by the Participant at least six months as of the date of
delivery, or (iv) by application of the then-market value of vested Options (net
of the Option Price). Shares of Common Stock used to satisfy the exercise price
of an Option shall be valued at their Fair Market Value on the date of exercise.
3.3 Option Period. Each Option and all rights or obligations
--------------
thereunder shall expire on such date as shall be determined by the Committee,
but not later than 10 years after the Award Date in the case of an Incentive
Stock Option (five years in the case of a person described in Section 3.5(c)),
and shall be subject to earlier termination as hereinafter provided or as
provided in any Award Agreement.
3.4 Exercise of Options. Except as otherwise provided in Section 4.4,
--------------------
an Option may become exercisable, in whole or in part, on the date or dates
specified in the Award Agreement which date(s) shall not be earlier than six
months after the Award Date and thereafter shall remain exercisable until the
expiration or earlier termination of the Participant's Option. The Committee
may, at any time after grant of the Option and from time to time, increase the
number of shares purchasable at any time so long as the total number of shares
subject to the Option is not increased. No Option shall be exercisable except
in respect of whole shares, and fractional share interests shall be disregarded.
Not less than 1,000 shares of Common Stock may be purchased at one time unless
the number purchased is the total number at the time available for purchase
under the terms of the Option.
5
<PAGE>
3.5 Limitations on Grant of Incentive Stock Options.
-----------------------------------------------------
(a) There shall be imposed in the Award Agreement relating to Incentive
Stock Options such terms and conditions as are required in order that the Option
be an "incentive stock option" as that term is defined in Section 422 of the
Code.
(b) No Incentive Stock Option may be granted to any person who, at the
time the Incentive Stock Option is granted, owns shares of outstanding Common
Stock possessing more than 10% of the total combined voting power of all classes
of stock of the Corporation, unless the exercise price of such Option is at
least 110% of the Fair Market Value of the stock subject to the Option and such
Option by its terms is not exercisable after the expiration of five years from
the date such Option is granted.
3.6 Reload Options.
---------------
(a) Concurrently with the award of Stock Options and/or the award of
Incentive Stock Options to any participant in the Plan, the Committee may
authorize reload options ("Reload Options") to purchase for cash or shares a
number of shares of Common Stock. The number of Reload Options shall equal (i)
the number of shares of Common Stock used to exercise the underlying Stock
Options or Incentive Stock Options and (ii) to the extent authorized by the
Committee, the number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the underlying Stock Options
or incentive Stock Options. The grant of a Reload Option will become effective
upon the exercise of underlying Stock Options, Incentive Stock Options or Reload
Options through the use of shares of Common Stock held by the optionee for at
least 12 months. Notwithstanding the fact that the underlying option may be an
Incentive Stock Option, a Reload Option is not intended to qualify as an
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986.
(b) Each Stock Option Agreement and Incentive Stock Option Agreement shall
state whether the Committee has authorized Reload Options with respect to the
underlying Stock Options and/or Incentive Stock Options. Upon the exercise of
an underlying Stock Option, Incentive Stock Option or other related Reload
Option, the Reload Option will be evidenced by an amendment to the underlying
Stock Option Agreement or Incentive Stock Option Agreement.
(c) The option price per share of Common Stock deliverable upon the
exercise of a Reload Option shall be the fair market value of a share of Common
Stock on the date the grant of the Reload Option becomes effective.
6
<PAGE>
(d) Each Reload Option is fully exercisable six months from the effective
date of the grant. The term of each Reload Option shall be equal to the
remaining option term of the underlying Stock Option and/or Incentive Stock
Option.
(e) No additional Reload Options shall be granted to optionees when Stock
Options, Incentive Stock Options and/or Reload Options are exercised pursuant to
the terms of this Plan following termination of the optionee's employment.
(f) Sections 2.5, Manner of Payment; 2.6, Restrictions on Certain Shares;
2.7, Death of Optionee; 2.8, Retirement or Disability; 2.9, Termination for
Other Reasons; and 2.10, Effect of Exercise, applicable to Stock Options, shall
apply equally to Reload Options. Said Sections are incorporated by reference in
this Section 3.6 as though fully set forth herein.
