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Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
NETAMERICA.COM CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[NETAMERICA.COM LETTERHEAD]
March 30, 2000
Dear NetAmerica.com Corporation Shareholder:
You are cordially invited to attend NetAmerica.com Corporation's 2000
annual meeting of shareholders to be held on Thursday, April 20, 2000 at 10:00
a.m., pacific standard time, at The Park Hyatt Hotel, 333 Battery Park Street,
San Francisco, California 94111.
An outline of the business to be conducted at the meeting is given in
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement.
In addition to the matters to be voted on, there will be a report on our
progress and an opportunity for shareholders to ask questions.
I hope you will be able to join us. To ensure your representation at the
meeting, I encourage you to complete, sign and return the enclosed proxy card as
soon as possible. Your vote is very important. Whether you own a few or many
shares of stock, it is important that your shares be represented.
Sincerely,
/s/ DONALD SLEDGE
----------------------------------
Donald Sledge
Chairman and
Chief Executive Officer
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NETAMERICA.COM CORPORATION
--------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 2000
TO THE SHAREHOLDERS:
The annual meeting of shareholders of NetAmerica.com Corporation will be
held on Thursday, April 20, 2000 at 10:00 a.m., pacific standard time, at The
Park Hyatt Hotel, 333 Battery Park Street, San Francisco, California 94111. At
the meeting, you will be asked:
1. To elect five directors to serve until the 2001 annual meeting of
shareholders;
2. To adopt an amendment to the Company's Certificate of Incorporation
changing the name of the corporation to RateXchange Corporation;
3. To approve the adoption of the 2000 Stock Option and Incentive
Plan;
4. To adopt an amendment to the Company's Certificate of Incorporation
authorizing 60,000,000 shares of preferred stock; and
5. To transact such other business as may properly be presented at the
annual meeting.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice.
If you were a shareholder of record at the close of business on March
27, 2000, you may vote at the annual meeting and any adjournment(s) thereof.
We invite all shareholders to attend the meeting in person. If you
attend the meeting, you may vote in person even if you previously signed and
returned a proxy.
FOR THE BOARD OF DIRECTORS
Paul Wescott
Chief Operating Officer and
Secretary/Treasurer
San Francisco, California
March 30, 2000.
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YOUR VOTE IS IMPORTANT. TO ASSURE REPRESENTATION OF YOUR SHARES, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
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<PAGE> 4
NETAMERICA.COM CORPORATION
TWO EMBARCADERO, SUITE 200
SAN FRANCISCO, CALIFORNIA 94111
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
GENERAL
NetAmerica.com Corporation, a Delaware corporation, is soliciting this
proxy on behalf of its Board of Directors to be voted at the 2000 annual meeting
of shareholders to be held on Thursday, April 20, 2000, at 10:00 a.m., pacific
standard time, or at any adjournment or postponement thereof. The annual meeting
of shareholders will be held at The Park Hyatt Hotel, 333 Battery Park Street,
San Francisco, California 94111.
METHOD OF PROXY SOLICITATION
These proxy solicitation materials were mailed on or about March 30, 2000
to all shareholders entitled to vote at the meeting. NetAmerica.com will pay the
cost of soliciting these proxies. These costs include the expenses of preparing
and mailing proxy materials for the annual meeting and reimbursement paid to
brokerage firms and others for their expenses incurred in forwarding the proxy
materials. Directors, officers and employees of NetAmerica.com may also solicit
proxies without additional compensation.
VOTING OF PROXIES
Your shares will be voted as you direct on your signed proxy card. If you
do not specify on your proxy card how you want to vote your shares, we will vote
signed returned proxies:
- FOR the election of the board's nominees for director,
- FOR an amendment to the Company's Certificate of Incorporation changing
the Company's name to RateXchange Corporation,
- FOR adoption of the 2000 Stock Option and Incentive Plan, and
- FOR an amendment to the Company's Certificate of Incorporation
authorizing 60,000,000 shares of preferred stock.
We do not know of any other business that may be presented at the annual
meeting. If a proposal other than those listed in the notice is presented at the
annual meeting, your signed proxy card gives authority to the persons named in
the proxy to vote your shares on such matters in their discretion.
REQUIRED VOTE
Record holders of shares of NetAmerica.com's common stock, par value $.0001
per share, at the close of business on March 27, 2000, may vote at the meeting.
Each shareholder has one vote for each share of common stock the shareholder
owns. At the close of business on March 27, 2000, there were 17,019,651 shares
of common stock outstanding.
The affirmative vote of a majority of a quorum of shareholders is required
for approval of all items submitted to the shareholders for their consideration.
NetAmerica.com's bylaws provide that a majority of the shares entitled to vote,
represented in person or by proxy, constitutes a quorum for transaction of
business. An automated system administered by NetAmerica.com's transfer agent
tabulates the votes. Abstentions and broker non-votes are counted as present for
purposes of establishing a quorum. Each is tabulated separately. Abstentions are
counted as voted and broker non-votes are counted as unvoted for determining the
approval of any matter submitted to the shareholders for a vote. A broker
non-vote occurs when a broker votes on some matters on the proxy card but not on
others because the broker does not have the authority to do so.
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REVOCABILITY OF PROXIES
You may revoke your proxy by giving written notice to the Secretary of
NetAmerica.com or by delivering a later proxy to the Secretary, either of which
must be received prior to the annual meeting, or by attending the meeting and
voting in person.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors has nominated five directors for election at the
2000 annual meeting. If you elect them, they will hold office until the next
annual meeting, until their respective successors are duly elected and
qualified, or until they retire. Cumulative voting is not permitted. Unless you
specify otherwise, your returned signed proxy will be voted in favor of each of
the nominees. In the event a nominee is unable to serve, your proxy may vote for
another person nominated by the board to fill that vacancy. The Board of
Directors has no reason to believe that any of the nominees will be unavailable.
All directors have served continuously since first elected as a director.
VOTE REQUIRED
The affirmative vote of a majority of a quorum of shareholders is required
to elect a director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH
OF THE NOMINEES LISTED BELOW.
DIRECTORS
Set forth below are the principal occupations of, and other information
regarding, the director nominees.
DOUGLAS D. COLE,
Director of NetAmerica.com since August 1998. Mr. Cole is also a director
of two of our subsidiaries, RateXchange, Inc. and PolarCap, Inc. He served as
Chairman, Chief Executive Officer, President and Principal Accounting Officer of
NetAmerica.com from April 1999 to February 2000. He has served as the CEO of
PolarCap, Inc. since its inception. For the past twenty years, Mr. Cole has
worked in the information technology industry, with focus on sales and
marketing. He has successfully completed numerous acquisitions and strategic
partnerships with various companies. Currently, Mr. Cole is acting Chief
Executive Officer and a member of the Board of Directors of Fulcrum
International, Inc., a privately held Delaware corporation. Mr. Cole is a former
board member of:
- VR1, a privately-held Boulder, Colorado company engaged in the business
of Internet multi-player games,
- Intelliquis International, Inc., a publicly-held company in software
wholesale, and
- RedFish Telemetrix, a privately-held Irvine, California company engaged
in the business of long distance optimization hardware.
From 1995 to 1996, Mr. Cole served as President and CEO of Starpress, Inc. after
Great Bear Technology Company, a publicly held California company, acquired it.
He served as President and CEO of Great Bear from 1993 through 1996. From 1985
through 1991 he served as President, CEO and Executive Vice President of Insight
Development Corporation, a company engaged in the business of network printing
utilities for Hewlett Packard. From 1977 through 1985 he served as Vice
President of Sales and Marketing of The David Jamison Carlyle Corporation. Mr.
Cole graduated from the University of California, Berkeley, in 1978 with a
Bachelor of Arts degree in Social Science. Age: 44.
DONALD H. SLEDGE,
Director of NetAmerica.com since September 1999 and Chairman and Chief
Executive Officer since February 2000. Mr. Sledge is also the Chairman of the
Board and Chief Executive Officer of RateXchange, Inc. Previously, he served as
Vice Chairman and Chief Executive Officer of TeleHub Communications Corporation,
a next generation ATM-based telecommunications company. From 1994 to 1995, Mr.
Sledge was President and Chief Operating Officer of WCT, a $160 million
long-distance telephone company which was one of Fortune Magazine's 25 fastest
growing public companies before it was acquired by Frontier Corporation. Mr.
Sledge has also served as:
- head of operations for New T&T, a Hong Kong based start-up company
competing with Hong Kong Telephone,
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- Chairman and Chief Executive Officer of New Zealand Telecom
International,
- a member of the executive board of TCNZ, where he led privatization and
public offerings,
- Managing Director of New Zealand's largest operating telephone company,
Telecom Auckland Ltd., and
- President and Chief Executive Officer of Pacific Telesis International.
One of the subsidiaries of TeleHub Communications, TeleHub Network Services
Corporation, filed for bankruptcy several months after Mr. Sledge resigned from
TeleHub. Mr. Sledge holds a Master of Business Administration degree and a
Bachelor of Arts degree in Industrial Management from Texas Technological
University. Age: 59.
CHRISTOPHER J. VIZAS,
Director of NetAmerica.com since February 2000. Mr. Vizas is currently the
Chairman and Chief Executive Officer of eGlobe, Inc. Mr. Vizas was elected
Chairman and appointed CEO of this Nasdaq traded company in December 1997.
eGlobe, Inc. operates in 41 nations and territories around the world and
originates telecommunications traffic in more than 90 countries. It provides
global enhanced telecommunications services, primarily Internet protocol-based
services, to carriers around the world. Through longstanding affiliations with
dominant carriers in key markets world-wide, eGlobe is building an intelligent
IP network. Current products and services of eGlobe, Inc. include IP voice, IP
fax, a range of calling card capabilities and unified messaging, along with a
global routing validation and billing competence. Mr. Vizas has extensive
experience in the structuring, development and early stage financing of
telecommunications and information technology business in North America, Europe
and Asia. Among other ventures, he was the co-founder of Orion Network Systems,
the first private multinational satellite company, and served as its Director
and Vice Chairman.
Between March 1995 and April 1997, Mr. Vizas was Chief Executive Officer of
Quo Vadis International, LLC, a Delaware company providing financial and
investment advice. Between April 1994 and March 1995, he was Managing Director
of Kouri Capital Group, a private company that also provides financial and
investment advisory services. Prior to pursuing his business interests, Mr.
Vizas held various positions in the United States government, serving in the
White House Office of Telecommunications Policy, as Special Counsel to the U.S.
Privacy Commission and on the staff of the U.S. House of Representatives. He has
represented the United States in international proceedings and has advised other
governments with regard to ITU and trade issues. Mr. Vizas is a graduate of Yale
University. Age: 50.
D. JONATHAN MERRIMAN,
Director of NetAmerica.com since February 2000. Mr. Merriman is currently
on the Board of Directors of First Security Van Kasper, BigStar Entertainment,
SSE Telecom, Leading Brands Inc. (formerly Brio Industries) and Fiberstars, Inc.
He brings with him 19 years of broad-based institutional investment experience.
In June 1998, Mr. Merriman became Managing Director and Head of the Equity
Capital Markets Group of First Security Van Kasper. In this capacity, he
oversees the Research, Institutional Sales, Equity Trading Syndicate and
Derivatives Trading departments. As a First Security Van Kasper board member,
Mr. Merriman also serves on the Management Committee, the Executive Committee,
the Commitment Committee and the First Security Van Kasper Advisors Investment
Committee.
Since June 1997, Mr. Merriman has served as Managing Director and head of
Capital Markets at The Seidler Companies in Los Angeles, where he also serves on
that firm's Board of Directors. Since December 1990, he has served as Managing
Director of Imperial Capital. Prior to Seidler, Mr. Merriman was Director of
Equities for Dabney/Resnick/Imperial, LLC where he increased that firm's equity
department from two principals to a sales, research and trading operation
comprising over 35 professionals. In 1989, Mr. Merriman co-founded the hedge
fund company Curhan, Merriman Capital Management, Inc., which managed money for
high net worth individuals and corporations in a market neutral strategy. Prior
to Curhan, Merriman Capital Management, Inc., he worked in the Risk Arbitrage
Department at Bear Stearns & Co. as a trader/analyst where he covered hedge and
arbitrage funds, researched special situations, and managed a position trading
account for the firm. Mr. Merriman began his career with Merrill Lynch's
Investment Banking Division where he worked on public offerings for growth
companies. He then joined Merrill Lynch's Institutional Equity Sales Department,
covering both mainstream institutions and equity hedge funds, while completing
coursework at New York University's Graduate School of Business. Mr. Merriman
received his Bachelor of Arts in Psychology from Dartmouth College. Age: 39.
RONALD E. SPEARS,
Director of NetAmerica.com since March 2000. Since May 1999, Mr. Spears has
overseen the formulation and implementation of CMGI Solutions' corporate-wide
development related to strategic planning, corporate vision, marketing, business
alliances and communications as CMGI Solutions' President and Chief Executive
Officer. He has over 20 years of leadership in the communications industry, and
has managed both telecommunications start-ups and established long distance
powerhouses. Mr. Spears joined CMGI Solutions after serving as an executive
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officer of e.spire Communications, Inc., one of the nation's fastest growing
integrated communications providers. As President and Chief Operating Officer of
e.spire Communications, Mr. Spears was responsible for day-to-day business
operations, including marketing, sales, customer service, network planning and
implementation, technology support and information systems. Previously he was
Corporate Vice President at Citizens Utilities, managing that company's
independent telephone company operations in 13 states, as well as director of
CLEC operations in five markets. He also served as President of MCI's Midwest
Division, from 1984 to 1990. A pioneer of the competitive long distance
industry, Mr. Spears began his career in telecommunications as a Manager of AT&T
Longlines, following eight years as an officer in the U.S. Army. He is a
graduate of the United States Military Academy at West Point and also holds a
Master's Degree in Public Service from Western Kentucky University. Age: 51.
BOARD MEETINGS AND COMMITTEES
In fiscal year 1999 the Board of Directors held two board meetings, with
each board member in attendance. The board also executed various resolutions and
written actions in lieu of meeting. During the 1999 fiscal year, the board
established an Audit Committee and a Compensation Committee.
