AFFILIATED RESOURCES CORPORATION
3050 Post Oak Boulevard, Suite 1080
Houston, Texas 77056
Telephone: 713/355-8940
Facsimile: 713/355-8949
NOTICE OF ANNUAL MEETING
To the Shareholders of
AFFILIATED RESOURCES CORPORATION:
Notice is hereby given that the Annual Meeting (the "Meeting") of
Shareholders of Affiliated Resources Corporation (the "Corporation") will be
held on Wednesday, June 7, 2000, at the Doubletree Hotel, 2001 Post Oak
Boulevard, Houston, Texas 77056 at 10:00 a.m. Houston Time, for the purposes of:
(1) electing a Board of Directors of five directors for the
ensuing year;
(2) approving an amendment to the Articles of Incorporation to
increase the number of authorized shares of Common Stock of
the Corporation from 25 million to 50 million shares;
(3) ratifying the adoption of the Corporation's 2000 Incentive
Awards Plan;
(4) approving the appointment of Weinstein Spira & Company, P.C.
as the Corporation's independent auditors for the ensuing
year; and
(5) transacting such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
During the Meeting a report will be given on the operations of the
Corporation. Directors and executive officers of the Corporation will be present
to respond to any questions that shareholders may have.
Please fill out, sign, date and return the enclosed Proxy Card
promptly. If you attend the Meeting and wish to vote your shares personally, you
may revoke your proxy at that time. The holders of record of Common Stock at the
close of business on May 3, 2000 will be entitled to vote at the Meeting and at
any adjournments thereof. Proxy soliciting material is first being mailed or
given to shareholders on or about May 5, 2000.
Your interest is very much appreciated.
By Order of the Board of Directors,
May 5, 2000 Peter C. Vanucci, Chairman of the Board
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. TO
VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
AFFILIATED RESOURCES CORPORATION
3050 Post Oak Boulevard, Suite 1080
Houston, Texas 77056
Telephone: 713/355-8940
Facsimile: 713/355-8949
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 7, 2000
PROXY STATEMENT
This Proxy Statement and accompanying Proxy are being furnished in
connection with the solicitation by the Board of Directors of Affiliated
Resources Corporation (the "Corporation") of proxies to be voted at the Annual
Meeting of Shareholders of the Corporation to be held on Wednesday, June 7, 2000
at the Doubletree Hotel, 2001 Post Oak Boulevard, Houston, Texas 77056, at 10:00
a.m. Houston time, and at any adjournment or postponement thereof (the "Annual
Meeting"), for the purposes set forth in this Proxy Statement and the
accompanying Notice of Annual Meeting. This Proxy Statement and accompanying
Proxy are being mailed on or about May 5, 2000, to shareholders of record on May
3, 2000.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL
MEETING, TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE. Your executed Proxy may be revoked at any time before it
is exercised by filing with the Secretary of the Corporation, at the
Corporation's principal executive offices, a written notice of revocation or a
duly executed Proxy bearing a later date. The execution of the enclosed Proxy
will not affect your right to vote in person, should you find it convenient to
attend the Meeting and desire to vote in person. Attendance at the Annual
Meeting will not in and of itself constitute the revocation of a Proxy.
The purposes of the Annual Meeting are (i) to elect five directors to
serve one-year terms until the next Annual Meeting which will be held on or
about May 10, 2001, and until their respective successors shall be elected and
qualified; (ii) to approve an amendment to the Articles of Incorporation to
increase the number of authorized shares of Common Stock of the Corporation from
25 million to 50 million shares; (iii) to ratify the adoption of the
Corporation's 2000 Incentive Awards Plan; (iv) to approve the appointment of
Weinstein Spira & Company, P.C. as the Corporation's independent auditors; and
(v) to act on any other matters that may come before the shareholders.
The Corporation intends to solicit proxies principally by the use of
the mails and will bear all expenses in connection with such solicitations. In
addition, some of the directors, officers and regular employees of the
Corporation may, without extra compensation, solicit proxies by telephone,
telegraph and personal interview. Arrangements have been made with banks,
brokerage houses and other custodians and nominees to forward copies of the
Proxy Statement and the Corporation's Annual Report for the fiscal year ended
December 31, 1999 to persons for whom they hold stock of the Corporation and to
request authority for the execution of proxies. The Corporation will reimburse
the foregoing persons for their reasonable expenses, upon request.
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VOTING SECURITIES
On May 3, 2000, the Record Date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting, 18,742,858 shares of
the Corporation's Common Stock were outstanding. The Common Stock is the only
class of stock of the Corporation outstanding and entitled to vote at the
Meeting. Shareholders are entitled to one vote per share on all matters to be
considered at the Meeting.
In accordance with the Corporation's Articles of Incorporation,
one-third of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. Except as otherwise
specified by law, if a quorum is present, the affirmative vote of a majority of
the shares represented in person or by proxy at the meeting and entitled to vote
on the subject matter shall be the act of the shareholders. Shareholders are
entitled to cumulative voting in the election of directors or otherwise, so any
shareholder may cumulate the number of votes he has for all five directors and
allocate them in favor of one or more of the director nominees. Directors are
elected by a plurality of the votes cast by the shares entitled to vote.
All duly executed proxies will be voted in accordance with the
instructions thereon. If no specification is made, the proxy will be voted "FOR"
the nominees, approval of the amendment to the Corporation's charter,
ratification of the 2000 Incentive Awards Plan and approval of Weinstein Spira &
Company, P.C. as the Corporation's independent auditors. Abstentions and broker
"non-votes" will be counted as being represented at the Meeting for quorum
purposes but will not have an effect on the vote. As to any other business which
may properly come before the Annual Meeting, the proxy holders will vote in
accordance with their best judgment. Management of the Corporation does not
presently know of any other such business.
If the shares represented in person or by proxy at the Meeting are not
sufficient to constitute a quorum, the Corporation may adjourn the Meeting
without notice other than by announcement at the Meeting, to permit the
Corporation to continue soliciting proxies. Proxies given pursuant to this
solicitation and not revoked will be voted at any postponement or adjournment of
the Annual Meeting in the manner set forth above.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors proposes the election of five directors, each to
hold office for a term of one year until the 2001 Annual Meeting of Shareholders
and until their respective successors are elected and qualified. The Board of
Directors currently consists of the five nominees for director, each of whom has
consented to serve if elected. Although it is not anticipated that any of the
nominees will decline or be unable to serve, if that should occur, the proxy
holders may, in their discretion, vote for substitute nominees.
Set forth below is certain information concerning the nominees for
election as director of the Corporation at the Meeting, including all positions
and offices with the Corporation held by each such person, the business
experience of each during at least the past five years, and the age of each
nominee on May 5, 2000.
Peter C. Vanucci, 52, was elected to serve as Chairman of the Board and
Chief Executive Officer of the Corporation effective as of February 15, 1998.
From 1990 until 1998, Mr. Vanucci held the position of President and a Director
of Wexford, Inc., a privately held corporation specializing in business and
property evaluation, ad valorem tax consulting, real estate development and
financial consulting.
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<PAGE>
Michael R. Bradle, 35, was elected to serve as President and Chief
Operating Officer of the Corporation on December 29, 1999. From 1990 to 1998,
Mr. Bradle served as President of The Bradle Group, a private business
consulting firm. During the period 1992 through 1999, Mr. Bradle served as
President of American Archaeology Group, an organization that provided historic
preservation consulting services; Chairman of Tejas Advocates, Inc., an
organization involved in non-profit advocacy work; President of Bradle Oil and
Gas, Inc., a privately held company located in Lampasas, Texas; and President of
Lonestar Investment Management LLC ("Lonestar"), which served as the Managing
General Partner of Seneca Energy Partners LP ("Seneca")and of Eagle Ridge Energy
Partners LP ("Eagle Ridge"), organizations involved in oil and gas drilling and
production. Upon accepting the position of President and Chief Operating Officer
of the Corporation in December 1999, Mr. Bradle resigned as President of
Lonestar and is now the Secretary/Treasurer of that company.
Edward S. Fleming, 45, held the position of President and Chief
Operating Officer of the Corporation for the period from May 1998 until December
29, 1999, and was first elected a director in December 1996. Prior to that time,
Mr. Fleming held the positions of Acting President beginning in October 1997, in
addition to his position as Vice President and Chief Financial Officer to which
he was elected in December 1996. From 1993 to the present, Mr. Fleming has held
the position of Geologic Science Advisor to the Astronaut Office, Johnson Space
Center, and was primarily responsible for the planning, coordination and
evaluation of military and civilian manned space observations of the Earth,
including the management of all Army personnel assigned to the Space Center. He
has an extensive background in systems administration of the SUN and UNIX
programs, as well as experience in a wide variety of sophisticated remote
sensing software packages.
Harvey R. Hilderbran, 40, was elected to serve as a director of the
Corporation in February 2000. For more than five years, Mr. Hilderbran has been
a state representative in the Texas legislature. He is a licensed real estate
broker in the state of Texas and is currently Executive Vice President of
Briscoe Hall, Inc., an advertising agency. Mr. Hilderbran has also served as
Executive Director of the Exotic Wildlife Association, a non-profit
membership/trade organization.
J. Thomas McManamon, 56, was elected to serve as a director in May
1998. Mr. McManamon has held the position of Director of the Science,
Engineering, Mathematics and Aerospace Academy for the Cuyahoga Community
College since January 1995. From 1992 to 1995, Mr. McManamon was a Financial
Consultant with the firm of Butcher & Singer.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES LISTED ABOVE AS DIRECTORS.