3.7 Alternate Appreciation Rights.
-------------------------------
(a) Concurrently with the award of any Stock Option, Incentive Stock
Option or Reload Option to purchase one or more shares of Common Stock, the
Committee may, subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, award to the optionee with respect to
each share of Common Stock, a related alternate appreciation right ("Alternate
Right"), permitting the optionee to be paid in appreciation on the option in
lieu of exercising the option. Such Alternate Right shall be evidenced in such
form as the Committee may from time to time determine.
(b) An optionee who has been granted Alternate Rights may, from time to
time, in lieu of the exercise of an equal number of options, elect to exercise
one or more Alternate Rights and thereby become entitled to receive from the
Corporation payment in Common Stock the number of shares determined pursuant to
Sections 3.7(c) and 3.7(d). Alternate Rights shall be exercisable only to the
same extent and subject to the same conditions as the options related thereto
are exercisable, as provided in this Plan. The Committee may, in its
discretion, prescribe additional conditions to the exercise of any Alternate
Rights.
(c) The amount of payment to which an optionee shall be entitled upon
exercise of each Alternate Right shall be equal to 100% of the amount, if any,
by which the fair market value of a share of Common Stock on the exercise date
exceeds the fair market value of a share of Common Stock on the date the option
related to said Alternate Rights was granted or became effective, as the case
may be.
(d) The number of shares to be paid shall be determined by dividing the
amount of payment determined pursuant to Section 3.7(c) by the fair market value
of a share of Common Stock on the exercise date of such Alternate Rights. As
soon as practicable after exercise, the Corporation shall deliver to the
optionee a certificate or certificates for such shares of Common Stock. All such
shares shall be issued with the rights and restrictions specified in Section
2.6.
7
<PAGE>
(e) The exercise of any Alternate Rights shall cancel an equal number of
Stock Options, Incentive Stock Options, Reload Options and Limited Rights, if
any, related to said Alternate Rights.
(f) Upon termination of optionee's employment (including employment as a
director of the Corporation after an optionee terminates employment as an
officer or key employee of the Corporation) by reason of permanent disability or
retirement (as each is determined by the Committee), the optionee may, within
six months from the date of such termination, exercise any Alternate Rights to
the extent such Alternate Rights are exercisable during such six month period.
(g) Except as provided in 3.7(f) herein, or except as otherwise determined
by the Committee, all Alternate Rights shall terminate upon the termination of
optionee's employment or upon the death of the optionee.
3.8 Limited Rights.
---------------
(a) Concurrently with or subsequent to the award of any Stock Option,
Incentive Stock Option, Reload Option or Alternate Right, the Committee may,
subject to the provisions of the Plan and such other terms and conditions as the
Committee may prescribe, award to the optionee with respect to each share of
Common Stock, a related limited right permitting the optionee, during a
specified limited time period, to be paid the appreciation on the option in lieu
of exercising the option ("Limited Right").
(b) Limited Rights granted under the Plan shall be evidenced by written
agreements in such form as the Committee may from time to time determine.
(c) Limited Rights are exercisable in full for a period of seven months
following a "Change in Control" of the Corporation (the "Exercise Period");
provided, however, that Limited Rights may not be exercised under any
circumstances until the expiration of the six-month period following the date of
grant.
(d) The amount of payment to which an optionee shall be entitled upon the
exercise of each Limited Right shall be equal to 100% of the amount, if any,
which is equal to the difference between the price per share of Common Stock
covered by the related option on the date the option was granted and the Market
Value of such Common Stock. Market Price is defined to be the greater of (i)
the highest price per share of the Corporation's Common Stock paid in connection
with any Change in Control and (ii) the Fair Market Value during the 60-day
period prior to the Change in Control.
