<PAGE> 1
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 Pursuant to Rule 14a-11(c) or Rule 14a-12
eVENTURES GROUP, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(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 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:
--------------------------------------------------------------------------------
[ ] 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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<PAGE> 2
[COMPANY LOGO]
October 5, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of eVentures Group, Inc. (the "Company"), which is to be held
at the Crescent Club, 300 Crescent Court, 17th Floor, Dallas, Texas 75201, on
Thursday, November 9, 2000, commencing at 3:00 PM (Central Daylight Savings
Time). The Company urges you to be present in person or to be represented by
proxy at the Annual Meeting.
The enclosed Notice of Annual Meeting and Proxy Statement fully describes
the purposes for the Annual Meeting, which include the following: (i) to elect
three Class I directors to serve until the 2003 Annual Meeting, and until their
successors are duly elected and qualified; (ii) to ratify the adoption of
certain amendments to the Company's 1999 Omnibus Securities Plan; (iii) to
consider and vote upon an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
common stock from 75,000,000 to 200,000,000 and to increase the number of
authorized shares of preferred stock from 5,000,000 to 25,000,000; and (iv) to
transact any other business that may properly be brought before the Annual
Meeting or any adjournment or postponement thereof.
The Company's Board of Directors (the "Board") believes that a favorable
vote on each of the matters to be considered at the Annual Meeting is in the
best interest of the Company and its stockholders, and the Board unanimously
recommends a vote "FOR" each of those matters. Accordingly, the Company urges
you to review the accompanying material carefully and to return the enclosed
proxy promptly.
The Board has fixed the close of business on September 15, 2000, as the
record date for the determination of the stockholders who will be entitled to
notice of and to vote at the Annual Meeting. Accordingly, only stockholders of
record at the close of business on that date will be entitled to vote at the
Annual Meeting. A list of the stockholders entitled to vote at the Annual
Meeting will be available for inspection during ordinary business hours at least
ten days prior to the Annual Meeting at the Company's offices, 300 Crescent
Court, Suite 800, Dallas, Texas 75201, and it will also be available for
inspection at the Annual Meeting.
Directors and officers of the Company will be present to help host the
Annual Meeting and to respond to any questions from the stockholders. Regardless
of whether or not you expect to attend the Annual Meeting, please mark, sign,
date, and return the enclosed proxy without delay. You may vote in person even
if you have previously returned a proxy.
Sincerely,
/s/ Jeffrey A. Marcus
Chairman and Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 9, 2000
TO THE STOCKHOLDERS OF EVENTURES GROUP, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of eVentures Group, Inc. (the "Company"), a Delaware corporation, will
be held on Thursday, November 9, 2000, at 3:00 PM (Central Daylight Savings
Time), at the Crescent Club, 300 Crescent Court, 17th Floor, Dallas, Texas
75201.
The Annual Meeting is for the following purposes:
1. to elect three Class I directors to serve until the 2003 Annual
Meeting, and until their successors are duly elected and qualified;
2. to ratify the adoption of certain amendments to the Company's 1999
Omnibus Securities Plan;
3. to consider and vote upon an amendment to the Company's Amended and
Restated Certificate of Incorporation to increase the number of
authorized shares of common stock from 75,000,000 to 200,000,000 and
to increase the number of authorized shares of preferred stock from
5,000,000 to 25,000,000 shares; and
4. to transact any other business that may properly be brought before the
Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice. A copy of the Company's 2000 Annual Report
to Stockholders, which includes audited financial statements, is also enclosed
with this notice.
Only stockholders of record at the close of business on September 15, 2000,
are entitled to notice of and to vote at the Annual Meeting. A list of such
stockholders will be available for inspection during ordinary business hours at
least ten days prior to the Annual Meeting in the Company's offices at 300
Crescent Court, Suite 800, Dallas, Texas 75201, and it also will be available
for inspection at the Annual Meeting.
Each vote is important. To ensure that it is cast, the enclosed proxy
should be marked, signed, dated, and returned as promptly as possible in the
postage-prepaid envelope that has been enclosed for that purpose. A stockholder
may vote in person even if he or she has previously returned a proxy.
By Order of the Board of Directors,
/s/ Stuart J. Chasanoff
Senior Vice President,
General Counsel and Secretary
Dallas, Texas
October 5, 2000
<PAGE> 4
eVENTURES GROUP, INC.
----------
PROXY STATEMENT
----------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 9, 2000
GENERAL INFORMATION
TIME, DATE AND PLACE OF MEETING
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of eVentures Group, Inc., a Delaware
corporation (the "Company"), of proxies from the holders of the Company's common
stock, par value $.00002 per share (the "Common Stock"), for use at the
Company's 2000 Annual Meeting of Stockholders (the "Annual Meeting") or at any
postponement or adjournment thereof, for the purposes set forth herein and in
the Notice of Annual Meeting of Stockholders. The Annual Meeting is to be held
on Thursday, November 9, 2000, commencing at 3:00 PM (Central Daylight Savings
Time) at the Crescent Club, 300 Crescent Court, 17th Floor, Dallas, Texas 75201.
This Proxy Statement and the enclosed form of proxy are first being sent to
stockholders on or about October 10, 2000. Stockholders should review the
information provided herein in conjunction with the Company's 2000 Annual Report
to Stockholders, which accompanies this Proxy Statement.
The Company's principal executive offices are located at 300 Crescent
Court, Suite 800, Dallas, Texas 75201 and its telephone number is (214)
777-4100.
INFORMATION CONCERNING THE PROXY
The enclosed proxy is solicited on behalf of the Board. The giving of a
proxy does not preclude the right to vote in person should any stockholder
giving a proxy so desire. Stockholders have the unconditional right to revoke
their proxy at any time prior to the exercise thereof, either in person at the
Annual Meeting or by filing with the Company's Secretary at the Company's
headquarters a written revocation or duly executed proxy bearing a later date;
however, no such revocation will be effective until written notice of the
revocation is received by the Company at or prior to the Annual Meeting.
All shares represented by valid proxies at the Annual Meeting, unless the
stockholder otherwise specifies, will be voted "FOR" the proposals (1) through
(3) described on the Notice of Annual Meeting and at the discretion of the proxy
holders with respect to any matter not known to the Board on the date of mailing
this Proxy Statement that may properly come before the Annual Meeting or any
adjournment or postponement thereof. Where a stockholder has appropriately
specified how a proxy is to be voted, it will be cast accordingly.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting and the enclosed proxy is to be borne by the Company.
In addition to the use of
<PAGE> 5
mail, employees of the Company may solicit proxies personally and by telephone.
The Company's employees will receive no compensation for soliciting proxies
other than their regular salaries. The Company may request banks, brokers and
other custodians, nominees and fiduciaries to forward copies of the proxy
material to their principals and to request authority for the execution of
proxies. The Company may reimburse such persons for their expense in so doing.
NO DISSENTERS' OR APPRAISAL RIGHTS
You will not be entitled to any right of appraisal or similar rights of
dissenters with respect to any of the proposals.
RECORD DATE AND OUTSTANDING VOTING SECURITIES; CONTROL BY MAJORITY STOCKHOLDERS
The close of business on September 15, 2000, is the record date (the
"Record Date") for determining the stockholders who will be entitled to vote at
the Annual Meeting. At the close of business on the Record Date, the Company had
issued and outstanding approximately:
o 51,989,745 shares of issued and outstanding Common Stock held by
approximately 1,060 stockholders of record;
o No shares of issued and outstanding Series A Convertible Preferred Stock
(the "Preferred A Stock");
o 4,500 shares of issued and outstanding Series B Convertible Preferred Stock
(the "Preferred B Stock") held by approximately 18 stockholders of record;
and
o 15,570 shares of Series C Convertible Preferred Stock (the "Preferred C
Stock") held by approximately 8 stockholders of record.
An additional 326,087, and 869,832 shares of Common Stock are issuable upon
the conversion of the outstanding Preferred B Stock, and Preferred C Stock,
respectively.
Each share of Common Stock is entitled to one vote. The Common Stock
constitutes the only outstanding securities of the Company that can vote at the
Annual Meeting.
IEO Investments Limited, Infinity Emerging Subsidiary Limited, and Infinity
Investors Limited (the "Infinity Entities") hold approximately 52.8% of the
Common Stock and have effective control of the Company through the voting power
of their shares. Accordingly, the Infinity Entities have the ability to elect
all directors and to affect or prevent any corporate transactions that require
the majority approval of the holders of the Common Stock, including mergers and
other business combinations.
QUORUM, ABSTENTIONS AND BROKER NON-VOTES
The presence at the Annual Meeting, either in person or by proxy relating
to any matter, of the holders of a majority of the outstanding shares of Common
Stock is necessary to constitute a quorum. If less than a majority of the
outstanding shares of Common Stock entitled to vote are represented at the
Annual Meeting, a majority of the shares of Common Stock so represented may
adjourn the Annual Meeting to another date, time or place, and notice need not
be given of the
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new date, time or place if the new date, time or place is announced at the
meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select an inspector for
elections of the Annual Meeting, who will be an employee of the Company's
transfer agent. Such inspector will determine the number of shares of Common
Stock represented at the meeting, the existence of a quorum and the validity and
effect of proxies, and shall receive, count and tabulate ballots and votes and
determine the results thereof.
Under Delaware law, abstentions and broker "non-votes," which are proxies
from brokers or nominees indicating that such person has not received
instructions from the beneficial owner or other person entitled to vote such
shares on a particular matter with respect to which the broker or nominee does
not have discretionary voting power, will be counted for determining whether a
quorum is present but will not be counted as votes cast.
VOTE REQUIRED
The two nominees receiving the greatest number of votes cast by those
entitled to vote will be elected. A majority vote of the outstanding Common
Stock is necessary for the adoption of the proposed amendments to the Company's
Amended and Restated Articles of Incorporation. For all other matters submitted
at the meeting (including the proposal to ratify the amendments to the Company's
1999 Omnibus Securities Plan), an affirmative vote of the majority of the shares
present in person or by proxy is necessary.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board currently consists of nine directors divided into three classes
of three directors each, designated Class I, Class II and Class III. Directors
in each class serve for a term of three years and until their successors are
duly elected and qualified. At this time, Class II has one vacancy. The term of
one class expires at each annual meeting of stockholders.
At the Annual Meeting, three directors will be elected as Class I
directors, to serve until the 2003 Annual Meeting and until their successors are
duly elected and qualified. The nominees for election at the Annual Meeting as
Class I directors of the Board are Mark R. Graham, Stuart Subotnick and Jan
Robert Horsfall. The nominees are now serving as directors. Mr. Graham was
previously elected by the stockholders of the Company and Mr. Subotnick and Mr.
Horsfall were elected by the Board.
Under the Company's Amended and Restated Bylaws, directors are elected by a
majority of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting. Proxy holders may not vote proxies
for a greater number of individuals than the nominees named. Unless otherwise
instructed, proxy holders will vote proxies for the three nominees.
If elected, Mr. Graham, Mr. Subotnick and Mr. Horsfall will serve as
directors until the Annual Meeting in 2003 and until their successors are duly
elected and qualified or until their earlier resignation or removal. Information
about each of the nominees is set forth in the following section regarding
current directors.
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THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE ELECTION OF THE THREE NOMINEES.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table and biographical descriptions set forth certain
information with respect to the three nominees for election as Class I directors
at the Annual Meeting and the continuing directors whose terms expire at the
annual meetings of stockholders in 2001 and 2002, based upon information
furnished to the Company by each director.
<TABLE>
<CAPTION>
Name Age Director Since
---- --- --------------
<S> <C> <C>
CLASS I NOMINEES FOR ELECTION
AT 2000 ANNUAL MEETING (TERM
EXPIRES IN 2003)
Mark R. Graham 42 1999
Jan R. Horsfall 40 2000
Stuart A. Subotnick 58 2000
CLASS II CONTINUING DIRECTORS
(TERM EXPIRES IN 2001)
David Leuschen 49 2000
Fred A. Vierra 68 1999
CLASS III CONTINUING DIRECTORS
(TERM EXPIRES IN 2002)
Clark K. Hunt 35 1999
Jeffrey A. Marcus 53 2000
Barrett N. Wissman 38 1999
</TABLE>
NOMINEES FOR ELECTION AT THE 2000 MEETING--TERM EXPIRES IN 2003
Mark R. Graham has been one of the Company's directors since September 22,
1999. Mr. Graham has been a principal of Catalyst Asset Management, since
December of 1999. He was a private investor based in Philadelphia from 1997
until forming Catalyst. Mr. Graham co-founded Drake Goodwin & Graham, a private
equity investment firm, in 1992 and served as a director until 1997. Mr. Graham
received a Bachelor of Arts in History, cum laude, from the University of
Michigan and a Juris Doctor degree from Georgetown University Law Center.
Stuart Subotnick has been one of the Company's directors since January 1,
2000. Mr. Subotnick was retained as a consultant to the Company from October
1999 through December 1999. He has been a general partner and an owner of
Metromedia Company since 1986. He is also Chief Executive Officer of Metromedia
International Group, Chairman of Big City Radio, Inc., and a director of
Carnival Cruise Lines, Inc. and Metromedia Fiber Network, Inc.
Jan Robert Horsfall has been one of the Company's directors since January
1, 2000. Mr. Horsfall has been the Company's Chief Internet Strategist since
October 14, 1999. Mr. Horsfall has been Chief Executive Officer and President of
PhoneFree.com since November of 1999. From 1996 until joining PhoneFree.com, Mr.
Horsfall was Vice President of Marketing for Lycos Inc. Prior to joining Lycos,
Mr. Horsfall was Vice President of Consumer Brands at The Valvoline Company, a
division of Ashland, Inc. Mr. Horsfall has a Bachelor of Science degree from
Colorado State University.
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<PAGE> 8
CLASS II CONTINUING DIRECTORS--TERM EXPIRES IN 2001
David M. Leuschen has been one of our directors since February 4, 2000. Mr.
Leuschen is a founder and managing director of Riverstone Holdings, LLC, a New
York and Connecticut-based private equity firm formed in March 2000 to invest in
a variety of energy and power related businesses on a worldwide basis. From 1977
to March 11, 2000, Mr. Leuschen was employed by Goldman, Sachs & Co. in various
capacities. From 1986 to 1999, he was a partner of Goldman, Sachs in charge of
the firm's Energy and Power Department within Investment Banking. He was also a
member of the Energy Investment Committee, which oversees direct investment
activity in the energy and power arenas. He is also owner and President of
Switchback Ranch LLC of Cody, Wyoming and Roscoe, Montana. He has been a
Director of Cambridge Energy Research Associates and Cross Timbers Oil Company.
He received his MBA and AB degrees from Dartmouth College in 1977 and 1974.
Fred A. Vierra has been one of the Company's directors since September 22,
1999. He was also Vice-Chairman of the Board, and served as Chairman of the
Board for the Company from September 1999 through April 2000. He was Chief
Executive Officer of Tele-Communications International, Inc., the international
arm of Tele-Communications, Inc., from 1994 to 1997. Mr. Vierra has served on
the Boards of Turner Broadcasting, Discovery Channel and Telewest plc.
Currently, Mr. Vierra is director of Formus Communications, Inc., and Jones
International Networks, Ltd.
CLASS III CONTINUING DIRECTORS--TERM EXPIRES IN 2002
Clark K. Hunt has been one of the Company's directors since September 22,
1999. He is President of Hunt Financial Group, LLC., a Dallas based financial
service firm, and is a Co-Manager of HW Capital and related investment advisory
companies which he co-founded in 1991. Mr. Hunt is also involved with several
family controlled enterprises, including venture capital investor, Hunt Capital
Group, real estate and mining conglomerate, Hunt Midwest Enterprises, and Hunt
Sports Group. Hunt Sports Group is the management company responsible for
overseeing the Hunt family's investments in the Kansas City Chiefs of the
National Football League, the Chicago Bulls of the National Basketball
Association, and two franchises in Major League Soccer. Mr. Hunt serves as a
director of United Petroleum Corporation. Mr. Hunt attended Southern Methodist
University, where he graduated first in his class with a Bachelor of Business
Administration and was a two-time recipient of the University's highest academic
award, the Provost Award for Outstanding Scholar.
Jeffrey A. Marcus has been Chairman and Chief Executive Officer of the
Company since April 4, 2000. Prior to joining eVentures in April of 2000, Mr.
Marcus was a co-founder and Senior Managing Partner of Marcus & Partners, a
Dallas-based venture capital firm formed in March 1999. From June 1998 through
March 1999, he was the President and Chief Executive Officer of AMFM, Inc.
(formerly Chancellor Media Corporation), one of the nation's largest radio
broadcasting companies. Prior to Chancellor Media, Mr. Marcus founded and served
as Chairman and Chief Executive Officer of Marcus Cable Company which he founded
in 1990. Mr. Marcus is a director of Brinker International. He received a
Bachelor of Science Degree in Economics from the University of California -
Berkeley.
Barrett N. Wissman has been President and one of the Company's directors
since September 22, 1999. He also served as President and Chief Executive
Officer from September 1999 through April 2000. He has been the sole manager of
HW Partners, a Co-Manager of HW
5
<PAGE> 9
Capital, and a manager of related investment advisory companies, which he
co-founded in 1993. Mr. Wissman holds a Bachelor of Arts degrees, cum laude, in
economics and political science from Yale University, a Master of Arts degree in
music from Southern Methodist University and a Doctorate in Music from Academia
Chiziannini in Italy.
THE BOARD AND ITS COMMITTEES
The business of the Company is managed under the direction of the Board.
The Board meets on a regular basis during the Company's fiscal year to review
significant developments affecting the Company and to act on matters requiring
Board approval. It also holds special meetings or acts by unanimous written
consent when an important matter requires Board action between scheduled
meetings. During fiscal year 2000, the Board had eight meetings and acted by
unanimous written consent on six occasions. Each member of the Board
participated in at least 75% of such Board and applicable committee meetings
held during fiscal year 2000 and the period during which he was a director.
The Board has established Audit and Compensation Committees to devote
attention to specific subjects and to assist the Board in the discharge of its
responsibilities. The functions of those committees and their current members
are set forth below.
The Audit Committee recommends to the Board the appointment of the firm
selected to serve as the independent auditor for the Company and its
subsidiaries and monitors the performance of any such firm. It also reviews and
approves the scope of the audit and evaluates, with the independent auditor, the
Company's audit and annual financial statements, reviews with management the
status of internal accounting controls, evaluates issues having a potential
financial impact on the Company, which may be brought to the Audit Committee's
attention by management, the independent auditors, or the Board and evaluates
public financial reporting documents of the Company. Fred A. Vierra, Mark R.
Graham, David M. Leuschen and Stuart Subotnick are currently members of the
Audit Committee and Mr. Vierra currently serves as Chairman. The Audit Committee
met one time during fiscal year 2000.
The Compensation Committee is responsible for evaluating the Company's
compensation policies, administering the Company's stock award and incentive
plans, and establishing the compensation for the executive officers. Clark K.
Hunt, David M. Leuschen, Barrett N. Wissman, and Mark R. Graham are currently
members of the Compensation Committee. The Compensation Committee has
established an Option Subcommittee to devote attention to option-related
policies and to assist the Compensation Committee in the discharge of its
responsibilities. David M. Leuschen and Mark R. Graham are currently members of
the Option Subcommittee. The Compensation Committee met one time during fiscal
year 2000 and acted by unanimous written consent on one occasion, and the Option
Subcommittee did not meet during the fiscal year 2000 or act by unanimous
written consent.
The Company does not have an Executive Committee or a Nominating Committee.
The functions customarily attributable to an Executive Committee and a
Nominating Committee are performed by the Board as a whole. See "Certain
Relationships and Related Transactions" for a discussion of the agreements
between the Company and the directors of the Company.
6
<PAGE> 10
COMPENSATION OF DIRECTORS
On September 22, 1999, pursuant to our 1999 Omnibus Securities Plan
described below, we granted a total of 600,000 options to purchase shares of
Common Stock to our newly appointed directors. On October 14, 1999, we granted
100,000 options to purchase shares of Common Stock to each of Jan Robert
Horsfall and Stuart Subotnick, respectively, in connection with their agreement
to serve as our directors. On February 4, 2000, we granted 100,000 options to
purchase shares of Common Stock to David M. Leuschen in connection with his
agreement to serve as our director.
Effective July 1, 2000, each non-employee director receives $1,000 for each
Board meeting and committee meeting attended in person and $500 for each Board
meeting and committee meeting attended by conference call.
PROPOSAL 2
RATIFICATION OF AMENDMENTS TO THE 1999 OMNIBUS SECURITIES PLAN
GENERAL.
