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 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11 or Rule 14a-12
DBS Industries, Inc.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
|X| No fee required
|_| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(I)(1), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(I)(3).
|_| 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 transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
|_| Fee paid previously by written preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>2
DBSINDUSTRIES, INC.
100 SHORELINE HIGHWAY, SUITE 190 A, MILL VALLEY, CA 94941
Tel: 415/380-8055 o Fax: 415/380-8199 o http://www.dbsindustries.com
To the Stockholders of DBS Industries, Inc.:
You are invited to attend the Annual Meeting of the Stockholders of DBS
Industries, Inc. ("DBSI") which will be held on June 8, 1999 at 2:00 p.m. (PDT)
at Embassy Suites Hotel, 101 McInnis Road, San Rafael, California 94903.
The accompanying Notice of the Annual Meeting of the Stockholders and Proxy
Statement contain the matters to be considered and acted upon, and you should
read such material carefully.
The Proxy Statement contains information about the three nominees for election
as Directors and the adoption of the 1999 Employee Stock Purchase Plan. The
Board of Directors strongly recommends your approval of these proposals.
We hope you will be able to attend the meeting, but, if you cannot do so, it is
important that your shares be represented. Accordingly, we urge you to mark,
sign, date and return the enclosed proxy promptly. You may, of course, withdraw
your proxy if you attend the meeting and choose to vote in person.
Sincerely,
Fred W. Thompson
Chairman and President
May 4, 1999
<PAGE>3
DBS Industries, Inc.
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
(415)380-8055
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS To Be Held On June 8, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of DBS
Industries, Inc., a Delaware corporation ("DBSI"), will be held on June 8, 1999
at 2:00 p.m. (PDT), at Embassy Suites Hotel, 101 McInnis Road, San Rafael,
California 94903, for the following purposes, which are more completely
discussed in the accompanying Proxy Statement:
1. To elect three directors, each to hold office for a three-year term ending
at the Annual Meeting of Stockholders in 2002 and until their successors
are elected and qualified;
2. To approve the 1999 Employee Stock Purchase Plan; and
3. To transact such other business as may properly come before the meeting or
any adjournments thereof.
Only stockholders of record at the close of business on April 27, 1999 are
entitled to notice of and to vote at the Annual Meeting of the Stockholders.
By Order of the Board of Directors
Fred W. Thompson
Chairman and President
May 4, 1999
YOU ARE CORDIALLY INVITED TO ATTEND DBSI'S ANNUAL MEETING OF STOCKHOLDERS. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN
IF YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF
YOU ATTEND THIS MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY
GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE
EXERCISE THEREOF.
<PAGE>4
PROXY STATEMENT
of
DBS Industries, Inc.
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
(415) 380-8055
Information Concerning the Solicitation
This Proxy Statement is furnished to the stockholders of DBS Industries, Inc.
("DBSI") in connection with the solicitation of proxies on behalf of DBSI's
Board of Directors for use at DBSI's Annual Meeting of the Stockholders (the
"Meeting") to be held on June 8, 1999 at 2:00 p.m. (PDT), at Embassy Suites
Hotel, 101 McInnis Road, San Rafael, California 94903, and at any and all
adjournments thereof. Only stockholders of record on April 27, 1999 will be
entitled to notice of and to vote at the Meeting.
The proxy solicited hereby, if properly signed and returned to DBSI and not
revoked prior to its use, will be voted at the Meeting in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted "FOR" the nominees for the Board of Directors and,
at the proxy holders' discretion, on such other matters, if any, which may come
before the Meeting (including any proposal to adjourn the Meeting). Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with DBSI Industries, Inc. written notice of its
revocation addressed to Secretary, DBSI Industries, Inc., 100 Shoreline Highway,
Suite 190A, Mill Valley, CA 94941, (ii) submitting a duly executed proxy bearing
a later date, or (iii) appearing in person at the Meeting and giving the
Secretary notice of his or her intention to vote in person.
DBSI will bear the entire cost of preparing, assembling, printing and mailing
proxy materials furnished by the Board of Directors to stockholders. Copies of
proxy materials will be furnished to brokerage houses, fiduciaries and
custodians to be forwarded to beneficial owners of the common stock. In addition
to the solicitation of proxies by use of the mail, some of the officers,
directors, employees and agents of DBSI may, without additional compensation,
solicit proxies by telephone or personal interview, the cost of which DBSI will
also bear.