Vote Required
The election of a director requires the approval of a plurality of the
votes of the holders of the outstanding shares of the Corporation's Common Stock
present at the Meeting, in person or by proxy, voting as a single class.
Shareholders may cumulate their votes in the election of directors.
Meetings of the Board of Directors
During the last fiscal year, the Board of Directors of the
Corporation, which consisted of three directors, held three meetings. Each
director attended at least 75% of the meetings of the Board of Directors.
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<PAGE>
Standing Committees
The Board of Directors has three standing committees, consisting of an
Audit Committee, an Executive Committee and a Compensation Committee.
The Audit Committee, which is composed of Messrs. Fleming and
McManamon, meets with key management and the independent public accountants to
review the internal controls of the Corporation and to review its financial
reporting. The Audit Committee also recommends to the Board of Directors the
appointment of the independent public accountants to serve as auditors in
examining the financial statements of the Corporation. The Audit Committee is
charged with the responsibility of reviewing and overseeing all material
transactions and proposed transactions between the Corporation and one or more
of its directors or executive officers, or their affiliates, with a view to
assuring that all such transactions will be on terms no less favorable to the
Corporation than would be available with unaffiliated third parties and ratified
by a majority of independent directors who have no interest in such
transactions.
The Executive Committee, which is composed of Messrs. Bradle and
Vanucci, has the authority to exercise all powers of the Board of Directors in
the management of the business and affairs of the Corporation during intervals
between meetings of the Board of Directors, except that it has no authority to
propose amendments to the Restated Articles of Incorporation, adopt an agreement
of merger or consolidation, recommend to the shareholders the sale, lease or
exchange of all or substantially all of the Corporation's assets or its
dissolution, or amend the Bylaws.
The Compensation Committee, which is composed of Messrs. Fleming and
McManamon (i) makes recommendations to the Board of Directors concerning the
election of the Corporation's officers, (ii) reviews the employee compensation
and benefit plans and sets the compensation for officers of the Corporation,
(iii) awards bonuses to officers of the Corporation, (iv) assumes responsibility
for all broad-based compensation and benefit programs of the Corporation and (v)
administers the Corporations's award compensation plans.
Non-employee directors are reimbursed for reasonable expenses incurred
in connection with attendance at any meetings of the Board of Directors of the
Corporation. Additional compensation has been awarded Messrs. Hilderbran and
McManamon for their service as directors in the form of options to purchase up
to 500,000 and 250,000 shares, respectively, of Common Stock at $.50 per share.
One half of Mr. Hilderbran's, and all of Mr. McManamon's, options are
immediately exercisable.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth certain information regarding the
executive officers of the Corporation. Each officer serves at the pleasure of
the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position Held with Corporation Year Named to Position
---- --- ------------------------------ ----------------------
<S> <C> <C> <C>
Peter C. Vanucci 52 Chairman & Chief Executive Officer March 1998
Michael R. Bradle 35 President & Chief Operating Officer December 1999
Virginia M. Lazar (1) 48 Executive Vice President & Secretary May 1998
Catherine A. Tamme(2) 46 Vice President & Chief Financial Officer February 2000
Barry Goverman(3) 55 Sr. Vice President & Chief February 2000
Communications Officer
</TABLE>
(1) Prior to joining the Corporation, Ms. Lazar was the President of
Corporate Administrative Services, Inc., a corporation engaged in
providing consulting and administrative services in the areas of
corporate governance and securities compliance to public and private
companies, from January 1996 through May 1998. From 1987 through 1995,
Ms. Lazar held the position of Corporate Secretary of Petrominerals
Corporation, a publicly held corporation located in Tustin, California.
Ms. Lazar's Employment Agreement with the Corporation is currently the
subject of negotiation.
(2) Prior to joining the Corporation, Ms. Tamme was a Loan Officer with
Resource One Mortgage in Beachwood, Ohio from September through
November 1999, a Senior Loan Officer at Northern Mortgage Company of
Cleveland in Cleveland, Ohio from 1997 to September 1999 and a Retail
Lending Officer with National City Bank in Cleveland, Ohio from 1984 to
1997.
(3) Prior to joining the Corporation, Mr. Goverman was employed by USA
Biomass Corporation, a green waste recycling company, since 1983, where
he held the position of Vice President and Chief Communications
Officer.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation for
services in all capacities awarded to, earned by, or paid to certain of the
Corporation's executive officers during the last three completed fiscal years.
<TABLE>
<CAPTION>
Annual Compensation
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
--------------------------- ---- ------ ----- ------------ ------------
<S> <C> <C>
Peter C. Vanucci, Chairman and 1999 $ 125,000
Chief Executive Officer (1) 1998 57,292
Edward S. Fleming, President 1999
and Chief Operating Officer (2) 1998
Virginia M. Lazar, Executive 1999 90,000
Vice President and Secretary (3) 1998 46,250
David L. Deerman, President, 1999 108,000
ChemWay Systems, Inc. (4) 1998
</TABLE>
(1) Mr. Vanucci's salary has been accrued for calendar years ended December
31, 1999 and 1998. See "Option Grants in Last Fiscal Year" for a
description of options granted to Mr. Vanucci.
(2) Mr. Fleming is not a full-time employee; no salary has been paid or
accrued for him at this time. Mr. Fleming resigned as President and
Chief Operating Officer of the Corporation on December 29, 1999. See
"Option Grants in Last Fiscal Year" for a description of options
granted to Mr. Fleming.
(3) Ms. Lazar's salary has been accrued for the calendar years ended
December 31, 1999 and 1998. See "Option Grants in Last Fiscal Year" for
a description of options granted to Ms. Lazar.
(4) Mr. Deerman, who served as president of one of the Corporation's
principal subsidiaries, resigned as of March 1, 2000.
During the calendar year ended December 31, 1999, the Corporation
provided travel and entertainment expenses to its executive officers and key
employees. The aggregate amount of such compensation, as to any executive
officer or key employee, did not exceed the lesser of $50,000 or 10% of the cash
compensation paid to or accrued for such executive officer or key employee, nor
did the aggregate
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<PAGE>
amount of such other compensation exceed 10% of the cash compensation paid to or
accrued for all executive officers or key employees as a group.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the grant of
options under the Corporation's 1997 Non-Statutory Stock Option Plan and
Incentive Stock Option Plan during the fiscal year ended December 31, 1999, to
the persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
% of total Exer-
Number of options cise or Market
securities granted to base Price Per
underlying employees price Share on
Name options in per Grant Expiration Grant Date
----
granted fiscal year share Date Date Value
----------- ----------- ------ ------------ ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
Peter C. Vanucci 1,000,000 36% .50 .2656 5/01/2002 $ 265,600
Michael R. Bradle 800,000 28% .50 .2656 5/15/2003 212,480
Edward S. Fleming 350,000 18% .20 .2656 5/01/2002 92,960
150,000 .50 .2656 5/01/2002 39,840
Virginia M. Lazar 500,000 18% .50 .2656 5/15/2003 132,800
</TABLE>
AGGREGATE OPTION HOLDINGS AND CALENDAR YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of securities Value of unexercised
acquired Value underlying unexercised in-the-money options
on Real- options at calendar year-end at calendar year-end
Name Exercise ized Exercisable/Unexercisable Exercisable/Unexercisable
---- ---------- ------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Peter C. Vanucci - - 1,000,000/0 0
Michael R. Bradle - - 800,000/0 0
Edward S. Fleming - - 500,000/0 $ 385,000/0
Virginia M. Lazar - - 500,000/0 0
David L. Deerman - - 0/250,000 0
</TABLE>
Employment Agreements
On January 3, 2000, Mr. Vanucci entered into an Employment Agreement
with the Corporation providing for an annual salary of $125,000, a signing bonus
of $25,000, a monthly auto allowance of $500 and a retention bonus of $20,000
payable on the first anniversary of his employment if neither Mr. Vanucci nor
the Corporation has given the other notice of termination. The term of his
employment is two years. In the event Mr. Vanucci is terminated without cause,
he will receive a lump sum payment equivalent to one year's annual salary. Mr.
Vanucci was also granted an option to purchase up to 500,000 shares of the
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<PAGE>
Common Stock of the Corporation at an exercise price of $.50 per share, subject
to a vesting schedule which will allow Mr. Vanucci to exercise his option to
purchase 50% of the shares following the completion of corporate restructuring
of operations and the preparation of a preferred offering, and the remaining 50%
if, within Mr. Vanucci's employment term, the price of the Common Stock of the
Corporation reaches $2.00 per share.
On January 3, 2000, Mr. Bradle entered into an Employment Agreement
with the Corporation providing for an annual salary of $120,000, a signing bonus
of $25,000, a monthly auto allowance of $500 and a retention bonus of $20,000
payable on the first anniversary of his employment if neither Mr. Bradle nor the
Corporation has given the other notice of termination. The term of his
employment is two years. In the event the Mr. Bradle is terminated without
cause, he will receive a lump sum payment equivalent to one year's annual
salary. Mr. Bradle will also be entitled to purchase up to 500,000 shares of the
Common Stock of the Corporation at an exercise price of $.50 per share, subject
to a vesting schedule which will allow Mr. Bradle to exercise his option to
purchase 50% of the shares following the completion of corporate restructuring
of operations and the preparation of a preferred offering and the remaining 50%
if, within Mr. Bradle's employment term, the price of the Common Stock of the
Corporation reaches $2.00 per share.