(e) Payment of the amount to which an optionee is entitled upon the
exercise of Limited Rights, as determined pursuant to Section 3.8(d), shall be
made solely in cash.
(f) If Limited Rights are exercised, the Stock Options, Incentive Stock
Options, Reload Options and Alternate Rights, if any, related to such Limited
Rights cease to be exercisable to the extent of the number of shares with
respect to which the Limited Rights were exercised. Upon the exercise or
termination of the options, and Alternate Rights, if any, related to such
Limited Rights, the Limited Rights granted with respect thereto terminate to the
extent of the number of shares as to which the related options and Alternate
Rights were exercised or terminated.
8
<PAGE>
(g) Upon termination of the optionee's employment (including employment as
a director of the Corporation after an optionee terminated employment as an
officer or key employee of the Corporation) by reason of permanent disability or
retirement (as each is determined by the Committee), the optionee may, within
six months from the date of termination, exercise any Limited Right to the
extent such Limited Right is exercisable during such six-month period.
(h) Except to the extent provided in Sections 3.8(g) and 3.8(i), or except
as otherwise determined by the Committee, all Limited Rights granted under the
Plan shall terminate upon the termination of optionee's employment or upon the
death of the optionee.
(i) The requirement that an optionee be terminated by reason of retirement
or permanent disability or be employed by the Corporation at the time of
exercise pursuant to Sections 3.8(g) and 3.8(h) respectively, is waived during
the Exercise Period as to any optionee who was employed by the Corporation at
the time of the Change in Control and is subsequently terminated by the
Corporation other than for Just Cause or who voluntarily terminates if such
termination was the result of a good faith determination by the optionee that as
a result of the Change in Control he is unable to effectively discharge his
present duties or the duties of the position which he occupied just prior to the
Change in Control.
ARTICLE IV
----------
OTHER PROVISIONS
----------------
4.1 Rights of Eligible Employees, Participants and Beneficiaries.
------------------------------------------------------------------
(a) Status as an Eligible Employee shall not be construed as a commitment
that any Award will be made under this Plan to an Eligible Employee or to
Eligible Employees generally.
(b) Nothing contained in this Plan (or in Award Agreements or in any other
documents related to this Plan or to Options) shall confer upon any Eligible
Employee or Participant any right to continue in the employ of the Corporation
or constitute any contract or agreement of employment, or interfere in any way
with the right of the Corporation to reduce such person's compensation or to
terminate the employment of such Eligible Employee or Participant, with or
without cause, but nothing contained in this Plan or any document related
thereto shall affect any other contractual right of any Eligible Employee or
Participant.
(c) Other than by will or the laws of descent and dis-tribution, no
interest in this Plan or in any Option shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge and any such attempted action shall be void and no such benefit or
interest shall be, in any manner, liable for, or subject to, debts, contracts,
liabili-ties, engagements or torts of any Eligible Employee, Participant or
Beneficiary. The Committee shall disregard any attempted transfer, assignment
or other alienation prohibited by the preceding sentence and shall pay or
deliver such cash or shares of Common Stock in accordance with the provisions of
this Plan.
9
<PAGE>
(d) No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of
Common Stock) of the Corporation by reason of any Option granted hereunder.
Neither the provisions of this Plan (or of any documents related hereto), nor
the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Corporation and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive an Option hereunder, such right shall
be no greater than the right of any unsecured general creditor of the
Corporation.
4.2 Adjustments Upon Changes in Capitalization.
----------------------------------------------
(a) If the outstanding shares of Common Stock are increased, decreased or
changed into, or exchanged for, a different number or kind of shares or
securities of the Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination, recapitalization,
reclassification, rights offering, stock split, stock dividend, stock
consolidation or any other change in the corporate structure or shares of
capital stock of the Corporation, an appropriate adjustment shall be made in the
number and kind of shares that may be issued pursuant to Options. A
corresponding adjustment to the consideration payable with respect to Options
granted prior to any such change shall also be made. Any such adjustment,
however, shall be made without change in the total payment, if any, applicable
to the portion of the Option not exercised but with a corresponding adjustment
in the price for each share.