This Proxy Statement and form of proxy were first mailed to stockholders on or
about May 4, 1999.
Record Date and Voting Rights
DBSI is currently authorized to issue up to 50,000,000 shares of common stock,
par value $0.0004, and 5,000,000 shares of preferred stock, par value $0.0004.
As of April 27, 1999, 14,195,427 shares of common stock were issued and
outstanding. No shares of preferred stock are outstanding. Each share of common
stock shall be entitled to one vote on all matters submitted for stockholder
approval, including the election of a director. The record date for
determination of stockholders entitled to notice of, and to vote at the Meeting,
is April 27, 1999. DBSI's Certificate of Incorporation does not provide for
cumulative voting.
One-third (1/3) of the shares of common stock of DBSI entitled to vote must be
represented in person or by proxy at the Meeting to constitute a quorum for the
transaction of business. Directors shall be elected by a plurality of the votes
of common shares present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors. Under Delaware law, abstentions
and broker non-votes shall be counted for purposes of determining quorum. Broker
non-votes, however, will not be counted for purposes of calculating voting
power, but abstentions will be counted towards calculating voting power.
<PAGE>5
PROPOSAL ONE
ELECTION OF DIRECTORS
General Information
DBSI adopted staggered terms for its Board of Directors at the 1996 Annual
Stockholders Meeting. Directors of the first class served until the 1997 Annual
Meeting of Stockholders. Directors of the second class served until the 1998
Annual Meeting of Stockholders, and directors of the third class will serve
until the 1999 Annual Meeting of Stockholders or until their successors have
been elected. At the Meeting, stockholders will be asked to elect the third
class of directors to serve until the 2002 Annual Meeting of Stockholders.
Messrs. Fred W. Thompson and E.A. James Peretti, both current third class
directors, are standing for re-election. Mr. Jessie J. Knight, Jr. is standing
for first time election to the board to serve as a third class director until
the 2002 Annual Meeting of Stockholders.
Nominees for Directors
The nominees for directors have consented to being named nominees in this Proxy
Statement and have agreed to serve as directors if elected at the Annual
Meeting. In the event that the nominees are unable to serve, the persons named
in the proxy have discretion to vote for other persons if such other persons are
designated by the Board of Directors. The Board of Directors has no reason to
believe that the nominees will be unavailable for election. The directors who
are elected shall hold office for three years, as set forth under Article VIII
of the Restated Certificate of Incorporation of May 29, 1997, or until their
successors are elected and qualified.
The following sets forth the persons nominated by the Board of Directors for
election as directors and certain information with respect to those persons.
Nominee Age Term
Fred W. Thompson 56 1999-2002
E.A. James Peretti 56 1999-2002
Jessie J. Knight, Jr. 48 1999-2002
Background of Nominees
Fred W. Thompson, serves as Chairman of the Board, President, and CEO of the
Company. He has over thirty years experience in the telecommunications industry.
From 1983 to 1986, Mr. Thompson managed Inter Exchange Consultant, Inc., a
company he founded, providing management, design and engineering services for
initial cellular telephone operations in New York City, San Francisco, Los
Angeles and other major cities in the U.S. From 1986 to 1990, Mr. Thompson
devoted his time to consulting on various telecommunication matters as an
independent contractor. His career of over 20 years with AT&T included various
management position in the Long Lines Department, Western Electric Company, Bell
Labs and with several operating telephone companies. Mr. Thompson received a BS
degree in Electrical Engineering from California Polytechnic.
E.A. James Peretti, Director, has served as Chief Operating Officer since August
1998, and was appointed in February 1996, as President and Chief Executive
Officer of Global Energy Metering Service, Inc., a wholly-owned subsidiary of
DBSI. Previously, Mr. Peretti served as President of Westinghouse Electric
Supply Company (WESCO), a business unit of Westinghouse Electric Corp. He also
served as a Vice President and officer of Westinghouse Electric Corp. During his
30 year tenure with WESCO, Mr. Peretti also held positions as Vice President and
General Manager of its Pacific Division. Mr. Peretti holds a BS degree from
Purdue University in Electrical Engineering and a MBA from the University of
Hawaii.