On December 27, 1998, David L. Deerman entered into an Employment
Agreement with the Corporation providing for an annual salary of $108,000, a
signing bonus of $20,000 and a monthly auto allowance of $500. Mr. Deerman was
also granted an option to purchase up to 250,000 shares of the Common Stock of
the Corporation, subject to certain terms and conditions under his Employment
Agreement. Mr. Deerman resigned as of March 1, 2000.
On December 28, 1999, Virginia M. Lazar entered into an Employment
Agreement with the Corporation providing for an annual salary of $90,000 and a
monthly auto allowance of $500. In the event of her termination without cause,
Ms. Lazar will be entitled to receive a lump sum payment equivalent to one
year's annual salary. In the event of a change of control, all accrued but
unpaid salary of the executive shall be paid to her within 15 days after the
consummation of the transaction causing the change of control. That Employment
Agreement is currently the subject of negotiation between the Corporation and
Ms. Lazar.
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<PAGE>
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Corporation's Common Stock as of May 3, 2000 by each
person or entity known to the Corporation to own beneficially 5% or more of the
Corporation's Common Stock, each of the Corporation's directors and executive
officers, and all executive officers and directors as a group. Unless otherwise
indicated in the footnotes below, each person has sole voting and investment
power over the shares indicated.
<TABLE>
<CAPTION>
Amount and Percent of Total
Name and Address of Nature of Outstanding
Title of Class Beneficial Owner Beneficial Interest Voting Securities
--------------- ----------------------- -------------------- -----------------
<S> <C> <C> <C>
$.003 par value Way Energy Inc. (1) 2,500,000 10.88%
Common Stock P.O. Box 2480
Bay City, Texas 77404
$.003 par value Merity International, Inc. 946,341 4.12%
Common Stock 1647 Dick Bay, Box RR #3
Dickinson, Texas 77539
$.003 par value Peter C. Vanucci (2) 1,000,000
Common Stock 8221 Brecksville Road, Ste 207 4.35%
Brecksville, Ohio 44141
$.003 par value Michael R. Bradle (3) 2,025,000 8.82%
Common Stock 1211 West 4th Street
Lampasas, Texas 76550
$.003 par value J. Thomas McManamon (4) 250,000 1.09%
Common Stock 8221 Brecksville Road, Ste 207
Brecksville, Ohio 44141
$.003 par value Edward S. Fleming (5) 500,000 2.18%
Common Stock 3050 Post Oak Blvd, Ste 1080
Houston, Texas 77056
$.003 par value Harvey R. Hilderbran(6) 250,000 1.09%
Common Stock 301 Junction Hwy., Ste 333
Kerrville, Texas 78028
$.003 par value Virginia M. Lazar (7) 596,750 2.60%
Common Stock 3050 Post Oak Blvd, Ste 1080
Houston, Texas 77056
$.003 par value Barry Goverman (8) 500,000 2.18%
Common Stock 42 Brentwood Drive
North Easton, Massachusetts
02072
$.003 par value Catherine A. Tamme (9) 200,000 .87%
Common Stock 8221 Brecksville Road, Ste 207
Brecksville, Ohio 44141
$.003 par value All executive officers and 5,321,750 23.17%
Common Stock directors as a group ( 8 persons)
</TABLE>
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<PAGE>
(1) Includes 1,500,000 shares held of record and the right to receive an
additional 1,000,000 shares held in escrow.
(2) Represents an immediately exercisable option to purchase up to
1,000,000 shares at an exercise price of $.50 per share.
(3) Includes an immediately exercisable stock option to purchase up to
800,000 shares of the Common Stock of the Corporation at an exercise
price of $.50 per share granted Mr. Bradle under his employment
agreement, and 800,000 shares and an immediately exercisable option to
purchase up to 425,000 additional shares at $.10 per share owned of
record by Lonestar. Mr. Bradle may be considered to own beneficially
the shares held of record by Lonestar.
(4) Represents a stock option to purchase up to 250,000 shares of the
Common Stock of the Corporation at an exercise price of $.50 per share.
(5) Includes a stock option to purchase up to 350,000 shares of the Common
Stock of the Corporation at an exercise price of $.20 per share; and
150,000 shares of the Common Stock of the Corporation at an exercise
price of $.50 per share.
(6) Represents a stock option to purchase up to 250,000 shares of the
Common Stock of the Corporation at an exercise price of $.50 per share.
(7) Represents a stock option to purchase up to 500,000 shares of the
Common Stock of the Corporation at an exercise price of $.50 per share.
(8) Represents a stock option to purchase up to 500,000 shares of the
Common Stock of the Corporation at an exercise price of $.50 per share.
(9) Represents a stock option to purchase up to 200,000 shares of the
Common Stock of the Corporation at an exercise price of $.50 per share.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
On December 30, 1999, the Corporation acquired an 85% limited
partnership interest in Seneca for 800,000 shares of Common Stock of the
Corporation and a stock option to purchase up to 425,000 additional shares at an
exercise price of $.10 per share. Michael R. Bradle, the Corporation's President
and Chief Operating Officer, was the President of Lonestar, which served as the
managing general partner of Seneca. Mr. Bradle resigned as the President of
Lonestar when he accepted the position of President and Chief Operating Officer
of the Corporation, and now serves as Secretary/Treasurer of Lonestar.
The purpose of the acquisition of the limited partnership interest in
Seneca was to provide the Corporation with the organizational and management
core of an energy division. By focusing on the acquisition of working interests
in producing oil and gas wells and by selective offset drilling in established
fields, Seneca's strategy is to add significantly to its reserves, generate
consistent revenues and thus build the overall book value of the partnership.
Seneca's reserves at the time of acquisition were estimated to be $121,853. In
addition to these reserves, the Corporation acquired access to significant
expertise in the energy industry and the progress made by Seneca on the
negotiation of significant oil and gas leases.
PROPOSAL 2
APPROVAL OF AMENDMENT TO CHARTER
INCREASING AUTHORIZED COMMON
The Board of Directors of the Corporation has adopted resolutions
approving and recommending to the shareholders of the Corporation for their
approval an amendment to the Restated Articles of Incorporation of the
Corporation which would increase the number of shares of authorized Common Stock
from 25 million
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<PAGE>
to 50 million. If the amendment to the Corporation's charter is approved by the
requisite vote of the shareholders, it will become effective at the time of the
filing of the Amendment with the Colorado Corporation Commission. The form of
amendment is set forth as Exhibit A hereto.
Reasons for the Charter Amendment
The Board of Directors has determined that the current number of
authorized shares is insufficient to meet the long term goals of the Corporation
of growth through acquisitions. Additional authorized shares are also necessary
to provide sufficient shares under the Corporation's stock option plans to
provide an incentive to employees, directors and other persons affiliated with
the Corporation. Finally, additional shares of Common Stock would be necessary
for the Corporation to issue preferred stock convertible into Common Stock,
either in connection with acquisitions or in the sale of equity to raise
capital.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL AND ADOPTION OF THE CHARTER
AMENDMENT PROPOSAL AND URGES EACH SHAREHOLDER TO VOTE "FOR" THE ADOPTION OF THIS
PROPOSAL.
Vote Required
Approval of Proposal No. 2 requires the affirmative vote of the holders
of a majority of the shares of the Corporation's Common Stock present at the
Meeting, in person or by proxy, voting as a single class.
PROPOSAL 3
RATIFICATION OF 2000 INCENTIVE AWARDS PLAN
General
On May 3, 2000 (the "Effective Date"), the Corporation's Board of
Directors adopted the Affiliated Resources Corporation 2000 Incentive Awards
Plan (the "Plan"),subject to stockholders' approval of the Plan within one year
of such date by a majority of the votes cast at a duly held meeting of the
stockholders . Upon approval of the Plan by the stockholders, all awards granted
under the Plan on or after the Effective Date shall be fully effective as if the
stockholders had approved the Plan on the Effective Date. The Board of Directors
has recommended to the stockholders of the Corporation ratification of the
adoption of that Plan. The Plan provides for the issuance of a total of up to
3,000,000 shares of Common Stock of the Corporation to employees, directors,
consultants and to others whose participation in the Plan is determined to be in
the best interests of the Corporation. Generally, shares subject to an award
that remain unissued upon expiration or cancellation of the award are available
for other awards under the Plan. The full text of the Plan is set forth in
Exhibit B hereto.
Awards under the Plan
Awards under the Plan may be made in the form of (i) incentive stock
options, (ii) non-qualified stock options (incentive and non-qualified stock
options are collectively referred to as "Options"), (iii) restricted stock, (iv)
performance shares or (v) any combination thereof. Awards may be granted to such
directors, employees and consultants of the Corporation (collectively, "Eligible
Persons") as the Board shall in its discretion select. Only employees of the
Corporation are eligible to receive grants of incentive stock options.
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Administration
The Plan is administered by the Board of Directors unless and until
that responsibility is delegated by the Board to the Compensation Committee. The
Board is authorized to construe, interpret and implement the provisions of the
Plan, to select the Eligible Persons to whom awards will be granted, to
determine the terms and provisions of awards and, with the consent of the
grantee, to cancel and re-grant outstanding awards. The determinations of the
Board are made in its sole discretion and are conclusive.
Grants under the Plan
Options. The Board determines the terms and conditions of each Option.
The purchase price per share payable upon the exercise of an Option (the "Option
Exercise Price") is established by the Board, and, in the case of an incentive
stock option the Option Exercise Price must be equal to at least 100% of the
fair market value of a share of the Common Stock on the date of grant. The
Option Exercise Price is payable in cash, by surrender of shares of Common Stock
having a fair market value on the date of the exercise equal to part or all of
the Option Exercise Price, or by a combination of cash and such shares, as the
Board may determine.