(b) Upon the dissolution or liquidation of the Corpora-tion, or upon a
reorganization, merger or consolidation of the Corporation with one or more
corporations as a result of which the Corporation is not the surviving
corporation, the Plan shall terminate, and any outstanding Options shall,
subject to the provisions of Section 4.4, terminate and be forfeited.
Notwithstanding the foregoing, the Committee may provide in writing in
connection with, or in contemplation of, any such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the
assumption by the successor corporation of the Options theretofore granted or
the substitution by such corporation for such Options or Options covering the
stock of the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices; (ii) for
the continuance of the Plan by such successor corporation in which event the
Plan and the Options shall continue in the manner and under the terms so
provided; or (iii) for the payment in cash or shares of Common Stock in lieu of
and in complete satisfaction of such Awards.
(c) In adjusting Options to reflect the changes described in this Section
4.2, or in determining that no such adjustment is necessary, the Committee may
rely upon the advise of independent counsel and accountants of the Corporation,
and the determination of the Committee shall be conclusive. No fractional
shares of stock shall be issued under this Plan on account of any such
adjustment.
10
<PAGE>
4.3 Termination of Employment.
---------------------------
(a) If the Participant's employment by the Corporation terminates as a
result of disability, the Participant or Participant's Personal Representative
may exercise any Option to the extent it shall have become exercisable.
(b) If the Participant's employment by the Corporation terminates as a
result of death while the Participant is employed by the Corporation (or in the
case of Incentive Stock Options was last employed by the Corporation within
three months before his death), the Participant's Option shall be exercisable by
the Participant's Beneficiary as to all or any part of the shares of Common
Stock covered thereby to the extent exercisable on the date of death (or earlier
termination).
(c) In the event of termination of employment with the Corporation for any
reason, other than discharge for Just Cause, the Committee may, in its
discretion, increase the portion of the Participant's Option available to the
Participant, or Participant's Beneficiary or Personal Representative, as the
case may be, upon such terms as the Committee shall determine.
(d) If an entity ceases to be a Subsidiary, such action shall be deemed
for purposes of this Section 4.3 to be a termination of employment of each
employee of that entity.
(e) Any requirement that an optionee be terminated by reason of retirement
or permanent disability or be employed by the Corporation at the time of
exercise of an Option shall be waived during the Exercise Period as to any
optionee who (i) was employed by the Corporation at the time of the Change in
Control and (ii) is subsequently terminated by the Corporation other than for
Just Cause or who voluntarily terminates if such termination was the result of a
good faith determination by the optionee that as a result of the Change in
Control he is unable to effectively discharge his present duties or the duties
of the position which he occupied just prior to the Change in Control.
4.4 Acceleration of Options. Unless prior to an Event the Board
-------------------------
determines that, upon its occurrence, there shall be no acceleration of Options
or determines those Options which shall be accelerated and the extent to which
they shall be accelerated, upon the occurrence of an Event each Option shall
become immediately exercisable to the full extent theretofore not exercisable;
provided, however, that Options shall not in any event be so accelerated to a
date less than six months after the Award Date. Acceleration of Options shall
comply with applicable regulatory requirements, including without limitation,
Section 422 of the Code. For purposes of this Section 4.4 only, the Board shall
mean the Board as constituted immediately prior to the Event.
4.5 Government Regulations. This Plan, the granting of Options under
-----------------------
this Plan and the issuance or transfer of shares of Common Stock (and/or the
payment of money) pursuant thereto are subject to all applicable federal and
state laws, rules and regulations and to such approvals by any regulatory or
governmental agency (including without limitation "no action" positions of the
Commission) which may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. Without limiting the generality
of the foregoing, no Options may be granted under this Plan, and no shares shall
be issued by the Corporation, pursuant to any such Option, unless and until, in
each such case, all legal requirements applicable to the issuance have, in the
opinion of counsel to the Corporation, been complied with. In connection with
any stock issuance or transfer, the person acquiring the shares shall, if
requested by the Corporation, give assurances satisfactory to counsel to the
Corporation in respect of such matters as the Corporation may deem desirable to
assure compliance with all applicable legal requirements.