<PAGE>6
Jessie J. Knight, Jr., Director, appointed in February 1999, was a Commissioner
of the California Public Utilities Commission from 1993 through December 1998.
Appointed by former Governor Pete Wilson, he was one of five individuals
responsible for economic and regulatory oversight of California's $52 billion
telecommunications, utility, trucking and rail industries. Before his
appointment to the Commission, he was Executive Vice President of the San
Francisco Chamber of Commerce, responsible for international operations,
economic development and attracting businesses to San Francisco. He also served
as Vice President, Marketing for the San Francisco Newspaper Agency, a $400
million publishing operation encompassing the San Francisco Chronicle and the
San Francisco Examiner. Mr. Knight is an active director of Blue Shield of
California and has been nominated to serve on the board of directors of Avista,
Inc. Mr. Knight holds a BA degree from St. Louis University and an MBA from the
University of Wisconsin.
Vote Required
The plurality of votes of common shares present in person or represented by
proxy and entitled to vote on the election of directors is required to elect the
nominees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE NOMINEES FOR THE
ELECTION OF DIRECTORS
PROPOSAL 2
ADOPTION OF THE DBSI 1999 EMPLOYEE STOCK PURCHASE PLAN
By unanimous consent of the Board of Directors of the Company on April 26, 1999,
the Board of Directors approved and recommended to the Stockholders the adoption
of the 1999 Employee Stock Purchase Plan for employees of the Company and its
subsidiaries (the "Stock Purchase Plan"). The Stock Purchase Plan was
established pursuant to the provisions of Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), and the principal features of the Plan
are summarized below. All statements made in the following summary of the Stock
Purchase Plan are qualified by reference to the full text of the Stock Purchase
Plan attached to this Proxy Statement as Exhibit A.
Purpose
The purpose of the Stock Purchase Plan is to provide a method whereby all
eligible employees of the Company may acquire a proprietary interest in the
Company through the purchase of Common Stock. Under the Stock Purchase Plan,
payroll deductions are used to purchase the Company's Common Stock. The Board of
Directors believes that the Stock Purchase Plan will serve as an incentive for
the Company to retain highly experienced and trained employees, to encourage the
sense of proprietorship of such persons, and to stimulate the active interest of
such persons in the development and financial success of the Company.
Reservation of Shares
An aggregate of 50,000 shares of Common Stock of the Company will be reserved
for issuance under the Stock Purchase Plan. In the event of corporate changes
affecting the Company's Common Stock, such as reorganizations, share splits,
mergers, consolidations or otherwise, the Company will make appropriate
adjustments in the number of shares reserved under the Stock Purchase Plan.
<PAGE>7
Administration
The Plan is administered by the Company's compensation committee (the
"Committee"). All determinations by the Committee are final and conclusive.
Eligibility
All employees, including officers, who are employed on a full time or part-time
basis by the Company and are regularly scheduled to work more than 20 hours per
week and more than five months per year will be eligible to participate in the
Stock Purchase Plan. Eligible employees of the Company as of the commencement of
any Offering Period under the Stock Purchase Plan can participate in the Stock
Purchase Plan. The employee must enroll in the Plan prior to the commencement of
any such offering periods. No employee shall be eligible to enroll under the
Stock Purchase Plan who, at the time of enrollment, owns stock possessing 5% or
more of the total combined voting power of the Company. Further, no participant
may be granted rights to purchase more than $25,000 worth of Common Stock
(valued at the time the purchase right is granted) for each calendar year in
which such purchase rights are outstanding under any other stock purchase plans.
The Company estimates that approximately 8 employees are eligible to participate
in the Stock Purchase Plan.
Purchase Terms
An employee electing to participate in the Stock Purchase Plan must authorize a
whole percentage (not less than 1% nor more than 10%) of the employee's
compensation to be deducted by the Company from the employee's pay during each
pay period included within the offering periods (the Offering Periods"). Unless
otherwise determined by the Committee, the semi-annual Offering Periods commence
on the first day of July and January, and terminate on the 31st day of December
and on the 30th day of June, respectively, with the last Offering Period
commencing on January 1, 2001. On the first business day of each of the Offering
Periods, the Company will grant to each participant an option to purchase shares
of Common Stock of the Company. On the last day of each of the Offering Periods,
the employee will be deemed to have exercised this option, at the option price,
to the extent of such employee's accumulated payroll deductions. The option
price under the Stock Purchase Plan is equal to 85% of the closing price of the
Common Stock on either the first business day or last business day of the
applicable Offering Period (or the nearest prior business day thereto),
whichever is lower. No interest will be paid on amounts deducted from an
employee's pay and used to purchase Common Stock under the Stock Purchase Plan.