Each Option granted under the Plan shall terminate and all rights to
purchase Common Stock thereunder shall cease upon the expiration of ten years
from the grant date, unless a shorter period is provided by the Board (the
"Option Term"). Unless otherwise expressly approved by the Board, Options shall
become vested at the following schedule so long as the grantee has not
experienced a termination of employment prior to such anniversary date: no more
than 25% of the total number of shares optioned on the first anniversary of the
Grant Date; no more than 50% of the total number of shares optioned on the
second anniversary of the Grant Date; no more than 75% of the total number of
shares optioned on the third anniversary of the Grant Date; and 100% of the
total number of shares optioned on and after the fourth anniversary of the Grant
Date. Options that have not vested may not be exercised.
Restricted Stock. The Board may grant restricted shares of Common Stock
to Eligible Persons subject to such terms and conditions (which may depend on or
be related to performance goals and other conditions) as the Board shall
determine. The certificates for the shares of Common Stock covered by a
restricted stock award remain in the possession of the Corporation until such
shares are free from restrictions. The grantee of restricted stock shall have
all rights and privileges of a stockholder as to such restricted stock,
including the right to receive dividends and the right to vote such shares,
except that the following restrictions shall apply: (i) the grantee shall not be
entitled to delivery of the certificate until the expiration of the restricted
period; and (ii) none of the shares of restricted stock may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
restricted period.
Performance Shares. The Board may grant performance share awards to
Eligible Persons under such terms and conditions as the Board shall determine.
Performance share awards entitle the grantee to acquire shares of Common Stock
of the Corporation, or to be paid the value thereof in cash, as the Board shall
determine, if specified performance goals are met. The grantee of a performance
share award will have the rights of a shareholder only as to shares for which a
certificate has been issued pursuant to the award and not with respect to any
other shares subject to the award.
Termination of employment or service
Options. In the case of termination of employment (other than a
Dismissal for Cause (as defined in the Plan)), unless otherwise provided in an
Option agreement and other than upon death or disability, Options
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otherwise exercisable on the date of the termination of employment will remain
exercisable for a period equal to the shorter of three months or the remaining
Option term. If a grantee dies while employed by the Corporation or suffers a
permanent and total disability, Options otherwise exercisable on the date of the
termination of employment will remain exercisable for a period equal to the
shorter of one year or the remaining Option term. Notwithstanding any other
provision in the Plan or an Option agreement, in the event that a grantee's
employment is terminated by reason of a Dismissal for Cause, the Award shall
expire on the day immediately preceding the date of the first event giving rise
to a Dismissal for Cause.
Restricted Stock. If a termination of employment occurs with respect to
a grantee prior to the expiration of the restricted period applicable to
restricted stock, the shares still subject to restrictions shall be forfeited
unless otherwise determined by the Board, and all rights of the grantee to such
shares shall terminate without further obligation on the part of the
Corporation.
Performance Shares. Unless otherwise provided by the Board prior to
termination of employment, the rights of a grantee of a performance share award
will automatically terminate upon the grantee's termination of employment for
any reason.
Tax consequences.
The following description of the tax consequences of awards under the
Plan is based on present Federal tax laws, and does not purport to be a complete
description of the tax consequences of the Plan.
There are generally no Federal tax consequences either to the optionee
or to the Corporation upon the grant of an Option. On the exercise of an
incentive stock option, the optionee will not recognize any income, and the
Corporation will not be entitled to a deduction for tax purposes, although such
exercise may give rise to liability for the optionee under the alternative
minimum tax provisions of the Internal Revenue Code of 1986, as amended (the
"Code"). However, if the optionee disposes of shares acquired upon the exercise
of an incentive stock option within two years of the date of grant or one year
of the date of exercise, the optionee will recognize ordinary income, and the
Corporation will be entitled to a deduction for tax purposes in the amount of
the excess of the fair market value of the shares of Common Stock on the date of
exercise over the Option Exercise Price (or the gain on sale, if less); the
remainder of any gain, and any loss, to the optionee will be treated as capital
gain or loss. If the shares are disposed of after the foregoing holding periods
are met, the Corporation will not be entitled to any deduction, and the entire
gain or loss will be treated as a capital gain or loss to the optionee. On
exercise of a non-qualified stock option, the amount by which the fair market
value of Common Stock on the date of exercise exceeds the Option exercise price
will generally be taxable to the optionee as ordinary income and will generally
be deductible for tax purposes by the Corporation. The disposition of shares
upon exercise of a non-qualified option will generally result in capital gain or
loss to the optionee but will have no tax consequences to the Corporation.
An award of restricted stock or performance shares generally will not
result in income for the grantee or in a tax deduction for the Corporation until
such time as the shares are no longer subject to forfeiture unless the grantee
elects otherwise. At that time, the grantee generally will recognize ordinary
income equal to the fair market value of the shares less any amount paid for
them, and the Corporation generally will be entitled to a tax deduction in the
same amount.
Section 162(m) of the Code limits the deduction which the Corporation
may take for otherwise deductible compensation payable to certain executive
officers to the extent that compensation paid to such officers for a year
exceeds $1 million, unless such compensation meets certain requirements.
Although the
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Corporation believes that compensation realized from options granted under the
Plan generally will satisfy the requirements of Section 162(m) of the Code,
there is no assurance that such awards will satisfy such requirements. The
deduction for compensation resulting from a restricted stock award will be
subject to the limitation imposed by Code Section 162(m).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
2000 INCENTIVE AWARDS PLAN.
Vote Required
Approval of Proposal No. 3 requires the affirmative vote of the holders
of a majority of the shares of the Corporation's Common Stock present at the
Meeting, in person or by proxy, voting as a single class.
PROPOSAL 4
APPROVAL OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Weinstein Spira &
Company, P.C., Independent Public Accountants, as the Corporation's auditors for
the ensuing year, subject to the approval of the shareholders. Weinstein Spira &
Company, P.C. has served as the Corporation's auditors since August 1998. Prior
to August 1998, Smith & Company served as the Corporation's auditors for the
fiscal years ended June 30, 1995, 1996 and 1997, and the subsequent period until
July 31, 1998. The Corporation expects to have a representative of Weinstein
Spira & Company, P.C. in attendance at the 2000 Annual Meeting of Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
APPOINTMENT OF WEINSTEIN SPIRA & COMPANY, P.C.
Vote Required
Approval of the appointment of Weinstein Spira & Company, P.C. as the
independent auditors of the Corporation requires the affirmative vote of the
holders of a majority of the shares of the Corporation's Common Stock present at
the meeting, in person or by proxy, voting as a single class.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
From time to time the shareholders of the Corporation submit proposals
which they believe should be voted upon by the shareholders. The Securities and
Exchange Commission has adopted regulations which govern the inclusion of such
proposals in the Corporation's annual proxy materials. All such proposals must
be submitted to the Corporate Secretary not later than February 1, 2001, in
order to be considered for inclusion in the proxy materials for the
Corporation's Annual Meeting of Shareholders to be held in May 2001.
OTHER BUSINESS
The Corporation does not intend to present any other business for
action at the Annual Meeting and does not know of any other business intended to
be presented by others. Should any other matters come before the meeting, the
Proxies will be voted by the persons authorized therein, or their substitutes,
in accordance with their best judgment on such matters.
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ANNUAL REPORT ON FORM 10-KSB
The Corporation's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999, as filed with the Securities and Exchange Commission,
is being mailed concurrently with the mailing of this Proxy Statement to
shareholders of record on or about May 5, 2000. The cost of furnishing such
Annual Report on Form 10-KSB and of making this proxy solicitation will be borne
by the Corporation. Copies of exhibits to the Annual Report on Form 10-KSB are
available, but a reasonable handling fee will be charged to the requesting
shareholder. Each written request must set forth a good faith representation
that, as of the record date, the person making the request is a beneficial owner
of the Corporation's Common Stock and entitled to vote at the Annual Meeting.
Shareholders should direct their written request to the Corporation, Attention:
Secretary, 3050 Post Oak Boulevard, Suite 1080, Houston, Texas 77056.
BY ORDER OF THE BOARD OF DIRECTORS
Dated: May 5, 2000 Peter C. Vanucci, Chairman of the Board
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Exhibit A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act,
the undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Affiliated Resources Corporation.
SECOND: The following amendment to the Articles of Incorporation was
approved by the Board of Directors and adopted by a vote of the shareholders on
June 7, 2000, as prescribed by the Colorado Business Corporation Act. The number
of shares voted for the amendment was sufficient for approval.
The first paragraph of Article Third of the Restated Articles of
Incorporation shall be amended to read as follows:
(a) The aggregate number of shares which the corporation shall have
authority to issue is Sixty Million (60,000,000)shares, divided between
Fifty Million (50,000,000) shares of Common Stock,$.003 par value, and
Ten Million (10,000,000) shares of Preferred Stock, $1.00 par value. No
shares shall be issued until consideration therefor has been received,
and all shares, when and as issued, shall thereafter be non-assessable.