The principal functions of the Audit Committee are to recommend engagement
of our independent auditors, to consult with our auditors concerning the scope
of the audit and to review with them the results of their examination, to
approve the services performed by the independent auditors, to review and
approve any material accounting policy changes affecting our operating results
and to review our financial control procedures and personnel. The following
board members served as Audit Committee members during 1999: John Dixon, Edward
Mooney and Douglas Cole. John Dixon and Edward Mooney resigned as committee
members pursuant to their resignations from the board in February 2000 and were
replaced by Christopher Vizas and D. Jonathan Merriman. The Audit Committee held
no meetings in 1999.
The Compensation Committee reviews compensation and benefits for
NetAmerica.com's executives. The Compensation Committee also administers
NetAmerica.com's stock option plans. Pursuant to delegated authority from the
Board of Directors, Donald Sledge, as Chief Executive Officer, determines all
salaries except for NetAmerica.com's corporate officers. The following board
members served as Compensation Committee members during 1999: Douglas Cole, John
Dixon and Douglas Glen. John Dixon and Douglas Glen resigned from the Committee
pursuant to their resignations from the board in February and March 2000 and
were replaced by Christopher Vizas and Ronald Spears. The Compensation Committee
held one meeting in 1999, with each member of the committee in attendance.
COMPENSATION OF DIRECTORS
Directors of the Company may receive stock option grants for service on the
board at the sole discretion of non-interested board members. Messrs. Cole and
Mooney each received options to purchase 100,000 shares of the Company's common
stock in January 1999 at an exercise price of $1.60 per share for their services
as board members. Mr. Glen received options to purchase 175,000 shares of
Company stock in April 1999 at an exercise price of $1.60 per share for his
service as a board member. For their services on the board, Messrs. Sledge and
Dixon each received options to purchase 100,000 shares of Company stock in
October 1999 at an exercise price of $2.75 per share. NetAmerica.com's
non-employee directors receive $500 for each board meeting attended in person
and $100 for each board meeting attended telephonically, plus out-of-pocket
expenses. There is no separate compensation for committee meeting attendance.
PROPOSAL TWO
AMENDMENT TO CHANGE THE COMPANY'S NAME
TO RATEXCHANGE CORPORATION
The Board of Directors of NetAmerica.com has approved, and recommends that
shareholders approve, adoption of an amendment to the Company's Certificate of
Incorporation changing the Company's name from NetAmerica.com Corporation to
RateXchange Corporation.
It is the Company's intent to restructure itself to focus its business
strategy on the continued development and expansion of the operations of its
subsidiary, RateXchange, Inc., which provides a business-to-business e-commerce
marketplace for buying and selling bandwidth and other telecommunications
products and services. As part of this restructuring, the Company intends to
change its name to RateXchange Corporation. The Board believes that changing the
Company's name to RateXchange Corporation will better reflect the Company's
focus on the business-to-business e-commerce vertical marketplace for the
telecommunications industry.
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The amendment to the Certificate of Incorporation changing the Company's
name to RateXchange Corporation, if approved by shareholders, will be effective
upon the execution, acknowledgement and filing of a certificate of amendment
with the Delaware Secretary of State.
This summary of the amendment is qualified in its entirety by reference to
the amendment itself, "Certificate of Amendment of Certificate of Incorporation
of NetAmerica.com Corporation," a copy of which is attached hereto as Appendix
A.
VOTE REQUIRED
The affirmative vote of a majority of a quorum of shareholders is required
to amend the Company's Certificate of Incorporation to change the Company's
name.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSAL TO ADOPT AN AMENDMENT TO THE CERTIFICATE OF
INCORPORATION CHANGING THE COMPANY'S NAME TO RATEXCHANGE CORPORATION.
PROPOSAL THREE
APPROVAL OF THE 2000 STOCK OPTION AND INCENTIVE PLAN
The Board of Directors of NetAmerica.com has approved, and recommends that
shareholders approve, adoption of the 2000 Stock Option and Incentive Plan for
employees, officers and directors of, and consultants and advisors to, the
Company and any subsidiary.
The board believes that the issuance of stock options, restricted stock and
restricted stock units under the 2000 Plan is an essential element of the
compensation package the Company uses to attract and retain employees in the
highly competitive Internet and e-commerce industries. The 2000 Plan utilizes
vesting periods and other restrictions to encourage key employees to continue in
the employ of the Company which vesting periods and restrictions act as
retention devices for those employees and encourage them to maintain a long-term
perspective. Furthermore, such issuances promote the success and enhance the
value of the Company by linking the personal interests of its employees,
officers, directors, consultants and advisors to those of its shareholders and
by providing such individuals with an incentive to work to maximize shareholder
value.
The plan, if approved by shareholders, will have an effective date of
February 28, 2000, the date the 2000 Plan was approved by the board. An
aggregate of 5,000,000 shares of our common stock will be available for grant
under the 2000 Plan. We intend to register all of the shares available under the
plan on Form S-8 under the Securities Act of 1933 as soon as practicable after
receiving shareholder approval pursuant to this Proxy Statement.
Because they may be granted stock options, restricted stock and restricted
stock units under the 2000 Plan, the Company's officers and directors have a
direct, substantial interest in this proposal.
The plan is described in more detail under the heading "2000 Stock Option
and Incentive Plan," beginning on page 13 of this Proxy Statement and is
qualified in its entirety by reference to the 2000 Plan, a copy of which is
attached hereto as Appendix B.
VOTE REQUIRED
The affirmative vote of a majority of a quorum of shareholders is required
for the adoption of the 2000 Stock Option and Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
ADOPTION OF THE 2000 STOCK OPTION AND INCENTIVE PLAN.
PROPOSAL FOUR
AUTHORIZATION OF PREFERRED STOCK
The Board of Directors of NetAmerica.com has approved, and recommends that
shareholders approve, adoption of an amendment to the Company's Certificate of
Incorporation authorizing 60,000,000 shares of blank check preferred stock. The
term "blank check" preferred stock refers to stock for which the designations,
preferences, rights, qualifications, limitations and restrictions thereof are
determined by the Board of Directors. Thus, if the preferred stock is approved,
the Board of Directors would be entitled to authorize the creation and
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issuance of up to 60,000,000 shares of preferred stock in one or more series
with such limitations and restrictions as may be determined at the board's sole
discretion, without further authorization by the Company's shareholders.
Shareholders will not have preemptive rights to subscribe for shares of
preferred stock.
The Company currently has no authorized stock other than common stock. The
Board of Directors believes that it is advisable to authorize the preferred
shares and have them available in connection with possible future transactions,
such as financings, strategic alliances, corporate mergers, acquisitions,
possible funding of new product programs or businesses and other uses not
presently determinable and as may be deemed feasible and in the best interests
of the Company.
The Board of Directors believes that authorizing the Company to issue blank
check preferred stock will provide the Company with a capital structure better
suited to meet the Company's short and long-term capital needs. Having the
authority to create an equity instrument with provisions to be determined at the
time of issuance provides for great flexibility in financing the future
operations of the Company. For example, blank check preferred stock permits the
Company to negotiate the precise terms of an equity investment by creating a new
series of preferred stock without incurring the cost and delay of obtaining
shareholder approval, except as otherwise required by law. This allows the
Company to more effectively negotiate with and satisfy the precise financial
criteria of any investor in a timely manner. Many investors require a stated
return on their investment and/or convertibility into common stock or other
features which preferred stock can be designated to provide. Although the Board
of Directors believes that having the ability to offer preferred stock as an
alternative to common stock will greatly enhance the Company's ability to obtain
financing, there can be no assurance that the Company will be able to raise such
financing on terms acceptable to the Company, if at all.
The Board of Directors is required by Delaware law to make any
determination to issue shares of preferred stock based upon the best interests
of the Company and its shareholders. When in the judgment of the Board of
Directors such action would be in the best interests of our shareholders, the
issuance of preferred stock could be used to create voting or other impediments
or to discourage persons seeking to gain control of the Company, for example, by
the sale of preferred stock to purchasers favorable to the Board of Directors.
In addition, the Board of Directors could authorize holders of a series of
preferred stock to vote either separately as a class or with the holders of
common stock, on any merger, sale or exchange of assets by the Company or any
other extraordinary corporate transaction. The existence of the additional
authorized shares could have the effect of discouraging unsolicited takeover
attempts. It may also be used to dilute the stock ownership of a person or
entity seeking to obtain control of the Company should the Board of Directors
consider the action of such entity or person not to be in the best interests of
the Company and its shareholders.
The authorization of new shares of preferred stock will not, by itself,
have any effect on the rights of the holders of shares of common stock.
Nonetheless, the issuance of the preferred stock could affect the holders of
common stock in a number of respects, including: (i) if voting rights are
granted to holders of preferred stock, the voting power of holders of common
stock will be diluted, (ii) the issuance of preferred stock may result in a
dilution of earnings per share of the common stock, (iii) dividends payable on
the preferred stock will reduce the amount of funds available for payment of
dividends on the common stock, and (iv) future amendments to the Certificate of
Incorporation affecting holders of preferred stock may require approval by the
separate vote of these shareholders (in addition to the approval of the holders
of shares of the common stock) before action can be taken by the Company.
Currently, the board does not know pursuant to which transactions all of
the blank check preferred stock may be issued. Specifically, the board cannot
anticipate the nature or amount of consideration to be received by the Company
in exchange for all of these shares. Although the board also cannot determine at
this point what portion of the consideration received upon the sale of these
shares will be devoted to which specific purposes, the board does anticipate
that most of the net proceeds realized will be used as general working capital.
Additionally, the board cannot anticipate, in each case, whether the preferred
stock will be issued otherwise than in a general public offering for cash.
The amendment to the Certificate of Incorporation authorizing 60,000,000
shares of blank check preferred stock, if approved by shareholders, will be
effective upon the execution, acknowledgement and filing of a certificate of
amendment with the Delaware Secretary of State.
The board reserves the right, notwithstanding shareholder approval and
without further action by shareholders, to not proceed with the amendment if, at
any time prior to filing the Certificate of Amendment with the Secretary of
State of the State of Delaware, or prior to the effective date of the
Certificate of Amendment, the board, in its sole discretion, determines that the
amendment is no longer in the best interests of the Company and its
shareholders. The board may consider a variety of factors in determining whether
or not to implement the amendment including, but not limited to, overall trends
in the stock market, recent changes and anticipated trends in the market price
per share of the Company's common stock, business and transactional developments
and the Company's actual and projected financial performance.
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This summary of information concerning the Amendment is qualified in its
entirety by reference to the amendment itself, "Certificate of Amendment of
Certificate of Incorporation of NetAmerica.com Corporation," a copy of which is
attached hereto as Appendix A.
VOTE REQUIRED
The affirmative vote of a majority of a quorum of shareholders is required
to amend the Company's Certificate of Incorporation to authorize 60,000,000
shares of preferred stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THIS PROPOSAL TO AUTHORIZE 60,000,000 SHARES OF PREFERRED STOCK.
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OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of common stock of the Company, other than directors' qualifying
shares, as of March 27, 2000, by (i) each person who is known by us to own
beneficially more than five percent, (ii) each of our directors and director
nominees, (iii) each of our executive officers including all those who served as
chief executive officer during the 1999 fiscal year and (iv) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
NON-MANAGEMENT BENEFICIAL OWNERS SHARES BENEFICIALLY OWNED PERCENTAGE(1)
- -------------------------------- ------------------------- -------------
<S> <C> <C>
Maroon Bells Capital Partners, Inc.(2) 1,967,844 11.26%
450 Sansome Street, Suite 1550, San Francisco, CA 94111
Malcolm E. Rogers(3) 843,000 5.0%
1239 Shendoah Drive, Seattle, WA 98112
Theodore Swindells(4) 2,067,844 11.80%
450 Sansome Street, Suite 1550, San Francisco, CA 94111
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
Douglas Cole(5) 818,151 4.77%
Edward Mooney(6) 562,500 3.27%
Donald Sledge(7) 1,000,000 5.55%
Christopher Vizas(8) 50,000 *
Ross Mayfield(9) 161,988 *
Paul Wescott(10) 79,167 *
Ronald Spears(11) 50,000 *
D. Jonathan Merriman(12) 160,000 *
Phillip Rice(13) 8,333 *
All Directors and Executive Officers(14) 2,890,139 15.45%
</TABLE>
- ----------
* Less than one percent.
(1) Applicable percentage ownership is based on 17,019,651 shares of common
stock outstanding as of the record date, March 27, 2000. Pursuant to the
rules of the Securities and Exchange Commission, shares shown as
"beneficially" owned include all shares of which the persons listed have
the right to acquire beneficial ownership within 60 days of the record
date, including (a) shares subject to options, warrants or any other right
exercisable within 60 days of the record date, even if these shares are
not currently outstanding, (b) shares attainable through conversion of
other securities, even if these shares are not currently outstanding, (c)
shares that may be obtained pursuant to the power to revoke a trust,
discretionary account or similar arrangement and (d) shares that may be
obtained pursuant to the automatic termination of a trust, discretionary
account or similar arrangement. This information is not necessarily
indicative of beneficial ownership for any other purpose. Our directors
and executive officers have sole voting and investment power over the
shares of common stock held in their names, except as noted in the
following footnotes.
(2) Includes 1,104,469 shares of common stock beneficially held by Theodore
Swindells, including Mr. Swindells' currently exercisable warrant to
purchase 25,000 shares at $5.00 per share, and 200,000 shares of common
stock held of record by Phillip Magiera. Messrs. Swindells and Magiera are
principals of Maroon Bells Capital Partners, Inc. (MBCP). MBCP disclaims
beneficial ownership of these shares. Also includes
8
<PAGE> 12
currently exercisable warrants to purchase 250,000 shares at $2.75 per
share, 3,375 shares at $5 per share and 200,000 shares at $14.40 per
share.
(3) Includes currently exercisable options to purchase 50,000 shares of common
stock at $0.33 per share, 50,000 shares of common stock at $1.06 per share
and 50,000 shares of common stock at $2.75 per share.