The Board and our stockholders adopted and approved our 1999 Omnibus
Securities Omnibus Plan (the "Omnibus Plan") as of September 22, 1999. Under the
Omnibus Plan, our officers, directors, key employees and consultants, together
with those of our affiliated entities, are eligible to receive stock options,
restricted and unrestricted stock awards, performance stock awards, dividend
equivalent rights, interest equivalents, and stock appreciation rights.
On November 10, 1999, the Board approved certain amendments to the Omnibus
Plan (the "Amendments"). The Amendments were designed to reflect certain
deficiencies in the original plan and to more accurately describe the terms and
conditions of the Omnibus Plan.
It is the opinion of the Board that approval of the Amendments will further
the purpose of the Omnibus Plan by more accurately fulfilling the purpose of the
Omnibus Plan and facilitating the administration of the Omnibus Plan.
SUMMARY OF AMENDMENTS.
Described below is a summary of some of the significant Amendments. The
full text of the Omnibus Plan, marked to show the Amendments, is set forth in
Appendix A hereto. The following description is qualified in its entirety by
reference to Appendix A.
AMENDMENTS REGARDING NUMBER OF SHARES AVAILABLE FOR AWARD
We have authorized and reserved 15% of our issued and outstanding shares of
Common Stock for delivery upon the exercise of stock options, or under other
awards, granted pursuant to the Omnibus Plan. The calculation of the 15%
threshold will be made prior to the date of any award using the same calculation
we use to calculate fully diluted earnings per share for the immediately
preceding fiscal year. As of June 30, 2000, this maximum would permit the
Company to make awards with respect to 15% of 51,989,745 shares (or
approximately 7.8 million shares).
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Prior to the Amendments, the maximum number of shares was set at 4,000,000.
This limitation was intended to be the maximum number of shares that may be
delivered pursuant to the exercise of "incentive stock options" granted under
the Omnibus Plan. We have maintained the 4,000,000 maximum limitation for
incentive stock options.
The Omnibus Plan provides that the maximum number of shares of Common Stock
that may be subject to awards for any individual to whom the Company intends to
grant "performance based compensation" (as such term is defined in Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code")) is
500,000. Performance based compensation awards are designed to preserve the
Company's compensation-related tax deduction for awards made to its top
executives. The Amendments do not change the 500,000 maximum. However, the
Amendments clarify that while shares of Common Stock that are subject to awards
that expire, terminate or are canceled may again be available for grant (and are
not counted in determining the other maximums under the Omnibus Plan), such
shares would count against the 500,000 maximum, to the extent Code Section
162(m) would so require, and thus would not be available for re-grant.
The Omnibus Plan allows awards to be granted in substitution for awards
made under another company's plans in cases where the other company becomes
affiliated with the Company (e.g., through acquisition). The Amendments clarify
that should such substitute awards be made under the Omnibus Plan, the
substitute awards would not be counted against the maximum number of shares
available for awards under the Omnibus Plan
AMENDMENTS TO ENSURE COMPLIANCE WITH OR OBTAIN BENEFIT OF CERTAIN LAWS
The Omnibus Plan is designed to ensure that awards comply with Code Section
162(m) (so that the Company preserves the compensation-related tax deduction for
awards made to its top executives) and Rule 16b-3 issued under Section 16 of the
Securities Exchange Act of 1934, as amended (to ensure that awards do not result
in liability to recipients for short-swing profits). Incentive stock options
granted under the Omnibus Plan are intended to meet the requirements of Code
Section 422. As administered, the Omnibus Plan intends to comply with other
applicable laws.
Code Section 162(m). With regard to Code Section 162(m), the Amendments
clarify the difference between "performance based compensation", which is a
defined term within Code Section 162(m), and the "performance criteria" on which
performance goals may be set. In that regard, the Amendments have modified the
list of performance criteria that can be made the basis of performance-based
award. As amended, the list of potential criteria are: (i) income or net income
(ii) pre-tax income, (iii) operating income, (iv) cash flow, (v) earnings per
share (including earnings before interest, taxes and amortization), (vi) return
on equity, (vii) return on invested capital or assets, (viii) cost reductions or
savings, (ix) funds from operations, (x) appreciation in the fair market value
of Common Stock, (xi) earnings before any of the following items: interest,
taxes, depreciation or amortization, (xii) book value of Common Stock, (xiii)
total stockholder return, (xiv) return on capital, (xv) return on assets or net
assets, and (xvi) operating margin.
The Amendments also include a number of safeguards to ensure that awards
intended to qualify as performance-based compensation so qualify and that such
awards are not modified after they are granted in a manner that would cause such
awards to lose such qualification. With respect to each type of award in the
Omnibus Plan a provision is added to clarify that vesting or
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<PAGE> 12
exercisability may be made contingent on satisfaction of performance goals based
on one or more of the listed performance criteria, as well as the lapse of time.
Rule 16b-3. The Omnibus Plan, as originally adopted, contained a number of
restrictions that were once, but are no longer, required to comply with Rule
16b-3. In particular, the Omnibus Plan required that certain awards could not
vest until six months and one day had elapsed from the date of the award and
also required that awards be completely non-transferable. To preserve
flexibility in administration, the Amendments delete the six month and one day
restrictions and permit the Omnibus Plan's administering body to allow
transferability in applicable award agreements.
The six-month holding requirements of Section 16 of the 1934 Act continue
to apply to stock a recipient may hold. Should the Omnibus Plan's administering
body permit a recipient to satisfy withholding requirements with stock in the
recipient's possession, the Amendments clarify that such stock must have been
held for more than six months by the recipient (or by the recipient and his
spouse jointly).
Code Section 422. The Omnibus Plan permits the Company to grant "incentive
stock options". The Amendments include a number of safeguards to ensure that
awards intended to qualify as incentive stock options so qualify and are not
modified after they are granted in a manner that would cause such awards to lose
such qualification unless disqualification is intended. For example, included in
the Amendments are provisions that require option award agreements to (i)
designate an option as either an incentive stock option or a nonstatutory stock
option, (ii) state the exercise price, and (iii) describe the vesting schedule.
Other Applicable Laws. In general, the Omnibus Plan intends to comply with
all applicable laws. As awards may be made outside of the United States,
language is added in the Amendments to contemplate compliance with foreign laws,
as well.
AMENDMENTS REGARDING ADJUSTMENT OR AMENDMENT OF AWARDS
The Omnibus Plan permits adjustment of awards for extraordinary dividends,
as well as other events related to the Company's stock or securities. Prior to
the Amendments, the Omnibus Plan contemplated adjustments only for extraordinary
cash dividends. The Amendments permit adjustment in the case of extraordinary
dividends payable in property.
The Omnibus Plan provides its administering body with a variety of criteria
that may be modified if an adjustment is necessary. However, prior to amendment,
the Omnibus Plan provided that the exercise price of an award could only be
adjusted if the aggregate exercise price for all awards would not exceed the
aggregate exercise price for all awards multiplied by the number of underlying
securities. Because this does not necessarily permit a full and fair adjustment
in all cases, the Amendments eliminated this limitation. The Amendments add that
any adjustment should be made to preserve the benefits of the Omnibus Plan and
outstanding awards.
The Omnibus Plan permits the Company to amend the terms of awards. However,
prior to the Amendments, no amendment could be made unless the recipient
consented. Because obtaining consent for all award amendments (even those
favorable to a recipient) is neither desirable nor necessary and could be
cumbersome, this restriction has been modified to require consent only when an
amendment would materially impair a recipient's rights under the Omnibus Plan.
9
<PAGE> 13
AMENDMENTS TO CLARIFY AUTHORITY UNDER THE OMNIBUS PLAN
Throughout the Omnibus Plan, reference is made to the authority of the
Board, the Company and the Omnibus Plan's "administering body". The Amendments
generally contemplate that the Omnibus Plan will be administered by an
"administering body" which serves at the discretion of the Board. Throughout the
Omnibus Plan, the Amendments more clearly delineate the administering body's
role, authority and power.
AMENDMENTS REGARDING AFFILIATED ENTITIES
The Omnibus Plan permits grants to employees of the Company and its
"affiliated entities". The Amendments more precisely define "affiliated entity"
and take care to include "affiliated entities" when such references should be
included but have been omitted (e.g., rules regarding the effect of termination
of employment refer now to termination of employment with the Company or an
affiliated entity). The Amendments also include procedures for addressing
transfers between affiliated entities and clarify in more detail how certain
transactions between affiliated entities would be treated under the Omnibus
Plan.
AMENDMENTS BETTER RECOGNIZING OMNIBUS NATURE OF OMNIBUS PLAN
While the Omnibus Plan permits the grant of many different types of awards,
some of the generally applicable provisions of the Omnibus Plan did not always
clearly refer to all types of awards. Throughout the Omnibus Plan, the
Amendments add the requisite language. For example, a Omnibus Plan provision
regarding payment for awards that referred only to awards that could be
exercised is amended to include other types of awards that do not have exercise
provisions (e.g., stock grants).
AMENDMENTS ADOPTING AND CLARIFYING CERTAIN ADMINISTRATIVE RULES IN THE
OMNIBUS PLAN
The Amendments adopt and clarify a number of rules regarding the day to day
administration of the Omnibus Plan. For example, the Amendments now explicitly
(i) state that award agreements must describe key features of the grant, (ii)
provide rules for acceleration of awards for non-employees whose engagement with
the Company or an affiliated company terminates, (iii) take the position that an
employee recipient who becomes an eligible non-employee shall not be considered
to have terminated employment (except with respect to incentive stock options)
unless the administering body provides otherwise, (iv) provide that in the case
of the death or disability of a recipient, the Omnibus Plan's administering body
need not work with the recipient's representative unless the administering body
is satisfied that the representative has the requisite authority, (v) provide
that taxes can be deducted from payments to be made under the plan provided the
amount to be withheld does not exceed the withholding obligation, (vi) permit
the administering body to add legends to stock in its discretion (rather than
those required by law) and (vii) state that no other rights are granted to
participants under the Omnibus Plan except the rights described in the Omnibus
Plan and any award agreement.
With respect to awards of restricted stock, the Amendments explicitly
provide (i) rules for making elections under Code Section 83(b) (which permits
recipients to recognize income on awards as of the date of the restricted stock
grant rather than at the time restrictions lapse); (ii) that a grant of
restricted stock must be accepted by the recipient by signing the award
agreement; (iii) for book entry of shares, provided, that if a recipient wants a
stock certificate issued, the recipient may be required to deliver it to the
secretary of the Company or an escrow agent.
10
<PAGE> 14
With respect to awards of unrestricted stock, the Amendments permit the
administering body to authorize and adopt rules regarding the deferral of
awards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENTS.
PROPOSAL 3
INCREASE IN NUMBER OF AUTHORIZED SHARES
The Company's Amended and Restated Certificate of Incorporation currently
authorizes the issuance of 75,000,000 shares of Common Stock and 5,000,000
shares of Preferred Stock. On September 7, 2000, the Board adopted a resolution
approving an amendment of said certificate to increase the authorized number of
shares of Common Stock to 200,000,000, and the authorized number of shares of
Preferred Stock to 25,000,000, subject to stockholder approval.
As of the Record Date, the Company had 51,989,745 shares of Common Stock
outstanding, 326,087 shares of Common Stock reserved for issuance upon
conversion of the Series B Preferred, 869,832 shares of Common Stock reserved
for issuance upon conversion of the Series C Preferred, 9,684,574 shares of
Common Stock reserved for future issuance under non-qualified stock options
grants, 6,901,928 shares of Common Stock reserved for issuance under the 1999
Omnibus Plan (of which approximately 4,176,663 shares are covered by outstanding
options and approximately 2,725,265 are available for future grant or purchase),
and 141,210 shares of Common Stock reserved for issuance upon the exercise of
outstanding warrants to purchase Common Stock. Based upon the foregoing number
of outstanding and reserved shares of Common Stock, the Company has
approximately 5,086,624 authorized and unissued shares available for other
purposes.
The Board has adopted resolutions setting forth the proposed amendment to
Article FOURTH of the Company's Amended and Restated Certificate of
Incorporation, the advisability of such an amendment, and a call for submission
of such amendment for approval by the stockholders at the Annual Meeting. The
following is the text of Article FOURTH of the Amended and Restated Certificate
of Incorporation, as proposed to be amended:
"FOURTH: The aggregate number of shares which the Corporation shall
have the authority to issue is 225,000,000, consisting of (i) 200,000,000
shares of Common Stock, par value $0.00002 per share (the "Common Stock"),
and (ii) 25,000,000 shares of Preferred Stock, par value $0.00002 per share
(the "Preferred Stock")."
The Board believes that it is in the best interest of the Company to
increase the number of shares of Common Stock and Preferred Stock that it is
authorized to issue in order to provide it with the flexibility to accomplish
such corporate purposes as may be identified in the future, such as to raise
equity capital, to make acquisitions, to establish strategic relationships with
other companies, to adopt additional or improve existing employee benefit plans,
and to allow for stock splits. The Board has no immediate plans, understandings,
agreements, or commitments to issue additional Common Stock or Preferred Stock
for any of the foregoing purposes.
The Board believes that the proposed increase in the number of authorized
shares of Common Stock and Preferred Stock will make available sufficient shares
to accomplish one or more of the foregoing purposes. No additional action or
authorization by the Company's stockholders would be necessary prior to the
issuance of additional shares, unless required by
11
<PAGE> 15
applicable law or regulation or the rules of any stock exchange or national
securities association trading system on which the Common Stock is then listed
or quoted. The Company reserves the right to seek a further increase in the
number of authorized shares of Common Stock and Preferred Stock from
time-to-time in the future as considered appropriate by the Board.
Under the Amended and Restated Certificate of Incorporation, the Company's
stockholders do not have preemptive rights with respect to the Common Stock or
Preferred Stock. Thus, should the Board elect to issue additional shares of
Common Stock or Preferred Stock, existing stockholders would not have any
preferential rights to purchase such shares. In addition, if the Board elects to
issue additional shares of Common Stock or Preferred Stock, such issuance could
have a dilutive effect on earnings per share, voting power, and share holdings
of current stockholders.
Also, the proposed increase in the number of authorized shares of Common
Stock and Preferred Stock could have an anti-takeover effect, under certain
circumstances, although such a result is not the intention behind the proposal.
For example, in the event of a hostile attempt to take control of the Company,
it may be possible for the Company to endeavor to impede such an effort by
issuing shares of Common Stock or Preferred Stock, thereby diluting the voting
power of the other outstanding shares and increasing the potential costs to
acquire control of the Company. The amendment, therefore, may have the effect of
discouraging unsolicited takeover attempts. By impeding the initiation of such
efforts, the amendment may limit the opportunity for the Company's stockholders
to dispose of their shares at the higher price generally available in takeover
attempts or under merger proposals. The amendment may have the effect of
permitting the Company's current management, including the Board, to retain its
position, and place it in a better position to resist changes that stockholders
may wish to make if they become dissatisfied with the conduct of the Company's
business. However, the Board is not aware of any attempt to take control of the
Company, and it is not presenting this proposal with the intent that it be
utilized as any type of anti-takeover device.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE AMENDMENT OF THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM 75,000,000 TO 200,000,000 AND AUTHORIZED
SHARES OF PREFERRED STOCK FROM 5,000,000 TO 25,000,000.
MANAGEMENT OF THE COMPANY
The following discussion sets forth information regarding our executive
officers. Information regarding those of our executive officers who are also
directors is set forth under "Proposal No. 1 Election of Directors - Information
Regarding Nominees and Directors."
Thomas P. McMillin, 39, serves as our Senior Executive Vice President and
Chief Operating Officer. Mr. McMillin joined the Company on April 3, 2000 as its
Executive Vice President. Mr. McMillin was previously a co-founder of Marcus &
Partners. Prior to forming Marcus & Partners, Mr. McMillin served as Senior Vice
President and Chief Financial Officer of AMFM Inc. (formerly Chancellor Media
Corporation) from October 1998 to March 1999. Mr. McMillin served as Executive
Vice President and Chief Financial Officer of Marcus Cable from 1994 to
September 1998. He received his Bachelor of Science in Accounting from the
University of Missouri-Columbia.
12
<PAGE> 16
Daniel J. Wilson, 36, serves as our Executive Vice President and Chief
Financial Officer. Mr. Wilson joined the Company on April 3, 2000 as a Senior
Vice President-Corporate Development. Mr. Wilson was previously a co-founder of
Marcus & Partners. Prior to forming Marcus & Partners, he was Vice President of
Strategic Development of AMFM Inc. (formerly Chancellor Media Corporation) from
October 1998 to March 1999. Prior to joining Chancellor Media in 1998, Mr.
Wilson served for four years in various financial positions at Marcus Cable,
most recently as Senior Vice President - Finance and Corporate Development. He
received his Bachelor of Science in Business Administration, cum laude, with
majors in Finance and Accounting from Saint Louis University.
Mitchell C. Arthur, 32, serves as our Executive Vice President--Global
Services and Network Development. Mr. Arthur co-founded AxisTel Communications,
one of our subsidiaries, in 1997 and served as its President and Chief Operating
Officer until September of 2000. He was also our Managing Director of
Communications Holdings from September 1999 until September 2000. From 1994 to
1998, Mr. Arthur was a Global Account Manager for U.S. and international
accounts at MFS Communications. Mr. Arthur received a BS in Business
Administration and Marketing from Dominican College.
David N. Link, 53, serves as our Executive Vice President--Global Network
Operations. Mr. Link was formerly the President and Chief Executive Officer of
Internal Global Services, Inc., one of our subsidiaries. From June 1999 through
August 1999, Mr. Link was the Chief Operating Officer for Internet Global
Services, Inc. From 1992 to 1996, Mr. Link was the President of
TMI-Telecommunications Management International, Inc., an international systems
development, engineering and management consulting firm. From 1990 to 1999, Mr.
Link was a Principal at Link Resources, a management/engineering consulting firm
with contracts supporting various telecommunications consulting firms. Mr. Link
received his Bachelor of Science in Electrical Engineering from Texas Tech
University. He has also completed graduate studies in Electrical Engineering,
Industrial Engineering and Utility Administration.
Olaf Guerrand-Hermes, 36, serves as our Senior Vice President--Investments
and President - Global Business Development. He joined us in April 2000 as
Senior Vice President - Corporate Development and previously served as a member
of our Board from September 1999 to April 2000. Prior to joining the Company,
Mr. Guerrand-Hermes was Managing Partner of Blue Growth Capital, LLC, a New
York-based investment partnership from 1997 to April 2000. Prior to organizing
Blue Growth, from 1995 to 1997, Mr. Guerrand-Hermes was Managing Director of
International Equities at The Athena Group, a private international investment
management company. Mr. Guerrand-Hermes is a board member of Hermes-Sellier, a
member of the New York bar, a graduate of New York University School of Law and
holds two masters degrees from the University of Patheon-Assas (Paris II) in
Paris, France.
Stuart J. Chasanoff, 35, serves as our Senior Vice President, General
Counsel and Secretary. Since September 22, 1999, Mr. Chasanoff has been General
Counsel and Secretary and has variously served as a Senior Vice President -
Corporate Development and Legal Affairs and Vice President of Business
Development. Prior to joining the Company, from 1996 to 1999, Mr. Chasanoff was
Senior Vice President and General Counsel to HW Partners. Between 1990 and 1994,
and again in 1996, Mr. Chasanoff was a corporate attorney with the New York
office of White & Case, LLP. Mr. Chasanoff is a director of United Petroleum
Corporation and Tamboril Cigar Company. Mr. Chasanoff is a member of the New
York bar, a 1990 cum laude graduate of the Fordham University School of Law and
a 1987 graduate of the University of Virginia with a Bachelor of Arts degree in
Political and Social Thought.
13
<PAGE> 17
EXECUTIVE COMPENSATION AND OTHER MATTERS
COMPENSATION FOR FISCAL YEAR 2000
Prior to September 22, 1999, Daniel L. Wettriech served as our
President, and we did not have any other employees or officers. During fiscal
year 2000, Daniel L. Wettriech did not receive any salary, bonuses, stock
awards, options or other compensation from the Company. Daniel L. Wettriech
resigned as our President on September 22, 1999.