THIRD: No exchange, reclassification or cancellation of issued shares
is effected by this amendment
AFFILIATED RESOURCES CORPORATION
By_______________________________________
Peter C. Vanucci, Chairman of the Board
and Chief Executive Officer
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Exhibit B
AFFILIATED RESOURCES CORPORATION
2000 INCENTIVE AWARDS PLAN
AFFILIATED RESOURCES CORPORATION, a Colorado corporation (the
"Company"), sets forth herein the terms of the 2000 Incentive Awards Plan (the
"Plan") as follows:
1. PURPOSE
Under the Plan, Awards may be granted to Eligible Persons to purchase
or otherwise obtain shares of the Company's capital stock. The Plan is designed
to enable the Company to attract, retain and motivate its employees, consultants
and others by providing for or increasing the proprietary interests of such
persons in the Company.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Agreements), the following definitions shall apply:
2.1. "AFFILIATE" means the Company and any company or other trade or
business that is controlled by or under common control with the Company,
determined in accordance with the principles of Section 414(b) and 414(c) of the
Code and the regulations thereunder, or is an affiliate of the Company within
the meaning of Rule 405 of Regulation C under the Securities Act.
2.2. "AGREEMENT" means the award agreement under which the Grantee
accepts the Award terms and conditions and receives an Award pursuant to the
Plan.
2.3. "AWARD" means individually, collectively or in tandem, an
incentive award granted under the Plan, whether in the form of Options,
Restricted Stock Awards, or performance shares, or such other form and subject
to such terms as the Committee may determine.
2.4. "AWARD PRICE" means the purchase price for each share of Common
Stock subject to an Award.
2.5. "BOARD" means the Board of Directors of the Company.
2.6. "CODE" means the Internal Revenue Code of 1986, as amended. Any
section thereof referenced in the Plan or an Agreement shall include the rules
and regulations thereunder, and any successor provisions thereto.
2.7. "COMMITTEE" means the Compensation Committee of the Board, which
must consist of no fewer than two members of the Board who satisfy the
definition under Rule 16b-3 of the Exchange Act for "nonemployee director".
2.8. "COMMON STOCK" means common stock, par value $.01, issued by the
Company.
2.9. "COMPANY" means Affiliated Resources Corporation, a Colorado
corporation, any Affiliates and any other entity as determined by the Committee.
B - 1
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2.10. "EFFECTIVE DATE" means May 3, 2000, the date of adoption of the
Plan by the Board.
2.11. "ELIGIBLE PERSON" is defined in Section 5.
2.12. "EMPLOYER" means the Company.
2.13. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended. Any section thereof referenced in the Plan or
an Agreement shall include the rules and regulations thereunder, and any
successor provisions thereto.
2.14. "FAIR MARKET VALUE" means the value of each share of Common Stock
subject to the Plan determined as follows: (a) if on the Grant Date or other
determination date the shares of Common Stock are listed on an established
national or regional stock exchange, are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System, or are publicly
traded on an established securities market, the Fair Market Value of the shares
of Common Stock shall be the closing price of the shares of Common Stock on such
exchange or in such market (the highest such closing price if there is more than
one such exchange or market) on the trading day immediately preceding the Grant
Date or such other determination date (or if there is no such reported closing
price, the Fair Market Value shall be the mean between the highest bid and
lowest asked prices or between the high and low sale prices on such trading
day); or (b) if no sale of the shares of Common Stock is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the shares of Common Stock are not listed on such an exchange,
quoted on such System or traded on such a market, Fair Market Value shall be
determined by the Board or Committee in good faith.
2.15. "GRANT DATE" means for a particular Award (i) the date as of
which the Committee approves the Award or (ii) any other date specified by the
Committee, if any.
2.16. "GRANTEE" means an individual to whom one or more Awards have
been granted.
2.17. "INCENTIVE STOCK OPTION" or "ISO" means an incentive stock option
within the meaning of Section 422 of the Code. Any Option that is not
specifically designated as an Incentive Stock Option shall under no
circumstances be considered an Incentive Stock Option.
2.18. "NONQUALIFIED STOCK OPTION" means any Option that does not
qualify under Section 422 of the Code.
2.19. "OPTION" means an option granted by the Company to purchase
Common Stock pursuant to the provisions of the Plan, including ISOs and
Nonqualified Stock Options.
2.20. "OPTION PERIOD" means the period during which Options may be
exercised as defined in Section 12.
2.21. "OPTION TERM" means the period defined under Section 12 herein.
2.22. "PLAN" means this Affiliated Resources Corporation 2000 Incentive
Awards Plan, as amended.
2.23. "RESTRICTED PERIOD" means the period of time from the Grant Date
of Restricted Stock until the lapse of restrictions attached thereto under the
terms of the Agreement granting such Restricted Stock, pursuant to the
provisions of the Plan or by action of the Committee.
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2.24. "RESTRICTED STOCK" shall mean an Award granted by the Committee
entitling the Grantee to acquire, at no cost or for a purchase price determined
by the Committee at the time of grant, shares of Common Stock which are subject
to restrictions in accordance with the provisions hereof.
2.26. "SECURITIES ACT" means the Securities Act of 1933, as now in
effect or as hereafter amended. Any section thereof referenced in the Plan or an
Agreement shall include the rules and regulations thereunder, and any successor
provisions thereto.
2.27. "STOCKHOLDER" means a holder of record of at least one share of
the voting stock of the Company.
2.28. "TERMINATION OF EMPLOYMENT" means that event when a person is no
longer employed by or continuously providing services to the Company or any
Affiliate as an employee, advisor, consultant or otherwise. The Committee may in
its discretion determine (a) whether any leave of absence constitutes a
termination of employment for purposes of the Plan; (b) the impact, if any, of
any such leave of absence on Awards theretofore made under the Plan; and (c)
when a change in a nonemployee's association with the Company constitutes a
termination of employment for purposes of the Plan. Such determinations of the
Committee shall be final, binding and conclusive.
3. ADMINISTRATION
3.1 ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board unless and until the Board
appoints the Compensation Committee or another committee of the Board to
administer the Plan. Until the appointment of such a committee, the term
"Committee" when used herein with respect to the administration of the Plan
shall be deemed to mean the Board.
3.2 SCOPE OF AUTHORITY
The Committee shall have the full power and authority to take all
actions and to make all determinations required or provided for under the Plan,
any Award granted or Agreement entered into hereunder, and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Committee to be necessary or appropriate to
the administration of the Plan, any Award or Agreement entered into hereunder.
Actions of the Committee shall be taken by the vote of a majority of its
members; provided, however, that the Plan shall be administered so that Awards
granted under the Plan will qualify for the benefits provided by Rule 16b-3 (or
any successor rule) under the Exchange Act and Section 162(m) of the Code, and
the regulations thereunder to the extent the Committee intends such grant to
qualify under Section 162(m). The interpretation and construction by the
Committee of any provision of the Plan or of any Award granted or Agreement
entered into hereunder shall be final and conclusive.
3.3 NO LIABILITY
No member of the Board or of the Committee shall be liable for any
action or determination made, or any failure to take or make an action or
determination, in good faith with respect to the Plan or any Option granted or
Agreement entered into hereunder.
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4. AWARDS; COMMON STOCK
4.1 Awards
Awards granted under the Plan may be Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock and performance shares, all as more
fully set forth herein. No Incentive Stock Option may be granted to a person who
is not an employee of the Company on the date of grant. Unless otherwise
specified in a particular grant, Awards granted under the Plan are intended to
qualify as performance-based compensation for the purposes of Section 162(m) of
the Code.
4.2 COMMON STOCK
The stock that may be issued pursuant to Awards granted under the Plan
shall be Common Stock, which shares may be treasury shares or authorized but
unissued shares. The number of shares of Common Stock that may be issued
pursuant to Awards granted under the Plan shall not exceed in the aggregate
three million (3,000,000) shares of Common Stock, which number of shares is
subject to adjustment and increase. If any Award expires, terminates or is
terminated for any reason prior to exercise in full, the shares of Common Stock
that were subject to the unexercised portion of such Award shall be available
for future Awards granted under the Plan. When the exercise price for an Award
under this Plan is paid with previously outstanding shares or with shares as to
which the Award is being exercised, as permitted in Section 12, only the number
of shares of Common Stock issued net of the shares of Common Stock tendered
shall be deemed delivered for purposes of determining the maximum number of
shares of Common Stock available for delivery under the Plan. Shares of Common
Stock delivered under the Plan in settlement, assumption or substitution of
outstanding Awards (or obligations to grant future Awards) under the plans or
arrangements of another entity shall not reduce the maximum number of shares of
Common Stock available for delivery under the Plan, to the extent that such
settlement, assumption or substitution is as a result of the Company or an
Affiliate acquiring another entity (or an interest in another entity).
5. ELIGIBILITY
Awards may be granted under the Plan to all current and former officers
and executive, administrative, technical or professional employees of the
Company; to current and former directors or consultants of the Company; and to
any other individual whose participation in the Plan is determined to be in the
best interests of the Company by the Committee (collectively, "Eligible
Persons"). An individual may hold more than one Award, subject to such
restrictions as are provided herein.
6. EFFECTIVE DATE AND PLAN TERM
6.1 EFFECTIVE DATE
The Plan is effective as of May 3, 2000, the date of adoption by the
Board, subject to Stockholders' approval of the Plan within one year of such
Effective Date by a majority of the votes cast at a duly held meeting of the
Stockholders of the Company at which a quorum representing a majority of all
outstanding Common Stock is present, either in person or by proxy, and voting on
the matter; provided, however, that upon approval of the Plan by the
Stockholders of the Company, all Awards granted under the Plan on or after the
Effective Date shall be fully effective as if the Stockholders of the Company
had approved the Plan on the Effective Date. If the Stockholders fail to approve
the Plan within one year of such Effective Date, any Awards granted hereunder
shall be null, void and of no effect.