(4) Includes 663,375 shares of common stock held of record by MBCP, including
currently exercisable warrants to purchase 453,375 shares held by MBCP.
Mr. Swindells, who is a principal of MBCP, may be deemed a beneficial
owner of the shares held of record by MBCP. Mr. Swindells disclaims
beneficial ownership these shares. Also includes 300,000 shares of common
stock held by Mr. Swindells' family and warrants to purchase 25,000 shares
at $5.00 per share, as well as the right to convert $100,000 of Company
indebtedness into common stock at $5.00 per share.
(5) Includes 35,500 shares held by members of Mr. Cole's family. Includes
currently exercisable options to purchase 100,000 shares of common stock
at $1.60 per share, and 50,000 shares of common stock at $7 per share. Mr.
Cole also holds options to purchase 50,000 shares of common stock that are
not currently exercisable.
(6) Includes Mr. Mooney's currently exercisable options to purchase 100,000
shares of common stock at $1.60 per share, and 62,500 shares of common
stock at $7 per share. Mr. Mooney also holds options to purchase 37,500
shares of common stock that are not currently exercisable.
(7) Includes Mr. Sledge's currently exercisable options to purchase 100,000
shares of common stock at $2.75 per share, and 900,000 shares of common
stock at $7 per share. Mr. Sledge holds additional options to purchase
600,000 shares of common stock that are not currently exercisable.
(8) Includes Mr. Vizas' currently exercisable options to purchase 50,000
shares of common stock at $7 per share. Mr. Vizas also holds options to
purchase 50,000 shares of common stock that are not currently exercisable.
(9) Includes Mr. Mayfield's currently exercisable options to purchase 145,313
shares of common stock at $7 per share. Mr. Mayfield also holds options to
purchase 254,687 shares of common stock that are not currently
exercisable.
(10) Includes Mr. Wescott's currently exercisable options to purchase 75,000
shares of common stock at $2.75 per share. Mr. Wescott also holds options
to purchase an additional 325,000 shares of common stock that are not
currently exercisable.
(11) Includes Mr. Spears' currently exercisable options to purchase 50,000
shares of common stock at $7 per share. Mr. Spears also holds options to
purchase 50,000 shares of common stock that are not currently exercisable.
(12) Includes Mr. Merriman's currently exercisable options to purchase 50,000
shares of common stock at $7 per share. Mr. Merriman also holds options to
purchase 50,000 shares of common stock that are not currently exercisable.
(13) Mr. Rice holds options to purchase 250,000 shares of common stock that are
not currently exercisable.
(14) The total for directors and officers as a group includes 1,207,326 shares
of common stock and 1,682,813 shares subject to outstanding stock options
that are currently exercisable.
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation paid
for services rendered during the last three completed fiscal years to the Chief
Executive Officer and the executive officers of NetAmerica.com, as well as
certain executive officers of our subsidiary, RateXchange, Inc., who were
appointed executive officers of NetAmerica.com in February 2000, whose annual
salary, bonus and other compensation exceeded $100,000 in 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------ -------
Name and Principal Restricted Securities
Position Other Annual Stock Underlying LTIP All Other
Year Salary Bonus Compensation Awards Options Payouts Compensation
---- ------ ----- ------------ ------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas Cole(1) 1999 $126,000 $125,000 $0 $0 100,000 $0 $0
Chairman and 1998 N/A N/A N/A N/A N/A N/A N/A
Chief Executive 1997 N/A N/A N/A N/A N/A N/A N/A
Officer
Edward Mooney(2) 1999 $ 90,000 $125,000 $0 0 100,000 $0 $0
Executive Vice 1998 N/A N/A N/A N/A N/A N/A N/A
President, 1997 N/A N/A N/A N/A N/A N/A N/A
Secretary and
Treasurer
Donald Sledge(3) 1999 $ 94,653 $ 75,000 $0 $0 100,000 $0 $0
Chairman and 1998 N/A N/A N/A N/A N/A N/A N/A
Chief Executive 1997 N/A N/A N/A N/A N/A N/A N/A
Officer
Ross Mayfield(4) 1999 $ 87,619 $0 $0 $0 100,000 $0 $0
President 1998 N/A N/A N/A N/A N/A N/A N/A
1997 N/A N/A N/A N/A N/A N/A N/A
Paul Wescott(5) 1999 $ 64,230 $0 $0 $0 150,000 $0 $0
Chief Operating 1998 N/A N/A N/A N/A N/A N/A N/A
Officer and 1997 N/A N/A N/A N/A N/A N/A N/A
Secretary/
Treasurer
</TABLE>
(1) Mr. Cole was hired as an officer on April 1, 1999 and resigned in February
2000. Mr. Cole's annual salary was $168,000 plus a bonus, pursuant to his
employment agreement. Mr. Cole's bonus of $125,000 accrued at year end on
the Company's books; however, the bonus was not paid to Mr. Cole until
2000.
(2) Mr. Mooney was hired as an officer on April 1, 1999 and resigned as
Executive Vice President in February 2000 and as Secretary and Treasurer in
March 2000. Mr. Mooney's annual salary was $120,000 plus a bonus, pursuant
to his employment agreement. Mr. Mooney's bonus of $125,000 accrued at year
end on the Company's books; however, the bonus was not paid to Mr. Mooney
until 2000.
(3) Mr. Sledge was hired on September 15, 1999 as one of our directors and as
the Chairman and CEO of RateXchange, Inc., one of our subsidiaries. Mr.
Sledge was appointed our Chairman and Chief Executive Officer in February
2000. Mr. Sledge's annual salary at RateXchange was $300,000 plus a bonus,
pursuant to his employment agreement. Mr. Sledge also received
approximately $1,000 each month for car allowance and approximately $1,000
each month for payment of whole life insurance premiums.
10
<PAGE> 14
(4) Mr. Mayfield was hired as an executive officer of RateXchange, Inc., one of
our subsidiaries, in July 1999. While employed at RateXchange, Mr. Mayfield
served, at various times during 1999, as Vice President of Sales and
Marketing, Chief Operating Officer and President. Mr. Mayfield's annual
salary at RateXchange during 1999 was $165,000, plus a bonus, pursuant to
his employment agreement. Mr. Mayfield was appointed our President in
February 2000.
(5) Mr. Wescott was hired as an executive officer of RateXchange, Inc., one of
our subsidiaries, in September 1999. While employed at RateXchange, Mr.
Wescott served, at various times during 1999, as an Executive Vice
President, Chief Operating Officer and Vice President of Business
Development. Mr. Wescott's annual salary at RateXchange during 1999 was
$165,000, plus bonuses, pursuant to his employment agreement. Mr. Wescott
was appointed our Chief Operating Officer in February 2000 and our
Secretary and Treasurer in March 2000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding options granted during
fiscal year 1999 to the named executive officers. No stock appreciation rights
were granted in 1999.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------
Percent of
Number of Total Potential Realizable Value at
Securities Options Exercise Assumed Annual Rates of Stock
Underlying Granted to or Base Price Appreciation for Option Term
Options Employees Price Per Expiration
Name Granted in 1999 Share(1) Date 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Douglas Cole 100,000 3.28% $1.60 1/2004 $ 44,205.05 $ 97,681.60
Edward Mooney 100,000 3.28% $1.60 1/2004 $ 44,205.05 $ 97,681.60
Donald Sledge 100,000 3.28% $2.75 10/2004 $ 75,977.42 $167,890.25
Ross Mayfield 40,000 1.31% $2.50 7/2004 $ 27,628.15 $ 61,051.00
60,000 1.97% $2.75 7/2004 $ 45,586.45 $100,734.15
Paul Wescott 150,000 4.92% $2.75 9/2004 $113,966.13 $251,835.37
</TABLE>
(1) The exercise prices of the options included in this table reflect the
board's bona fide estimation of market value of the shares on the various grant
dates. The shares underlying each of these options are restricted shares. In
addition, Company shares are currently traded on the OTC Bulletin Board, making
it difficult to determine the value of restricted shares of the same class.
11
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE CHART
The graph below compares the 12 month total return to shareholders
(stock price appreciation plus reinvested dividends) for the Company's common
stock with the comparable return of two indices: the Russell 2000 Index and the
Hambrecht & Quist Internet Index (the "Peer Group"). Representative companies in
the Peer Group include the following companies: Amazon.com Inc., DoubleClick
Inc., eBay Inc., Egghead.com Inc., E*TRADE Group Inc., Network Solutions, Inc.,
EarthLink Network, USWeb Corp., America OnLine, Intuit, Yahoo!, Microsoft Corp.,
Netscape Communications, and Internet Security Systems, Inc. The graph assumes
investment of $100 in the Company's common stock and in each of the indices on
December 18, 1998, when the stock first traded on OTC Bulletin Board, and that
all dividends were reinvested.
COMPARISON OF 12 MONTH CUMULATIVE TOTAL RETURN*
AMONG NETAMERICA.COM CORP., THE RUSSELL 2000 INDEX
AND THE HAMBRECHT & QUIST INTERNET INDEX
[GRAPH]
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------------------------
12/18/1998 12/31/1998 12/31/1999
<S> <C> <C> <C>
NETAMERICA.COM CORP. 100.00 111.11 133.33
RUSSELL 2000 100.00 103.14 101.60
HAMBRECHT & QUIST INTERNET 100.00 120.56 418.01
</TABLE>
12
<PAGE> 16
2000 STOCK OPTION AND INCENTIVE PLAN
The Board of Directors has approved, and recommends that the shareholders
approve, the adoption of the 2000 Stock Option and Incentive Plan for employees,
officers and directors of, and consultants and advisors to, the Company and any
subsidiary. The plan authorizes grants of Incentive Stock Options ("ISOs") or
Nonqualified Stock Options ("NQSOs"), in addition to restricted stock and
restricted stock units. The plan was established to provide a simplified
mechanism for the granting of stock options and restricted stock to eligible
individuals.
The board believes that the issuance of stock options, restricted stock and
restricted stock units under the plan is beneficial to the Company as a means of
promoting the success and enhancing the value of the Company by linking the
personal interests of its employees, officers, directors, consultants and
advisors to those of its shareholders and by providing such individuals with an
incentive for outstanding performance. These incentives also provide the Company
flexibility in its ability to attract and retain the services of individuals
upon whose judgment, interest and special effort the successful conduct of the
Company's operation is largely dependent. The following summary is qualified by
reference to the 2000 Plan, a copy of which is attached hereto as Appendix B.
ADMINISTRATION
The 2000 Plan will be administered by either the board or a committee of
the board. Either the board or the committee will have the exclusive authority
to administer the 2000 Plan, including the power to determine eligibility, the
types and sizes of awards, the price and timing of awards and the acceleration
or waiver of any vesting restriction.
ELIGIBILITY
Persons eligible to participate in the plan include all employees, officers
and directors of, and consultants and advisors to the Company and its
subsidiaries, as determined by the board or board committee.
TERMINATION PROVISION
Stock Options. The plan provides that in the event an individual ceases to
be employed by the Company or its subsidiary for any reason other than death,
disability or election or appointment as a director, each option which is
exercisable on the individual's termination date must be exercised within ninety
days after the termination date unless otherwise provided by the board or
committee pursuant to the option grant. Each option that has not vested in
accordance with the 2000 Plan will terminate immediately upon termination of the
grantee's employment or other relationship with the Company or subsidiary. To
the extent any ISOs are not exercised within three months after an individual's
termination date, they will be treated as NQSOs.
Restricted Stock Awards. In the event an individual ceases to be employed
by the Company or its affiliates for any reason, other than death, disability or
election or appointment as a director, shares of restricted stock or restricted
stock units that have not vested or with respect to which all restrictions have
not lapsed, shall be immediately forfeited, unless otherwise provided by the
board or committee.
LIMITATION ON OPTIONS AND SHARES AVAILABLE
An aggregate of 5,000,000 shares of the Company's common stock are
available for grant under the plan. The maximum number of shares of stock that
may be subject to one or more option grants to a single participant under the
plan during any fiscal year is 1,000,000, during any time the Company has a
class of equity security registered under Section 12 of the Securities Exchange
Act of 1934.
DESCRIPTION OF THE AVAILABLE AWARDS
INCENTIVE STOCK OPTIONS
An ISO is a stock option that satisfies the requirements specified in
Internal Revenue Code Section 422. Under the Code, ISOs may only be granted to
employees. In order for an option to qualify as an ISO, the price payable to
exercise the option must equal or exceed the fair market value of the stock on
the date of the grant, the option must lapse no later than 10 years from the
date of the grant and the stock subject to ISOs that are first exercisable by an
employee in any calendar year must not have a value of more than $100,000 as of
the date of grant. Certain other requirements must also be met.
An optionee will not be treated as receiving taxable income upon either the
grant of an ISO or upon the exercise of an ISO. However, the difference between
the exercise price and the fair market value on the date of exercise will be an
item of tax preference at the time of exercise in determining liability for the
alternative minimum tax, assuming that the stock is either transferable or is
not subject to a substantial risk of forfeiture under Section 83
13
<PAGE> 17
of the Code. If at the time of exercise, the common stock is both
nontransferable and is subject to a substantial risk of forfeiture, the
difference between the exercise price and the fair market value of the common
stock (determined at the time the common stock becomes either transferable or
not subject to a substantial risk of forfeiture) is a tax preference item in the
year in which the common stock becomes either transferable or not subject to a
substantial risk of forfeiture.
If stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date such stock is transferred to the optionee, any gain or
loss resulting from its disposition will be treated as long-term capital gain or
loss. If such stock is disposed of before the expiration of the above-mentioned
holding periods, a "disqualifying disposition" will occur. If a disqualifying
disposition occurs, the optionee will realize ordinary income in the year of the
disposition in an amount equal to the difference between the fair market value
of the stock on the date of exercise and the exercise price, or the selling
price of the stock and the exercise price, whichever is less. The balance of the
optionee's gain on a disqualifying disposition, if any, will be taxed as capital
gain.
In the event an optionee exercises an ISO using stock acquired by a
previous exercise of an ISO, unless the stock exchange occurs after the required
holding periods, such exchange shall be deemed a disqualifying disposition of
the stock exchanged.