The maximum number of shares of Common Stock to be issued in each Offering
Period shall be 12,500, plus unissued shares from any prior Offering Periods,
whether offered or not.
A participant may voluntarily withdraw from the Stock Purchase Plan at any time
by giving at least 5 days' notice to the Company prior to the end of the
Offering Period and shall receive on withdrawal the cash balance (with interest)
then held in the participant's account. Upon termination of employment for any
reason, including resignation, discharge, disability or retirement, or upon the
death of participant, the balance of the participant's account (with interest)
shall be paid to the participant or his or her designated beneficiary.
Amendment or Termination
The Board of Directors may at any time amend, suspend or discontinue the Stock
Purchase Plan provided no such suspension or discontinuance may adversely affect
any outstanding options. The Stock Purchase Plan provides that, without
shareholder approval, no amendment may (i) increase the maximum number of shares
issuable under the Stock Purchase Plan (except for adjustments as a result of
corporate changes affecting the Company's Common Stock specifically authorized
in the Stock Purchase Plan), (ii) increase the benefits accruing to participants
under the Stock Purchase Plan or (iii) modify the requirements as to eligibility
for participation in the Plan. The Stock Purchase Plan will terminate by its own
terms on June 30, 2001.
<PAGE>8
Miscellaneous
The proceeds received by the Company from the sale of Common Stock pursuant to
the Stock Purchase Plan will be used for general corporate purposes. The Company
is not obligated to hold the accrued payroll deductions in a segregated account.
The Stock Purchase Plan will be effective upon shareholder approval and will
commence as of July 1, 1999, subject to stockholder approval of the Plan.
Certain Federal Income Tax Consequences
The following general description of federal tax consequences is based on
current statutes, regulations and interpretations, and does not include possible
state or local income tax consequences. The Stock Purchase Plan is intended to
qualify as an "Employee Stock Purchase Plan" within the meaning of Section 423
of the Code with the following principal tax consequences.
Amounts deducted from a participant's pay under the Stock Purchase Plan are
included in the participant's compensation subject to federal income and
employment taxes. The Company will withhold taxes on these amounts.
The purchase of shares of Common Stock under the Stock Purchase Plan will not
result in an employee's realization of the bargain element of the purchase (15%
discount), thus permitting employees to acquire stock in the company without
immediate tax consequences. An employee who does not dispose of the Common Stock
so purchased until at least two years after the date of enrollment in the
Offering Period in which employee's shares are purchased and 1 year after the
date of purchase will include as ordinary income at the time of such employee's
disposition of such employee's Common Stock the lesser of (i) the excess of its
fair market value over the price at the time enrollment is effective or (ii) the
excess of its fair market value at the time of disposition over the amount such
employee actually paid for such shares. Any additional gain will be long-term
capital gain. If an employee sells such employee's Common Stock under such
circumstances for less than such employee paid for such shares, there is no
ordinary income and such employee will realize a long-term capital loss on that
difference. Any ordinary income realized by an employee will increase the basis
of such employee's Common Stock for purposes of determining the amount of any
gain or loss realized upon its disposition.
With limited exceptions, an employee who fails to retain Common Stock purchased
under the Stock Purchase Plan until at lease two years after the effective date
of enrollment in the Offering Period in which employee's shares are purchased
and 1 year after the date of purchase is considered to have made a
"disqualifying disposition" and forfeits the special tax treatment extended
under Section 423 of the Code. In general, such an employee recognizes ordinary
income at the time of such disposition equal to the excess of the fair market
value of the Common Stock at the exercise date over the purchase price paid.
Such fair market value as of the exercise date becomes the tax basis for
determining any further gain or loss at the time of disposition of the Common
Stock.
The Company is entitled to a deduction equal to the amount of ordinary income
realized by an employee who makes a disqualifying disposition. Otherwise, the
Company is not entitled to any deduction on account of the purchase of Common
Stock under the Stock Purchase Plan or the subsequent sale by employees of
Common Stock purchased pursuant to the Stock Purchase Plan.