6.2 TERM
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The Plan shall terminate on the date ten (10) years after the Effective
Date.
7. GRANT OF AWARDS
7.1 AWARDS
The Committee shall determine the type or types of Awards to be made to
each Grantee. Awards may be granted singly, in combination or in tandem subject
to restrictions set forth herein. Without limiting the foregoing, the Committee
may at any time amend the terms of outstanding Awards or issue new Awards in
exchange for the surrender and cancellation of outstanding Awards. The date on
which the Committee approves the Award shall be considered the date on which
such Award is granted, unless the Committee approves a separate grant date. The
terms and conditions of the Awards granted under this Section shall be
determined from time to time by the Committee, as set forth in the Agreement,
and the conditions herein.
7.2 NONQUALIFIED OPTIONS
The Award Price for each share of Common Stock issuable pursuant a
Nonqualified Stock Option shall be set by the Committee, but may not be less
than par value.
7.3 INCENTIVE STOCK OPTIONS
The Award Price for each share of Common Stock issuable pursuant to an
Incentive Stock Option may not be less than the Fair Market Value on the Grant
Date.
7.4 INCENTIVE STOCK OPTIONS - SPECIAL RULES
Options granted in the form of ISOs shall be subject to the following
provisions:
(a) No Incentive Option shall be granted pursuant to this plan
more than ten (10) years after the Effective Date.
(b) An Option shall constitute an ISO only to the extent that
the aggregate Fair Market Value (determined at the time the Option is
granted) of the Common Stock with respect to which ISOs are exercisable
for the first time by any Grantee during any calendar year under the
Plan and all other plans of the Grantee's employer Company and its
parent and Affiliates does not exceed $100,000. This limitation shall
be applied by taking Options into account in the order in which such
Options were granted.
(c) If any Grantee to whom an ISO is to be granted pursuant to
the provisions of the Plan is, on the date of grant, an individual
described in Section 422(b)(6) of the Code, then the following special
provisions shall be applicable to the Option granted to such
individual:
(i) the Award Price of shares subject to such ISO
shall not be less than 110% of the Fair Market Value of Common
Stock on the date of grant; and
(ii) the Option shall not have a term in excess of
five (5) years from the date of grant.
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7.5 CHANGES IN LAW
The Committee may establish rules with respect to, and may grant to
Eligible Persons, Options to comply with any amendment to the Code made after
the Effective Date.
8. AGREEMENTS
All Awards granted pursuant to the Plan shall be evidenced by written
Agreements in such form or forms as the Committee shall from time to time
determine. Agreements covering Awards need not contain similar provisions;
provided, however, that all such Agreements shall comply with the terms of the
Plan and all applicable laws and regulations. By accepting an Award pursuant to
the Plan, a Grantee thereby agrees that the Award shall be subject to all of the
terms and provisions of the Plan and the applicable Agreement.
9. RESTRICTED STOCK
The Committee may in its sole discretion grant Restricted Stock to
Eligible Persons, subject to the following provisions. At the time a grant of
Restricted Stock is made, the Committee shall establish a period of time (the
"Restricted Period") applicable to such Restricted Stock. Each grant of
Restricted Stock may be subject to a different Restricted Period. The Committee
may, in its sole discretion, at the time a grant of Restricted Stock is made,
prescribe restrictions in addition to or other than the expiration of the
Restricted Period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the
Restricted Stock. Such performance objectives shall be established in writing by
the Committee prior to the ninetieth day of the year in which the grant is made
and while the outcome is substantially uncertain. Performance objectives shall
be based on Common Stock price, market share, sales, earnings per share, return
on equity or costs.
Performance objectives may include positive results, maintaining the
status quo or limiting economic losses. The Committee also may, in its sole
discretion, shorten or terminate the Restricted Period or waive any other
restrictions applicable to all or a portion of the Restricted Stock. Restricted
Stock may not be sold, transferred, assigned, pledged or otherwise encumbered or
disposed of during the Restricted Period or prior to the satisfaction of any
other restrictions prescribed by the Committee with respect to such Restricted
Stock.
9.1 RESTRICTIONS
A Common Stock certificate representing the number of shares of
Restricted Stock granted shall be held in custody by the Company for the
Grantee's account. The Grantee shall have all rights and privileges of a
Stockholder as to such Restricted Stock, including the right to receive
dividends and the right to vote such shares, except that subject to the
provisions below, the following restrictions shall apply: (i) The Grantee shall
not be entitled to delivery of the certificate until the expiration of the
Restricted Period; (ii) none of the shares of Restricted Stock may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period; (iii) the Grantee shall, if requested by the Company, execute
and deliver to the Company, a Common Stock power endorsed in blank. If a
Termination of Employment occurs with respect to a Grantee prior to the
expiration of the Restricted Period applicable to such shares, shares of
Restricted Stock still subject to restrictions shall be forfeited unless
otherwise determined by the Committee, and all rights of the Grantee to such
shares shall terminate without further obligation on the part of the Company.
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9.2 DELIVERY OF RESTRICTED SHARES
At the end of the Restricted Period, a Common Stock certificate for the
number of shares of Restricted Stock with respect to which the restrictions have
lapsed shall be delivered (less any amount in satisfaction of any withholding
obligation), free of all such restrictions, except applicable securities laws,
to the Grantee. The Company shall not be required to deliver any fractional
shares of Common Stock but shall pay, in lieu thereof, the Fair Market Value (as
of the date the restrictions lapse) of such fractional share to the Grantee.
Notwithstanding the foregoing, the Committee may authorize the delivery of the
Restricted Stock to a Grantee during the Restricted Period, in which event any
Common Stock certificates in respect of any shares of Restricted Stock thus
delivered to a Grantee during the Restricted Period applicable to such shares
shall bear an appropriate legend referring to the terms and conditions,
including the restrictions, applicable thereto.
10. PERFORMANCE SHARES
The Committee may in its sole discretion grant performance share Awards
to such individuals and under such terms and conditions as the Committee shall
determine, subject to the provisions of the Plan. Such an Award shall entitle a
Grantee to acquire shares of Common Stock of the Company, or to be paid the
value thereof in cash, as the Committee shall determine, if specified
performance goals are met. Performance shares may be awarded independently of or
in connection with any other Award under the Plan. The Grantee of a performance
share Award will have the rights of a shareholder only as to shares for which a
certificate has been issued pursuant to the Award and not with respect to any
other shares subject to the Award. Except as otherwise may be provided by the
Committee at any time prior to Termination of Employment, the rights of a
Grantee of a performance share Award shall automatically terminate upon the
Grantee's Termination of Employment for any reason.
11. AWARD PRICE
The purchase price of each share of Common Stock subject to an Award
shall be fixed by the Committee and stated in each Agreement.
12. TERM, VESTING AND EXERCISE OF AWARDS
12.1 TERM
Each Award granted under the Plan shall terminate and all rights to
purchase Common Stock thereunder shall cease upon the expiration of ten (10)
years from the Grant Date, as otherwise provided herein, or on such date prior
thereto as may be fixed by the Committee and stated in the Agreement relating to
such Award; provided, however, that in the event the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to Common Stock ownership of
more than 10 percent), an Option granted to such Grantee which is intended to be
an Incentive Stock Option shall in no event be exercisable after the expiration
of five years from the Grant Date (collectively, the "Option Term").
12.2 VESTING
Unless otherwise expressly provided herein or in an Agreement approved
by the Committee, Options granted hereunder shall become vested at the following
schedule so long as the Grantee has not experienced a Termination of Employment
prior to such anniversary date: no more than 25% of the total number of shares
optioned on the first anniversary of the Grant Date; no more than 50% of the
total number of shares optioned on the second anniversary of the Grant Date; no
more than 75% of the total
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number of shares optioned on the third anniversary of the Grant Date; and 100%
of the total number of shares optioned on and after the fourth anniversary of
the Grant Date. Options that have not vested may not be exercised. All Awards
that have not vested prior to Termination of Employment shall terminate and be
of no further force and effect upon such Termination of Employment.
12.3 EXERCISE BY GRANTEE
Only the Grantee receiving an Award (or, in the event of the Grantee's
legal incapacity or incompetency, the Grantee's guardian or legal
representative, and in the case of the Grantee's death, the Grantee's estate)
may exercise the Award.
12.4 LIMITATIONS ON EXERCISE AND SALE; FORFEITURE
The Committee, subject to the terms and conditions of the Plan, may in
its sole discretion provide in an Agreement that an Option may not be exercised
in whole or in part for any period or periods of time during which such Option
is outstanding as the Committee shall determine (and as set forth in the
Agreement relating to such Option). Any such limitation on the exercise of an
Option contained in any Agreement may be rescinded, modified or waived by the
Committee, in its sole discretion, at any time and from time to time after the
date of grant of such Option. The Committee may also include such other terms
and conditions as it deems effect the purpose of the Plan and are in the best
interest of the Company.