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation
awarded for the past three fiscal years to Jeffrey A. Marcus, our Chairman and
CEO, and to each of our other four most highly compensated executive officers
during fiscal year 2000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
-------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING OTHER
COMPEN- OPTIONS/ COMPEN-
NAME YEAR SALARY($) BONUS($) SATION($) SARS (#) SATION
---- ---- --------- -------- --------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey A. Marcus(1) 2000 50,000 -- -- 3,910,000(2) --
Chairman and Chief Executive 1999 -- -- -- -- --
Officer 1998 -- -- -- -- --
Barrett N. Wissman(3) 2000 117,500 -- -- 1,500,000(4) --
President 1999 -- -- -- -- --
1998 -- -- -- -- --
Mitchell A. Arthur 2000 168,461 -- -- 425,000(5) --
Executive Vice 1999 -- -- -- -- --
President--Customer Solutions 1998 -- -- -- -- --
Samuel Litwin 2000 168,461 -- -- 425,000(6) --
Senior Vice President--Business 1999 -- -- -- -- --
Development and 1998 -- -- -- -- --
President-International
J. Stevens Robling, Jr.(7) 2000 141,923 -- -- 425,000(8) --
Vice President and Chief 1999 -- -- -- -- --
Financial Officer 1998 -- -- -- -- --
</TABLE>
----------------
(1) Mr. Marcus became Chairman and CEO on April 3, 2000. He is currently
compensated at an annual salary of $200,000.
(2) Represents non-qualified stock options granted to Mr. Marcus pursuant
to stock options issued outside of the Omnibus Plan as provided in his
employment agreement.
(3) Prior to April 3, 2000, Mr. Wissman served as our President and CEO and
was compensated by HW Partners at a rate of $120,000 per annum. We
reimbursed HW Partners for Mr. Wissman's salary pursuant to a
Management Services Agreement, dated as of September 22, 1999, between
the Company and HW Partners. A description of the management services
agreement is set forth below under the caption "Certain Relationships
and Related Transactions." On April 3, 2000, Mr. Wissman became
President of the Company. He is currently compensated at an annual
salary of $190,000.
14
<PAGE> 18
(4) Represents 100,000 stock options issued to Mr. Wissman under the
Omnibus Plan in September 1999 in consideration for his services as one
of our directors and 1,400,000 non-qualified stock options granted to
Mr. Wissman in April 2000 pursuant to stock options issued outside of
the Omnibus Plan as provided in his employment agreement.
(5) Represents stock options granted under the Omnibus Plan.
(6) Represents stock options granted under the Omnibus Plan.
(7) Mr. Robling resigned his position effective September 1, 2000.
(8) Represents stock options granted under the Omnibus Plan.
OPTION GRANTS DURING FISCAL YEAR 2000
Prior to September 22, 1999, we did not grant any stock options. We
have never granted any stock appreciation rights ("SARs"). The following table
describes the options to acquire shares of Common Stock granted to the CEO and
the Named Executive Officers during fiscal year 2000.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM(1)
---------------------------------------------------------------------------------------- --------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/ EXERCISE
UNDERLYING SARS GRANTED OR BASE
OPTIONS/ TO EMPLOYEES PRICE
NAME SARS GRANTED (#) IN FISCAL YEAR ($/SHR) EXPIRATION DATE 5%($) 10%($)
---- ---------------- -------------- ---------- --------------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey A. Marcus 3,910,000 28.5% 23.00 April 2, 2010 56,556,494 143,325,259
Barrett N. Wissman 100,000 0.7% 10.00 September 22, 2009 -- 136,059
1,400,000 10.2% 23.00 April 2, 2010 20,250,407 51,318,507
Mitchell A. Arthur 425,000 3.1% 10.00 September 22, 2009 -- 578,252
Samuel Litwin 425,000 3.1% 10.00 September 22, 1999 -- 578,252
J. Stevens Robling, Jr. 425,000 3.1% 10.00 September 22, 2000 -- 578,252
</TABLE>
-----------------
(1) Based upon (a) $4.38 for the options expiring September 22, 2009 and
(b) $23.00 for the options expiring April 2, 2010, in each case
representing the fair market value of the Common Stock on the date of
grant, and annual appreciation at the rate stated on such price through
the expiration date of the options. Amounts represent hypothetical
gains that could be achieved for the options if exercised at the end of
the term. The assumed 5% and 10% rates of stock price appreciation are
provided in accordance with the rules of the Securities and Exchange
Commission (the "Commission") and do not represent our estimate or
projection of the future stock price. Actual gains, if any, are
contingent upon the continued employment of the Named Executive Officer
through the expiration date, as well as being dependent upon the
general performance of the Common Stock. The potential realizable
values have not taken into account amounts required to be paid as
taxes.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES IN FISCAL YEAR
2000
During fiscal year 2000, we granted options to each of the Named
Executive Officers. The following table describes the value of our options
exercised by our Named Executive Officers during fiscal year 2000 and the value
of unexercised options held by such officers at June 30, 2000.
15
<PAGE> 19
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FISCAL FISCAL YEAR END
YEAR END (#) ($)(1)
----------------------- --------------------
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
--------------------------- -------------- ---------------- ------------------------ --------------------
<S> <C> <C> <C> <C>
Jeffrey A. Marcus - - 0/3,910,000 - / -
Barrett N. Wissman - - 50,000/1,450,000 312,500/312,500
Mitchell A. Arthur - - 0/425,000 0/2,656,250
Samuel Litwin - - 0/425,000 0/2,656,250
J. Stevens Robling, Jr. - - 0/425,000 0/2,656,250
</TABLE>
--------------------
(1) Based on the average of the closing bid and asked prices of the Common
Stock on the National Association of Securities Dealers OTCBB quotation
bureau on June 30, 2000, of $16.25 per share.
EMPLOYMENT AND CONSULTING AGREEMENTS
Jeffrey A. Marcus, our Chief Executive Officer and Chairman of the
Board, is employed pursuant to an employment agreement that was entered into on
April 4, 2000. The agreement commenced on April 3, 2000 and will expire on April
2, 2003. Mr. Marcus receives an annual base salary of $200,000. Mr. Marcus's
employment agreement entitles him to participate in an incentive bonus plan
payable by us on such terms and conditions as determined by the Board or the
Compensation Committee, in any event, not to exceed 50% of Mr. Marcus's base
salary. In addition, Mr. Marcus's employment agreement also grants him an option
to purchase 3,910,000 shares of Common Stock. These options have an exercise
price of $23.00 per share and shall vest as follows: 977,500 shares which vested
on July 2, 2000; 977,500 shares which shall vest on April 2, 2001; 977,500
shares which shall vest on April 2, 2002; and 977,500 shares which shall vest on
April 2, 2003. In addition, these options will vest immediately if we terminate
Mr. Marcus's employment without cause or if Mr. Marcus terminates his employment
for good reason. Mr. Marcus's employment may be terminated for cause, without
cause, by voluntary resignation, death or disability. If Mr. Marcus' employment
is terminated by us without cause, Mr. Marcus shall be entitled to payment of
all base salary earned but unpaid, any accrued but unused vacation pay, all
expenses not yet reimbursed and all other benefits earned, accrued and owing to
Mr. Marcus (including any incentive bonus earned for the applicable fiscal
year), plus equal monthly payments in an amount equal to his monthly rate of
base salary plus the amount of any incentive bonus paid to him the prior fiscal
year, annualized, divided by twelve, for a period the greater of twelve months
or the remaining term of his employment with the Company. If Mr. Marcus
terminates his employment for good reason, such amount will be paid in one lump
sum.
Barrett N. Wissman provided services and received compensation as our
President and Chief Executive Officer from September 22, 1999 until April 1,
2000 pursuant to a Management Services Agreement between the Company and HW
Partners. We reimbursed HW Partners for Mr. Wissman's salary of $120,000 per
annum. For a description of the other services provided to
16
<PAGE> 20
us by HW Partners under the management services agreement, see "Certain
Relationships and Related Transactions."
On April 4, 2000, we entered into an employment agreement with Mr.
Wissman. Pursuant to the employment agreement, Mr. Wissman is employed as our
President. The agreement commenced on April 3, 2000 and will expire on April 2,
2003. Mr. Wissman receives an annual base salary of $190,000. Mr. Wissman's
employment agreement entitles him to participate in an incentive bonus plan
payable by us on such terms and conditions as determined by the Board or the
Compensation Committee, in any event, not to exceed 50% of Mr. Wissman's base
salary. In addition, Mr. Wissman's employment agreement also grants him an
option to purchase 1,400,000 shares of Common Stock. These options have an
exercise price of $23.00 per share and shall vest as follows: 350,000 shares
which vested on July 2, 2000; 350,000 shares which shall vest on April 2, 2001;
350,000 shares which shall vest on April 2, 2002; and 350,000 shares which shall
vest on April 2, 2003. In addition, these options will vest immediately if we
terminate Mr. Wissman's employment without cause or if Mr. Wissman terminates
his employment for good reason. Mr. Wissman's employment may be terminated for
cause, without cause, by voluntary resignation, death or disability. If Mr.
Wissman's employment is terminated by us without cause, Mr. Wissman shall be
entitled to payment of all base salary earned but unpaid, any accrued but unused
vacation pay, all expenses not yet reimbursed and all other benefits earned,
accrued and owing to Mr. Wissman (including any incentive bonus earned for the
applicable fiscal year), plus equal monthly payments in an amount equal to his
monthly rate of base salary plus the amount of any incentive bonus paid to him
the prior fiscal year, annualized, divided by twelve, for a period the greater
of twelve months or the remaining term of his employment with the Company. If
Mr. Wissman terminates his employment for good reason, such amount will be paid
in one lump sum.
Thomas P. McMillin, our Senior Executive Vice President and Chief
Operating Officer, is employed pursuant to an employment agreement that was
entered into on April 4, 2000. The agreement commenced on April 3, 2000 and will
expire on April 2, 2003. Mr. McMillin receives an annual base salary of
$180,000. Mr. McMillin's employment agreement entitles him to participate in an
incentive bonus plan payable by us on such terms and conditions as determined by
the Board or the Compensation Committee, in any event, not to exceed 50% of Mr.
McMillin's base salary. In addition, Mr. McMillin's employment agreement also
grants him an option to purchase 1,360,000 shares of Common Stock. These options
have an exercise price of $23.00 per share and shall vest as follows: 340,000
shares which vested on July 2, 2000; 340,000 shares which shall vest on April 2,
2001; 340,000 shares which shall vest on April 2, 2002; and 340,000 shares which
shall vest on April 2, 2003. In addition, these options will vest immediately if
we terminate Mr. McMillin's employment without cause or if Mr. McMillin
terminates his employment for good reason. Mr. McMillin's employment may be
terminated for cause, without cause, by voluntary resignation, death or
disability severance. If Mr. McMillin's employment is terminated by us without
cause, Mr. McMillin shall be entitled to payment of all base salary earned but
unpaid, any accrued but unused vacation pay, all expenses not yet reimbursed and
all other benefits earned, accrued and owing to Mr. McMillin (including any
incentive bonus earned for the applicable fiscal year), plus equal monthly
payments in an amount equal to his monthly rate of base salary plus the amount
of any incentive bonus paid to him the prior fiscal year, annualized, divided by
twelve, for a period the greater of twelve months or the remaining term of his
employment with the Company. If Mr. McMillin terminates his employment for good
reason, such amount will be paid in one lump sum.
17
<PAGE> 21
Daniel J. Wilson, our Executive Vice President and Chief Financial
Officer, is employed pursuant to an employment agreement that was entered into
on April 4, 2000. The agreement commenced on April 3, 2000 and will expire on
April 2, 2003. Mr. Wilson receives an annual base salary of $180,000. Mr.
Wilson's employment agreement entitles him to participate in an incentive bonus
plan payable by us on such terms and conditions as determined by the Board or
the Compensation Committee, in any event, not to exceed 50% of Mr. Wilson's base
salary. In addition, Mr. Wilson's employment agreement also grants him an option
to purchase 1,020,000 shares of Common Stock. These options have an exercise
price of $23.00 per share and shall vest as follows: 255,000 shares which vested
on July 2, 2000; 255,000 shares which shall vest on April 2, 2001; 255,000
shares which shall vest on April 2, 2002; and 255,000 shares which shall vest on
April 2, 2003. In addition, these options will vest immediately if we terminate
Mr. Wilson's employment without cause or if Mr. Wilson terminates his employment
for good reason. Mr. Wilson's employment may be terminated for cause, without
cause, by voluntary resignation, death or disability. If Mr. Wilson's employment
is terminated by us without cause or by Mr. Wilson for good reason, Mr. Wilson
shall be entitled to payment of all base salary earned but unpaid, any accrued
but unused vacation pay, all expenses not yet reimbursed and all other benefits
earned, accrued and owing to Mr. Wilson (including any incentive bonus earned
for the applicable fiscal year), plus equal monthly payments in an amount equal
to his monthly rate of base salary plus the amount of any incentive bonus paid
to him the prior fiscal year, annualized, divided by twelve, for a period the
greater of six months or the remaining term of his employment with the Company.
Mitchell C. Arthur, our Executive Vice President - Global Services and
Network Development and President and Chief Operating Officer of our
wholly-owned subsidiary, AxisTel Communications, Inc., is employed by AxisTel
pursuant to an employment agreement that was entered into on October 28, 1998
and amended and restated on September 22, 1999. The amended and restated
employment agreement commenced on September 22, 1999 and shall continue for
twenty-four months, expiring on September 21, 2001. Upon the end of this initial
term, AxisTel has agreed to offer to extend the term of employment for one
additional year ending September 21, 2002 on substantially identical terms and
base salary applicable at the time of expiration of the initial term of
employment, but without the requirement for the issuance of any additional stock
options. In addition, the employment agreement may be renewed by mutual
agreement of the parties at the end of each term for additional one-year
periods. Under the amended and restated employment agreement, Mr. Arthur will
receive an annual base salary of $180,000 during each fiscal year of the term of
employment. This compensation shall be reviewed at least annually by our Board,
and any appropriate increases to this base salary may be made at the sole
discretion of our Board. Mr. Arthur's employment agreement provides him with the
eligibility to receive discretionary bonuses payable by us on such terms and
conditions as determined by our Board or the Compensation Committee.
In addition, Mr. Arthur's employment agreement also grants him an
option to purchase 425,000 shares of our Common Stock, pursuant to our Omnibus
Plan. These options have an exercise price of $10 per share and shall vest as
follows: 141,666 shares shall vest on September 21, 2000; 141,667 shares shall
vest on September 21, 2001; and 141,667 shares shall vest on September 21, 2002.
These options will vest immediately if we terminate Mr. Arthur's employment
without cause, if we fail to extend, as agreed, Mr. Arthur's term of employment
for an additional year after the expiration of the initial term or if the
options are accelerated upon a change of control of the Company. Mr. Arthur's
employment may be terminated for cause, without cause, by voluntary resignation,
death or disability. If AxisTel terminates Mr. Arthur's employment during the
term of the agreement without cause, then Mr. Arthur shall be entitled to
18
<PAGE> 22
receive his base salary then in effect for the remainder of the term and the
contractual restriction on Mr. Arthur's ability to sell any shares of Common
Stock set forth in the registration rights agreement executed on September 22,
1999 shall terminate and cease to apply to Mr. Arthur.
David Link, our Executive Vice President - Global Network Operations,
is employed by our wholly-owned subsidiary, Internet Global Services, Inc.,
pursuant to an employment agreement that was entered into on March 10, 2000. The
agreement commenced on March 10, 2000 and shall continue for two years, expiring
on March 9, 2002, and will automatically be extended for additional one year
periods unless either Internet Global or Mr. Link notifies the other in writing
at least ninety days prior to the expiration of the then current term that the
extension will not take effect. Mr. Link receives an annual base salary of
$200,000. Any increases to this base salary may be made at the sole discretion
of the board of directors of Internet Global. Mr. Link's employment agreement
provides him with the eligibility to receive discretionary bonuses payable by
Internet Global on such terms and conditions as determined by the board of
directors of Internet Global. Mr. Link's employment may be terminated for cause,
without cause, by voluntary resignation, death or disability. On March 10, 2000,
we executed a joinder to Mr. Link's employment agreement with Internet Global
for the sole purpose of undertaking to perform Internet Global's obligations
with respect to the payment of Mr. Link's compensation and expenses. If Mr.
Link's employment is terminated without cause, he is entitled to earned, but
unpaid base salary, accrued vacation pay, and an amount equal to his base salary
then in effect for the remainder of the employment term or six months, which
ever is longer.
Stuart J. Chasanoff, our Senior Vice President, General Counsel and
Secretary, is employed pursuant to an employment agreement that was entered into
on September 22, 1999. The agreement commenced on September 22, 1999 and will
expire on September 21, 2002, and will automatically be extended for additional
terms of successive one-year periods unless either we or Mr. Chasanoff notifies
the other in writing at least sixty days prior to the expiration of the then
current term that the extension will not take effect. Mr. Chasanoff will receive
the following annual base salary: $160,000 for the period October 1, 1999
through September 21, 2000; $172,800 for the period September 22, 2000 through
September 21, 2001; and $186,624 for the period September 22, 2001 through
September 21, 2002.
Mr. Chasanoff's employment agreement provides him with the eligibility
to receive discretionary bonuses payable by us on such terms and conditions as
determined by the Board or the Compensation Committee. In addition, Mr.
Chasanoff's employment agreement also grants him an option to purchase 500,000
shares of Common Stock, pursuant to our Omnibus Plan. These options have an
exercise price and shall vest as follows: $2.50 per share for 166,666 shares
which shall vest on September 21, 2000; $5.00 per share for $166,667 shares
which shall vest on September 21, 2001; and $7.50 per share for 166,667 shares
which shall vest on September 21, 2002. In addition, these options will vest
immediately if we terminate Mr. Chasanoff's employment without cause, if Mr.
Chasanoff terminates his employment for good reason or the options are
accelerated upon a change of control of the Company. Mr. Chasanoff's employment
may be terminated for cause, without cause, by voluntary resignation, death or
disability. If at least thirty days prior to the expiration of the employment
term we have failed to offer to extend the term for a period of at least one
year on substantially identical terms as set forth in the agreement, then Mr.
Chasanoff shall be entitled to receive payments of an amount equal to his then
monthly rate of base salary for a period of six months following the date of
termination.
Samuel L. Litwin, our Senior Vice President - Business Development and
President of International Services and Chief Executive Officer of AxisTel, is
employed by AxisTel pursuant
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<PAGE> 23
to an employment agreement that was entered into on October 28, 1998 and amended
and restated on September 22, 1999. The amended and restated employment
agreement commenced on September 22, 1999 and shall continue for twenty-four
months, expiring on September 21, 2001. Upon the end of this initial term,
AxisTel has agreed to offer to extend the term of employment for one additional
year ending September 21, 2002 on substantially identical terms and base salary
applicable at the time of expiration of the initial term of employment, but
without the requirement for the issuance of any additional stock options. In
addition, the employment agreement may be renewed by mutual agreement of the
parties at the end of each term for additional one-year periods. Under the
amended and restated employment agreement, Mr. Litwin will receive an annual
base salary of $180,000 during each fiscal year of the term of employment. This
compensation shall be reviewed at least annually by our Board, and any
appropriate increases to this base salary may be made at the sole discretion of
our Board. Mr. Litwin's employment agreement provides him with the eligibility
to receive discretionary bonuses payable by us on such terms and conditions as
determined by our Board or the Compensation Committee.
In addition, Mr. Litwin's employment agreement also grants him a stock
option to purchase 425,000 shares of our Common Stock, pursuant to our Omnibus
Plan. These options have an exercise price of $10 per share and shall vest as
follows: 141,666 shares shall vest on September 21, 2000; 141,667 shares shall
vest on September 21, 2001; and 141,667 shares which shall vest on September 21,
2002. These options will vest immediately if we terminate Mr. Litwin's
employment without cause, if we fail to extend, as agreed, Mr. Litwin's term of
employment for an additional year after the expiration of the initial term or if
the options are accelerated upon a change of control of the Company. Mr.
Litwin's employment may be terminated for cause, without cause, by voluntary
resignation, death or disability. If AxisTel terminates Mr. Litwin's employment
during the term of the agreement without cause, then Mr. Litwin shall be
entitled to receive his base salary then in effect for the remainder of the term
and the contractual restriction on Mr. Litwin's ability to sell any shares of
Common Stock set forth in the registration rights agreement executed on
September 22, 1999 shall terminate and cease to apply to Mr. Litwin.
Olaf Guerrand-Hermes, our Senior Vice President - Investments and
President - Global Business Development, is employed pursuant to an employment
agreement that was entered into on April 4, 2000. The agreement commenced on
April 3, 2000 and will expire on April 2, 2003. Mr. Guerrand-Hermes receives an
annual base salary of $180,000. Mr. Guerrand-Hermes's employment agreement
entitles him to participate in an incentive bonus payable by us on such terms
and conditions as determined by the Board or the Compensation Committee, in an
event, not to exceed 50% of Mr. Guerrand-Hermes' base salary. In addition, Mr.