The Company will not be entitled to any tax deduction as a result of the
grant or exercise of an ISO, or on a later disposition of the stock received,
except that in the event of a disqualifying disposition, the Company will be
entitled to a deduction equal to the amount of ordinary income realized by the
optionee.
NON-QUALIFIED STOCK OPTIONS
An NQSO is any stock option other than an incentive stock option. Such
options are referred to as "nonqualified" because they do not meet the
requirements of, and are not eligible for, the favorable tax treatment provided
by Section 422 of the Code.
No taxable income will be realized by an optionee upon the grant of an
NQSO, nor is the Company entitled to a tax deduction by reason of such grant.
Upon the exercise of an NQSO, the optionee will realize ordinary income in an
amount equal to the excess of the fair market value of the stock on the date of
exercise over the exercise price and the Company will be entitled to a
corresponding tax deduction.
Upon a subsequent sale or other disposition of stock acquired through
exercise of an NQSO, the optionee will realize capital gain or loss to the
extent of any intervening appreciation or depreciation. Such a resale by the
optionee will have no tax consequence to the Company.
RESTRICTED STOCK AWARDS
Under the restricted stock feature of the 2000 Plan, an eligible individual
may be granted a specified number of shares of stock. However, vested rights to
such stock are subject to certain restrictions or may be conditioned on the
attainment of certain performance goals. If the recipient violates any of the
restrictions during the period specified by the board or committee, or the
performance standards fail to be satisfied, the stock is forfeited.
A restricted stock award is taxable as ordinary income to the recipient at
the time, and to the extent, the award is no longer subject to a risk of
forfeiture. The recipient of a restricted stock award will recognize ordinary
income equal to the excess of (a) fair market value of the stock received
(determined as of the first time the shares are no longer subject to a risk of
forfeiture) over (b) the amount, if any, paid for such stock by the recipient,
and the Company will be entitled at that time to a tax deduction for the same
amount.
Instead of postponing the income tax consequences of a restricted stock
award, the recipient may elect to include the fair market value of the stock
covered by the award as income in the year the award is granted, in which case
the Company will be entitled to a corresponding federal income tax deduction.
This election is made under Section 83(b) of the Code by filing a written notice
with the Internal Revenue Service office with which the recipient files his or
her Federal income tax return. The notice must be filed within thirty (30) days
of the date of grant and must meet certain technical requirements.
The tax treatment of the subsequent disposition of restricted stock will
depend upon whether the recipient has made a Section 83(b) election to include
the value of the stock in income when awarded. If the recipient makes a Section
83(b) election, any disposition thereafter will result in a capital gain or loss
equal to the difference between the selling price of the stock and the fair
market value of the stock on the date of grant. If no Section 83(b) election is
made, any disposition thereafter will result in a capital gain or loss equal to
the difference between the selling price of the stock and the fair market value
of the stock on the date the restrictions lapsed. The character of such capital
gain or loss will depend upon the period the restricted stock is held.
14
<PAGE> 18
RESTRICTED STOCK UNIT AWARDS
Under the restricted stock unit feature of the 2000 Plan, an eligible
individual may be granted a restricted stock unit award which provides the
recipient the right to receive or purchase shares of stock in the future.
Generally, restricted stock unit awards have no federal income tax consequences
at the time of grant.
The recipient of stock pursuant to a restricted stock unit award will
recognize ordinary income equal to the excess of (a) fair market value of the
stock received over (b) the amount, if any, paid for such stock by the
recipient, and the Company will be entitled at that time to a tax deduction for
the same amount.
Upon a subsequent sale or other disposition of stock acquired through a
restricted stock unit, the recipient will realize capital gain or loss to the
extent of any intervening appreciation or depreciation. Such a resale by the
recipient will have no tax consequence to the Company.
RECENT TAX CHANGES
Section 162(m) of the Code, adopted as part of the Revenue Reconciliation
Act of 1993, generally limits to $1 million the deduction that can be claimed by
any publicly-held corporation for compensation paid to any covered employee in
any taxable year. Performance-based compensation is outside the scope of the $1
million limitation and, hence, generally can be deducted by a publicly-held
corporation without regard to amount, provided that, among other requirements,
such compensation is approved by shareholders. Among the items of
performance-based compensation that can be deducted without regard to amount
(assuming shareholder approval and other applicable requirements are satisfied)
is compensation associated with the exercise price of a stock option so long as
the option has an exercise price equal to or greater than the fair market value
of the underlying stock at the time of the option grant. All options granted
under the plan that are intended to qualify as performance-based compensation
will have an exercise price at least equal to the fair market value of the
underlying stock on the date of grant.
AMENDMENT AND TERMINATION
The Board of Directors may amend, suspend or terminate the plan at any time
as to shares of stock as to which grants have not been awarded; provided,
however, that shareholder approval is required for any amendment that would
alter the 2000 Plan such that it does not comply with the Internal Revenue Code.
Shareholder approval is also required to the extent necessary or desirable to
comply with any applicable law, regulation or stock exchange rule.
Except for limited circumstances described in the 2000 Plan, the board
shall not amend, suspend or terminate the 2000 Plan without the consent of the
grantee, where such amendment, suspension or termination will have the effect of
altering or impairing the rights or obligations of any grant theretofore
awarded.
ASSUMPTION OF OPTIONS BY SUCCESSORS
The following events constitute a "Change in Control" for purposes of the
2000 Plan: (i) the dissolution or liquidation of the Company or a merger,
consolidation or reorganization of the Company with one or more entities in
which the Company is not the surviving entity, (ii) a sale of substantially all
of the assets of the Company to another entity or (iii) any transaction which
results in any person or entity (other than persons who are shareholders or
affiliates of the Company at the time the 2000 Plan is approved by the Company's
shareholders) owning at least 80% of the combined voting power of all classes of
stock of the Company. All outstanding restricted stock and restricted stock
units shall be deemed to have vested and all applicable restrictions and
conditions shall be deemed lapsed, immediately prior to the Change in Control.
Fifteen days prior to a scheduled consummation of a Change in Control, all
outstanding options granted pursuant to the 2000 Plan shall become immediately
exercisable for a period of fifteen days. Exercise of any option during this
fifteen-day period will be conditioned upon consummation of the event resulting
in the Change in Control. Upon such consummation, all outstanding but
unexercised options shall terminate.
Immediate vesting of restricted stock, restricted stock units and all
outstanding options shall not apply to any Change of Control context in which
(A) provision is made for the assumption of the options, restricted stock and
restricted stock units previously granted, or for the substitution of options,
restricted stock and restricted stock units of a successor entity (or parent or
subsidiary thereof) with appropriate adjustments as to the number and kind of
shares or units and exercise prices, in which case the 2000 Plan will continue
to govern these options, restricted stock and restricted stock units or (B) a
majority of the full Board of Directors determines that such Change of Control
does not trigger application of this provision, as provided in the 2000 Plan.
EMPLOYMENT AND TERMINATION AGREEMENTS
As part of our restructuring to focus on the business of RateXchange, Inc.,
Mr. Cole has agreed to resign his position as an executive officer of the
Company, effective February 2000. Mr. Mooney resigned his positions as a
15
<PAGE> 19
director and an executive officer in February 2000. In March 2000, Mr. Mooney
resigned as Secretary and Treasurer of the Company. Pursuant to severance
agreements the Company and Messrs. Cole and Mooney executed, Mr. Cole and Mr.
Mooney will continue to provide consulting services to the Company during our
transition phase. During this phase, Messrs. Cole and Mooney will receive
consulting fees and six-months' severance pay. They may also receive performance
bonuses and health insurance.
Also in February 2000, we appointed Donald Sledge as our Chairman and Chief
Executive Officer, Ross Mayfield as our President and Paul Wescott as our Chief
Operating Officer. In March 2000, Mr. Wescott was appointed as our Secretary and
Treasurer. As soon as reasonably practicable, the Company intends to execute
separate employment agreements with Messrs. Sledge, Mayfield and Wescott. It is
the Company's intent that each of these agreements will provide for the
employment of each of these executive officers as officers of both
NetAmerica.com and RateXchange. The Company also anticipates that these
agreements will substantially resemble the terms and conditions already included
in the employment agreements between these officers and RateXchange, Inc.
Mr. Sledge's RateXchange, Inc. employment agreement provides for an annual
base salary of $300,000, an annual incentive bonus of up to 50% of base salary,
stock purchase rights, an expense reimbursement and other employee benefits.
Pursuant to this agreement, Mr. Sledge's employment may be terminated for cause
or upon death or disability so long as RateXchange pays all compensation owed as
of the date of termination. Mr. Sledge's employment may be terminated without
cause if RateXchange pays (1) severance pay equal to one year's annual salary
and (2) a bonus payment of $150,000.
Mr. Mayfield's RateXchange, Inc. employment agreement provides for an
annual base salary of $165,000, an annual incentive bonus of up to 50% of Mr.
Mayfield's base salary, stock purchase rights and other employee benefits.
Pursuant to this agreement, Mr. Mayfield's employment may be terminated for
cause or upon death or disability, and all obligations of RateXchange to pay
compensation and provide benefits shall thereafter cease. Mr. Mayfield's
employment may be terminated without cause if RateXchange pays Mr. Mayfield's
base salary for a period following termination and provides Mr. Mayfield certain
other benefits.
Mr. Wescott's RateXchange, Inc. employment agreement provides for an annual
base salary of $200,000, an annual incentive bonus of up to 50% of his base
salary, stock purchase rights and other employee benefits. Pursuant to this
agreement, Mr. Wescott's employment may be terminated for cause, or upon death
or disability, and all obligations of RateXchange to pay compensation and
provide benefits shall thereafter cease. Mr. Wescott's employment may be
terminated without cause if RateXchange pays to Mr. Wescott his base salary for
a period following termination and provides Mr. Wescott certain other benefits.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Due to the closely held nature of the Company, it has engaged in certain
transactions with its officers, directors, principal shareholders and
affiliates. We believe that each of the transactions described below was entered
into on terms no less favorable to us than could have been obtained from
unaffiliated third parties. All transactions between the Company and its
officers, directors, principal shareholders and affiliates were reviewed and
passed upon by the Audit Committee of the Board of Directors.
- - The Board of Directors of the Company authorized the issuance to Theodore
Swindells, Douglas Cole and another unrelated party a total of 666,574
shares of common stock in exchange for a total of $66,657 in secured notes
dated January 2, 1999. The board has placed restrictions on this stock so
that the stock cannot be sold, traded, assigned, transferred or pledged
until the Company reaches $10,000,000 in gross revenues in a one-year
period. Mr. Swindells is a significant shareholder of the Company, either
directly or through beneficial ownership of the Company's stock owned of
record by Maroon Bells Capital Partners, Inc. Mr. Cole is a director and
former executive officer of the Company. Interest on the notes was 6.5% APR
and, together with any unpaid principal on the notes, was due on January 2,
2001. The greatest aggregate amount outstanding on the notes during 1999 was
$70,990.13, on December 31, 1999. In February 2000, the parties fully
satisfied their obligations under the January 2, 1999 notes. Because Messrs.
Swindells and Cole paid the entire principal amount owed under these notes
early at the Company's request, the Company agreed to waive unpaid accrued
interest in the approximate amount of $4,700.
- - On December 15, 1998, we entered into an advisory agreement with MBCP for 18
months with an automatic 12 month renewal. The Company anticipates renewing
the contract until at least January 2001. MBCP, a merchant banking firm, is
one of our significant shareholders. Pursuant to the advisory agreement,
MBCP provides certain advisory and business development services in exchange
for a monthly advisory fee. In addition, MBCP is paid a success fee upon the
completion of certain merger and acquisition and business development
activities on behalf of the Company. The cost of the MBCP consulting
agreement to the Company during 1999 was $120,000 in advisory fees, $315,800
in success fees for financings and acquisitions and warrants to purchase
250,000 shares of our common stock at a price of $2.75 per share. We
anticipate
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<PAGE> 20
paying to MBCP at least $120,000 in advisory fees and at least $150,000 in
structuring and financing success fees during 2000.
Theodore Swindells is a principal of MBCP. Edward Mooney, a former director
and executive officer of the Company, is an employee of MBCP. Mr. Mooney's
interest in the consulting agreement is limited to his interest in MBCP as
an employee of that company. Mr. Mooney is not a shareholder of MBCP.
- - On December 18, 1998, Douglas Cole, a director and our former Chief
Executive Officer, executed a promissory note to us under which Mr. Cole
purchased 250,000 shares of our common stock at a price of $0.50 per share.
The note was secured and accrued interest at a rate of six and one-half
percent (6 1/2%) APR, with principal and interest due in two years on
December 18, 2000. The largest aggregate amount owed by Mr. Cole during 1999
on this note was approximately $133,000 on December 31, 1999. In March 2000,
Mr. Cole paid the note in full, including all accrued interest.
- - On December 18, 1998, Edward Mooney, a former director and executive
officer, executed a promissory note to us under which Mr. Mooney purchased
400,000 shares of our common stock at an average price of $0.2188 per share.
The note was secured and accrued interest at a rate of six and one-half
percent (6 1/2%) APR, with principal and interest due in two years on
December 18, 2000. The largest aggregate amount owed by Mr. Mooney during
1999 was approximately $93,550 on December 31, 1999. In February 2000, Mr.
Mooney paid the note in full, including all accrued interest.
- - In March 1999, the Company sold 525,000 shares of common stock to Theodore
Swindells in exchange for a note in the amount of $560,000 and bearing
interest at a rate of six and one-half percent (6 1/2%) APR, due in March
2001. Mr. Swindells' obligation under this note was fully satisfied in
February 2000. Because Mr. Swindells paid the entire principal amount owed
under the note more than one year early, the Company agreed to waive all
interest accrued in the amount of approximately $25,000.
- - In conjunction with a private offering of the Company's securities, the
Company anticipates that it will pay to the investment banking firm First
Security Van Kasper a commission consisting of 7% of the aggregate proceeds
of the offering and warrants to purchase shares of the Company's common
stock in an amount equal to (a) 7% of the common stock purchased by
investors at an exercise price of $12.00 per share, and (b) 7% of the
warrants purchased by investors at an exercise price of $14.40 per share.