11
<PAGE>
4.6 Tax Withholding. Upon the disposition by a Participant or other
----------------
person of shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to satisfaction of the holding period requirements
of Section 422 of the Code, or upon the exercise of a Nonqualified Stock Option,
the Corporation shall have the right to require such Participant or such other
person to pay by cash, or certified or cashier's check payable to the
Corporation, the amount of any taxes which the Corporation may be required to
withhold with respect to such transactions. The above notwithstanding, in any
case where a tax is required to be withheld in connection with the issuance or
transfer of shares of Common Stock under this Plan, the Participant may elect,
pursuant to such rules as the Committee may establish, to have the Corporation
reduce the number of such shares issued or transferred by the appropriate number
of shares to accomplish such withholding; provided, the Committee may impose
such conditions on the payment of any withholding obligation as may be required
to satisfy applicable regulatory requirements.
4.7 Amendment, Termination, and Suspension.
-----------------------------------------
(a) The Board may, at any time, terminate or, from time to time, amend,
modify or suspend this Plan (or any part hereof). In addition, the Committee
may, from time to time, amend or modify any provision of this Plan except
Section 4.4 and, with the consent of the Participant, make such modifications of
the terms and conditions of such Participant's Option as it shall deem
advisable. The Committee, with the consent of the Participant, may also amend
the terms of any Option to provide that the Option price of the shares remaining
subject to the original Option shall be reestablished at a price not less than
100% of the Fair Market Value of the Common Stock on the effective date of the
amendment. No modification of any other term or provision of any Option which is
amended in accordance with the foregoing shall be required, although the
Committee may, in its discretion, make such further modifications of any such
Option as are not inconsistent with or prohibited by the Plan. No Options may
be granted during any suspension of this Plan or after its termination.
(b) If an amendment would (i) increase the aggregate number of shares
which may be issued under this Plan, or (ii) modify the requirements of
eligibility for participation in this Plan, the amendment shall be approved by
the Board or the Committee and by a majority of the stockholders.
(c) In the case of Options issued before the effective date of any
amendment, suspension or termination of this Plan, such amendment, suspension or
termination of the Plan shall not, without specific action of the Board and
consent of the Participant, in any way modify, amend, alter or impair any rights
or obligations under any Option previously granted under the Plan.
12
<PAGE>
4.8 Privileges of Stock Ownership; Nondistributive Intent. A
----------------------------------------------------------
Participant shall not be entitled to the privilege of stock ownership as to any
shares of Common Stock not actually issued to him. Upon the issuance and
transfer of shares to the Participant, unless a registration statement is in
effect under the Securities Act, relating to such issued and transferred Common
Stock and there is available for delivery a prospectus meeting the requirements
of Section 10 of the Securities Act, the Common Stock may be issued and
transferred to the Participant only if he represents and warrants in writing to
the Corporation that the shares are being acquired for investment and not with a
view to the resale or distribution thereof. No shares shall be issued and
transferred unless and until there shall have been full compliance with any the
applicable regulatory requirements (including those of exchanges upon which any
Common Stock of the Corporation may be listed).
4.9 Effective Date of the Plan. This Plan shall be effective upon its
---------------------------
approval by the Board, subject to approval by the stockholders of the
Corporation within 12 months from the date of such Board approval.
4.10 Term of the Plan. Unless previously terminated by the Board, this
----------------
Plan shall terminate at the close of business on June 29, 2004, and no Options
shall be granted under it thereafter, but such termination shall not affect any
Option theretofore granted.
4.11 Governing Law. This Plan and the documents evidencing Options and
-------------
all other related documents shall be governed by, and construed in accordance
with, the laws of the State of Delaware. If any provision shall be held by a
court of competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue to be fully effective.
13
<PAGE>