Guerrand-Hermes's employment agreement also grants him an option to purchase
900,000 shares of Common Stock. These options have an exercise price of $23.00
per share and shall vest as follows: 225,000 shares which vested on July 2,
2000; 225,000 shares which shall vest on April 2, 2001; 225,000 shares which
shall vest on April 2, 2002; and 225,000 shares which shall vest on April 2,
2003. In addition, these options will vest immediately if we terminate Mr.
Guerrand-Hermes's employment without cause or, if Mr. Guerrand-Hermes terminates
his employment for good reason. Mr. Guerrand-Hermes's employment may be
terminated for cause, without cause, by voluntary resignation, death or
disability. If Mr. Guerrand-Hermes' employment is terminated by us without cause
or by Mr. Guerrand-Hermes for good reason, Mr. Guerrand-Hermes shall be entitled
to payment of all base salary earned but unpaid, any accrued but unused vacation
pay, all expenses not yet reimbursed and all other benefits earned, accrued and
owing to Mr. Guerrand-Hermes (including any incentive bonus earned for the
applicable fiscal year), plus equal monthly payments in an amount equal to his
monthly rate of base salary plus the amount of any incentive bonus paid to him
the
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<PAGE> 24
prior fiscal year, annualized, divided by twelve, for a period the greater of
six months or the remaining term of his employment with the Company.
SECURITY OWNERSHIP OF DIRECTORS,
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock as of the Record Date by: (i)
each person who is a beneficial owner of more than 5% of the Company's capital
stock; (ii) each director of the Company; (iii) the Named Executive Officers;
and (iv) all executive officers and directors of the Company as a group. Unless
otherwise indicated, the address of each listed stockholder is in care of the
Company at 300 Crescent Court, Suite 800, Dallas, Texas 75201.
All of the shares indicated in the table below are of Common Stock:
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF SHARES BENEFICIALLY
HOLDERS BENEFICIALLY OWNED(1) OWNED(2)
---------------------------------------- --------------------- -------------
<S> <C> <C>
IEO Investments, Limited(3).............. 10,316,200 19.8%
Infinity Emerging Subsidiary Limited(4).. 8,683,800 16.7%
Infinity Investors Limited(5)............ 8,500,000 16.3%
HW Capital, L.P.(6)...................... 8,819,800 17.0%
HW Partners, L.P.(7)..................... 8,500,000 16.3%
Jeffrey A. Marcus(8)..................... 1,482,300 2.8%
Barrett N. Wissman(9).................... 18,744,800 35.7%
Mark R. Graham(10)....................... 261,000 *
Jan R. Horsfall(11)...................... 150,000 *
Clark K. Hunt(12)........................ 28,521,000 54.8%
David Leuschen(13)....................... 250,000 *
Stuart A. Subotnick(14).................. 300,000 *
Fred A. Vierra(15)....................... 225,000 *
Mitchell A. Arthur(16)................... 1,676,666 3.2%
Samuel Litwin(17)........................ 1,576,166 3.0%
J. Stevens Robling(18)................... 261,666 *
Officers and Directors as a Group
(16 Persons)(19).................... 37,533,631 67.5%
</TABLE>
---------------
* Represents less than one percent.
(1) All information has been determined as of August 29, 2000. For purposes
of this table, a person is deemed to have beneficial ownership of the
number of shares of Common Stock that such person has the right to
acquire pursuant to the exercise of stock options exercisable within 60
days.
(2) For purposes of computing the percentage of outstanding shares of
Common Stock held by such person, any shares of Common Stock which such
person has the right to acquire pursuant to the exercise of a stock
option exercisable within 60 days is deemed to be outstanding, but is
not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) This information is based on information reported by the stockholder in
filings made with the Commission. The address of IEO Investments
Limited is Hunkins Waterfront Plaza, Main Street Post Office Box 556,
Charlestown, Nevis, West Indies.
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<PAGE> 25
(4) This information is based on information reported by the stockholder in
filings made with the Commission. The address of Infinity Emerging
Subsidiary Limited is Hunkins Waterfront Plaza, Main Street Post Office
Box 556, Charlestown, Nevis, West Indies.
(5) This information is based on information reported by the stockholder in
filings made with the Commission. The address of Infinity Investors
Limited is Hunkins Waterfront Plaza, Main Street Post Office Box 556,
Charlestown, Nevis, West Indies.
(6) This information is based on information reported by the stockholder in
filings made with the Commission. The address of HW Capital, L.P. is
1601 Elm Street, 40th Floor, Dallas, Texas 75201.
(7) This information is based on information reported by the stockholder in
filings made with the Commission. The address of HW Partners, L.P. is
1601 Elm Street, 40th Floor, Dallas, Texas 75201.
(8) Includes (a) 504,800 shares of Common Stock owned directly and (b)
options to purchase 977,500 of Common Stock.
(9) Includes (a) 25,000 shares of Common Stock owned directly, (b)
8,683,800 shares of Common Stock owned by Infinity Emerging Subsidiary
Limited and 8,500,000 shares of Common Stock owned by Infinity
Investors Limited, (c) 950,000 shares of Common Stock owned by a trust
of which Mr. Wissman has indirect beneficial ownership, (d) 136,000
shares of Common Stock owned by a partnership as to which Mr. Wissman
has shared ownership and (e) options to purchase 450,000 shares of
Common Stock. Mr. Wissman disclaims beneficial ownership of the shares
of Common Stock held by Infinity Emerging Subsidiary Limited and
Infinity Investors Limited.
(10) Includes (a) 125,000 shares of Common Stock owned by a corporation
controlled by Mr. Graham, (b) 136,000 shares of Common Stock owned by a
partnership as to which Mr. Graham has shared control and (c) options
to purchase 100,000 shares of Common Stock.
(11) Includes options to purchase 150,000 shares of Common Stock.
(12) Includes (a) 35,000 shares of Common Stock owned directly, (b)
10,316,200 shares of Common Stock owned by IEO Holdings Limited,
8,683,800 shares of Common Stock owned by Infinity Emerging Subsidiary
Limited, 8,500,000 shares of Common Stock owned by Infinity Investors
Limited and 750,000 shares of Common Stock owned by Mustang Capital,
Limited., and (c) 136,000 shares of Common Stock owned by a partnership
in which Mr. Hunt has shared ownership and (d) options to purchase
100,000 shares of Common Stock. Mr. Hunt disclaims beneficial ownership
of the shares of Common Stock held by IEO Investments, Limited,
Infinity Emerging Subsidiary Limited, Infinity Investors Limited and
Mustang Capital. The address of Mustang Capital is 1601 Elm Street,
40th Floor, Dallas, Texas 75201.
(13) Includes (a) 200,000 shares of Common Stock owned directly and (b)
options to purchase 50,000 shares of Common Stock.
(14) Includes (a) 250,000 shares of Common Stock owned directly and (b)
options to purchase 50,000 shares of Common Stock.
(15) Includes (a) 25,000 shares of Common Stock owned directly and (b)
options to purchase 200,000 shares of Common Stock.
(16) Includes (a) 1,535,000 shares of Common Stock owned directly and (b)
options to purchase 141,666 shares of Common Stock. Mr. Arthur's
address is 1 Evertrust Plaza, 8th Floor, Jersey City, New Jersey 07302.
(17) Includes (a) 1,405,000 shares of Common Stock owned directly, (b)
30,000 shares of Common Stock owned indirectly and (c) options to
purchase 141,666 shares of Common Stock. Mr. Litwin's address is 1
Evertrust Plaza, 8th Floor, Jersey City, New Jersey 07302.
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<PAGE> 26
(18) Includes (a) 120,000 shares of Common Stock owned directly and (b)
options to purchase 141,666 shares of Common Stock.
(19) Includes options to purchase 3,589,165 shares of Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), requires our directors, executive officers, and individuals who own more
than 10% of a registered class of our equity securities to file initial reports
of ownership and changes in ownership of Common Stock with the Commission. Such
persons are required by applicable regulations to furnish us with copies of all
Section 16(a) reports that they file.
To our knowledge, based solely on the review of the copies of such
reports furnished to us, all of our directors, officers and 10% stockholders
have complied with the applicable Section 16(a) reporting requirements, except
for the Statements of Beneficial Ownership on Form 3 relating to the ownership
of shares of Common Stock initially filed by Messrs. Marcus, Wissman, McMillin,
Wilson, Coben, Litwin, Arthur, Chasanoff, Hunt, Graham, Hermes, Vierra,
Subotnick, Leuschen and Horsfall and Ms. Holliday. Due to a misunderstanding
regarding the effective date of our Form 10 Registration Statement, such filings
were not made until April 28, 2000. We were informed by the Staff of the
Commission on April 26, 2000 that the Form 10 had become effective by Rule on
February 18, 2000.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is responsible for reviewing the
compensation paid to our executive officers and making recommendations to the
Board with respect to such compensation. The Board approves all compensation
paid to executive officers, with the exception of grants of stock options which
are made by the Option Subcommittee as provided in the Company's 1999 Omnibus
Securities Plan.
OVERALL COMPENSATION OBJECTIVES
Our goal is to become a leading global provider of customer solution
focused, broadband and packet-based services through the development of a
facilities-based, converged network. In furtherance of this strategy, our
compensation strategies are designed to attract and to retain the best possible
executive talent. Compensation packages to executive officers include a base
salary that recognizes individual performance and cash and equity-based
incentives designed to align the financial interests of executives with those of
the stockholders. In the past year we entered into new long-term employment
agreements with Messrs. Litwin and Arthur as part of the acquisition of AxisTel,
with Messrs. Marcus, Wissman, McMillin and Wilson as part of the expansion of
our management team, and with Mr. Link as part of the Internet Global
acquisition. Each agreement provides for a base salary, annual discretionary
cash incentive bonus and the award of options to purchase Common Stock. In
entering these employment agreements, the Compensation Committee and the Board
considered such factors as each executive's role in carrying out our strategy
and the potential for increasing value to our stockholders.
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION, INCLUDING CEO COMPENSATION
The principal elements of compensation to our executive officers
include a base salary and annual cash bonuses and, at appropriate intervals,
grants of stock options. We also provide to
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<PAGE> 27
our executive officers medical, pension and other fringe benefits generally
available to other Company employees. Base salary for our executive officers
under their respective agreements was determined by evaluating the
responsibilities of the position held by, and the personal experience level of,
the specific individual. In determining levels of base salary, the Compensation
Committee also decided to set an appropriate level of base compensation to
motivate and retain our executive officers in light of our relative position to
our competition in the communications industry and the performance standards
established for such individuals. The Board based its determination of the base
salary and incentive compensation levels for Mr. Marcus based upon his business
experience and past successes and on the levels of compensation paid to chief
executive officers of other communications companies.
Section 162(m) of the Internal Revenue Code. Section 162(m) of the
Internal Revenue Code limits deductions for certain executive compensation in
excess of $1 million. Certain types of compensation in excess of $1 million are
deductible only if performance goals are specified in detail by a compensation
committee comprised solely of two or more outside directors, payments are
approved by a majority vote of the stockholders prior to payment of such
compensation and after the material terms of the compensation are disclosed to
the stockholders, and the compensation committee certifies that the performance
goals were in fact satisfied. During fiscal year 2000, the Compensation
Committee considered the compensation arrangements of the Company's executive
officers in light of the requirements of Section 162(m).
While the Compensation Committee will continue to give due
consideration to the deductibility of compensation payments on future
compensation arrangements with the Company's executive officers, the
Compensation Committee will make its compensation decision based upon an overall
determination of what it believes to be in the best interests of the Company and
its stockholders, and deductibility will be only one among a number of factors
used by the Compensation Committee in making its compensation decisions.
Accordingly, we may enter into compensation arrangements in the future under
which payments are not deductible under Section 162(m).
COMPENSATION COMMITTEE MEMBERS
Clark K. Hunt
Barrett N. Wissman
Mark R. Graham
David Leuschen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2000, no member of the Compensation Committee was an
officer or employee of the Company other than Barrett Wissman. No member of the
Compensation Committee serves as a member of the board of directors or
compensation committee of any entity that has one or more of its executive
officers serving as a member of our Board or Compensation Committee, except for
Barrett Wissman, who is a director of PhoneFree.com Inc., of which Jan R.
Horsfall is an executive officer.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return on our
Common Stock from the effective date of our Form 10 registration statement on
February 18, 2000 through June 30, 2000 with the cumulative total return on the
NASDAQ Composite Index and the Morgan Stanley Internet Index over the same
period (assuming an investment of $100 in our Common Stock, the NASDAQ
Composite Index and the Morgan Stanley Internet Index on February 18, 2000,
and reinvestment of all dividends).
<TABLE>
<CAPTION>
EVENTURES NASDAQ MORGAN STANLEY
GROUP, INC. COMPOSITE INTERNET INDEX
(EVNT) (COMPX) (MOX)
--------------- --------------- ---------------
<S> <C> <C> <C> <C>
2/18/00 100.00 100.00 100.00
2/29/00 130.71 106.46 108.61
3/31/00 125.00 103.65 100.48
4/28/00 82.61 87.51 78.65
5/31/00 58.70 77.09 63.67
6/30/00 67.39 89.90 70.48
</TABLE>
[PERFORMANCE GRAPH]
24
<PAGE> 28
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is made up of the following members: Fred A. Vierra
(Chairman and member since December 1999), Mark R. Graham (since June 2000),
David M. Leuschen (since June 2000) and Stuart Subotnick (since December 1999).
The Committee operates pursuant to a charter approved and adopted by the Board
on September 7, 2000. A copy of the charter is included as Appendix B to this
Proxy Statement. In accordance with the charter, all of the members of the Audit
Committee are independent pursuant to Rule 4200(a)(15) of the NASD's listing
standards and are financially literate and at least one member of the Audit
Committee has accounting or related financial management expertise.
The Audit Committee, on behalf of the Board, oversees our financial
reporting process. In fulfilling its oversight responsibilities, the Audit
Committee reviewed with management the audited financial statements and the
footnotes thereto in our 2000 Annual Report to Stockholders and discussed with
management the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments and the clarity of
disclosures in the financial statements.
Our outside auditors are responsible for expressing an opinion on the
conformity of our audited financial statements to generally accepted accounting
principles. The Audit Committee reviewed and discussed with the outside auditors
their judgments as to the quality, not just the acceptability, of our accounting
principles and such other matters as are required to be discussed by the Audit
Committee with our outside auditors under generally accepted auditing standards.
Our outside auditors have expressed the opinion that our audited financial
statements conform to generally accepted accounting principles.
The Audit Committee discussed with the outside auditors the outside
auditors' independence from management and the Company, and received the written
disclosures concerning the outside auditors' independence required by the
Independence Standards Board to be made by the outside auditors to the Company.
The Audit Committee discussed with our outside auditors the overall
scope and plans for their respective audits. The Audit Committee met with the
outside auditors to discuss the results of their examinations, their evaluations
of our internal controls and the overall quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Annual Report on Form 10-K for the year ended June 30, 2000, as
filed with the Securities and Exchange Commission.
INDEPENDENT PUBLIC ACCOUNTANTS
BDO Seidman, LLP served as the Company's independent auditors for the
fiscal year ended June 30, 2000. No member of BDO Seidman, LLP or any of its
associates has any financial in the Company or its affiliates It is anticipated
that a representative of BDO Seidman, LLP will be available at the Annual
Meeting to respond to appropriate questions and will be given an opportunity to
make a statement on behalf of BDO Seidman, LLP, if desired.
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<PAGE> 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH eVENTURES
TRANSACTIONS WITH AFFILIATES OF INFINITY ENTITIES
On September 27, 1999, we entered into a Management Services Agreement
with HW Partners. Barrett Wissman, our President and Chief Executive Officer, is
the sole manager of HW Partners, which has investment discretion over Infinity
Investors Limited, one of the Infinity Entities.
Under the management services agreement, HW Partners had agreed to
perform various management, operational and administrative services for the
Company. Whenever we wish to engage HW Partners to perform services with respect
to a particular project, we negotiate the terms and conditions of a work order
with respect to that particular project with HW Partners, specifying, among
other things, the management services to be rendered and the fee arrangements
for that specific project. Each work order must be approved by a majority of our
directors who are not employees, directors or affiliates of HW Partners. During
fiscal year 2000, the Board approved work orders in the amount of approximately
$244,000 per year for services performed by employees of HW Partners under the
management services agreement. The management services agreement was terminated
effective April 1, 2000.
TRANSACTIONS WITH EMPLOYEES
On April 3, 2000, in connection with the relocation of our corporate
offices and our employment of Jeffrey A. Marcus, Thomas P. McMillin, Daniel J.
Wilson and Chad E. Coben, we entered into a letter agreement with each of these
individuals that required us to reimburse Marcus & Partners (an affiliate of Mr.
Marcus) for certain leasehold improvements, fixtures and other costs associated
with the finish out of our new offices, which had previously been the offices of
Marcus & Partners and expenses not to exceed $80,500, in the aggregate, incurred
by each of the individuals in connection with negotiating employment with the
Company. The total payment to Marcus & Partners pursuant to this letter
agreement was $1,558,645, representing the actual costs paid by Marcus &
Partners for such items.
On April 24, 2000, we entered into Issuer Stock Option Agreements,
dated as of April 10, 2000 (the "Agreements") with each of Samuel L. Litwin and
Mitchell C. Arthur. The Agreements provide that each of Litwin and Arthur grant
us options to acquire shares of Common Stock of the Company. The Agreements also
provide for a number of restrictions on the exercise of the options. Each
Agreement expires on September 22, 2001 and provides for exercise prices of
$15.00 per share until September 22, 2000 and $20.00 per share thereafter. Mr.
Litwin granted us an option over 300,000 shares, and Mr. Arthur granted us an
option over 400,000 shares. In exchange for the grant of these options, we paid
premiums of $100,000 to each of Mr. Litwin and Mr. Arthur. The options may not
be exercised (a) at any time that we are engaged in a "distribution" as defined
in Regulation M under the 1934 Act, or at any time when the counter-party to the
call option is an "affiliated purchaser" or a "distribution participant" as
defined in Regulation M; or (b) during a "restricted period" or a "reference
period" as defined in Regulation M; or (c) at any time when the independent bid
price on any market or exchange on which such shares are traded is less than the
exercise price then in effect under such option.
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<PAGE> 30
TRANSACTIONS WITH AFFILIATES
On August 20, 1999, Infinity Emerging Holdings Subsidiary Limited
("IEHSL") was issued a note in the aggregate principal amount of $750,000 by
AxisTel. The note bore interest at the rate of 10% per annum, payable monthly.
The note matured on December 30, 1999. AxisTel repaid this note with part of the
proceeds of our private placement of Common Stock and Preferred Stock on
September 28, 1999.
On September 22, 1999, IEO Holdings Limited exercised its warrants to
purchase 1,499 shares of class B common stock of AxisTel. The notes originally
issued to IEHSL were surrendered as payment of the purchase price for such
shares. Such shares, in addition to the shares of class B common stock of
AxisTel owned by IEO Holdings Limited, represented 50% of the outstanding shares
of AxisTel. On September 22, 1999, IEO Holdings Limited exchanged its shares in
AxisTel for 6,000,000 shares of the our Common Stock.
On September 22, 1999, we acquired e.Volve common stock and e.Volve
debentures with an aggregate principal amount of $4,020,000 held by Infinity
Investors Limited in exchange for 5,682,807 shares of Common Stock and acquired
IEO Holdings Limited, the holder of, among other assets, the remaining
outstanding shares of e.Volve Common Stock and the additional e.Volve debentures
with an aggregate principal amount of $4,020,000, for 14,562,193 shares of
Common Stock. The debentures were converted into an intercompany loan on
December 31, 1999.
On March 3, 2000, we loaned $3.0 million to PhoneFree.com under a
convertible promissory note dated March 2, 2000. The promissory note was due on
September 1, 2000 and bore interest at 7% per annum. Under the terms of the
note, PhoneFree.com could repay this promissory note at any time, subject to our
right to convert it into PhoneFree.com common stock under certain circumstances.
In connection with the loans made under the promissory note, we also received a
four-year non-callable warrant to purchase 240,000 shares of PhoneFree.com
common stock at a price equal to 110% of the conversion price of the promissory
note.
On May 4, 2000, we purchased 1,856,199 shares of Series A Cumulative
Convertible Preferred Stock of PhoneFree.com. The consideration paid was
$10,000,000 in cash and the cancellation of the promissory note previously
issued to us. In addition, PhoneFree.com issued an additional four-year
non-callable warrant to us to purchase 100,000 shares of common stock of
PhoneFree.com for an exercise price of $7.11 per share.