In February 2000, RateXchange, Inc. closed a $2,000,000 convertible note
offering. The note offered was convertible into RateXchange, Inc. common
stock at a price per share to be determined in an anticipated subsequent
financing of RateXchange, Inc. In addition, warrants to purchase RateXchange
common stock were issued. As a result of our new business strategy, we
offered to such note holders the right to convert their notes into
NetAmerica.com common stock at an exchange rate of $5.00 per share. In
addition, we agreed to issue such holders an aggregate of 500,000 warrants
to purchase common stock at $5.00 per share. Any note holders who decline
this offer will be entitled to rescind their original investment and receive
their principal back in full, including accrued interest.
Pursuant to the offer to convert the RateXchange notes into the Company's
common stock, and warrants to purchase the Company's common stock, the
Company anticipates that FSVK may be issued 105,000 shares of common stock,
as well as a warrant to purchase an additional 131,250 shares at $5.00 per
share, in exchange for the note held by FSVK in the principal amount of
$525,000. In addition, the Company will issue to FSVK a warrant to purchase
22,650 shares at $5.00 per share to compensate FSVK for its services as
placement agent during the RateXchange, Inc. convertible note offering.
Mr. Merriman, a member of the Company's Board of Directors since February
2000, is a director of FSVK, as well as its Managing Director and Head of
the Equity Capital Markets Group.
- - Also pursuant to the offer to convert the RateXchange notes into the
Company's common stock and warrants to purchase the Company's common stock,
we anticipate that Theodore Swindells, one of our significant shareholders,
may be issued 20,000 shares, as well as a warrant to purchase an additional
25,000 shares at $5.00 per share, in exchange for the note held by Mr.
Swindells in the principal amount of $100,000.
BOARD COMPENSATION COMMITTEE 1999 REPORT ON EXECUTIVE COMPENSATION
GENERAL COMPENSATION POLICY
The Compensation Committee of the Board of Directors has exclusive
authority to establish the level of compensation paid to the Company's executive
officers. Compensation policies of the Committee are designed to attract, retain
and motivate highly skilled executive officers by providing compensation that is
comparable to that provided by our competitors for key personnel. It is the
Committee's policy to offer executive officers competitive
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<PAGE> 21
compensation that is based upon overall Company performance, individual
contributions to the Company's financial success and the scope of
responsibilities performed pursuant to particular offices.
Currently, the Committee does not use quantitative methods or mathematical
formulas to set any element of compensation for a particular executive officer.
Instead, the Committee administers the executive compensation system through
informal surveys of compensation programs of other similar companies and
application of the subjective business judgment of each Committee member. In
employing its discretion, the Committee principally considers for each component
of an executive's compensation factors such as previous and anticipated Company
performance, as well as demonstrated individual initiative and performance. The
principal components of the Company's executive compensation include (i) annual
base salary, (ii) bonus programs and (iii) equity awards. Currently, we do not
contribute to any retirement programs or pension plans on behalf of our
executive officers.
BASE SALARIES
Annual base salaries for executive officers are initially determined by
evaluating the scope of the responsibilities of the office and the experience
and knowledge of the individual officer. A secondary consideration is the
competitiveness of the marketplace for executive talent. The Committee
establishes base salaries of its executives with the objective of ensuring that
the salaries we offer remain competitive with those of similar companies.
In establishing the annual base salaries of our executive officers, the
Company's Board of Directors specifically assessed the responsibilities of the
offices, evaluated the officers' level of experience, skills and knowledge
relevant to the Company's business objectives and informally reviewed the
compensation for executive officers of comparable companies. The Committee
believes that the annual base salaries of our executive officers are appropriate
when compared to salaries paid by other companies for the same offices, and in
light of both the scope of responsibilities and anticipated performance, as well
as previous related work experience and level of skill and knowledge of our
officers.
The Committee anticipates that it will periodically review the individual
salaries of each of our executive officers. Adjustments to base salaries are
made at the discretion of the Committee, which takes into consideration factors
such as past and anticipated performance of the Company and the Committee's
subjective perception of the individual's performance.
BONUSES
Executive officer bonuses are designed to provide the Company flexibility
in devising incentives for exceptional performance by our executive officers.
Generally, cash bonus payouts are tied to achievement of company-wide
performance goals, including stock performance. At its sole discretion, the
Committee may award annual cash bonuses to the Company's executive officers. The
amount of the performance bonus awarded, if any, is tied to both the level of
our executive officers' performance and that of the Company.
Nevertheless, bonuses available to our executive officers reflect the
specific capitalization and development needs of the Company as a
development-stage company. Thus, the Company has utilized the incentive of
special cash fundraising bonuses for executive officers, which bonuses are
granted in the event the Company obtains certain levels of aggregate net
proceeds from borrowing and issuance of debt and equity securities. The Company
has also employed special acquisition bonuses as an incentive for our executive
officers to identify and consummate certain business combinations that promote
the business objectives of the Company.
EQUITY AWARDS
In granting stock options, the Company's goals are to attract, retain and
motivate the highest caliber of executives by offering long-term compensation
that links a meaningful portion of the executives' total compensation to the
best interests of shareholders. Making stock options a significant component of
executive compensation provides each executive officer with incentive to manage
the Company from the perspective of an owner with an equity interest in the
Company. The Committee also believes that, given the emerging market in which
the Company operates and the Company's early stage of development, equity-based
compensation provides the greatest incentive for outstanding executive
performance.
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CONCLUSION
In conclusion, a significant portion of the Company's executive
compensation is linked directly to individual performance of our executive
officers as measured by the accomplishment of the Company's strategic goals and
stock price appreciation. The Committee intends to continue the practice of
linking executive compensation to Company performance, individual officer
performance and stockholder return, realizing, of course, that the business
cycle from time to time may result in an imbalance for a particular period.
The Compensation Committee
Douglas Cole
Christopher Vizas
Ronald Spears
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to creating the Compensation Committee during 1999, members of the
board performed all functions currently delegated to the committee. During 1999,
the following directors served as Compensation Committee members: Douglas Cole,
John Dixon and Douglas Glen. Currently, the Compensation Committee is composed
of Douglas Cole, Christopher Vizas and Ronald Spears. John Dixon and Douglas
Glen resigned from the Committee in February and March 2000 in conjunction with
their resignations from the board.
DOUGLAS COLE
In addition to his membership on the Compensation Committee, until February
2000 Mr. Cole was the Company's Chief Executive Officer, President and Principal
Financial Accounting Officer. Furthermore, in 1999, Mr. Cole served as Chief
Executive Officer of PolarCap, Inc., our wholly-owned subsidiary and director of
RateXchange, Inc., another subsidiary.
Mr. Cole is acting Chief Executive Officer and a director of Fulcrum
International, Inc. Mr. Glen, one of our Compensation Committee members, is also
a director of this company and has served on its compensation committee or board
equivalent.
Mr. Cole is promisor on two notes held by the Company for the purchase of
Company shares in the principal amounts of $22,257.40 and $125,000 and dated
January 2, 1999, and December 18, 1998, respectively. Interest on both notes was
6 1/2 % APR, and, together with any unpaid principal on the notes, was due on
January 2, 2001, and December 18, 2000, respectively. The greatest aggregate
amount outstanding on the notes during 1999 was approximately $23,703 and
$133,000, respectively, on December 31, 1999. In February 2000, Mr. Cole fully
satisfied his obligations under the January 2, 1999 note; however, because Mr.
Cole paid the entire principal amount owed under this note early at the
Company's request, the Company agreed to waive unpaid accrued interest in the
approximate amount of $1,500. In March 2000, Mr. Cole paid the December 18, 1998
note in full, including all accrued interest.
JOHN DIXON
During 1999, John Dixon was as a member of the Compensation Committee;
however, he has never been an officer or employee of the Company or its
subsidiaries. Mr. Dixon resigned as a director in February 2000.
DOUGLAS GLEN
During 1999, Douglas Glen was a member of the Compensation Committee;
however, he has never been an officer or employee of the Company or its
subsidiaries. Mr. Glen is a director of Fulcrum International, Inc. and has
served on that company's compensation committee or board equivalent. Mr. Cole,
one of our Compensation Committee members, is the acting Chief Executive Officer
and a director of Fulcrum. Mr. Glen resigned as a director in March 2000.
EDWARD MOONEY
Mr. Mooney, who participated in board deliberations regarding executive
officer compensation, also served as the Company's Executive Vice President,
Secretary and Treasurer during 1999. Mr. Mooney resigned as both executive
officer and director in February 2000. In addition, during 1999 Mr. Mooney
served as Director and Secretary of RateXchange, Inc., one of our subsidiaries,
and Director of Telenisus Corporation, one of our former subsidiaries.
Currently, he is an employee of Maroon Bells Capital Partners, Inc., a merchant
investment banking firm that is a party to a consulting agreement with the
Company.
On December 15, 1998, we entered into an advisory agreement with Maroon
Bells Capital Partners, Inc. for 18 months with an automatic 12 month renewal.
The Company anticipates renewing the contract until at least January 2001. MBCP
is one of our significant shareholders. Pursuant to the advisory agreement, MBCP
provides certain advisory and business development services in exchange for a
monthly advisory fee. In addition, MBCP will be paid a success fee upon the
completion of certain merger and acquisition and business development activities
on behalf of the Company. The cost of the MBCP consulting agreement to the
Company during 1999 was $120,000 in advisory fees, $315,800 in success fees for
financings and acquisitions and warrants to purchase 250,000 of our shares at
$2.75 per share. We anticipate paying to MBCP at least $120,000 in advisory fees
and at least $150,000 in structuring and financing success fees during 2000.
Mr. Mooney was promisor on a note held by the Company for purchase of
400,000 Company shares in the amount of $87,520 and dated December 18, 1998. The
note was secured and accrued interest at a rate of six and one-half percent (6
1/2%) APR, with principal and interest due in two years on December 18, 2000.
The largest
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aggregate amount owed by Mr. Mooney during 1999 was approximately $93,550 on
December 31, 1999. In February 2000, Mr. Mooney paid the note in full, including
all accrued interest.
DONALD SLEDGE
As a board member, Mr. Sledge participated in board deliberations regarding
executive officer compensation. Mr. Sledge was appointed our Chief Executive
Officer in February 2000 and also served as Chief Executive Officer of
RateXchange, Inc. during 1999. Mr. Sledge's son is also an employee of
RateXchange, Inc., earning a base salary of approximately $70,000 annually.
INDEPENDENT AUDITORS
The independent auditing firm for the Company for fiscal years 1997 to 1999
was Crouch, Bierwolf & Chisholm. Representatives of Crouch, Bierwolf & Chisholm
are not expected to attend the meeting, make a statement to shareholders or
respond to questions.
SHAREHOLDER PROPOSALS
If you wish to submit proposals to be included in NetAmerica.com's year
2001 proxy statement, we must receive them on or before December 1, 2000. Please
address your proposals to the Corporate Secretary.
If you wish to raise a matter before the shareholders at the year 2001
annual meeting, you must notify the Secretary in writing by not later than
February 14, 2001. Please note that this requirement relates only to matters you
wish to bring before your fellow shareholders at the annual meeting. It is
separate from the SEC's requirements to have your proposal included in next
year's proxy statement.
ADDITIONAL INFORMATION
We have included with this proxy statement a copy of our annual report on
Form 10-K dated December 31, 1999, which we incorporate by reference in its
entirety. We will provide without charge to each person solicited, upon oral or
written request of any such person, an additional copy of our Form 10-K,
including the consolidated financial statements and the financial statement
schedules required to be filed with the Securities and Exchange Commission
pursuant to Rule 13a-1 under the Securities Exchange Act of 1934. Direct any
such correspondence to the Secretary of NetAmerica.com.
NETAMERICA.COM CORPORATION
Paul Wescott
Chief Operating Officer and
Secretary/Treasurer
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APPENDIX A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NETAMERICA.COM CORPORATION
NetAmerica.com Corporation (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of the Corporation has duly adopted a
resolution proposing and declaring advisable an Amendment to the Certificate of
Incorporation of the Corporation changing the name of the Corporation to
"RateXchange Corporation." The resolution setting forth the proposed amendment
is as follows:
RESOLVED, that the Certificate of Incorporation of NetAmerica.com
Corporation be amended by changing Article thereof numbered "FIRST" so
that, as amended, said Article shall be and read as follows:
FIRST: THE NAME OF THIS CORPORATION IS RATEXCHANGE CORPORATION.
SECOND: That the Board of Directors of the Corporation has adopted a
resolution proposing and declaring advisable an Amendment to the Certificate of
Incorporation of the Corporation restructuring the capitalization of the
Corporation by authorizing 60,000,000 shares of preferred stock, having such
rights and preferences as designated by the Board of Directors in its sole
discretion upon issuance of said shares. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of NetAmerica.com
Corporation be amended by deleting the Article thereof numbered "Fourth"
in its entirety and, in lieu thereof, inserting a new Article to reflect
the restructured capitalization of the Corporation which shall
incorporate the following language:
FOURTH: THE TOTAL NUMBER OF SHARES OF ALL CLASSES OF STOCK WHICH
THE CORPORATION SHALL HAVE AUTHORITY TO ISSUE IS 360,000,000, CONSISTING
OF THE FOLLOWING:
(A) COMMON STOCK. THERE SHALL BE AUTHORIZED THREE HUNDRED
MILLION (300,000,000) SHARES OF THE COMMON STOCK OF THE
CORPORATION WITH A PAR VALUE OF $.0001. THE HOLDERS OF THE COMMON
STOCK SHALL BE ENTITLED TO ONE VOTE FOR EACH SHARE ON ALL MATTERS
REQUIRED OR PERMITTED TO BE VOTED ON BY STOCKHOLDERS OF THE
CORPORATION; AND
(B) PREFERRED STOCK. THERE SHALL BE AUTHORIZED SIXTY
MILLION SHARES (60,000,000) OF BLANK CHECK PREFERRED STOCK WHICH
MAY BE CREATED AND ISSUED FROM TIME TO TIME, WITH SUCH
PREFERENCES, RIGHTS AND QUALIFICATIONS AS SHALL BE STATED AND
EXPRESSED IN THE RESOLUTION OR RESOLUTIONS PROVIDING FOR THE
CREATION AND ISSUANCE OF SUCH PREFERRED STOCK AS ADOPTED BY THE
BOARD OF DIRECTORS PURSUANT TO THE AUTHORITY IN THIS PARAGRAPH
GIVEN.