The approval of the adoption of the Stock Purchase Plan requires the affirmative
vote of a majority of the shares of Common Stock present or represented by
properly executed and delivered proxies, and entitled to vote at the Annual
Meeting.
The Board of Directors recommends a vote `FOR" the adoption of the Stock
Purchase Plan. Proxies solicited by the Board of Directors will be so voted
unless Stockholders specify otherwise.
<PAGE>9
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE 1999 EMPLOYEE STOCK
PURCHASE PLAN
DIRECTORS AND EXECUTIVE OFFICERS
Identification of DBSI's Directors and Executive Officers
The directors and executive officers of DBSI, their ages, positions held, and
duration as such, are as follows:
<TABLE>
<S> <C> <C> <C>
Name Position Age Period
Fred W. Thompson Chairman of the Board, President, 56 December 1992-present
Chief Executive Officer and
Chief Financial Officer November 1993-present
Michael T. Schieber Director 59 December 1992-present
Secretary
Jerome W. Carlson Director 62 May 1997-present
E.A. James Peretti Director, Chief Operating Officer 56 February 1996-present
President and
Chief Executive Officer, GEMS
H. Tate Holt Director 47 February 1996-present
Jessie J. Knight, Jr. Director 48 February 1999-present
Gregory T. Leger Executive Vice President, Engineering 43 March 1998 -present
Frederick R. Skillman, Jr. Vice President, Business Development 37 August 1995-present
</TABLE>
Background of Present Directors and Executive Officers
Fred W. Thompson, serves as Chairman of the Board, President, CEO and CFO of
DBSI. He has over thirty years' experience in the telecommunications industry.
From 1983 to 1986, Mr. Thompson managed Inter Exchange Consultants, Inc., a
company he founded, providing management, design and engineering services for
initial cellular telephone operations in New York City, San Francisco, Los
Angeles and other major cities in the U.S. From 1986 to 1990, Mr. Thompson
devoted his time to consulting on various telecommunication matters as an
independent contractor. His career of over 20 years with AT&T included various
management positions in the Long Lines Department, Western Electric Company,
Bell Labs and with several operating telephone companies. Mr. Thompson received
a BS degree in Electrical Engineering from California Polytechnic.
Michael T. Schieber, Director, has served as a Director of DBSI since December
1992. He has served as the Managing General Partner of ZAMSTL Partners, a real
estate development firm in Washington State since June 1991. From 1987 to
December 1992, Mr. Schieber was the Managing Partner of Amador
Telecommunications. Mr. Schieber also holds minority interests in two Illinois
cellular telephone licenses. He retired from the Department of Fisheries with
the State of Washington in May 1993 where he had served as a civil engineer
since 1984. He is also a retired Air Force Major and Command Pilot. Mr. Schieber
received an MA degree in International Relations and Government from the
University of Notre Dame, a BS in Engineering from the Air Force Academy, and a
BA in Business from The Evergreen State College.
<PAGE>10
E.A. James Peretti, Director appointed in February 1996, Chief Operating Officer
of DBSI, President and Chief Executive Officer of Global Energy Metering
Service, Inc., a wholly owned subsidiary of DBSI. Previously, Mr. Peretti served
as President of Westinghouse Electric Supply Company (WESCO), a business unit of
Westinghouse Electric Corp. He also served as a Vice President and officer of
Westinghouse Electric Corp. During his 30 year tenure with WESCO, Mr. Peretti
also held positions as Vice President and General Manager of its Pacific
Division. Mr. Peretti holds a BS degree from Purdue University in Electrical
Engineering and an MBA from the University of Hawaii.
H. Tate Holt, Director, appointed in February 1996, is currently President of
Holt & Associates, a growth management consulting firm and has held that
position since July 1990. Previously, from 1987 to 1990, Mr. Holt was a Senior
Vice President at Automatic Data Processing, Inc. in Roseland, New Jersey and
Santa Clara, California. Mr. Holt has over twenty years of experience in various
senior sales, marketing and general management positions with IBM, Triad
Systems, and ADP. He has participated in major restructuring and strategic
planning in these and other companies. Since 1990, Holt & Associates has
assisted its clients in developing and achieving aggressive growth targets, both
domestically as well as internationally. Mr. Holt is also an active director of
several private and publicly traded companies including Onsite Energy. Mr. Holt
holds an AB from Indiana University.