On September 1, 2000, PhoneFree.com acquired Callrewards. Prior to the
acquisition, we owned approximately 30% of the voting equity interests in
Callrewards. In the transaction, we received approximately 104,000 shares of
PhoneFree.com common stock in exchange for 750,000 shares of Callreward's Series
A-1 Convertible Preferred Stock and promissory notes owed to us by Callrewards
of approximately $184,000. After the transaction, assuming full conversion of
our preferred stock and including our two warrants, we own approximately 22% of
the common stock of PhoneFree.com.
OTHER MATTERS TO BE ACTED UPON AT THE ANNUAL MEETING.
Our management knows of no other matters to be presented at the
meeting. Should any other matter requiring a vote of the stockholders arise at
the meeting, the persons named in the proxy will vote the proxies in accordance
with their best judgment.
27
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DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholders are entitled to present proposals for action at the next
Annual Meeting if they comply with the requirements of the proxy rules
established by the United States Securities and Exchange Commission and the
terms of the Company's Bylaws. Proposals that are intended to be presented by
stockholders at the next Annual Meeting of Stockholders must be received by us
at 300 Crescent Court, Suite 800, Dallas, Texas 75201, by June 11, 2001, in
order for them to be considered for inclusion in the proxy and the proxy
statement for that annual meeting. In the case of other stockholder proposals
not submitted in time to be included in our proxy materials, we may generally
exercise discretionary voting authority, conferred by proxies at our next Annual
Meeting.
28
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Appendix A
eVENTURES GROUP, INC.
1999 OMNIBUS SECURITIES PLAN
ARTICLE 1. PURPOSE OF PLAN
The Company adopted this Plan to promote the interests of the Company, its
Affiliated Entities and their respective stockholders by using investment
interests in the Company to attract, retain and motivate management and other
persons, including officers, directors, employees and certain consultants of the
Company and the Affiliated Entities to encourage and reward such persons'
contributions to the performance of the Company and to align their interests
with the interests of the Company's stockholders. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in Article 13.
ARTICLE 2. EFFECTIVE DATE AND TERM OF PLAN
2.1 TERM OF PLAN. This Plan became effective as of the Effective Date and
shall continue in effect until the Expiration Date, at which time this Plan
shall automatically terminate.
2.2 EFFECT ON AWARDS. Awards may be granted during the Plan Term, but no
Awards may be granted after the Plan Term. Notwithstanding the foregoing, each
Award properly granted under this Plan during the Plan Term shall remain in
effect after termination of this Plan until such Award has been exercised,
terminated or expired, as applicable, in accordance with its terms and the terms
of this Plan.
2.3 STOCKHOLDER APPROVAL. This Plan shall be approved by the Company's
stockholders within twelve (12) months after the Effective Date. The
effectiveness of any Awards granted prior to such stockholder approval shall be
specifically subject to, and conditioned upon, such stockholder approval.
ARTICLE 3. SHARES SUBJECT TO PLAN
3.1 RESERVED NUMBER OF SHARES. The maximum number of shares of Common Stock
that may be delivered pursuant to Options or other Awards granted under this
Plan as of or prior to any date during the term of this Plan shall be equal to
fifteen percent (15%) of the issued and outstanding shares of Common Stock as
that number is determined by the Company to calculate fully diluted earnings per
share for the Company's fiscal year immediately preceding such date; provided,
however, that for the purposes of determining the number of issued and
outstanding shares of Common Stock as of the date of this Plan, 45,207,673
shares of Common Stock shall be deemed to have been issued and outstanding; and
provided, further, that the maximum number of
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.)
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shares of Common Stock that may be delivered pursuant to Incentive Stock Options
granted under this Plan shall be four million (4,000,000), subject in any case
to adjustment as set forth in Section 3.4.
3.2 SOURCE OF SHARES. The Common Stock to be issued under this Plan will be
made available, at the discretion of the Board, either from authorized but
unissued shares of Common Stock or from previously issued shares of Common Stock
reacquired by the Company, including without limitation, shares purchased on the
open market.
3.3 AVAILABILITY OF UNUSED SHARES. Shares of Common Stock subject to and/or
underlying any unexercised, unearned or yet-to-be acquired portions of any Award
granted under this Plan that expire, terminate or are canceled, and shares of
Common Stock issued pursuant to Awards under this Plan that are reacquired by
the Company pursuant to the terms under which such shares were issued, will
again become available for the grant of further Awards under this Plan.
Notwithstanding the provisions of this Section 3.3, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the IRC.
3.4 ADJUSTMENT PROVISIONS.
(a) If (i) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares or other
securities, or if additional shares or new or different shares or other
securities are distributed in respect of such shares of Common Stock (or
any stock or securities received with respect to such Common Stock),
through merger, consolidation, sale or exchange of all or substantially all
of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split,
spin-off or other distribution with respect to such shares of Common Stock
(or any stock or securities received with respect to such Common Stock), or
(ii) the value of the outstanding shares of Common Stock is reduced by
reason of an extraordinary dividend payable in cash or property, an
appropriate and proportionate adjustment may be made in (1) the maximum
number and kind of shares or securities available for issuance under this
Plan, (2) the number and kind of shares or other securities that can be
granted to any one individual Recipient under his or her Awards, (3) the
number and kind of shares or other securities subject to then outstanding
Awards under this Plan, and/or (4) the price for each share or other unit
of any other securities subject to then outstanding Awards under this Plan.
(b) No fractional interests will be issued under this Plan resulting
from any adjustments, but the Administering Body, in its sole discretion,
may make a cash payment in lieu of any fractional shares of Common Stock
issuable as a result of such adjustments.
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 2
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(c) Any adjustments pursuant to this Section 3.4 shall be made by the
Administering Body, in its discretion, to preserve the benefits or
potential benefits intended to be made available under this Plan or with
respect to any outstanding Awards or otherwise necessary to reflect any
capital change or other event described in Section 3.4(a), whose
determination in that respect shall be final, binding and conclusive.
(d) The grant of Awards pursuant to this Plan shall not affect 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 or to consolidate or to dissolve, liquidate or sell,
or transfer all or any part of its business or assets.
(e) No adjustment to the terms of an Incentive Stock Option shall be
made unless such adjustment would not cause such Incentive Stock Option to
lose its status as an incentive stock option under the provisions of the
IRC, unless the Administering Body determines otherwise.
3.5 SUBSTITUTE AWARDS. The Administering Body may grant Awards under this
Plan in substitution for stock and stock based awards held by employees of
another corporation who become employees of the Company or an Affiliated Entity
as a result of a merger or consolidation of the employing corporation with the
Company or an Affiliated Entity or the acquisition by the Company or an
Affiliated Entity of property or stock of the employing corporation. The
Administering Body may direct that the substitute Awards be granted on such
terms and conditions as the Administering Body considers appropriate in the
circumstances. Any shares of Common Stock delivered under any such substitute
Awards shall not reduce the maximum number of shares of Common Stock available
for issuance under this Plan.
ARTICLE 4. ADMINISTRATION OF PLAN
4.1 ADMINISTERING BODY.
(a) This Plan shall be administered by the Board; provided, however,
that if the Board appoints a Stock Plan Committee pursuant to Section
4.1(b), this Plan shall be administered by the Stock Plan Committee,
subject to the right of the Board to exercise, at any time and from time to
time, any and all of the duties and responsibilities of the Stock Plan
Committee as the Administering Body, including, but not limited to,
establishing procedures to be followed by the Stock Plan Committee;
provided further, however, that the Board shall not exercise any authority
regarding matters which under applicable law, rule or regulation,
including,
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 3
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without limitation, any exemptive rule under Section 16 of the Exchange Act
(including Rule 16b-3) or IRC Section 162(m), are required to be determined
in the sole discretion of the Stock Plan Committee. The Stock Plan
Committee may be (but is not required to be), in the discretion of the
Board, the same as the compensation committee of the Board, if such
committee has been appointed.
(i) The Board in its sole discretion may from time to time
appoint a Stock Plan Committee of not less than two (2) Board members
to administer this Plan. The Board may from time to time increase or
decrease (but not below two (2)) the number of members of the Stock
Plan Committee, remove from membership on the Stock Plan Committee all
or any portion of its members, and/or appoint such person or persons
as it desires to fill any vacancy existing on the Stock Plan
Committee, whether caused by removal, resignation or otherwise. The
Board may disband the Stock Plan Committee at any time and thereby
revest in the Board the administration of this Plan.
(ii) The Stock Plan Committee shall report to the Board the names
of Eligible Persons granted Awards, the precise type of Award granted,
the number of shares of Common Stock issuable pursuant to such Award,
if any, and the terms and conditions of each such Award.
4.2 AUTHORITY OF ADMINISTERING BODY.
(a) Subject to the express provisions of this Plan, the Administering
Body shall have the power to interpret and construe this Plan and any
agreements or other documents defining the rights and obligations of the
Company or any Affiliated Entity and such Eligible Persons who have been
granted Awards hereunder and thereunder, to determine all questions arising
hereunder and thereunder, to adopt and amend such rules and regulations for
the administration hereof and thereof as it may deem desirable, to correct
any errors, supply any omissions and reconcile any inconsistencies in this
Plan and/or any Award Agreement or any other instrument relating to any
Award, and to otherwise carry out the terms of this Plan and such
agreements
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 4
<PAGE> 36
and other documents. Such interpretations and constructions by the
Administering Body of any provisions of this Plan or of any Award, as well
as any other decisions, actions or inactions of the Administering Body
relating to this Plan or any Award or Award Agreement, shall be within the
absolute discretion of the Administering Body (subject only to the express
terms of this Plan and the Award Agreement and all applicable laws,
regulations and rules) and shall be final, conclusive and binding upon all
persons.
(b) Subject to the express provisions of this Plan, the Administering
Body may from time to time, in its discretion, select the Eligible Persons
to whom, and the time or times at which, Awards may be granted; the nature
of each Award; the number of shares of Common Stock that comprise or
underlie each Award; the period for the purchase or exercise of each
Award, as applicable and such other terms and conditions applicable to each
individual Award as the Administering Body shall determine. Subject to
Section 5.16(a), the Administering Body may grant, at any time, new Awards
to an Eligible Person who has previously received Awards whether such prior
Awards are still outstanding, have previously been canceled, disposed of or
exercised as a whole or in part, as applicable, or are canceled in
connection with the issuance of new Awards. The Administering Body may
grant Awards singly, in combination or in tandem with other Awards, as it
determines in its discretion. Subject to Section 5.16(a), any and all terms
and conditions of the Awards, including, without limitation, the purchase
or exercise price, may be established by the Administering Body without
regard to existing Awards.
(c) Any action of the Administering Body with respect to the
administration of this Plan shall be taken pursuant to a majority vote of
the authorized number of members of the Administering Body or by the
unanimous written consent of its members; provided, however, that (i) if
the Administering Body is the Stock Plan Committee and consists of two (2)
members, then actions of the Administering Body must be unanimous and (ii)
if the Administering Body is the Board, actions taken at a meeting of the
Board shall be valid if approved by directors constituting a majority of
the required quorum for such meeting.
(d) Except to the extent prohibited by applicable law, including,
without limitation, the requirements applicable under IRC Section 162(m) to
any Award intended to be "qualified performance-based compensation," or the
requirements for any Award granted to an officer of the Company or a
Director to be covered by any exemptive rule under Section 16 of the
Exchange Act (including Rule 16b-3), or the rules of a stock exchange or
automated quotation system then listing shares of Common Stock, the
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 5
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Administering Body may, in its discretion, allocate all or any portion of
its responsibilities and powers under this Plan to any one or more of its
members and/or delegate all or any part of its responsibilities and powers
under this Plan to any person or persons selected by it; provided, however,
that the Administering Body may not delegate its authority to correct
errors, omissions or inconsistencies in this Plan. Any such authority
delegated or allocated by the Administering Body under this paragraph (d)
of Section 4.2 shall be exercised in accordance with the terms and
conditions of this Plan and any rules, regulations or administrative
guidelines that may from time to time be established by the Administering
Body, and any such allocation or delegation may be revoked by the
Administering Body at any time.
4.3 ELIGIBILITY. Only Eligible Persons shall be eligible to receive Awards
under this Plan.
4.4 NO LIABILITY. No member of the Board or the Stock Plan Committee or any
designee thereof will be liable for any action or inaction with respect to this
Plan or any Award or any transaction arising under this Plan or any Award,
except in circumstances constituting bad faith of such member.
4.5 AMENDMENTS.
(a) The Administering Body may, insofar as permitted by applicable
law, rule or regulation, from time to time suspend or discontinue this Plan
or revise or amend it in any respect whatsoever, and this Plan as so
revised or amended will govern all Awards hereunder, including those
granted before such revision or amendment; provided, however, that, except
as otherwise provided by this Plan, no such revision or amendment shall
materially impair or diminish any rights or obligations under any Award
previously granted under this Plan, without the written consent of the
Recipient. Without limiting the generality of the foregoing, the
Administering Body is authorized to amend this Plan to comply with or take
advantage of amendments to applicable laws, rules or regulations, including
amendments to the Securities Act, Exchange Act or the IRC or any rules or
regulations promulgated thereunder. No such revision or amendment of this
Plan shall be made without first obtaining approval of the stockholders of
the Company to the extent such approval is required by applicable law, rule
or regulation, including, without limitation, the requirements of any
stock exchange or automated quotation system then listing the shares of
Common Stock or any applicable requirements relating to Incentive Stock
Options or for exemption from IRC Section 162(m) or the then-applicable
requirements of Rule 16b-3.
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 6
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(b) The Administering Body may amend the terms and conditions of an
Award previously granted under this Plan, including any Award Agreement,
retroactively or prospectively, but no such amendment shall materially
impair or diminish any rights or obligations of a Recipient under such
Award without such Recipient's written consent. Without limiting the
generality of the foregoing, the Administering Body may, in its discretion,
at any time and from time to time after the grant of any Award (i)
accelerate or extend the vesting or exercise period, or lapse of
restrictions, applicable to any Award as a whole or in part, (ii) adjust or
reduce the purchase or exercise price, as applicable, of Awards held by
such Recipient by cancellation of such Awards and granting of Awards at
lower purchase or exercise prices or by modification, extension or renewal
of such Awards and (iii) reduce or otherwise modify the performance goals
applicable to any Award. Notwithstanding any other provision of this Plan
to the contrary, no amendment or modification of this Plan or any
outstanding Award shall cause any outstanding Award granted with the
intention that it qualify as Performance-Based Compensation to fail to
continue to so qualify. In the case of Incentive Stock Options, Recipients
acknowledge that extensions of the exercise period may result in the loss
of the favorable tax treatment afforded incentive stock options under
Section 422 of the IRC.
4.6 OTHER COMPENSATION PLANS. The adoption of this Plan shall not affect
any other stock option, securities purchase, incentive or other compensation
plans in effect for the Company or any Affiliated Entity, and this Plan shall
not preclude the Company or an Affiliated Entity from establishing any other
forms of incentive or other compensation for Employees, Directors, Consultants
or others, whether or not approved by the stockholders of the Company.
4.7 PLAN BINDING ON SUCCESSORS. This Plan shall be binding upon the
successors and assigns of the Company.
4.8 REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES. Any reference
in this Plan to a particular statute, regulation or rule shall also refer to any
successor provision of such statute, regulation or rule.
4.9 ISSUANCES FOR COMPENSATION PURPOSES ONLY. This Plan constitutes an
"employee benefit plan" as defined in Rule 405 promulgated under the Securities
Act. Awards to eligible Employees or Directors shall be granted for any lawful
consideration, including compensation for services rendered, promissory notes or
otherwise. Awards to
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 7
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eligible Consultants shall be granted only in exchange for bona fide services
rendered by such Consultants and such services must not be in connection with
the offer and sale of securities in a capital-raising transaction.
4.10 INVALID PROVISIONS. In the event that any provision of this Plan is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision were not contained herein.
4.11 GOVERNING LAW. This Plan and each Award Agreement shall be governed by
and interpreted in accordance with the internal laws of the State of Delaware,
without giving effect to the principles of the conflicts of laws thereof.
ARTICLE 5. GENERAL AWARD PROVISIONS
5.1 PARTICIPATION IN THIS PLAN.
(a) A person shall be eligible to receive Award grants under this Plan
if, at the time of the grant of such Award, such person is an Eligible
Person.
(b) Incentive Stock Options may be granted only to Employees who, at
the date of granting of such Incentive Stock Options, are Employees of the
Company or a Parent Corporation or a Subsidiary Corporation, and otherwise
meet the employment requirements of Section 422 of the IRC, or a similar
statute governing Incentive Stock Options.
(c) Notwithstanding anything to the contrary herein, the Administering
Body may, in its discretion, in order to fulfill the purposes of this Plan,
modify grants of Awards to Recipients who are foreign nationals or employed
outside of the United States to recognize differences in applicable law,
tax policy or local custom.
5.2 AWARD AGREEMENTS.
(a) Each Award granted under this Plan shall be evidenced by an
agreement duly executed on behalf of the Company and by the Recipient or,
in the Administering Body's discretion, a confirming memorandum issued by
the Company to the Recipient, setting forth such terms and conditions
applicable to such Award as the Administering Body may in its discretion
determine. Award Agreements may but need not be identical and shall comply
with and be subject to the terms and conditions of this Plan, a copy of
which shall be provided to each Recipient and incorporated by reference
into each Award Agreement. Any Award Agreement may contain such other
terms, provisions and conditions not inconsistent with this Plan as may be
determined by the Administering Body.
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 8
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(b) In case of any conflict between this Plan and any Award Agreement,
this Plan shall control except as specifically provided in the Award
Agreement.
(c) In case of any conflict between this Plan and any Award Agreement,
on the one hand, and any employment agreement (an "Employment Agreement")
between a Recipient and either the Company and/or an Affiliated Entity, on
the other hand, the terms and conditions of the Employment Agreement shall
apply with respect to those items specifically addressed in the Employment
Agreement.
(d) In consideration of the granting of an Award under this Plan, if
requested by the Company, the Recipient shall agree, in the Award
Agreement, to remain in the employ of (or to consult for or to serve as a
Director of, as applicable) the Company or any Affiliated Entity for a
period of at least one (1) year (or such shorter period as may be fixed in
the Award Agreement or by action of the Administering Body following grant
of the Award) after the Award is granted (or, in the case of a Director,
until the next annual meeting of stockholders of the Company).
5.3 EXERCISE OF AWARDS. No Award granted hereunder shall be issuable or
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded. Not less than 100 shares of Common Stock (or such other
amount as is set forth in the applicable Award Agreement) may be purchased or
issued at one time upon exercise of a Stock Option or under any other Award, and
Stock Options and other Awards must be exercised, issued or purchased, as
applicable, in multiples of 100 shares unless the number of shares purchased is
the total number of shares at the time available under the terms of the Award.
An Award shall be deemed to be claimed or exercised when the Secretary or other
official of the Company designated by the Administering Body receives
appropriate written notice, on such form acceptable to the Administering Body,
from the Recipient together with payment of the applicable purchase or exercise
price, if any, made in accordance with the Award Agreement and any amounts
required under Section 5.11 of this Plan. Notwithstanding any other provision of
this Plan, the Administering Body may impose, by rule and/or in Award
Agreements, such conditions upon the exercise of Awards (including without
limitation conditions limiting the time of exercise to specified periods) as may
be required to satisfy applicable regulatory requirements, including without
limitation Rule 16b-3 and Rule 10b-5 under the Exchange Act, or any other
applicable law, regulation or rule, including, without limitation, any
applicable requirements under the IRC, or the regulations promulgated
thereunder.
5.4 PAYMENT FOR AWARDS.
(a) Awards requiring payment of a purchase or exercise price shall be
payable upon the exercise or purchase of such Award
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 9
<PAGE> 41
by delivery of legal tender of the United States or payment of such other
consideration permitted by applicable law as the Administering Body may
from time to time deem acceptable in any particular instance, including
consideration pursuant to paragraph (b) or (c) of this Section 5.4.
(b) The Company may, in the discretion of the Administering Body,
assist any Recipient (including without limitation any Employee, Director
or Consultant) in the payment of the exercise price or other amounts
payable in connection with the receipt or exercise of such Award, by
lending such amounts to such person on such terms and at such rates of
interest and upon such security (if any) as shall be approved by the
Administering Body.