THIRD: That on April 20, 2000, the aforesaid amendments were duly
adopted by shareholder vote in accordance with the applicable provisions of
Section 242 and Section 211 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its authorized officer this _____ day of April 2000.
By:
_____________________________________
Ross Mayfield, President
NetAmerica.com Corporation.
<PAGE> 26
APPENDIX B
2000 STOCK OPTION AND INCENTIVE PLAN
RateXchange Corporation, a Delaware corporation (the "Company"), sets
forth herein the terms of its 2000 Stock Option and Incentive Plan (the "Plan")
as follows:
1. PURPOSE
The Plan is intended to enhance the Company's and its subsidiaries' (as
defined herein) ability to attract and retain highly qualified officers,
directors, key employees, and other persons, and to motivate such officers,
directors, key employees, and other persons to serve the Company and its
affiliates and to expend maximum effort to improve the business results and
earnings of the Company, by providing to such officers, key employees and other
persons an opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company. To this end, the Plan provides
for the grant of stock options, restricted stock and restricted stock units in
accordance with the terms hereof. Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as provided herein.
2. DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:
<TABLE>
<S> <C>
2.1 "Affiliate" of, or person "affiliated" with, a person means any
company or other trade or business that controls, is controlled
by or is under common control with such person within the meaning
of Rule 405 of Regulation C under the Securities Act, including,
without limitation, any Subsidiary.
2.2 "Award Agreement" means the stock option agreement, restricted
stock agreement, restricted stock unit agreement or other written
agreement between the Company and a Grantee that evidences and
sets out the terms and conditions of a Grant.
2.3 "Benefit Arrangement" shall have the meaning set forth in SECTION
14 hereof.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Change of Control" means (i) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the
Company with one or more other entities in which the Company is
not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another entity, or (iii) any transaction
(including without limitation a merger or reorganization in which
the Company is the surviving entity) which results in any person
or entity (other than persons who are shareholders or affiliates
of the Company at the time the Plan is approved by the Company's
shareholders) owning 80% or more of the combined voting power of
all classes of stock of the Company.
2.6 "Code" means the Internal Revenue Code of 1986, as now in effect
or as hereafter amended.
2.7 "Committee" means a committee of, and designated from time to
time by resolution of, the Board.
2.8 "Company" means RateXchange Corporation.
2.9 "Effective Date" means February 28, 2000, the date the Plan was
approved by the Board.
2.10 "Exchange Act" means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended.
2.11 "Fair Market Value" means the closing price of the Stock on the
OTC Bulletin Board or the Nasdaq Stock Market on 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, if no sale of Stock is
reported for such trading day, on the next preceding day on which
any sale shall have been reported.
</TABLE>
<PAGE> 27
<TABLE>
<S> <C>
2.12 "Family Member" means a person who is a spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, of the Grantee, any person sharing the
Grantee's household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the
Grantee) control the management of assets, and any other entity
in which these persons (or the Grantee) own more than fifty
percent of the voting interests.
2.13 "Grant" means an award of an Option, Restricted Stock or
Restricted Stock Unit under the Plan.
2.14 "Grant Date" means, as determined by the Board or authorized
Committee, (i) the date as of which the Board or such Committee
approves a Grant, (ii) the date on which the recipient of a Grant
first becomes eligible to receive a Grant under SECTION 6 hereof,
or (iii) such other date as may be specified by the Board or such
Committee.
2.15 "Grantee" means a person who receives or holds an Option,
Restricted Stock or Restricted Stock Unit under the Plan.
2.16 "Incentive Stock Option" means an "incentive stock option" within
the meaning of Section 422 of the Code, or the corresponding
provision of any subsequently enacted tax statute, as amended
from time to time.
2.17 "Option" means an option to purchase one or more shares of Stock
pursuant to the Plan.
2.18 "Option Period" means the period during which Options may be
exercised as set forth in SECTION 10 hereof.
2.19 "Option Price" means the purchase price for each share of Stock
subject to an Option.
2.20 "Other Agreement" shall have the meaning set forth in SECTION 14
hereof.
2.21 "Plan" means this 2000 Stock Option and Incentive Plan.
2.22 "Reporting Person" means a person who is required to file reports
under Section 16(a) of the Exchange Act.
2.23 "Restricted Period" means the period during which Restricted
Stock or Restricted Stock Units are subject to restrictions or
conditions pursuant to SECTION 12.2 hereof.
2.24 "Restricted Stock" means shares of Stock, awarded to a Grantee
pursuant to SECTION 12 hereof, that are subject to restrictions
and to a risk of forfeiture.
2.25 "Restricted Stock Unit" means a unit awarded to a Grantee
pursuant to SECTION 12 hereof, which represents a conditional
right to receive a share of Stock in the future, and which is
subject to restrictions and to a risk of forfeiture.
2.26 "Securities Act" means the Securities Act of 1933, as now in
effect or as hereafter amended.
2.27 "Stock" means the common stock of the Company.
2.28 "Subsidiary" means any "subsidiary corporation" of the Company
within the meaning of Section 424(f) of the Code.
2.29 "Termination Date" means the date upon which an Option shall
terminate or expire, as set forth in SECTION 10.2 hereof.
</TABLE>
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3. ADMINISTRATION OF THE PLAN
3.1 BOARD.
The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company's certificate of
incorporation and by-laws and applicable law. The Board shall have full power
and authority to take all actions and to make all determinations required or
provided for under the Plan, any Grant or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Grant or any Award Agreement. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company's certificate of incorporation and
by-laws and applicable law. The interpretation and construction by the Board of
any provision of the Plan, any Grant or any Award Agreement shall be final and
conclusive.
3.2 COMMITTEE.
The Board from time to time may delegate to a Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in SECTION 3.1 above and in other applicable provisions, as the Board
shall determine, consistent with the certificate of incorporation and by-laws of
the Company and applicable law. In the event that the Plan, any Grant or any
Award Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken by or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section. Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive.
3.3 GRANTS.
Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority (i) to designate Grantees, (ii) to determine the
type or types of Grant to be made to a Grantee, (iii) to determine the number of
shares of Stock to be subject to a Grant, (iv) to establish the terms and
conditions of each Grant (including, but not limited to, the exercise price of
any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer, or
forfeiture of a Grant or the shares of Stock subject thereto, and any terms or
conditions that may be necessary to qualify Options as Incentive Stock Options),
(v) to prescribe the form of each Award Agreement evidencing a Grant, and (vi)
to amend, modify, or supplement the terms of any outstanding Grant. Such
authority specifically includes the authority, in order to effectuate the
purposes of the Plan but without amending the Plan, to modify Grants to eligible
individuals who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law, tax policy, or
custom. As a condition to any Grant, the Board shall have the right, at its
discretion, to require Grantees to return to the Company Grants previously
awarded under the Plan. Subject to the terms and conditions of the Plan, any
such subsequent Grant shall be upon such terms and conditions as are specified
by the Board at the time the new Grant is made. The Company may retain the right
in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on
account of actions taken by the Grantee in violation or breach of or in conflict
with any non-competition agreement, any agreement prohibiting solicitation of
employees or clients of the Company or any affiliate thereof or any
confidentiality obligation with respect to the Company or any affiliate thereof
or otherwise in competition with the Company, to the extent specified in such
Award Agreement applicable to the Grantee. Furthermore, the Company may annul a
Grant if the Grantee is an employee of the Company or an affiliate thereof and
is terminated "for cause" as defined in the applicable Award Agreement. The
Board may permit or require the deferral of any award payment, subject to such
rules and procedures as it may establish, which may include provisions for the
payment or crediting of interest or dividend equivalents, including converting
such credits into deferred Stock equivalents.
3.4 NO LIABILITY.
No member of the Board or of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Grant or
Award Agreement.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in SECTION 17 hereof, the number of
shares of Stock available for issuance under the Plan shall be five million
(5,000,000). Stock issued or to be issued under the Plan shall be authorized but
unissued shares. If any shares covered by a Grant are not purchased or are
forfeited, or if a Grant otherwise terminates without delivery of any Stock
subject thereto, then the number of shares of Stock counted against the
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<PAGE> 29
aggregate number of shares available under the Plan with respect to such Grant
shall, to the extent of any such forfeiture or termination, again be available
for making Grants under the Plan.
5. EFFECTIVE DATE AND TERM OF THE PLAN
5.1 EFFECTIVE DATE.
The Plan shall be effective as of the Effective Date, subject to approval
of the Plan within one year of the Effective Date, by a majority of the votes
cast on the proposal at a meeting of shareholders, provided that a quorum is
present or by the written consent of the holders of a majority of the Company's
shares of Stock entitled to vote. Upon approval of the Plan by the shareholders
of the Company as set forth above, all Grants made under the Plan on or after
the Effective Date shall be fully effective as if the shareholders of the
Company had approved the Plan on the Effective Date. If the shareholders fail to
approve the Plan within one year after the Effective Date, any Grants made
hereunder shall be null and void and of no effect.
5.5 TERM.
The Plan has no termination date; however, no Incentive Stock Option may
be granted under the Plan on or after the tenth anniversary of the Effective
Date.
6. OPTION GRANTS
6.1 EMPLOYEES OR CONSULTANTS.
Grants (including Grants of Incentive Stock Options, subject to SECTION
7.1) may be made under the Plan to any employee, officer or director of, or any
consultant or advisor to, the Company or any Subsidiary, as the Board shall
determine and designate from time to time.
6.2 SUCCESSIVE GRANTS.
An eligible person may receive more than one Grant, subject to such
restrictions as are provided herein.
7. LIMITATIONS ON GRANTS
7.1 LIMITATIONS ON INCENTIVE STOCK OPTIONS.
An Option shall constitute an Incentive Stock Option only (i) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (ii) to the extent specifically provided in the related Award
Agreement; and (iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of Stock with
respect to which all Incentive Stock Options held by such Grantee become
exercisable for the first time during any calendar year (under the Plan and all
other plans of the Grantee's employer and its affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.
7.2 LIMITATION ON SHARES OF STOCK SUBJECT TO GRANTS.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, the maximum number of shares of
Stock subject to Options that can be awarded under the Plan to any person
eligible for a Grant under Section 6 hereof is one million (1,000,000) per year.
8. AWARD AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Award Agreement,
in such form or forms as the Board shall from time to time determine. Award
Agreements granted from time to time or at the same time need not contain
similar provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing a Grant of Options shall specify whether such Options
are intended to be non-qualified stock options or Incentive Stock Options, and
in the absence of such specification such options shall be deemed non-qualified
stock options.
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9. OPTION PRICE
The Option Price of each Option shall be fixed by the Board and stated in
the Award Agreement evidencing such Option. In the case of an Incentive Stock
Option the Option Price shall be the Fair Market Value on the Grant Date of a
share of Stock; provided, however, that in the event that a 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 ownership
of more than ten percent of the Company's outstanding shares of Stock), the
Option Price of an Option granted to such Grantee that is intended to be an
Incentive Stock Option shall be not less than the greater of the par value or
110 percent of the Fair Market Value of a share of Stock on the Grant Date. In
no case shall the Option Price of any Option be less than the par value of a
share of Stock.
10. VESTING, TERM AND EXERCISE OF OPTIONS
10.1 VESTING AND OPTION PERIOD.
Subject to SECTIONS 10.2 and 17.3 hereof, each Option granted under the
Plan shall become exercisable at such times and under such conditions as shall
be determined by the Board and stated in the Award Agreement. For purposes of
this SECTION 10.1, fractional numbers of shares of Stock subject to an Option
shall be rounded down to the next nearest whole number. The period during which
any Option shall be exercisable shall constitute the "Option Period" with
respect to such Option.
10.2 TERM.
Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Board and stated in the Award Agreement relating to such Option; provided,
however, that in the event that 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 ownership of more than ten percent
of the outstanding shares of Stock), an Option granted to such Grantee that is
intended to be an Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date.
10.3 ACCELERATION.
Any limitation on the exercise of an Option contained in any Award
Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option shall be exercisable
in whole or in part prior to the date the Plan is approved by the shareholders
of the Company as provided in SECTION 5.1 hereof.
10.4 TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.
Unless otherwise provided by the Board, upon the termination of a
Grantee's employment or other relationship with the Company or any Subsidiary
other than by reason of death or "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code), any Option or portion thereof held by
such Grantee that has not vested in accordance with the provisions of SECTION
10.1 hereof shall terminate immediately, and any Option or portion thereof that
has vested in accordance with the provisions of SECTION 10.1 hereof but has not
been exercised shall terminate at the close of business on the 90th day
following the Grantee's termination of employment or other relationship (or, if
such 90th day is a Saturday, Sunday or holiday, at the close of business on the
next preceding day that is not a Saturday, Sunday or holiday). Upon termination
of an Option or portion thereof, the Grantee shall have no further right to
purchase shares of Stock pursuant to such Option or portion thereof. Whether a
termination of employment or other relationship shall have occurred for purposes
of the Plan shall be determined by the Board, which determination shall be final
and conclusive. For purposes of the Plan, a termination of employment, service
or other relationship shall not be deemed to occur if the Grantee is immediately
thereafter a director of the Company or an affiliate.
10.5 RIGHTS IN THE EVENT OF DEATH.
Unless otherwise provided by the Board, if a Grantee dies while employed
by or providing services to the Company or Subsidiary, all Options granted to
such Grantee shall fully vest on the date of death, and the executors or
administrators or legatees or distributees of such Grantee's estate shall have
the right, at any time within one year
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after the date of such Grantee's death and prior to termination of the Option
pursuant to SECTION 10.2 above, to exercise any Option held by such Grantee at
the date of such Grantee's death.