12.5 METHOD OF EXERCISE
(a) An Award that is exercisable hereunder may be exercised by
delivery to the Company on any business day, at its principal office
addressed to the attention of the Committee (or such other person
identified in an Agreement), of written notice of exercise, which
notice shall specify the number of shares for which the Award is being
exercised, and shall be accompanied by payment in full of the Award
Price of the shares of Common Stock for which the Award is being
exercised. Payment of the Award Price for the shares of Common Stock
purchased pursuant to the exercise of an Award shall be made, as
determined by the Committee and set forth in the Agreement pertaining
to an Award, (i) in cash or by certified check payable to the order of
the Company; (ii) to the extent the Company is not prohibited from
purchasing or acquiring shares of Common Stock, through the tender to
the Company of shares of Common Stock, which shares shall be valued,
for purposes of determining the extent to which the Award Price has
been paid thereby, at their Fair Market Value on the date of exercise;
or (iii) by a combination of the methods described in Sections
12.5(a)(i) and (ii) hereof, or such other method permitted by the
Committee; provided, however, that the Committee may in its discretion
at any time impose such limitations or prohibitions on the use of
shares of Common Stock to exercise Awards as it deems appropriate. If
and while payment with Common Stock is permitted for the exercise of an
Award granted under this Plan in accordance with the foregoing
provision, the instrument evidencing the Award may also provide that,
in lieu of using previously outstanding shares therefor, the Grantee
may pay the Award Price by directing the Company to retain so many of
the underlying shares as have a market value on the date of exercise
equal to the Award Price, and any such exercise will cause the
surrender and cancellation of the Award to the extent of the shares so
retained by the Company.
As soon as practical after receipt of the foregoing written
notice of exercise, full payment of the Award Price, and full payment
of all amounts due to satisfy any applicable tax withholding
requirements (which the Grantee shall be required to pay in cash,
rather than by application of shares of Common Stock otherwise
deliverable upon exercise of the Award), the Company shall deliver to
the Grantee, in the Grantee's name, a certificate evidencing the number
of shares of
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Common Stock purchased upon exercise of the Award. Any attempt to
exercise any Award granted hereunder other than as set forth above
shall be invalid and of no force and effect.
An Agreement may provide that payment in full of the Award
Price need not accompany the written notice of exercise provided the
notice directs that the Common Stock certificate or certificates for
the shares for which the Award is exercised be delivered to a licensed
broker acceptable to the Company as the agent for the individual
exercising the Award and, at the time such Common Stock certificate or
certificates are delivered, the broker tenders to the Company cash (or
cash equivalents acceptable to the Company) equal to the Award Price.
(b) Except as provided in Section 9.1, an individual holding
or exercising an Award shall have none of the rights of a Stockholder
until the shares of Common Stock covered thereby are fully paid and
issued to such individual and, except as provided in Section 20 hereof,
no adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such issuance.
12.6 FINANCIAL ASSISTANCE
The Company is vested with authority under this Plan to assist any
employee to whom an Award is granted hereunder in the payment of the Award Price
payable on exercise of the Award, by lending part or all of the amount of such
Award Price to such employee on such terms and at such rates of interest and
upon such security (or no security) as shall have been authorized by or under
authority of the Committee. The Company is under no obligation to provide such
assistance, however.
13. TRANSFERABILITY OF AWARDS
Unless otherwise expressly provided in an Agreement, no Award granted
under the Plan may be sold, transferred, pledged, assigned, hypothecated or
otherwise alienated, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined
under the Code or the Employee Retirement Income Security Act, as amended, or
the rules thereunder. Any attempted assignment of an Award or any other benefit
under this Plan in violation of this Section 13 will be null and void. The
designation of a beneficiary with respect to an Award shall not constitute a
transfer for purposes of this Section.
14. TERMINATION OF EMPLOYMENT
In the case of Termination of Employment (other than a Dismissal for
Cause), unless otherwise provided in an Agreement and other than upon death or
Disability (as hereafter defined), Awards otherwise exercisable on the date of
the Termination of Employment will remain exercisable for a period equal to the
shorter of three (3) months or the remaining Award Term. If, on the date of the
Termination of Employment, the Grantee is not entitled to exercise the Grantee's
entire Award, the Common Stock covered by the unexercisable portion of the Award
shall revert to the Plan. If, after Termination of Employment, the Grantee does
not exercise the Award within the time prescribed, the Award shall terminate and
the Common Stock covered by such Award shall revert to the Plan. For purposes of
the Plan, a Termination of Employment with the Company or an Affiliate shall not
be deemed to occur if the Grantee is immediately thereafter employed with the
Company or any Affiliate.
Notwithstanding any other provision in this Plan or an Agreement, in
the event that a Grantee's employment is terminated by reason of a Dismissal for
Cause, the Award shall expire on the day immediately preceding the date of the
first event giving rise to a Dismissal for Cause. "Dismissal for
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Cause" means Termination of Employment for: (a) theft or embezzlement of
property of the Company; (b) fraud or other wrongdoing against the Company; (c)
a conviction of a crime of moral turpitude; (d) receipt of consideration or
acceptance of benefits from, or the participation in business activities with,
persons doing business with the Company in violation of the business ethics of
the Company; (e) malicious destruction of property of the Company; (f) improper
disclosure of confidential information of the Company; (g) actively engaging in
or working for a business in competition with the Company while employed by the
Company; or (h) such other reason that has a material adverse effect on the
Company. The Committee shall have the sole discretion to determine whether a
Termination of Employment has occurred by reason of Dismissal for Cause.
15. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
15.1 DEATH
If a Grantee dies while employed by the Company or an Affiliate, the
executors, administrators, legatees or distributees of such Grantee's estate
shall have the right (subject to the general limitations on exercise set forth
in Section 12 hereof), at any time within one (1) year (unless otherwise
provided in an Agreement) after the date of such Grantee's death and prior to
the end of the Award Term, to exercise any Award held by such Grantee at the
date of such Grantee's death, to the extent such Award was otherwise exercisable
immediately prior to such Grantee's death.
15.2 DISABILITY
If a Grantee experiences a Termination of Employment with the Company
or an Affiliate by reason of a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code ("Disability") of such Grantee, then
such Grantee shall have the right (subject to the general limitations on
exercise set forth in Section 12 hereof), at any time within one (1) year
(unless otherwise provided in an Agreement) after such Termination of Employment
and prior to the expiration of the Award Term, to exercise, in whole or in part,
any Award held by such Grantee at the date of such Termination of Employment, to
the extent such Award was exercisable immediately prior to such Termination of
Employment.
16. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock
pursuant to Awards granted under the Plan shall constitute general funds of the
Company.
17. SECURITIES LAWS
The Company shall not be required to sell or issue any Award or shares
of Common Stock under any Award if the sale or issuance of such Award or shares
would constitute a violation of any provisions of any law or regulation of any
governmental authority, including, without limitation, any federal or state
securities laws or regulations. If at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of any shares
subject to the Award upon any securities exchange or under any state or federal
law, or the consent of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the issuance or purchase of shares,
the Award may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the Award.
Specifically in connection with the Securities Act, upon exercise of any Award,
unless a registration statement under the Securities Act is in effect with
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<PAGE>
respect to the shares of Common Stock covered by such Award, the Company shall
not be required to sell or issue such shares unless the Company has received
evidence satisfactory to the Company that the Grantee may acquire such shares
pursuant to an exemption from registration under the Securities Act. Any
determination in this connection by the Company shall be final and conclusive.
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act. The Company shall not be
obligated to take any affirmative action in order to cause the exercise of an
Award or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an Award shall not be exercisable unless and until
the shares of Common Stock covered by such Award are registered or are subject
to an available exemption from registration, the exercise of such Award (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.
18. EXCHANGE ACT: RULE 16B-3
18.1 GENERAL
The Plan is intended to comply with Rule 16b-3 (and any successor
thereto) ("Rule 16b-3") under the Exchange Act. Any provision or action
inconsistent with Rule 16b-3 shall, to the extent permitted by law and
determined to be advisable by the Committee, be inoperative and void.
18.2 RESTRICTION ON TRANSFER OF COMMON STOCK
Unless otherwise permitted under an exemption under Rule 16b-3, no
officer or other "insider" of the Company subject to Section 16 of the Exchange
Act shall be permitted to sell Common Stock (which such "insider" had received
upon exercise of an Award) during the six months immediately following the grant
of such Award.
19. AMENDMENT AND TERMINATION
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan or an Agreement governing any Award that has not vested.
Except as permitted under this Plan, no amendment, suspension or termination of
the Plan or an Agreement shall, without the consent of the Grantee, alter or
impair rights or obligations under any vested Award.
20. EFFECT OF CHANGES IN CAPITALIZATION
20.1 CHANGES IN COMMON STOCK
If the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or securities of the Company, whether through
reorganization, recapitalization, reclassification, stock dividend or other
distribution, split, reverse split, combination of interest, exchange of
interests, change in corporate structure or the like, an appropriate and
proportionate adjustment shall be made in the number and kind of shares of
Common Stock subject to the Plan and in the number, kind and per share exercise
price of shares of Common Stock subject to unexercised Awards, or portions
thereof granted prior to any such change. In the event of any such adjustment in
an outstanding Award, the Grantee thereafter shall have the right to purchase
the number of shares of Common Stock under such Award at the per share price, as
so adjusted, which the Grantee could purchase at the total purchase price
applicable to the Award immediately prior to such adjustment.
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20.2 REORGANIZATION WITH COMPANY SURVIVING
Subject to Section 19, if the Company shall be the surviving entity in
any reorganization, merger, consolidation or the like of the Company with one or
more other entities, any Award theretofore granted pursuant to the Plan shall
apply to the securities resulting immediately following such reorganization,
merger, consolidation or the like, with a corresponding proportionate adjustment
of the number of shares and Award Price per share so that the aggregate number
of shares and Award Price thereafter shall be the same as the aggregate share
number and Award Price immediately prior to such reorganization, merger,
consolidation or the like.