(c) In the discretion of the Administering Body, and subject to such
limitations or conditions as it may prescribe, if permitted by applicable
law, (i) payments for purchase or exercise of Awards may be by matured
capital stock of the Company (i.e., capital stock owned longer than six (6)
months by the person delivering such capital stock (or by such person and
his or her spouse jointly)) delivered in transfer to the Company by or on
behalf of the Recipient exercising or purchasing the Award and duly
endorsed in blank or accompanied by stock powers duly endorsed in blank,
with signatures guaranteed in accordance with the Exchange Act if required
by the Administering Body (valued at Fair Market Value as of the exercise
or purchase date), or such other consideration as the Administering Body
may from time to time in the exercise of its discretion deem acceptable in
any particular instance; (ii) the Administering Body may allow the exercise
of Stock Options in a broker-assisted or similar transaction in which the
exercise price is not received by the Company until promptly after
exercise; and (iii) the Administering Body may allow the Company to loan
the applicable purchase or exercise price to the Recipient, if the purchase
or exercise will be followed by a prompt sale of some or all of the
underlying shares and a portion of the sale proceeds is dedicated to full
payment of the purchase or exercise price and amounts required pursuant to
Section 5.11 of this Plan.
5.5 NO EMPLOYMENT OR OTHER CONTINUING RIGHTS. Nothing contained in this
Plan (or in any Award Agreement or in any other agreement or document related to
this Plan or to Awards granted hereunder) shall confer upon (a) any Eligible
Person or Recipient any right to continue in the employ (or other business
relationship) of the Company or any Affiliated Entity or constitute any contract
or agreement of employment or engagement, or interfere in any way with the right
of the Company or any Affiliated Entity to reduce such person's compensation or
other benefits or to terminate the employment or engagement of such Eligible
Person or Recipient, with or without cause; or (b) any Recipient any right to
exercise or claim his or her Award otherwise than in accordance with the express
terms and conditions of his or her Award Agreement and this Plan. Except as
expressly provided in this Plan or in any Award Agreement
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 10
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pursuant to this Plan, the Company and any Affiliated Entity shall have the
right to deal with each Recipient in the same manner as if this Plan and any
such Award Agreement did not exist, including without limitation with respect to
all matters related to the hiring, retention, discharge, compensation and
conditions of the employment or engagement of the Recipient. Any questions as to
whether and when there has been a termination of a Recipient's employment or
engagement, the reason (if any) for such termination, and/or the consequences
thereof under the terms of this Plan or any statement evidencing the grant of
Awards pursuant to this Plan shall be determined by the Administering Body, and
the Administering Body's determination thereof shall be final and binding.
5.6 RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS.
(a) All Awards granted under this Plan shall be subject to the
requirement that, if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to any such Award granted under this Plan upon any securities
exchange or under any federal, state or foreign law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Awards or the
issuance, if any, or purchase of shares in connection therewith, such
Awards may not be granted or exercised as a whole or in part unless and
until such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Administering Body. During the term of this Plan, the Company will use
reasonable efforts to seek to obtain from the appropriate regulatory
agencies any requisite qualifications, consents, approvals or
authorizations in order to issue and sell such number of shares of its
Common Stock as shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any such regulatory
agency having jurisdiction thereof the qualifications, consents, approvals
or authorizations deemed by the Company to be necessary for the lawful
issuance and sale of any shares of its Common Stock hereunder shall relieve
the Company of any liability in respect of the nonissuance or sale of such
stock as to which such requisite authorization shall not have been
obtained.
(b) The Company shall be under no obligation to register or qualify
the issuance of Awards or underlying shares of Common Stock under the
Securities Act or applicable state securities laws. Unless the shares of
Common Stock applicable to any such Award have been registered under the
Securities Act and qualified or registered under applicable state
securities laws, the Company shall be under no obligation to issue any
shares of Common Stock covered by any Award unless the Award and underlying
shares of Common Stock, as applicable, may be issued pursuant to applicable
exemptions from such registration or qualification requirements. In
connection with any such exempt issuance, the Administering Body may
require the Recipient to provide a written representation and undertaking
to the Company, satisfactory in form and scope to the Administering Body
and upon which the Company may reasonably rely, that such Recipient is
acquiring such shares of Common Stock for his or
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 11
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her own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares of Common Stock, and
that such person will make no transfer of the same except in compliance
with any rules and regulations in force at the time of such transfer under
the Securities Act and other applicable law, and that if shares of Common
Stock are issued under this Plan without such registration, a legend to
this effect (together with any other legends deemed appropriate by the
Administering Body) may be endorsed upon the certificates evidencing the
shares of Common Stock so issued. The Administering Body may also order its
transfer agent to stop transfers of such shares. The Administering Body may
also require the Recipient to provide the Company such information and
other documents as the Administering Body may request in order to satisfy
the Administering Body as to the investment sophistication and experience
of the Recipient and as to any other conditions for compliance with any
such exemptions from registration or qualification.
5.7 ADDITIONAL CONDITIONS. Any Award may also be subject to such other
provisions (whether or not applicable to any other Award or Eligible Person) as
the Administering Body determines appropriate, in accordance with this Plan and
the Award Agreement, including, without limitation, (a) provisions to assist the
Recipient in financing the purchase of Common Stock issuable as a result of such
Award, (b) provisions for the forfeiture of or restrictions on resale or other
disposition of shares of Common Stock acquired under any Award, (c) provisions
giving the Company the right to repurchase shares of Common Stock acquired under
any Award in the event the Recipient elects to dispose of such shares, and (d)
provisions to comply with federal, state or foreign securities laws and federal,
state or foreign income or employment tax withholding requirements.
5.8 NO PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise set forth herein,
a Recipient shall have no rights as a stockholder with respect to any shares
issuable or issued in connection with an Award until the date of the exercise of
the Option or Stock Appreciation Right, if applicable, in accordance with the
Award Agreement and this Plan, and the receipt by the Company of all amounts
payable in connection with the purchase or exercise, as applicable, of the
Award, the satisfaction or waiver of all applicable performance goals and
performance by the Recipient of all conditions and obligations applicable to the
Award, in accordance with this Plan and the applicable Award Agreement. Status
as an Eligible Person shall not be construed as a commitment that any Award will
be granted under this Plan to an Eligible Person or to Eligible Persons
generally. No person shall have any right, title or interest in any fund or in
any specific asset (including shares of capital stock) of the Company by reason
of any Award granted hereunder. Neither this Plan (nor any documents related
hereto) nor any action taken pursuant hereto (or thereto) shall be construed to
create a trust of any kind or a fiduciary relationship between the Company and
any Person. To the extent that any Person acquires any right with
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respect to Awards hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Company.
5.9 TRANSFERABILITY OF AWARDS.
(a) Except as otherwise provided by this Section 5.9 or by the
Administering Body, no Award under this Plan may be sold, pledged,
assigned, transferred, encumbered, alienated, hypothecated or otherwise
disposed of (whether voluntarily or involuntarily or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy)) in any manner other than by will or the
laws of descent and distribution or, subject to the consent of the
Administering Body, pursuant to a DRO, unless and until such Award has been
exercised, if applicable, and the shares of Common Stock underlying such
Award have been issued, and all restrictions applicable to such shares have
lapsed, and no Award or interest or right therein shall be liable for the
debts, contracts, liabilities or contractual obligations of the Recipient
thereof. Any attempted disposition of an Award or any interest therein
shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.
(b) Except as otherwise provided by the Administering Body, during the
lifetime of a Recipient, only he or his court appointed guardian may
exercise an Award (or any portion thereof) granted to him under this Plan,
unless it has been transferred in accordance with paragraph (c) of this
Section 5.9 or, with the consent of the Administering Body, pursuant to a
DRO. After the death of a Recipient, any exercisable or vested but unpaid
portion of an Award may, prior to the time when such portion becomes
unexercisable or is terminated or expires under this Plan or the applicable
Award Agreement, be exercised by or paid to the beneficiary most recently
named by such Recipient in a written designation thereof filed with the
Company, to the extent permitted by the Recipient's Award Agreement, or, in
the absence of a validly designated beneficiary, his or her personal
representative or by any person empowered to do so under the deceased
Recipient's will or under the then applicable laws of descent and
distribution. In the event any Award is to be exercised by, or paid to, the
executors, administrators, heirs or distributees of the estate of a
deceased Recipient, or such Recipient's beneficiary, or an incapacitated
Recipient's guardian, or the transferee of such Award, in any case pursuant
to the terms and conditions of this Plan and the applicable Award
Agreement, and in accordance with such terms and conditions as may be
specified from time to time by the
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Administering Body, the Company shall be under no obligation to issue
shares of Common Stock or make any payment under such Award unless and
until the Administering Body is satisfied that the person or persons
exercising or to receive payment under such Award is the duly appointed
legal representative of the deceased Recipient's estate or the proper
legatee or distributee thereof.
(c) The Administering Body may, in its discretion, permit the transfer
of an Award to, exercise of an Award by, or payment of an Award to, a
person other than the Recipient who received the grant of such Award in
accordance with the Award Agreement and such terms and conditions as the
Administering Body may specify from time to time.
(d) Notwithstanding the foregoing, no Stock Option owned by a
Recipient subject to Section 16 of the Exchange Act may be assigned or
transferred in any manner inconsistent with Rule 16b-3, and Incentive Stock
Options (or other Stock Options subject to transfer restrictions under the
IRC) may not be assigned or transferred if such assignment or transfer
would cause such an Incentive Stock Option to fail to qualify under Section
422 of the IRC (or any comparable or successor provision) or the
regulations thereunder.
5.10 INFORMATION TO RECIPIENTS.
(a) The Administering Body in its sole discretion shall determine
what, if any, financial and other information shall be provided to
Recipients and when such financial and other information shall be provided
after giving consideration to applicable federal, state and foreign laws,
rules and regulations, including without limitation applicable federal,
state and foreign securities laws, rules and regulations.
(b) The furnishing of financial and other information that is
confidential to the Company shall be subject to the Recipient's agreement
that the Recipient shall maintain the confidentiality of such financial and
other information, shall not disclose such information to third parties,
and shall not use the information for any purpose other than evaluating an
investment in the Company's securities under this Plan. The Administering
Body may impose other restrictions on the access to and use of such
confidential information and may require a Recipient to acknowledge the
Recipient's obligations under this Section 5.10(b) (which acknowledgment
shall not be a condition to the Recipient's obligations under this Section
5.10(b)).
5.11 WITHHOLDING TAXES. Whenever the granting, vesting, exercise or
payment of any Award granted under this Plan, or the transfer of any shares
issued upon exercise of any Award, gives rise to tax or tax withholding
liabilities or obligations, the Administering Body shall have the right, as a
condition to the issuance of any shares of
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Common Stock under, or other payment of, such Award, to require the Recipient to
remit to the Company an amount sufficient to satisfy all such federal, state,
local and foreign tax requirements, and the Company or any Affiliated Entity
shall, to the extent permitted by applicable law, have the right to deduct any
such taxes from any payment of any kind otherwise due to such Recipient. The
Administering Body may, in the exercise of its discretion, permit a Recipient to
satisfy such tax withholding requirements by (a) delivery to the Company of
Common Stock owned by such Recipient (or by such Recipient and his or her spouse
jointly) and acquired more than six (6) months prior to such delivery or (b)
electing withholding by the Company of a portion of the Common Stock otherwise
issuable in connection with such Recipient's Award (provided, however, that the
amount of any Common Stock so withheld shall not exceed the amount necessary to
satisfy required federal, state, local and foreign withholding obligations using
the minimum statutory rate), to the extent permitted by applicable law and
pursuant to procedures approved by the Administering Body.
5.12 LEGENDS ON COMMON STOCK CERTIFICATES. Each certificate representing
shares acquired as a result of any Award granted hereunder shall be endorsed
with all legends, if any, required by applicable federal and state securities or
other laws or the Administering Body to be placed on the certificate. The
determination of which legends, if any, shall be placed upon such certificates
shall be made by the Administering Body in its sole discretion and such decision
shall be final and binding.
5.13 EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS - EMPLOYEES ONLY.
(a) TERMINATION FOR JUST CAUSE. Subject to Section 5.13(c), and except
as otherwise provided in a written agreement (including, without
limitation, any Award Agreement) between the Company and/or an Affiliated
Entity and the Recipient, which may be entered into at any time before or
after termination of employment of the Recipient, in the event of a Just
Cause Dismissal of an Employee Recipient from employment with the Company
or any Affiliated Entity, all of the Recipient's unvested Awards shall be
terminated and become void, and all of the Recipient's unexercised Awards
(whether or not vested) shall be forfeited, expire and become void, as of
the date of such Just Cause Dismissal.
(b) TERMINATION OTHER THAN FOR JUST CAUSE DISMISSAL. Subject to
Section 5.13(c), and except as otherwise provided in a written agreement
(including, without limitation, any Award Agreement) between the Company
and/or an Affiliated Entity and the Recipient, which may be entered into at
any time before or after termination of employment, in the event of an
Employee Recipient's termination of employment with the Company or any
Affiliated Entity for:
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(i) any reason other than for Just Cause Dismissal, death,
Permanent Disability or Retirement, the Recipient's unvested and/or
unexercised Awards, whether or not vested, shall expire and become
void as of the earlier of (A) the date such Awards would have expired
in accordance with their terms had the Recipient remained employed and
(B) three (3) months after the date of such termination; or
(ii) death, Permanent Disability or Retirement, the Recipient's
unvested and/or unexercised, whether or not vested, Awards shall
expire and become void as of the earlier of (A) the date such Awards
would have expired in accordance with their terms had the Recipient
remained employed and (B) one (1) year after the date of such
termination; provided, however, that the one-year period provided in
(B) shall be three (3) months for Incentive Stock Options following
termination of employment for Retirement.
(c) ALTERATION OF VESTING AND EXERCISE PERIODS. Notwithstanding
anything to the contrary in Section 5.13(a) or Section 5.13(b), the
Administering Body may in its discretion designate shorter or longer
periods to claim or otherwise exercise Awards following a Recipient's
termination of employment with the Company or any Affiliated Entity;
provided, however, that any shorter periods determined by the Administering
Body shall be effective only if provided for in the Award Agreement that
evidences the Recipient's Award or if such shorter period is agreed to in
writing between the Recipient and the Company. Notwithstanding anything to
the contrary herein, Awards shall be claimed, paid or exercisable by a
Recipient following such Recipient's termination of employment with the
Company or any Affiliated Entity only to the extent that installments
thereof had become exercisable or vested (i.e., in the case of any
Restricted Stock Awards, to the extent restrictions described in Article 7
applicable to such Awards have lapsed) on or prior to the date of such
termination; and provided further that the Administering Body may, in its
discretion, elect to accelerate the vesting or exercisability of, or lapse
of restrictions applicable to, all or any portion of any Awards that had
not become vested or exercisable on or prior to the date of such
termination, in the event of a termination of employment due to the
Recipient's death or Permanent Disability, or, except with respect to any
Award intended to qualify as Performance-Based Compensation, in the event
of Retirement or otherwise. Furthermore, at any time prior to a Recipient's
termination of employment with the Company or any Affiliated Entity, the
Administering Body may, in its discretion, accelerate the vesting or
exercisability, or waive or, subject to the other provisions of this Plan,
amend any and all of the goals, restrictions or conditions imposed under
any Award; provided, however, no such acceleration, waiver or amendment
shall cause
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any Award otherwise intended to qualify as Performance-Based Compensation
to fail to so qualify.
5.14 EFFECT OF TERMINATION OF ENGAGEMENT ON AWARDS - NON-EMPLOYEES ONLY.
(a) TERMINATION OF ENGAGEMENT. Subject to Section 5.14(b), and except
as otherwise provided in a written agreement between the Company and/or an
Affiliated Entity and the Recipient, which may be entered into at any time
before or after termination of engagement of the Recipient, in the event of
the termination of any non-Employee Recipient's engagement with the Company
or any Affiliated Entity (including any such Recipient who is a Director,
but not also an Employee, or a Consultant), all of the Recipient's unvested
Awards shall be terminated and become void, and all of the Recipient's
unexercised Awards (whether or not vested) shall be forfeited, expire and
become void as of the earlier of (i) the date such Awards would expire in
accordance with their terms had the Recipient remained engaged by the
Company or such Affiliated Entity and (ii)(A) three (3) months after such
termination as a result of death or Permanent Disability and (B) thirty
(30) days after such termination for any other reason.
(b) ALTERNATION OF VESTING AND EXERCISE PERIODS. Notwithstanding
anything to the contrary in Section 5.14(a), the Administering Body may, in
its discretion, designate shorter or longer periods to claim or otherwise
exercise Awards following a non-Employee Recipient's termination of
engagement with the Company or any Affiliated Entity; provided, however,
that any shorter periods determined by the Administering Body shall be
effective only if provided for in the Award Agreement that evidences the
Recipient's Award or if such shorter period is agreed to in writing by the
Recipient. Notwithstanding anything to the contrary herein, Awards shall be
claimed, paid or exercisable by a Recipient following such Recipient's
termination of engagement with the Company or any Affiliated Entity only to
the extent that the installments thereof had become exercisable or vested
(i.e., in the case of any Restricted Stock Awards, to the extent
restrictions described in Article 7 applicable to such Awards have lapsed)
on or prior to the date of such termination; and provided further that the
Administering Body may, in its discretion, elect to accelerate the vesting
or exercisability of, or lapse of restrictions applicable to, all or any
portion of any Awards that had not become vested or exercisable on or prior
to the date of such termination. Furthermore, at any time prior to a
Recipient's termination of engagement with the Company or any Affiliated
Entity, the Administering Body may, in its discretion, accelerate the
vesting or exercisability, or waive or, subject to the other provisions of
this Plan, amend any and all of the goals, restrictions or conditions
imposed under any Award.
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5.15 TRANSFER; LEAVE OF ABSENCE. For purposes of this Plan, the transfer by
a Recipient to the employment or engagement of (i) the Company from an
Affiliated Entity, (ii) from the Company to an Affiliated Entity or (iii) from
one Affiliated Entity to another Affiliated Entity (including, with respect to
Consultants, the assignment between the Company and an Affiliated Entity or
between two Affiliated Entities, as applicable, of an agreement pursuant to
which such services are rendered) or, with respect solely to Employees, an
approved leave of absence for military service, sickness, or for any other
purpose approved by the Company, shall not be deemed a termination of employment
or engagement of such Recipient, as the case may be; provided, however, that a
change in status of a Recipient from an Employee to a Consultant, or to a
Director who is not an Employee, shall be considered a termination of such
Recipient's employment with the Company or an Affiliated Entity for purposes of
this Plan and such Recipient's Awards, except to the extent that the
Administering Body determines, in its discretion, otherwise with respect to any
Award that is not an Incentive Stock Option. In no event, however, shall an
Award be exercisable after the date such Award would expire in accordance with
its terms had the Recipient remained continuously employed or engaged in the
service of the Company or an Affiliated Entity. Whether a Recipient's employment
or service with the Company or any Affiliated Entity has terminated, and, if so,
whether such termination constituted Just Cause Dismissal, shall be determined
by the Administering Body, in its good faith discretion, in accordance with this
Plan, and any such determination shall be final, binding and conclusive upon all
persons.
5.16 LIMITS ON AWARDS TO CERTAIN ELIGIBLE PERSONS.
(a) LIMITATIONS APPLICABLE TO IRC SECTION 162(m) Recipients.
Notwithstanding any other provision of this Plan, in order for the
compensation attributable to Awards hereunder to qualify as
Performance-Based Compensation, no one Eligible Person shall be granted any
one or more Awards with respect to more than Five Hundred Thousand
(500,000) shares of Common Stock in any one calendar year. The limitation
set forth in this Section 5.16(a) shall be subject to adjustment as
provided in Section 3.4 and under Article 12, but only to the extent such
adjustment would not affect the status of compensation attributable to
Awards hereunder as Performance-Based Compensation. To the extent required
by Section 162(m) of the IRC, shares of Common Stock subject to Awards
which are canceled shall continue to be counted against such limitation and
if, after the grant of an Award, the price of shares subject to such Award
is reduced and the transaction is treated as a cancellation of the Award
and a grant of a new Award, both the Award deemed to be canceled and the
Award deemed to be granted shall be counted against such limitation.
(b) LIMITATIONS APPLICABLE TO SECTION 16 PERSONS. Notwithstanding any
other provision of this Plan, this Plan, and any Award granted or awarded
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to any individual who is then subject to Section 16 of the Exchange Act,
shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3)
that are requirements for the application of such exemptive rule. To the
extent permitted by applicable law, this Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
5.17 Performance-Based Compensation. If the amount of compensation an
Eligible Person may receive under any Award is not based solely on an increase
in the value of Common Stock after the date of grant, the Administering Body, in
order to qualify such Awards as Performance-Based Compensation, may condition
the payment, granting, vesting or exercisability or purchase price of such
Awards on the attainment of one or more pre-established, objective performance
goals that are determined over a measurement period or periods established by
the Administering Body and relate to one or more Performance Criteria. The
Administering Body shall establish and administer any such performance goals.