10.6 RIGHTS IN THE EVENT OF DISABILITY.
Unless otherwise provided by the Board, if a Grantee's employment or
other relationship with the Company or Subsidiary is terminated by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Grantee, all Options granted to such Grantee shall fully vest on
the date of permanent and total disability, and the Grantee shall have the
right, at any time within one year after the date of such Grantee's permanent
and total disability and prior to termination of the Option pursuant to SECTION
10.2 above, to exercise any Option held by such Grantee. Whether a termination
of employment or service is to be considered by reason of "permanent and total
disability" for purposes of the Plan shall be determined by the Board, which
determination shall be final and conclusive.
10.7 LIMITATIONS ON EXERCISE OF OPTION.
Notwithstanding any other provision of the Plan, in no event may any
Option be exercised, in whole or in part, prior to the date the Plan is approved
by the shareholders of the Company as provided herein, or after ten years
following the date upon which the Option is granted, or after the occurrence of
an event referred to in SECTION 17 hereof which results in termination of the
Option.
10.8 METHOD OF EXERCISE.
An Option that is exercisable may be exercised by the Grantee's delivery
to the Company of written notice of exercise on any business day, at the
Company's principal office, addressed to the attention of the Board. Such notice
shall specify the number of shares of Stock with respect to which the Option is
being exercised and shall be accompanied by payment in full of the Option Price
of the shares for which the Option is being exercised. The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of (i) 100 shares or such lesser number
set forth in the applicable Award Agreement and (ii) the maximum number of
shares available for purchase under the Option at the time of exercise. Payment
of the Option Price for the shares purchased pursuant to the exercise of an
Option shall be made (i) in cash or in cash equivalents acceptable to the
Company; (ii) to the extent permitted by law and at the Board's discretion,
through the tender to the Company of shares of Stock, which shares, if acquired
from the Company, shall have been held for at least six months at the time of
tender and which shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their Fair Market Value on the
date of exercise; or (iii) to the extent permitted by law and at the Board's
discretion, by a combination of the methods described in (i) and (ii). In
addition and unless the Board provides otherwise in the Award Agreement, payment
in full of the Option Price need not accompany the written notice of exercise
provided that the notice of exercise directs that the certificate or
certificates for the shares of Stock for which the Option is exercised be
delivered to a licensed broker acceptable to the Company as the agent for the
individual exercising the Option and, at the time such certificate or
certificates are delivered, the broker tenders to the Company cash (or cash
equivalents acceptable to the Company) equal to the Option Price for the shares
of Stock purchased pursuant to the exercise of the Option plus the amount (if
any) of federal and/or other taxes which the Company may in its judgment, be
required to withhold with respect to the exercise of the Option. An attempt to
exercise any Option granted hereunder other than as set forth above shall be
invalid and of no force and effect. Unless otherwise stated in the applicable
Award Agreement, an individual holding or exercising an Option shall have none
of the rights of a shareholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock
or to direct the voting of the subject shares of Stock) until the shares of
Stock covered thereby are fully paid and issued to such individual. Except as
provided in SECTION 17 hereof, no adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date of
such issuance.
10.9 DELIVERY OF STOCK CERTIFICATES.
Promptly after the exercise of an Option by a Grantee and the payment in
full of the Option Price, such Grantee shall be entitled to the issuance of a
stock certificate or certificates evidencing such Grantee's ownership of the
shares of Stock subject to the Option.
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11. TRANSFERABILITY OF OPTIONS
11.1 TRANSFERABILITY OF OPTIONS
Except as provided in SECTION 11.2, during the lifetime of a Grantee,
only the Grantee (or, in the event of legal incapacity or incompetency, the
Grantee's guardian or legal representative) may exercise an Option. Except as
provided in SECTION 11.2, no Option shall be assignable or transferable by the
Grantee to whom it is granted, other than by will or the laws of descent and
distribution.
11.2 TRANSFERS.
A. FAMILY TRANSFERS
If authorized in the applicable Award Agreement, a Grantee may transfer,
not for value, all or part of an Option which is not an Incentive Stock Option
to any Family Member. For the purpose of this SECTION 11.2, a "not for value"
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic
relations order in settlement of marital property rights; or (iii) a transfer to
an entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that entity.
Following a transfer under this SECTION 11.2, any such Option shall continue to
be subject to the same terms and conditions as were applicable immediately prior
to transfer. Subsequent transfers of transferred Options are prohibited except
to Family Members of the original Grantee in accordance with this SECTION 11.2
or by will or the laws of descent and distribution. The events of termination of
employment or other relationship of SECTION 10.4 hereof shall continue to be
applied with respect to the original Grantee, following which the Option shall
be exercisable by the transferee only to the extent, and for the periods
specified in SECTIONS 10.4, 10.5, or 10.6.
B. COMPANY APPROVED TRANSFERS
If authorized in the applicable Award Agreement, a Grantee may transfer
all or part of an option which is not an Incentive Stock Option to any employee
or co-worker of such Grantee after written approval of the Board.
12. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
12.1 GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS.
The Board may from time to time grant Restricted Stock or Restricted
Stock Units to persons eligible to receive Grants under SECTION 6 hereof,
subject to such restrictions, conditions and other terms as the Board may
determine.
12.2 RESTRICTIONS.
At the time a Grant of Restricted Stock or Restricted Stock Units is
made, the Board shall establish a period of time (the "Restricted Period")
applicable to such Restricted Stock or Restricted Stock Units. Each Grant of
Restricted Stock or Restricted Stock Units may be subject to a different
Restricted Period. The Board may, in its sole discretion, at the time a Grant of
Restricted Stock or Restricted Stock Units 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 or Restricted Stock
Units. Such performance objectives shall be established in writing by the Board
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 a
number of factors including, but not limited to, 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. Subject to the fourth sentence of this SECTION 12.2, the Board 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 or
Restricted Stock Units. Neither Restricted Stock nor Restricted Stock Units may
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 Board with respect to such Restricted Stock or
Restricted Stock Units.
12.3 RESTRICTED STOCK CERTIFICATES.
The Company shall issue, in the name of each Grantee to whom Restricted
Stock has been granted, stock certificates representing the total number of
shares of Restricted Stock granted to the Grantee, as soon as reasonably
practicable after the Grant Date. The Board may provide in an Award Agreement
that either (i) the Secretary of the
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Company shall hold such certificates for the Grantees' benefit until such time
as the Restricted Stock is forfeited to the Company, or the restrictions lapse,
or (ii) such certificates shall be delivered to the Grantee, provided, however,
that such certificates shall bear a legend or legends that complies with the
applicable securities laws and regulations and makes appropriate reference to
the restrictions imposed under the Plan and the Award Agreement.
12.4 RIGHTS OF HOLDERS OF RESTRICTED STOCK.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock shall have the right to vote such Stock and the right to
receive any dividends declared or paid with respect to such Stock. The Board may
provide that any dividends paid on Restricted Stock must be reinvested in shares
of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any,
received by a Grantee with respect to Restricted Stock as a result of any stock
split, stock dividend, combination of shares or other similar transaction shall
be subject to the restrictions applicable to the original Grant.
12.5 RIGHTS OF HOLDERS OF RESTRICTED STOCK UNITS.
Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Stock Units shall have no rights as stockholders of the Company. The
Board may provide in an Award Agreement evidencing a Grant of Restricted Stock
Units that the holder of such Restricted Stock Units shall be entitled to
receive, upon the Company's payment of a cash dividend on its outstanding Stock,
a cash payment for each Restricted Stock Unit held equal to the per-share
dividend paid on the Stock. Such Award Agreement may also provide that such cash
payment will be deemed reinvested in additional Restricted Stock Units at a
price per unit equal to the Fair Market Value of a share of Stock on the date
that such dividend is paid.
12.6 TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.
Unless otherwise provided by the Board, upon the termination of a
Grantee's employment or other relationship with the Company or Subsidiary other
than by reason of death or "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code), any shares of Restricted Stock or Restricted
Stock Units held by such Grantee that have not vested, or with respect to which
all applicable restrictions and conditions have not lapsed, shall immediately be
deemed forfeited. Upon forfeiture of Restricted Stock or Restricted Stock Units,
the Grantee shall have no further rights with respect to such Grant, including
but not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock or Restricted Stock Units.
Whether a termination of employment or other relationship shall have occurred
for purposes of the Plan shall be determined by the Board, which determination
shall be final and conclusive. For purposes of the Plan, a termination of
employment, service or other relationship shall not be deemed to occur if the
Grantee is immediately thereafter a director of the Company or an affiliate.
12.7 RIGHTS IN THE EVENT OF DEATH.
Unless otherwise provided by the Board, if a Grantee dies while employed
by the Company or Subsidiary, all Restricted Stock or Restricted Stock Units
granted to such Grantee shall fully vest on the date of death, and the shares of
Stock represented thereby shall be deliverable in accordance with the terms of
the Plan to the executors, administrators, legatees or distributees of the
Grantee's estate.
12.8 RIGHTS IN THE EVENT OF DISABILITY.
Unless otherwise provided by the Board, if a Grantee's employment or
other relationship with the Company or Subsidiary is terminated by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Grantee, such Grantee's Restricted Stock or Restricted Stock Units
shall continue to vest in accordance with the applicable Award Agreement for a
period of one year after such termination of employment or service, subject to
the earlier forfeiture of such Restricted Stock or Restricted Stock Units in
accordance with the terms of the applicable Award Agreement. Whether a
termination of employment or service is to be considered by reason of "permanent
and total disability" for purposes of the Plan shall be determined by the Board,
which determination shall be final and conclusive.
12.9 DELIVERY OF STOCK AND PAYMENT THEREFOR.
Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to shares of Restricted Stock or Restricted Stock Units shall lapse,
and, unless otherwise provided in the Award Agreement, upon payment by the
Grantee to the Company, in
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cash or by check, of the greater of (i) the aggregate par value of the shares of
Stock represented by such Restricted Stock or Restricted Stock Units or (ii) the
purchase price, if any, specified in the Award agreement relating to such
Restricted Stock or Restricted Stock Units, a stock certificate for such shares
shall be delivered, free of all such restrictions, to the Grantee or the
Grantee's beneficiary or estate, as the case may be.
12. CERTAIN PROVISIONS APPLICABLE TO AWARDS
13.1 STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE GRANTS
Grants under the Plan may, in the discretion of the Board, be granted
either alone or in addition to, in tandem with or in substitution or exchange
for, any other Grant or any award granted under another plan of the Company, any
affiliate or any business entity to be acquired by the Company or an affiliate,
or any other right of a Grantee to receive payment from the Company or any
affiliate. Such additional, tandem and substitute or exchange Grants may be
awarded at any time. If a Grant is awarded in substitution or exchange for
another Grant, the Board shall require the surrender of such other Grant in
consideration for the new Grant. In addition, Grants may be made in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the
Company or any affiliate, in which the value of Stock subject to the Grant is
equivalent in value to the cash compensation (for example, Restricted Stock), or
in which the exercise price, grant price or purchase price of the Grant in the
nature of a right that may be exercised is equal to the Fair Market Value of the
underlying Stock minus the value of the cash compensation surrendered (for
example, Options granted with an exercise price "discounted" by the amount of
the cash compensation surrendered).
13.2 TERM OF GRANT.
The term of each Grant shall be for such period as may be determined by
the Board; provided that in no event shall the term of any Option exceed a
period of ten years (or such shorter term as may be required in respect of an
Incentive Stock Option under Section 422 of the Code).
13.3 FORM AND TIMING OF PAYMENT UNDER GRANTS; DEFERRALS.
Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or an affiliate upon the exercise of an
Option or other Grant may be made in such forms as the Board shall determine,
including, without limitation, cash, Stock, other Grants or other property, and
may be made in a single payment or transfer, in installments, or on a deferred
basis. The settlement of any Grant may be accelerated, and cash paid in lieu of
Stock in connection with such settlement, in the discretion of the Board or upon
occurrence of one or more specified events. Installment or deferred payments may
be required by the Board or permitted at the election of the Grantee on terms
and conditions established by the Board. Payments may include, without
limitation, provisions for the payment or crediting of a reasonable interest
rate on installment or deferred payments or the grant or crediting of dividend
equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
14. PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by a
Grantee with the Company or any affiliate, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
participants or beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash or is in the form of a benefit to or
for the Grantee (a "Benefit Arrangement"), if the Grantee is a "disqualified
individual," as defined in Section 280G(c) of the Code, any Option, Restricted
Stock or Restricted Stock Unit held by that Grantee and any right to receive any
payment or other benefit under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting, payment or benefit,
taking into account all other rights, payments, or benefits to or for the
Grantee under this Plan, all Other Agreements and all Benefit Arrangements,
would cause any payment or benefit to the Grantee under this Plan to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code as then in effect (a "Parachute Payment") and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment or benefit under this Plan, in conjunction with
all other rights, payments or benefits to or for the Grantee under any Other
Agreement or any Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute Payment under this Plan that would have the effect of
decreasing the after-tax amount received by the Grantee as described in clause
(ii) of the preceding sentence, then the Grantee shall
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have the right, in the Grantee's sole discretion, to designate those rights,
payments or benefits under this Plan, any Other Agreements and any Benefit
Arrangements that should be reduced or eliminated so as to avoid having the
payment or benefit to the Grantee under this Plan be deemed to be a Parachute
Payment.
15. REQUIREMENTS OF LAW
15.1 GENERAL.
The Company shall not be required to sell or issue any shares of Stock
under any Grant if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising a right emanating from
such Grant, or the Company of any provision 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 a Grant upon any securities exchange or under any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares hereunder, no shares of Stock may be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Grant 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 Grant. Specifically, in connection with the
Securities Act, upon the exercise of any right emanating from such Grant or the
delivery of any shares of Restricted Stock or Stock underlying Restricted Stock
Units, unless a registration statement under such Act is in effect with respect
to the shares of Stock covered by such Grant, the Company shall not be required
to sell or issue such shares unless the Board has received evidence satisfactory
to it that the Grantee or any other individual exercising an Option may acquire
such shares pursuant to an exemption from registration under the Securities Act.