20.3 OTHER REORGANIZATIONS; SALE OF ASSETS OR COMMON STOCK
Unless otherwise provided in an Agreement, upon the dissolution or
liquidation of the Company, or upon a merger, consolidation or reorganization of
the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of substantially all of the assets of the
Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
entity) approved by the Board that results in any person or entity (other than
persons who are holders of Common Stock of the Company at the time the Plan is
approved by the Stockholders and other than an Affiliate) owning fifty percent
(50%) or more of the combined voting power of all classes of Common Stock of the
Company (in any event, each a "Liquidation Event"), the Plan and all Awards
outstanding hereunder shall terminate on the date of such transaction, except to
the extent provision is made in connection with such transaction for the
continuation of the Plan and/or the assumption of the Awards theretofore
granted, or for the substitution for such awards of new awards covering the
common stock of a successor entity, or a parent or Affiliate thereof, with
appropriate adjustments as to the number and kinds of shares and exercise
prices, in which event the Plan and Awards theretofore granted shall continue in
the manner and under the terms so provided. In the event of any such Liquidation
Event, each Grantee shall have the right (subject to the general limitations on
exercise set forth in Section 12 hereof and except as otherwise specifically
provided in the Agreement relating to such Award), immediately prior to the
occurrence of such Liquidation Event and during such period occurring prior to
such Liquidation Event as the Committee in its sole discretion shall designate,
to exercise such Award in whole or in part, to the extent such Award was
otherwise exercisable at the time such Liquidation Event occurs. The Committee
shall send written notice of an event that will result in a Liquidation Event to
all Grantees not later than the time at which the Company gives notice thereof
to its stockholders. Notwithstanding anything herein to the contrary, the
Committee in its discretion may provide for the acceleration of the vesting of
any Award in the case of a merger or a significant sale of the common stock or
assets of the Company (as determined by the Committee).
20.4 ADJUSTMENTS
Adjustments under this Section 20 relating to Common Stock or
securities of the Company shall be made by the Committee, whose determination in
that respect shall be final and conclusive. No fractional shares of Common Stock
or units of other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share or unit.
20.5 NO LIMITATIONS ON COMPANY
The grant of an Award pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
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21. WITHHOLDING
The Company or an Affiliate may be obligated to withhold federal and
local income taxes and Social Security taxes to the extent that a Grantee
realizes income in connection with the exercise of an Award. The Company or an
Affiliate may withhold amounts needed to cover such taxes from payments
otherwise due and owing to a Grantee, and upon demand the Grantee will promptly
pay to the Company or an Affiliate having such obligation any additional amounts
as may be necessary to satisfy such withholding tax obligation. Such payment
shall be made in cash or cash equivalents. The Company may also withhold shares
or amounts payable to a Grantee pursuant to court order.
22. DISCLAIMER OF RIGHTS
The existence of this Plan does not, and no provision in the Plan or in
any Award granted or Agreement entered into pursuant to the Plan shall be
construed to, create an employment contract; confer upon any individual the
right to receive an Award; permit a Grantee to remain in the employ of the
Company or alter a Grantee's status as an at-will employee; or allow the Grantee
to interfere in any way with the right and authority of the Company either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. The obligation of the Company to pay any benefits pursuant to the Plan
shall be interpreted as a contractual obligation to pay only those amounts
described herein, in the manner and under the conditions prescribed herein. The
Plan shall in no way be interpreted to require the Company to transfer any
amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.
23. NONEXCLUSIVITY
Neither the adoption of the Plan nor the submission of the Plan to the
Stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of Common Stock options otherwise
than under the Plan.
24. GOVERNING LAW
This Plan and all Agreements shall be executed and performed under, and
all Awards to be granted hereunder shall be provided under and governed by, the
laws of the State of Texas (but not including the choice of law rules thereof).
Any disputes concerning the Plan or an Agreement shall be brought before the
federal or state courts of the State of Texas .
25. BINDING EFFECT
Subject to all restrictions provided in this Plan and all applicable
laws, this Plan and all Agreements hereunder shall be binding on and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
26. UNFUNDED PLAN
Insofar as it provides for Awards of cash, Common Stock or rights
thereto, this Plan will be unfunded. Although bookkeeping accounts may be
established with respect to Eligible Persons who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts will be used merely
as
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a bookkeeping convenience. The Company will not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor will this Plan be construed as providing for that segregation, nor
shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Eligible Person with respect to an
Award of cash, Common Stock or rights thereto under this Plan shall be based
solely on any contractual obligations that may be created by this Plan and any
Agreement, and no such liability or obligation of the Company will be deemed to
be secured by any pledge or other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee will be required to give any
security or bond for the performance of any obligation that may be created by
this Plan.
27. MISCELLANEOUS REQUIREMENTS
27.1 OTHER AWARD PROVISIONS
Awards granted under the Plan shall contain such other terms and
provisions that are not inconsistent with this Plan as the Committee may
authorize in its discretion, providing for (a) special vesting schedules
governing the exercisability of an Award; (b) provisions for acceleration of
such vesting schedules in certain events; (c) arrangements whereby the Company
may fulfill any tax obligations for employees in connection with an Award; (d)
provisions imposing restrictions upon the transferability of Common Stock
acquired on exercise of such Award, whether required by this Plan or applicable
securities laws or imposed for other reasons; and (e) provisions regarding the
termination or survival of any such Award upon the Grantee's death, retirement
or other termination of employment and the extent, if any, to which any such
Award may be exercised after such event. Any dispute concerning an Award must be
brought in the federal or state courts of Texas . In interpreting any
inconsistencies, gaps or discrepancies between or among any documents, the Plan
shall control over an Agreement (unless there is an express specific exception
in an Agreement to the Plan), and an Agreement shall control over any letter or
other notice or document describing a grant of an Award.
27.2 CONSENTS
If the Committee shall at any time determine that any Consent (as
hereafter defined) is necessary or desirable as a condition of, or in connection
with, the granting of any Award under the Plan, the issuance or purchase of
shares or other rights thereunder, or the taking of any other action thereunder
("Plan Action"), then such Plan Action shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the full
satisfaction of the Committee. "Consent" with respect to any Plan Action means
(a) any and all listings, registrations or qualifications in respect thereof
upon any securities exchange or under any federal, state or local law, rule or
regulation; (b) any and all written agreements and representations by the
Grantee with respect to the disposition of shares of Common Stock, or with
respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration, or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made; and (c) any and all other
consents, clearances and approvals in respect of a Plan Action.
27.3 NOTICE
Any notice required to be given to the Company hereunder shall be in
writing and shall be addressed to Corporate Secretary, Affiliated Resources
Corporation, 3050 Post Oak Boulevard, Suite 1080, Houston, Texas 77056, or at
such other address the Company may hereafter designate to the Grantee. Any
notice to be given to the Grantee hereunder shall be addressed to the Grantee at
the address set forth beneath his/her signature hereto, or at such other address
as the Grantee may hereafter designate
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to the Company by notice as provided herein. A notice shall be deemed to have
been duly given when personally delivered or mailed by registered mail or
certified mail to the party entitled to receive it.
27.4 NOTICE OF SECTION 83(b) ELECTION AND DISQUALIFYING DISPOSITION
If any Grantee shall, in connection with the acquisition of Common
Stock make the election permitted under Section 83(b) of the Code (i.e., an
election to include in gross income in the year of transfer the amounts
specified in Section 83(b)), such Grantee shall notify the Company within ten
(10) days of filing the notice of election with the Internal Revenue Service.
Further, Grantee must notify the Company of any disposition of any Common Stock
issued pursuant to the exercise of such Award under the circumstances described
in Section 421(b) of the Code (relating to certain disqualifying dispositions)
within 10 days of such disposition.
The Plan was duly adopted and approved by the Board on May 3, 2000, and
was duly adopted and approved by the Stockholders of the Company on June 7,
2000.
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AFFILIATED RESOURCES CORPORATION
3050 Post Oak Boulevard, Suite 1080
Houston, Texas 77056
VOTING BALLOT
The undersigned hereby appoints Peter C. Vanucci and Michael R. Bradle
as Proxies, each with power to appoint its substitute, to represent and to vote
on behalf of the undersigned all shares of common stock which the undersigned is
entitled to vote at the Annual Meeting of Shareholders scheduled to be held on
June 7, 2000 at the Doubletree Hotel, 2001 Post Oak Boulevard, Houston, Texas
77056 at 10:00 a.m., and to any and all adjournments thereof, with all powers
the undersigned would possess if personally present and particularly with
respect to Proposals 1 through 4, and, in their discretion, upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted "FOR" Proposals 1
through 4, and in accordance with the best judgment of the proxies on any other
matters which may properly come before the meeting.
1. ELECTION OF THE FOLLOWING NOMINEES FOR DIRECTOR: Peter C. Vanucci,
Michael R. Bradle, Edward S. Fleming, Harvey R. Hilderbran, and J.
Thomas McManamon (INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name in the space below.)
[ ] FOR all nominees listed, except [ ] WITHHOLD AUTHORITY
as marked to the contrary to vote for all nominees listed
2. APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 25 MILLION TO 50
MILLION
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. RATIFICATION OF THE ADOPTION OF THE CORPORATION'S 2000 INCENTIVE AWARDS
PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF THE APPOINTMENT OF WEINSTEIN SPIRA & COMPANY, P.C. AS THE
CORPORATION'S INDEPENDENT PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. [ ] TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT OF THE MEETING.
DATED:
(Signature)
(Signature if held jointly)
Please sign exactly as name appears in type. When the shares are held for 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.