Payment of compensation in respect of any such Award shall not be made unless
and until the Administering Body certifies in writing that the applicable
performance goals and any other material terms of such Award were in fact
satisfied, except as otherwise provided by the Administering Body in accordance
with this Plan and the applicable Award Agreement in the event of termination of
a Recipient's employment or service with the Company or an Affiliated Entity due
to death or Disability or in the event of a Change in Control.
ARTICLE 6. STOCK OPTIONS
6.1 NATURE OF STOCK OPTIONS. Subject to the limitations provided otherwise
herein, Stock Options may be Incentive Stock Options or Non-qualified Stock
Options. Each Award Agreement relating to a Stock Option shall state whether
such Option will be treated as an Incentive Stock Option or a Non-qualified
Stock Option.
6.2 OPTION EXERCISE PRICE. The exercise price for each Stock Option shall
be determined by the Administering Body as of the date such Stock Option is
granted and stated in the Award Agreement. The exercise price shall be no less
than the Fair Market Value of the Common Stock subject to the Option on the date
such Option is granted; provided, however, that the Administering Body may, in
its discretion, with the consent of the Recipient in the case of an
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Incentive Stock Option, amend the terms of any Stock Option not intended to
qualify as Performance-Based Compensation to provide that the exercise price of
the shares remaining subject to the Stock Option shall be reestablished at a
price not less than 100% of the Fair Market Value of the Common Stock on the
effective date of the amendment.
6.3 OPTION PERIOD AND VESTING. Stock Options granted hereunder shall vest
and may be exercised as determined by the Administering Body and stated in the
Award Agreement, except that exercise of such Stock Options after termination of
the Recipient's employment or engagement shall be subject to Section 5.13 or
5.14, as the case may be. Each Stock Option granted hereunder and all rights or
obligations thereunder shall expire on such date as shall be determined by the
Administering Body, but not later than ten (10) years after the date the Stock
Option is granted and shall be subject to earlier termination as provided herein
or in the Award Agreement. The Administering Body may, in its discretion at any
time and from time to time after the grant of a Stock Option, accelerate vesting
of such Option as a whole or in part by increasing the number of shares then
purchasable, provided that the total number of shares subject to such Stock
Option may not be increased. Except as otherwise provided herein, a Stock Option
shall become exercisable, as a whole or in part, on the date or dates, or upon
satisfaction of such conditions, specified by the Administering Body and
thereafter shall remain exercisable until the expiration or earlier termination
of the Stock Option.
6.4 SPECIAL PROVISIONS REGARDING INCENTIVE STOCK OPTIONS.
(a) Notwithstanding anything in this Article 6 to the contrary, the
exercise price and vesting period of any Stock Option intended to qualify
as an Incentive Stock Option shall comply with the provisions of Section
422 of the IRC and the regulations thereunder. As of the Effective Date,
such provisions require, among other matters, that (i) the exercise price
must not be less than the Fair Market Value of the underlying stock as of
the date the Incentive Stock Option is granted, and not less than 110% of
the Fair Market Value as of such date in the case of a grant to a
Significant Stockholder; and (ii) that the Incentive Stock Option not be
exercisable after the expiration of five (5) years from the date of grant
in the case of an Incentive Stock Option granted to a Significant
Stockholder.
(b) The aggregate Fair Market Value (determined as of the respective
date or dates of grant) of the Common Stock for which one or more Incentive
Stock Options granted to any Recipient under this Plan (or any other option
plan of the Company or an Affiliated Entity) may for the first time become
exercisable as "incentive stock options" under the IRC during any one
calendar year shall not exceed $100,000.
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(c) Any Options granted as Incentive Stock Options pursuant to this
Plan that for any reason fail or cease to qualify as such shall be treated
as Non-qualified Stock Options.
6.5 RELOAD OPTIONS. At the discretion of the Administering Body, Stock
Options granted pursuant to this Plan may include a "reload" feature pursuant to
which a Recipient exercising an Option by the delivery of a number of shares of
matured capital stock in accordance with Section 5.4(c) hereof and the Award
Agreement would automatically be granted an additional Option (with an exercise
price equal to the Fair Market Value of the Common Stock on the date the
additional Option is granted and with the same expiration date as the original
Option being exercised, and with such other terms as the Administering Body may
provide) to purchase that number of shares of Common Stock equal to the number
delivered to exercise the original Option.
6.6 RESTRICTIONS. The Administering Body, in its sole and absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Award Agreement and
may be referred to on the certificates evidencing such shares. The Recipient
shall give the Company prompt notice of any disposition of shares of Common
Stock acquired by exercise of an Incentive Stock Option within (i) two years
from the date of granting (including the date the Option is modified, extended
or renewed for purposes of Section 424(h) of the IRC) such Option to such
Recipient or (ii) one year after the transfer of such shares to such Recipient.
ARTICLE 7. RESTRICTED STOCK AWARDS
7.1 NATURE OF RESTRICTED STOCK AWARDS. The Administering Body may grant
Restricted Stock Awards to any Eligible Person. A Restricted Stock Award is an
Award entitling the recipient to acquire, at par value or such other purchase
price, if any, determined by the Administering Body (but not less than the par
value thereof unless permitted by applicable state law), shares of Common Stock
subject to such restrictions and conditions as the Administering Body may
determine at the time of grant ("RESTRICTED STOCK"). Conditions may be based on
continuing employment (or other business relationships) with the Company or an
Affiliated Entity and/or, in the case of Restricted Stock Awards intended to be
Performance-Based Compensation, the achievement of pre-established, objective
performance goals that are determined over a measurement period or periods
established by the Administering Body and relate to one or more Performance
Criteria. Any Restricted Stock Award must be accepted by the applicable
Recipient within a period of sixty (60) days (or a shorter period as determined
by the Administering Body at the time of award) after the award date, by
executing the applicable Award Agreement and providing to the Administering Body
or its designee a copy of such executed Award Agreement and payment of the
applicable purchase price, if any, of such shares of Restricted Stock.
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7.2 RIGHTS AS STOCKHOLDERS. Subject to Section 7.3, upon delivery of the
shares of the Restricted Stock to a Recipient, or creation of a book entry
evidencing a Recipient's ownership of shares of Restricted Stock, pursuant to
Section 7.5, the Recipient shall have, unless otherwise provided by the
Administering Body, all the rights of a stockholder with respect to said shares,
subject to the restrictions in his or her Award Agreement, including the right
to receive all dividends and other distributions paid or made with respect to
the shares; provided, however, that, in the discretion of the Administering
Body, any extraordinary distributions with respect to the Common Stock shall be
subject to the restrictions set forth in Section 7.3.
7.3 RESTRICTION. All shares of Restricted Stock issued under this Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Administering Body shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment or
engagement with the Company or its Affiliated Entities, Company performance and
individual performance; provided, however, that, except with respect to shares
of Restricted Stock intended to qualify as Performance-Based Compensation, by
action taken after the Restricted Stock is issued, the Administering Body may,
on such terms and conditions as it may determine to be appropriate, remove any
or all of the restrictions imposed by the terms of the Award Agreement.
Restricted Stock may not be sold, transferred, assigned or encumbered until all
restrictions are terminated or expire.
7.4 FORFEITURE OR REPURCHASE OF RESTRICTED STOCK. The Administering Body
shall provide in the terms of each individual Award Agreement for forfeiture and
reversion to the Company of a Recipient's shares of Restricted Stock, or that
the Company shall have a right to repurchase such shares of Restricted Stock, at
a cash price per share equal to the price, if any, paid by the Recipient for
such shares of Restricted Stock, to the extent such shares are then subject to
restrictions under the Award Agreement, immediately upon any failure to satisfy
applicable conditions set forth in the Award Agreement or upon a termination of
employment (with or without cause and for any reason whatsoever) or, if
applicable, upon a termination of engagement (with or without cause and for any
reason whatsoever) between the Recipient and the Company or any Affiliated
Entity, subject, in any case, to Sections 5.13 and 5.14, as applicable.
7.5 Certificates, Escrows. Each Recipient receiving a Restricted Stock
Award shall be issued a stock certificate or certificates evidencing the shares
of Common Stock covered by such Award registered in the name of such Recipient.
The Administering Body may require a Recipient who receives a certificate or
1999 OMNIBUS SECURITIES PLAN (eVENTURES GROUP, INC.) - PAGE 22
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certificates evidencing a Restricted Stock Award to immediately deposit such
certificate or certificates, together with a stock power or other appropriate
instrument of transfer, endorsed in blank by the Recipient, with signatures
guaranteed in accordance with the Exchange Act if required by the Administering
Body, with the Secretary of the Company or an escrow holder as provided in the
immediately following sentence. The Secretary of the Company or such other
escrow holder as the Administering Body may appoint shall retain physical
custody of each certificate representing Restricted Stock until all of the
restrictions imposed under the Award Agreement with respect to the shares
evidenced by such certificate expire or shall have been removed. The foregoing
to the contrary notwithstanding, the Administering Body may, in its discretion,
provide that a Recipient's ownership of Restricted Stock prior to lapse of the
restrictions set forth in the Award Agreement shall, in lieu of certificates, be
evidenced by a "book entry" (i.e., a computerized or manual entry) in the
records of the Company or its designated agent in the name of such Recipient.
Such records of the Company or such agent shall, absent manifest error, be
binding on all Recipients who receive Restricted Stock Awards. The holding of
shares of Restricted Stock by the Company or an escrow holder, in accordance
with this Section 7.5, or the use of book entries to evidence the ownership of
shares of Restricted Stock, in accordance with this Section 7.5, shall not
affect the rights of Recipients as owners of their shares of Restricted Stock,
nor affect the restrictions applicable to such shares under the Award Agreement
or this Plan.
7.6 VESTING OF RESTRICTED STOCK. The Administering Body at the time of
grant shall specify and state in the Award Agreement the date or dates and/or,
in the case of Restricted Stock Awards intended to qualify as Performance-Based
Compensation, attainment of performance goals and other conditions, on which
Restricted Stock shall become vested and free of restrictions applicable
thereto, subject to Section 7.4 and to such further rights of the Company or its
assigns as may be specified in the Award Agreement or other instrument
evidencing the Restricted Stock Award. Upon expiration or termination of the
restrictions applicable to a Recipient's shares of Restricted Stock, pursuant to
the applicable Award Agreement and this Plan, the Company shall, subject to
Sections 5.6, 5.11 and 5.12, then deliver to such Recipient a certificate or
certificates evidencing such shares registered in the name of such Recipient.
7.7 WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The Award Agreement or
other written instrument evidencing a Restricted Stock Award may require or
permit the immediate payment, waiver, deferral or investment of dividends paid
on the Restricted Stock.
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7.8 Section 83(b) Election. If a Recipient of a Restricted Stock Award
makes an election under Section 83(b) of the IRC, or any successor section
thereto, to be taxed with respect to the Restricted Stock as of the date of
transfer of the Restricted Stock rather than as of the date or dates upon which
such Recipient would otherwise be taxable under Section 83(a) of the IRC, such
Recipient shall deliver a copy of such election to the Company immediately after
filing such election with the Internal Revenue Service. Such election shall be
in the sole discretion of any such Recipient. None of the Company or any
Affiliated Entity shall have any liability or responsibility relating to or
arising out of the filing or not filing of any such election or any defects in
its construction.
ARTICLE 8. UNRESTRICTED STOCK AWARDS
8.1 GRANT OR SALE OF UNRESTRICTED STOCK.
(a) GRANT OR SALE OF UNRESTRICTED STOCK. The Administering
Body may, in its sole discretion, grant (or sell at a purchase price
determined by the Administering Body) an Unrestricted Stock Award to
any Eligible Person, pursuant to which such individual may receive
shares of Common Stock free of any vesting restrictions ("UNRESTRICTED
STOCK") under this Plan. Unrestricted Stock Awards may be granted or
sold as described in the preceding sentence as a bonus in respect of
past services or other valid consideration, or in lieu of any cash
compensation due to such individual.
(b) DEFERRAL OF AWARDS. The Administering Body may, in its
discretion, permit any Recipient who has received shares of
Unrestricted Stock under this Article 8 to elect to defer receipt of up
to 100% of such shares of Unrestricted Stock in accordance with such
rules and procedures as may from time to time be established by the
Administering Body for that purpose, and such election shall be
effective on the later of the date one (1) year from the date of such
election or the beginning of the next calendar year, or such later
date as the Administering Body may specify in the Award Agreement. Any
such deferred Unrestricted Stock shall be entitled to receive Dividend
Equivalent Rights settled in shares of Common Stock.
ARTICLE 9. PERFORMANCE STOCK AWARDS
9.1 NATURE OF PERFORMANCE STOCK AWARDS. A Performance Stock Award is an
Award entitling the Recipient to acquire shares of Common Stock upon the
attainment of pre-established, objective performance goals based on Performance
Criteria. The Administering Body may make Performance Stock Awards independent
of or in connection with the granting of any other Award under this Plan.
Performance Stock Awards may be granted under this Plan to any Eligible Person.
The Administering Body, in its sole discretion, shall determine whether and to
whom Performance Stock Awards shall be made, the performance goals
1999 OMNIBUS SECURITIES (eVENTURES GROUP, INC) - PAGE 24
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applicable under each such Award, the periods during which performance is to be
measured, and all other limitations and conditions applicable to the awarded
shares, which, in any case, shall be stated in the Award Agreement; provided,
however, that the Administering Body may rely on the performance goals, based on
Performance Criteria, and other standards applicable to other performance unit
plans of the Company in setting the standards for Performance Stock Awards under
this Plan.
9.2 RIGHTS AS A STOCKHOLDER. A Recipient receiving a Performance Stock
Award shall have the rights of a stockholder only as to shares of Common Stock
actually received by the Recipient upon satisfaction or achievement of the terms
and conditions of such Award and not with respect to shares subject to the Award
but not actually issued to such Recipient. Accordingly, a Recipient shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Common Stock under a Performance Stock Award only upon satisfaction of all
conditions specified in the Award Agreement evidencing the Performance Stock
Award (or in a performance plan adopted by the Administering Body).
ARTICLE 10. DIVIDEND EQUIVALENT RIGHTS; INTEREST EQUIVALENTS
10.1 DIVIDEND EQUIVALENT RIGHTS. A Dividend Equivalent Right is an
Award entitling the Recipient to receive credits based on cash dividends that
would be paid on the shares of Common Stock specified in the Dividend Equivalent
Right (or other Award to which it relates) if such shares were held by the
Recipient. A Dividend Equivalent Right may be granted hereunder to any Eligible
Person, as a component of another Award or as a freestanding Award. The terms
and conditions of Dividend Equivalent Rights shall be specified by the
Administering Body and stated in the Award Agreement. Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Common Stock, which may
thereafter accrue additional equivalents. Any such reinvestment shall be at Fair
Market Value on the date of reinvestment or such other price as may then apply
under a dividend reinvestment plan sponsored by the Company, if any. Dividend
Equivalent Rights may be settled in cash or shares of Common Stock or a
combination thereof, in a single installment or installments. A Dividend
Equivalent Right granted as a component of another Award may provide that such
Dividend Equivalent Right shall be settled upon exercise, settlement, or payment
of, or lapse of restrictions on, such other Award and that such Dividend
Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other Award. A
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Dividend Equivalent Right granted as a component of another Award may also
contain terms and conditions different from such other Award.
10.2 INTEREST EQUIVALENTS. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the Award Agreement
for interest equivalents to be credited with respect to such cash payment.
Interest equivalents may be compounded and shall be paid upon such terms and
conditions as may be specified at the time of grant in the Award Agreement.
ARTICLE 11. STOCK APPRECIATION RIGHTS
11.1 GRANT OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right may
be granted to any Eligible Person selected by the Administering Body. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of a Stock Option, (b) with respect to previously granted Non-qualified
Stock Options, or (c) independent of a Stock Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with this Plan as
the Administering Body shall impose and shall be evidenced by an Award
Agreement.
11.2 COUPLED STOCK APPRECIATION RIGHTS.
(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Stock Option and shall be exercisable only when
and to the extent the related Stock Option is exercisable.
(b) A CSAR may be granted to the Recipient for no more than
the number of shares subject to the simultaneously or previously
granted and unexercised Stock Option to which it is coupled.
(c) A CSAR shall entitle the Recipient to surrender to the
Company unexercised a portion of the Stock Option to which the CSAR
relates (to the extent then exercisable pursuant to its terms) and to
receive from the Company in exchange therefor an amount determined by
multiplying the difference obtained by subtracting the Stock Option
exercise price from the Fair Market Value of a share of Common Stock on
the date of exercise of the CSAR by the number of shares of Common
Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Administering Body may impose. An Option with
respect to which a Recipient has elected to exercise a CSAR shall, to
the extent of the shares covered by such exercise, be canceled
automatically and surrendered to the Company. Such Option shall
thereafter remain exercisable according to its terms only with respect
to the number of shares of Common Stock as to which it would otherwise
be exercisable, less the number of such shares with respect to which
such CSAR has been so exercised.
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11.3 INDEPENDENT STOCK APPRECIATION RIGHTS.
(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Stock Option and shall have the terms set by the
Administering Body. An ISAR shall be exercisable in such installments
and subject to such conditions as the Administering Body may determine.
An ISAR shall cover such number of shares of Common Stock as the
Administering Body may determine . The exercise price per share of the
Common Stock subject to each ISAR shall be set by the Administering
Body and, together with the other terms and conditions of the ISAR,
shall be set forth in the Award Agreement.
(b) An ISAR shall entitle the Recipient to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant
to its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price
per share of the ISAR from the Fair Market Value of a share of Common
Stock on the date of exercise of the ISAR by the number of shares of
Common Stock with respect to which the ISAR shall have been exercised,
subject to any limitations the Administering Body may impose.
11.4 PAYMENT AND LIMITATIONS ON EXERCISE.
(a) Payment of the amounts determined under Section 11.2(c)
and 11.3(b) above shall be in cash, in Common Stock (based on its Fair
Market Value as of the date the Stock Appreciation Right is exercised)
or a combination of both, as determined by the Administering Body. To
the extent such payment is effected in Common Stock it shall be made
subject to satisfaction of all provisions of this Plan pertaining to
Stock Options.
(b) Holders of Stock Appreciation Rights may be required to
comply with any timing or other restrictions with respect to the
settlement or exercise of a Stock Appreciation Right, including a
window-period limitation, as may be imposed in the discretion of the
Administering Body.
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ARTICLE 12. REORGANIZATIONS
12.1 CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN CONTROL. If the
Company shall consummate any Reorganization not involving a Change in Control in
which holders of shares of Common Stock are entitled to receive in respect of
such shares any securities, cash or other consideration (including without
limitation a different number of shares of Common Stock), each Award outstanding
under this Plan shall thereafter be claimed or exercisable, in accordance with
this Plan, only for the kind and amount of securities, cash and/or other
consideration receivable upon such Reorganization by a holder of the same number
of shares of Common Stock as are subject to that Award immediately prior to such
Reorganization, and any adjustments will be made to the terms of the Award, and
the underlying Award Agreement, in the sole discretion of the Administering Body
as it may deem appropriate to give effect to the Reorganization.
12.2 CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL. As of the
effective time and date of any Change in Control, this Plan and any then
outstanding Awards (whether or not vested) shall automatically terminate unless
(a) provision is made in writing in connection with such transaction for the
continuance of this Plan and for the assumption of such Awards, or for the
substitution for such Awards of new grants covering the securities of a
successor entity or other party to the transaction resulting in such Change in
Control, or an affiliate thereof, with appropriate adjustments as to the number
and kind of securities and exercise prices, in which event this Plan and such
outstanding Awards shall continue or be replaced, as the case may be, in the
manner and under the terms provided by the Administering Body and/or in any
written agreement relating to such Change in Control transaction; or (b) the
Board otherwise has provided or shall provide in writing for such adjustments as
it deems appropriate in the terms and conditions of the then-outstanding Awards
(whether or not vested), including without limitation (i) accelerating the
vesting or exercisability of outstanding Awards and/or (ii) providing for the
cancellation of Awards and their automatic conversion into the right to receive
the securities, cash and/or other consideration that a holder of the shares
underlying such Awards would have been entitled to receive upon consummation of
such Change in Control had such shares been issued and outstanding immediately
prior to the effective date and time of the Change in Control (net of the
appropriate option exercise prices). If, pursuant to the foregoing provisions of
this Section 12.2, this Plan and any outstanding Awards granted hereunder shall
terminate by reason of the occurrence of a Change in Control without provision
for any of the actions described in clause (a) or (b) hereof, then any Recipient
holding outstanding Awards shall have the right, at such time immediately prior
to the consummation of the Change in Control as the Administering Body shall
designate, to convert, claim or exercise, as applicable, the Recipient's Awards
to the full extent not theretofore converted, claimed or exercised, including
any installments which have not yet become vested or exercisable.