Any determination in this connection by the Board shall be final, binding 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
Option or the issuance of shares of Stock pursuant to the Plan to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable until
the shares of Stock covered by such Option are registered or are exempt from
registration, the exercise of such Option (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.
15.2 RULE 16b-3.
During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the Company
that Grants pursuant to the Plan and the exercise of Options granted hereunder
will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To
the extent that any provision of the Plan or action by the Board does not comply
with the requirements of Rule 16b-3, it shall be deemed inoperative to the
extent permitted by law and deemed advisable by the Board, and shall not affect
the validity of the Plan. In the event that Rule 16b-3 is revised or replaced,
the Board may exercise its discretion to modify this Plan in any respect
necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Grants have not been
made; provided, however, that the Board shall not, without approval of the
Company's shareholders, amend the Plan such that it does not comply with the
Code. Except as permitted under this SECTION 16 or SECTION 17 hereof, no
amendment, suspension or termination of the Plan shall, without the consent of
the Grantee, alter or impair rights or obligations under any Grant theretofore
awarded under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
17.1 CHANGES IN STOCK.
If the number of outstanding shares of Stock is increased or decreased or
the shares of Stock are changed into or exchanged for a different number or kind
of shares or other securities of the Company on account of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares
for which Grants of Options, Restricted Stock and Restricted Stock Units may be
made under the Plan shall be adjusted proportionately and accordingly by the
Company. In addition, the number and kind of shares for which Grants are
outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the Grantee
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immediately following such event shall be, to the extent practicable, the same
as immediately before such event. Any such adjustment in outstanding Options
shall not change the aggregate Option Price payable with respect to shares that
are subject to the unexercised portion of an Option outstanding but shall
include a corresponding proportionate adjustment in the Option Price per share.
The conversion of any convertible securities of the Company shall not be treated
as an increase in shares effected without receipt of consideration.
17.2 REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING ENTITY AND
IN WHICH NO CHANGE OF CONTROL OCCURS.
Subject to SECTION 17.3 hereof, if the Company shall be the surviving
entity in any reorganization, merger or consolidation of the Company with one or
more other entities and in which no Change of Control occurs, any Option
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to such
Option would have been entitled immediately following such reorganization,
merger or consolidation, with a corresponding proportionate adjustment of the
Option Price per share so that the aggregate Option Price thereafter shall be
the same as the aggregate Option Price of the shares remaining subject to the
Option immediately prior to such reorganization, merger or consolidation.
Subject to any contrary language in an Award Agreement evidencing a Grant of
Restricted Stock, any restrictions applicable to such Restricted Stock shall
apply as well to any replacement shares received by the Grantee as a result of
the reorganization, merger or consolidation.
17.3 REORGANIZATION, SALE OF ASSETS OR SALE OF STOCK WHICH INVOLVES A
CHANGE OF CONTROL.
Subject to the exceptions set forth in the last sentence of this SECTION
17.3, (i) upon the occurrence of a Change of Control, all outstanding shares of
Restricted Stock and Restricted Stock Units shall be deemed to have vested, and
all restrictions and conditions applicable to such shares of Restricted Stock
and Restricted Stock Units shall be deemed to have lapsed, immediately prior to
the occurrence of such Change of Control, and (ii) fifteen days prior to the
scheduled consummation of a Change of Control, all Options outstanding hereunder
shall become immediately exercisable and shall remain exercisable for a period
of fifteen days. Any exercise of an Option during such fifteen-day period shall
be conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event. Upon consummation of any
Change of Control, the Plan and all outstanding but unexercised Options shall
terminate. The Board shall send written notice of an event that will result in
such a termination to all individuals who hold Options not later than the time
at which the Company gives notice thereof to its shareholders. This SECTION 17.3
shall not apply to any Change of Control to the extent that (A) provision is
made in writing in connection with such Change of Control for the assumption of
the Options, Restricted Stock and Restricted Stock Units theretofore granted, or
for the substitution for such Options, Restricted Stock and Restricted Stock
Units of new options, restricted stock and restricted stock units covering the
stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares or units and exercise prices,
in which event the Plan and Options, Restricted Stock and Restricted Stock Units
theretofore granted shall continue in the manner and under the terms so provided
or (B) a majority of the full Board determines that such Change of Control shall
not trigger application of the provisions of this SECTION 17.3.
17.4 ADJUSTMENTS.
Adjustments under this SECTION 17 related to shares of Stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
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.
17.5 NO LIMITATIONS ON COMPANY.
The making of Grants 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.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Grant or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the
Company. In addition, notwithstanding anything contained in the Plan to the
contrary, unless otherwise stated in the applicable Award Agreement, no Grant
awarded under the Plan shall be affected by any change of duties or position of
the Grantee, so long as such Grantee continues to be a director, officer,
consultant or
11
<PAGE> 37
employee of the Company or any affiliate. The obligation of the Company to pay
any benefits pursuant to this 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 participant or
beneficiary under the terms of the Plan. No Grantee shall have any of the rights
of a shareholder with respect to the shares of Stock subject to an Option except
to the extent the certificates for such shares of Stock shall have been issued
upon the exercise of the Option.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders 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 particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.
20. WITHHOLDING TAXES
The Company or any affiliate, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to a Grantee any Federal,
state or local taxes of any kind required by law to be withheld with respect to
the vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the issuance of any shares of Stock upon the
exercise of an Option. At the time of such vesting, lapse or exercise, the
Grantee shall pay to the Company or affiliate, as the case may be, any amount
that the Company or affiliate may reasonably determine to be necessary to
satisfy such withholding obligation. Subject to the prior approval of the
Company or the affiliate, which may be withheld by the Company or the affiliate,
as the case may be, in its sole discretion, the Grantee may elect to satisfy
such obligations, in whole or in part, (i) by causing the Company or the
affiliate to withhold shares of Stock otherwise issuable to the Grantee in an
amount equal to the statutory withholding amount or (ii) by delivering to the
Company or the affiliate shares of Stock already owned by the Grantee. The
shares of Stock so delivered or withheld shall have an aggregate Fair Market
Value equal to such withholding obligations. The Fair Market Value of the shares
of Stock used to satisfy such withholding obligation shall be determined by the
Company or the affiliate as of the date that the amount of tax to be withheld is
to be determined. A Grantee who has made an election pursuant to this SECTION 20
may satisfy his or her withholding obligation only with shares of Stock that are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.
21. CAPTIONS
The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.
22. OTHER PROVISIONS
Each Grant awarded under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.
23. NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.
24. SEVERABILITY
If any provision of the Plan or any Award Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.
25. POOLING
In the event any provision of the Plan or the Award Agreement would
prevent the use of pooling of interests accounting in a corporate transaction
involving the Company and such transaction is contingent upon pooling of
interests accounting, then that provision shall be deemed amended or revoked to
the extent required to preserve such pooling of interests. The Company may
require in an Award Agreement that a Grantee who receives a Grant under
12
<PAGE> 38
the Plan shall, upon advice from the Company, take (or refrain from taking, as
appropriate) all actions necessary or desirable to ensure that pooling of
interests accounting is available.
26. GOVERNING LAW
The validity and construction of this Plan and the instruments
evidencing the Grants awarded hereunder shall be governed by the laws of the
State of Delaware (excluding the choice of law rules thereof).
27. NONTRANSFERABILITY OF SHARES
A Grantee shall not sell, pledge, assign, gift, transfer, or otherwise
dispose of any shares of stock acquired pursuant to a Grant.
BLUE SKY PROVISIONS REQUIRED TO BE SET FORTH IN THE PLAN
28.1 CALIFORNIA PROVISIONS
Notwithstanding the foregoing sections, any Grant made under the Plan to
a Grantee who is a resident of the State of California on the Grant Date shall
be subject to the following additional terms and conditions:
A. For the purpose of Grants which are not Incentive Stock
Options, Fair Market Value shall be determined in a manner
not inconsistent with Section 260.140.50 of the California
Code of Regulations or any successor statute, and the
exercise price of any non-incentive stock option shall not
be less than 85% of Fair Market Value on the date of grant.
B. Grants may not be made under the Plan to Grantees ten years
after the earlier of: (i) the date the Plan was adopted by
the Board or (ii) the date the Plan was approved by the
shareholders of the Company.
C. An Option granted under the Plan to a Grantee who is a
person who owns stock possessing more than ten percent of
the combined voting power of all classes of stock of the
Company or its parent or its Subsidiary corporations shall
have an Option Price of at least 110% of the Fair Market
Value of a share of Stock on the Grant Date.
D. Any Option granted under the Plan to a Grantee who is not an
officer, director, or consultant of the Company or its
affiliates shall become exercisable at a rate of at least
twenty percent (20%) of the shares of Stock subject to such
Grant per year for a period of five years from the Grant
Date; provided, that, such Option shall be subject to such
reasonable forfeiture conditions as the Board may choose to
impose and which are not inconsistent with Section
260.140.41 of the California Code of Regulations or any
successor statute. E. The Company shall deliver to the
Grantee financial statements on an annual basis regarding
the Company. The financial statements so provided shall
comply with Section 260.140.46 of the California Code of
Regulations or any successor statute, but need not comply
with Section 260.613 of the California Code of Regulations
or any successor statute.
F. Any transfer of an Option granted under the Plan authorized
by the Board in an Award Agreement must comply with Section
260.140.41(d) of the California Code of Regulations or any
successor statute.
G. A grant which authorizes a Grantee to purchase Stock under
the Plan (other than a non-qualified stock option) shall not
be transferable other than by will or the laws of descent
and distribution.
H. Unless a Grantee's employment is terminated for cause as
defined by applicable law, the Grantee shall have the right
to exercise an Option, prior to the termination of the
Option in accordance with SECTION 10 and only to the extent
that the Grantee was entitled to exercise such Option on the
date employment terminates, as follows: (i) at least six (6)
months from the date of termination if the termination was
caused by the Grantee's death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the
Code), and (ii) at least thirty (30) days from the date of
termination if termination was caused by other than death or
"permanent and total disability" (within the meaning of
Section 22(e)(3) of the Code) of the Grantee.
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<PAGE> 39
I. The purchase price for a grant of Restricted Stock or
Restricted Stock Units shall be at least 85% of the Fair
Market Value of the Stock on the Grant Date and at least
100% of the Fair Market Value of Stock on the Grant Date in
the case of a person who owns stock possessing more than ten
percent of the combined voting power of all classes of stock
of the Company or its parent or its Subsidiary corporations.
J. At no time shall the total number of shares of Stock
issuable upon exercise of all outstanding Options and the
total number of shares provided for under all stock bonus or
similar plans of the Company exceed the applicable
percentage as calculated in accordance with the conditions
and exclusions of Section 260.140.45 of the California Code
of Regulations or any successor statute.
K. Grants may be made only to persons who are employees,
directors, or consultants of the Company or its affiliates.
If the Stock is listed on an established national or regional stock
exchange or is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System, or is publicly traded in an established
securities market, the restrictions of this SECTION 28.1 shall terminate as of
the first date that the Stock is so listed, quoted or publicly traded.
28.2 FLORIDA, VIRGINIA AND MISSOURI PROVISIONS.
Notwithstanding SECTION 6:
(a) a resident of Florida or Virginia who is not an employee or
director of the Company or an employee of any wholly-owned subsidiary of the
Company shall not be eligible to receive a Grant under the Plan; and
(b) a resident of Missouri who is not an employee of the Company
or an employee of any wholly-owned subsidiary of the Company shall not be
eligible to receive a Grant under the Plan.
* * *
<PAGE> 40
PROXY
NETAMERICA.COM CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 20, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald Sledge and Ross Mayfield and each of
them, as proxies, with full power of substitution, and hereby authorizes them to
represent and vote, as designated on the reverse, all shares of common stock of
NetAmerica.com Corporation, a Delaware corporation, held of record by the
undersigned, on March 27, 2000, at the annual meeting of shareholders to be held
on Thursday, April 20, 2000, at 10:00 a.m., pacific standard time, at The Park
Hyatt Hotel, 333 Battery Street, San Francisco, California 94111, or at any
adjournment or postponement thereof, upon the matters set forth on the reverse,
all in accordance with and as more fully described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby
acknowledged.
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" THE ELECTION OF THE DIRECTOR NOMINEES NAMED ON THE REVERSE, "FOR"
THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE
COMPANY NAME TO RATEXCHANGE CORPORATION, "FOR" THE PROPOSAL TO ADOPT THE 2000
STOCK OPTION AND INCENTIVE PLAN AND "FOR" THE PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION AUTHORIZING 60,000,000 SHARES OF BLANK CHECK
PREFERRED STOCK. PLEASE COMPLETE, SIGN AND DATE THIS PROXY WHERE INDICATED AND
RETURN PROMPTLY IN THE ACCOMPANYING PREPAID ENVELOPE.
(To be Signed on Reverse Side.)
<PAGE> 41
1. Election of Directors. This proxy will be voted for each of the nominees
identified in the proxy statement at the annual meeting of shareholders
unless authority to vote for one or more of the nominees is expressly
withheld.
[ ] For All Nominees [ ] Withhold Authority to Vote for any individual
nominee (TO WITHHOLD AUTHORITY FOR ONE OR MORE [
] Abstain
INDIVIDUAL NOMINEES, CROSS OUT THE NAME OF EACH SUCH PERSON).
Douglas Cole, Jonathan Merriman, Ronald Spears, Donald Sledge,
Christopher Vizas
2. Proposal to amend the Company's Certificate of Incorporation to change the
name of the Company from NetAmerica.com Corporation to RateXchange
Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to adopt the 2000 Stock Option and Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to amend the Company's Certificate of Incorporation authorizing
60,000,000 shares of preferred stock. [ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournment or
postponement thereof. [ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
--------------------------------
SIGNATURE
DATE
--------------------------------
--------------------------------
SIGNATURE
DATE
--------------------------------
NOTE: Please sign above exactly
as the shares are issued.
When shares are held by
joint tenants, both should
sign. When signing as an
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.