ARTICLE 13. DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined shall have the
meanings set forth below:
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"ADMINISTERING BODY" shall mean the Board as long as no Stock Plan Committee has
been appointed and is in effect and shall mean the Stock Plan Committee as long
as the Stock Plan Committee is appointed and in effect.
"AFFILIATED ENTITY" shall mean (i) any corporation or limited liability company,
other than the Company, in an unbroken chain of corporations or limited
liability companies ending with the Company if each corporation or limited
liability company owns stock or membership interests (as applicable) possessing
more than fifty percent (50%) of the total combined voting power of all classes
of stock in one of the other corporations or limited liability companies in such
chain; (ii) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is more than fifty percent (50%)
controlled (whether by ownership of stock, assets or an equivalent ownership
interest or voting interest) by the Company or another Affiliated Entity; or
(iii) any other entity, approved by the Administering Body as an Affiliated
Entity under the Plan, in which the Company or any other Affiliated Entity has a
material equity interest.
"AWARD" OR "AWARDS," except where referring to a particular category or grant
under this Plan, shall include Incentive Stock Options, Non-qualified Stock
Options, Restricted Stock Awards, Unrestricted Stock Awards, Performance Stock
Awards, Dividend Equivalent Rights and Stock Appreciation Rights.
"AWARD AGREEMENT" means the agreement or confirming memorandum setting forth the
terms and conditions of the Award.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" means the following and shall be deemed to occur if any of
the events specified in clause (a), (b), (c) or (d) occur:
(a) Any person, within the meaning of Section 13(d) or 14(d)
of the Exchange Act (other than the Company or any corporation or other
such person of which a majority of its voting power or its voting
equity securities or equity interests is owned, directly or indirectly,
by the Company (a "Related Entity"), or any employee benefit plan (or a
trust forming a part thereof) maintained by the Company or any Related
Entity), becomes, after the Effective Date, the beneficial owner
(within the meaning of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities; or
(b) During any period of two (2) consecutive years,
individuals, who at the beginning of such period, constitute the Board
and any new Director of the Company (other than a Director designated
by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or
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(d) of this definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the Directors of the Company then still in
office who either were Directors of the Company at the beginning of the
two-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority of the Board;
(c) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more
than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that
a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no person acquires more
than fifty percent (50%) of the combined voting power of the Company's
then outstanding securities shall not constitute a Change in Control;
and provided further a merger or consolidation in which the Company is
the surviving entity (other than as a wholly owned subsidiary of
another entity) and in which the Board of Directors of the Company or
the successor to the Company, after giving effect to the merger or
consolidation, is comprised of a majority of members who are either (x)
Directors of the Company immediately preceding the merger or
consolidation, or (y) appointed to the Board by the Company (or the
Board) as an integral part of such merger or consolidation, shall not
constitute a Change in Control; or
(d) Approval by the stockholders of the Company or any order
by a court of competent jurisdiction of a plan of liquidation of the
Company, or the sale or disposition by the Company of all or
substantially all of the Company's assets other than (i) the sale or
disposition of all or substantially all of the assets of the Company to
a person or persons who beneficially own, directly or indirectly, at
least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale;
or (ii) pursuant to a dividend in kind or spinoff type transaction,
directly or indirectly, of such assets to the stockholders of the
Company.
(e) Notwithstanding the foregoing, a Change in Control of the
type described in paragraph (b), (c) or (d) shall be deemed to be
completed on the date it occurs, and a Change in Control of the type
described in paragraph (a) shall be deemed to be completed as of the
date the entity or group attaining 50% or greater ownership has elected
its representatives to the Board and/or caused its nominees to become
officers of the Company with the authority to terminate or alter the
terms of any Employee's employment.
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"COMMON STOCK" means the common stock of the Company, par value $.001 per share,
as constituted on the Effective Date, and as thereafter adjusted as a result of
any one or more events requiring adjustment of outstanding Awards under Section
3.4 above.
"COMPANY" means eVentures Group, Inc., a Delaware corporation.
"CONSULTANT" means any consultant or advisor if:
(a) the consultant or advisor renders bona fide services to
the Company or any Affiliated Entity;
(b) the services rendered by the consultant or advisor are not
in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a
market for the Company's securities; and
(c) the consultant or advisor is a natural person who has
contracted directly with the Company or an Affiliated Entity to render
such services.
"CSAR" means a coupled stock appreciation right as defined in Section 11.2.
"DIRECTOR" means any person serving on the Board or the Board of Directors of an
Affiliated Entity irrespective of whether such person is also an Employee of the
Company or an Affiliated Entity.
"DIVIDEND EQUIVALENT RIGHT" shall mean any Award granted pursuant to Article 10
of this Plan.
"DRO" shall mean a domestic relations order as defined by the IRC or Title I of
ERISA or the rules thereunder.
"EFFECTIVE DATE" means September 22, 1999, which is the date this Plan was
adopted by the Board.
"ELIGIBLE PERSON" shall include key Employees, Directors and Consultants of the
Company or of any Affiliated Entity.
"EMPLOYEE" means any officer or other employee (as defined in accordance with
Section 3401(c) of the IRC) of the Company or any Affiliated Entity.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"EXPIRATION DATE" means the tenth anniversary of the Effective Date.
"FAIR MARKET VALUE" of a share of the Company's capital stock as of a particular
date shall be: (a) if the stock is listed on an established stock exchange or
exchanges (including for this purpose, the NASDAQ National Market), the closing
sale price of the stock quoted for such date as reported in the transactions
index of each such exchange, as published in The Wall Street Journal and
determined by the Administering Body, or, if no sale price was quoted in any
such index for such date, then as of the next preceding date on which such a
sale price was quoted; or (b) if the stock is not then listed on an exchange or
the NASDAQ National Market, the average of the closing bid and asked prices per
share for the stock in the over-the-counter market as quoted on The NASDAQ Small
Cap Market, or, if not so quoted, on the OTC Bulletin Board, on such date; or
(c) if the stock is not then listed on an exchange or quoted in the
over-the-counter market, an amount determined in good faith by the Administering
Body; provided, however, that (i) when appropriate, the Administering Body, in
determining Fair Market Value of capital stock of the Company, may take into
account such other factors as it may deem appropriate under the circumstances
and (ii) if the stock is traded on The NASDAQ Small Cap Market and both sales
prices and bid and asked prices are quoted or available, the Administering Body
may elect to determine Fair Market Value under either clause (a) or (b) above.
Notwithstanding the foregoing, the Fair Market Value of capital stock for
purposes of grants of Incentive Stock Options shall be determined in compliance
with applicable provisions of the IRC.
"INCENTIVE STOCK OPTION" means a Stock Option that qualifies as an incentive
stock option under Section 422 of the IRC, or any successor statute thereto.
"IRC" means the Internal Revenue Code of 1986, as amended.
"ISAR" means an independent stock appreciation right as defined in Section 11.3.
"JUST CAUSE DISMISSAL" shall mean a termination of a Recipient's employment for
any of the following reasons: (a) the Recipient violates any reasonable rule or
regulation of the Board, the Company's Chief Executive Officer or the
Recipient's superiors that results in material damage to the Company or an
Affiliated Entity or which, after written notice to do so, the Recipient fails
to correct within a reasonable time; (b) any willful misconduct or gross
negligence by the Recipient in the responsibilities assigned to the Recipient;
(c) any willful failure to perform the Recipient's job as required to meet the
Company's or an Affiliated Entity's objectives; (d) any wrongful conduct of a
Recipient which has an adverse impact on the Company or an Affiliated Entity or
which constitutes a misappropriation of assets of the Company or an Affiliated
Entity; (e) the Recipient's performing services for any other person or entity
that competes with the Company or an Affiliated Entity while the Recipient is
employed by the Company or an Affiliated Entity, without the prior written
approval of the Chief Executive Officer of the Company or an Affiliated Entity;
or (f) any other conduct that the Administering
1999 OMNIBUS SECURITIES (eVENTURES GROUP, INC) - PAGE 33
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Body determines constitutes just cause for dismissal; provided, however, that if
a Recipient is party to an employment agreement with the Company and/or an
Affiliated Entity providing for just cause dismissal (or some comparable notion)
of such Recipient from his or her employment with the Company or an Affiliated
Entity, "Just Cause Dismissal" for purposes of this Plan shall have the same
meaning as ascribed thereto or to such comparable notion in such employment
agreement.
"NON-QUALIFIED STOCK OPTION" means a Stock Option that is not an Incentive Stock
Option.
"PARENT CORPORATION" means any parent corporation of the Company as defined in
Section 424(e) of the IRC.
"PERFORMANCE-BASED COMPENSATION" means performance-based compensation as
described in Section 162(m)(4)(C) of the IRC.
"PERFORMANCE CRITERIA" shall mean the following business criteria with respect
to the Company, any Affiliated Entity or any division or operating unit of any
thereof: (a) income or net income, (b) pre-tax income, (c) operating income or
net operating income, (d) cash flow, (e) earnings per share (including earnings
before interest, taxes and amortization), (f) return on equity, (g) return on
invested capital or assets, (h) cost reductions or savings, (i) funds from
operations, (j) appreciation in the fair market value of Common Stock, (k)
earnings before any one or more of the following items: interest, taxes,
depreciation or amortization, (l) book value of Common Stock, (m) total
stockholder return, (n) return on capital, (o) return on assets or net assets,
or (p) operating margin.
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"PERFORMANCE STOCK AWARDS" means Awards granted pursuant to Article 9.
"PERMANENT DISABILITY" shall mean that the Recipient becomes physically or
mentally incapacitated or disabled so that the Recipient is unable to perform
substantially the same services as the Recipient performed prior to incurring
such incapacity or disability (the Administering Body, at its option and the
Company's expense, may retain a physician to confirm the existence of such
incapacity or disability, and the determination of such physician shall be
binding upon the Company and the Recipient), and such incapacity or disability
continues for a period of three consecutive months or six months in any 12-month
period or such other period(s) as may be determined by the Administering Body
with respect to any Award, provided that for purposes of determining the period
during which an Incentive Stock Option may be exercised pursuant to Section
5.13(b)(ii) hereof, Permanent Disability shall mean "permanent and total
disability" as defined in Section 22(e) of the IRC.
"PLAN" means this 1999 Omnibus Securities Plan of the Company.
"PLAN TERM" means the period during which this Plan remains in effect
(commencing on the Effective Date and ending on the Expiration Date).
"RECIPIENT" means an Eligible Person who has received an Award or Awards under
this Plan or any person who is recognized under this Plan as the successor in
interest to such an Eligible Person with respect to such Eligible Person's
Award.
"REORGANIZATION" means any merger, consolidation or other reorganization.
"RESTRICTED STOCK" shall have the meaning ascribed thereto in Section 7.1.
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"RESTRICTED STOCK AWARDS" means any Award granted pursuant to Article 7 of this
Plan.
"Retirement" means normal retirement from employment with the Company or an
Affiliated Entity in accordance with the retirement policies of the Company or
any such Affiliated Entity then in effect, as determined by the Administering
Body.
"RULE 16b-3" means Rule 16b-3 under the Exchange Act, or any successor or
similar rule under the Exchange Act, as the same may be amended from time to
time.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SIGNIFICANT STOCKHOLDER" is an individual who, at the time an Award is granted
to such individual under this Plan, owns more than 10% of the combined voting
power of all classes of stock of the Company or of any Parent Corporation or
Subsidiary Corporation (after application of the attribution rules set forth in
Section 424(d) of the IRC).
"STOCK APPRECIATION RIGHT" means a stock appreciation right granted under
Article 11 of this Plan.
"STOCK OPTION" OR "OPTION" means a right to purchase stock of the Company
granted under Article 6 of this Plan to an Eligible Person.
"STOCK PLAN COMMITTEE" means the committee appointed by the Board to administer
this Plan pursuant to Section 4.1.
"SUBSIDIARY CORPORATION" means any subsidiary corporation of the Company as
defined in Section 424(f) of the IRC.
"UNRESTRICTED STOCK" shall have the meaning ascribed thereto in Section 8.1.
"UNRESTRICTED STOCK AWARD" means any Award granted pursuant to Article 8 of this
Plan.
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APPENDIX B
eVENTURES GROUP, INC.
AUDIT COMMITTEE CHARTER
GENERAL
The Audit Committee of the Board of Directors of eVentures Group, Inc. shall
consist of at least three independent directors. Members of the Committee shall
be considered independent if they meet the independent director criteria of Rule
4200(a)(15) of the Nasdaq Stock Market, Inc. As determined by the Board of
Directors, the Members of the Committee will be able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement, and cash flow statement or will become able to do so within a
reasonable period of time after his or her appointment to the Audit Committee.
Additionally, at least one member of the Audit Committee must have past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication, including being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities. Company management,
independent auditors and the Company's General Counsel may attend each meeting
or portions thereof as required by the Committee. The Committee shall meet as
scheduled by the Chairperson selected by the Board of Directors, as frequently
as circumstances dictate.
RESPONSIBILITIES
The Audit Committee's role is one of oversight whereas the Company's management
is responsible for preparing the Company's financial statements and the
independent auditors are responsible for auditing those financial statements. In
particular, the Committee will not plan or conduct the Company's audit or
determine whether the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. The
Committee recognizes that the Company's financial management and the independent
auditors have more time, knowledge and more detailed information on the Company
than do the members of the Committee; consequently, the Audit Committee is not
providing any expert or special assurance as to the Company's financial
statements or any professional certification as to the independent auditor's
work, and is not responsible for resolving disagreements, if any, between the
Company's management and the independent auditors. Additionally, it is not the
responsibility of the Committee to ensure that the Company complies with all
laws and regulations.
<PAGE> 68
The following functions shall be the key responsibilities of the Audit Committee
in carrying out its oversight function.
1. Provide an open avenue of communications among the independent
auditors, Company management and the Board of Directors, including
private sessions with the independent auditors, and/or Company
management to discuss any matters that the Committee may deem
appropriate or that either of these groups believes should be
discussed.
2. Provide open communication with Company management relating to the
quality and adequacy of the Company's financial reporting process,
published financial statements and/or major disclosures and the
adequacy of the Company's system of internal controls.
3. Provide open communication with Company management and General Counsel
relating to legal and regulatory matters that may have a material
impact on the Company's financial statements and Company compliance
policies.
4. Meet with Company management and independent auditors regarding the
appropriateness of accounting principles followed by the Company,
changes in accounting principles and their impact on the financial
statements.
5. The Committee and Board of Directors shall be ultimately responsible
for the approval (subject to ratification by the shareholders),
evaluation, and replacement of the independent auditors. The Committee
will:
o Monitor the independence and performance of the independent
auditors and their audit of the Company's financial statements.
o Recommend annually the appointment of the independent auditors to
the Board for its approval.
o In accordance with The Independence Standards Board Statement
No.1, request from the independent auditors a formal written
statement delineating all relationships between the independent
auditors and the Company, including all non-audit services and
fees.
o Discuss with the independent auditors if any disclosed
relationship or service could impact the auditors' objectivity
and independence.
o Recommend that the Board of Directors take appropriate action in
response to the auditors' statement to ensure the independence of
the independent auditors.
o Approve the fees and other significant compensation to be paid to
the independent auditors.
6. Meet with the independent accountants and Company management to review
the scope of the proposed external audit for each fiscal year. The
external audit scope shall include a requirement that the independent
accountants inform the Committee of any significant changes in the
independent accountant's original
2
<PAGE> 69
audit plan and that the independent accountants will conduct a review
on interim financial information prior to the Company's filing of each
quarterly report to shareholders (Form 10-Q).
7. Review with Company management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to filing or
distribution.
8. Meet with independent auditors, Company management and internal
auditors and review their report to the Committee including comments
relating to the system of internal controls, published financial
statements and related disclosures, the adequacy of the financial
reporting process and the scope of the independent audit. The Board of
Directors and the Committee are in place to represent the Company's
stockholders; accordingly, the independent auditors are ultimately
accountable to the Board of Directors and the Committee on all such
matters.
9. Review the Company's annual audited financial statements (including
results thereof) prior to filing or distribution (which review should
include discussion with management and independent auditors of
significant issues regarding accounting principles, practices and
judgments).
10. Prepare a Report, for inclusion in the Company's proxy statement,
disclosing that the Committee reviewed and discussed the audited
financial statements with management and discussed certain other
matters with the independent auditors. Based upon these discussions,
state in the Report whether the Committee recommended to the Board of
Directors that the audited financial statements be included in the
Annual Report.
11. Approve and monitor a code of conduct for the Company.
12. Review and advise the Board on potential conflicts of interest
regarding the Company and its officers and directors.
13. Review and reassess the adequacy of the Audit Committee's charter
annually. If any revisions therein are deemed necessary or
appropriate, submit the same to the Board for its consideration and
approval.
14. Monitor the performance of the internal auditing department.
15. Perform any other activities consistent with this Charter, the
Company's by-laws and governing law, as the Committee or the Board of
Directors deems necessary or appropriate.
16. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
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<PAGE> 70
The Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities and it has direct access to the independent
auditors as well as anyone in the organization and full access to all books,
records, facilities and personnel of the Company. The Committee has the ability
to retain, at the Company's expense, special legal, accounting or other
consultants or experts it deems necessary in the performance of its duties.
QUORUM
For the transaction of business at any meeting of the Audit Committee, the
presence of no less than 50% of the members shall constitute a quorum.
********************************************************************************
Nothing contained in this charter is intended to, or should be construed as,
creating any responsibility or liability of the members of the Committee except
to the extent otherwise provided under Federal securities laws or the Delaware
General Corporation law which shall continue to set the legal standard for the
conduct of the members of the Committee.
********************************************************************************
4
<PAGE> 71
PROXY CARD
PLEASE SIGN, DATE AND RETURN YOUR
PROXY CARD AS SOON AS POSSIBLE
ANNUAL MEETING OF SHAREHOLDERS
eVENTURES GROUP, INC.
NOVEMBER 9, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
The undersigned, having received the notice and accompanying Proxy
Statement for the annual meeting of stockholders of eVentures Group, Inc. (the
"Company") to be held on Thursday, November 9, 2000 (the "Annual Meeting"),
hereby appoints Thomas P. McMillin or Stuart J. Chasanoff, and each of them,
with full power of substitution, as the undersigned's proxy and attorney-in-fact
to vote at the Annual Meeting, or any adjournment thereof, all shares voting
stock of the Company, which the undersigned may be entitled to vote. The above
proxies are hereby instructed to vote at the Annual Meeting or any adjournment
thereof, as shown below.
PLEASE MARK YOUR VOTES
[X] AS IN THIS EXAMPLE
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
------------------
<S> <C> <C> <C>
1. PROPOSAL NO. 1 - Mark R. Graham [ ] [ ]
ELECTION OF DIRECTORS Stuart A. Subotnick [ ] [ ]
Jan R. Horsfall [ ] [ ]
FOR AGAINST ABSTAIN
2. PROPOSAL NO. 2 - [ ] [ ] [ ]
RATIFICATION OF AMENDMENTS
TO THE 1999 OMNIBUS SECURITIES
PLAN
FOR AGAINST ABSTAIN
3. PROPOSAL NO. 3 - [ ] [ ] [ ]
INCREASE IN AUTHORIZED
SHARES
I PLAN TO ATTEND MEETING [ ]
</TABLE>
The undersigned acknowledges receipt of (a) notice of annual meeting of
stockholders, (b) the accompanying proxy statement and (c) the company's 2000
Annual Report to Stockholders.
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS MADE ABOVE. YOU ARE URGED TO COMPLETE, SIGN,
DATE AND RETURN THIS PROXY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY, IF
SO DESIRED, REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
SIGNATURE DATE , 2000
---------------------- -------------
SIGNATURE DATE , 2000
---------------------- -------------
(Signature if held jointly)
<PAGE> 72
PROXY INSTRUCTIONS:
1. Please sign exactly as the name or names appear on your stock certificate
(as indicated hereon).
2. If the shares are issued in the name of two or more persons, all of them
must sign the proxy.
3. A proxy executed by a corporation must be signed in its name by an
authorized officer. Executors, administrators, trustees and partners should
indicate their capacity when signing.
2