Jerome W. Carlson, Director, elected to the Board in May 1997, is currently
President of Raljer, Inc., management consulting firm, and has held that
position since January 1995. Previously, from 1984 to 1995, Mr. Carlson was the
Chief Financial Officer, Vice President of Finance and Corporate Secretary for
Triad Systems Corporation in Livermore, California. Mr. Carlson has over twenty
years experience with Hewlett Packard Company, in various general management and
corporate finance positions. Since 1995, Raljer, Inc., has assisted a range of
businesses in developing and achieving their strategic and tactical goals in
several industries. Mr. Carlson a director of Valley Community Bank as well as
an active director and advisor in several private companies. He holds a BS
degree from the University of California at Davis and an MBA from the Stanford
Graduate School of Business.
Jessie J. Knight, Jr., Director, appointed in February 1999, was a Commissioner
of the California Public Utilities Commission from 1993 through December 1998.
Appointed by former Governor Pete Wilson, he was one of five individuals
responsible for economic and regulatory oversight of California's $52 billion
telecommunications, utility, trucking and rail industries. Before his
appointment to the Commission, he was Executive Vice President of the San
Francisco Chamber of Commerce, responsible for international operations,
economic development and attracting businesses to San Francisco. He also served
as Vice President, Marketing for the San Francisco Newspaper Agency, a $400
million publishing operation encompassing the San Francisco Chronicle and the
San Francisco Examiner. Mr. Knight is an active director of Blue Shield of
California and has been nominated to serve on the board of directors of Avista,
Inc. Mr. Knight holds a BA degree from St. Louis University and an MBA from the
University of Wisconsin.
Gregory T. Leger, Executive Vice President Engineering, joined the Company in
March 1998. Mr Leger is responsible for the design and construction of the E-SAT
System. Mr. Leger has over nine years experience in engineering systems,
management, business planning, marketing and proposal preparation with strong
analytical and negotiating skills. Most recently and for the past five years,
Mr. Leger was employed by Seimac Limited, as its Product Development Manager,
where he combined business development activities with technical and project
leadership to provide customers with solutions encompassing electronics data
telemetry, software and packaging. Mr. Leger received his BS degree in Physics
at Dalhousie University, Canada, his MS degree in Oceanography at Dalhousie
University, and a degree in Master Space Systems Engineering at Technical
University of Delft, Netherlands.
Fred R. Skillman, Jr., Vice President Business Development, joined the Company
in August 1995. Mr. Skillman also manages the business case development as well
as the marketing and sales activities for the Company. Mr Skillman has been
working inn the utility industry for 13 years, with extensive utility operating
experience, contract administration, product development, project management and
direct line supervision. Prior to joining the Company, Mr. Skillman worked for
Pacific Gas & Electric ("PG&E") for eleven years. During his tenure at PG&E, Mr.
Skillman was an electrical engineer for the initial AMR system installed for
GPG&E in Marin County, California. Mr. Skillman holds a BS degree in Electrical
Engineering from California Polytechnical State University, and an MBA degree
from the University of San Francisco.
<PAGE>11
Family Relationships
There are no family relationships between any director, executive officer or key
employee.
Board of Directors
The Board of Directors held 5 meetings during the year ended December 31, 1998,
and each director attended all meetings.
Committees of the Board
During the year ended December 31, 1998, the Board had a nominating committee
which consisted of Messrs. Holt, Carlson and Thompson and a compensation
committee which consisted of Messrs. Schieber and Carlson. The Board also had an
audit committee which consisted of Messrs. Schieber, Peretti and Carlson.
The primary function of the audit committee is to review the scope and results
of audits by DBSI's independent accountants and the cost of accounting services.
The nominating committee assists in the process of officer and director
nominations. The nominating committee will not consider nominees recommended by
stockholders at the Annual Meeting.
The compensation committee administers the Company's various stock option plans
and approves compensation, remuneration and incentive arrangements for officers
of the company.
EXECUTIVE COMPENSATION
Compensation of Directors
Non-employee directors do not receive any direct compensation; however,
directors do receive stock options.
Cash Compensation
The following table provides certain summary information for the year ended
December 31, 1998, concerning compensation in excess of $100,000 paid or accrued
by DBSI and its subsidiary to or on behalf of DBSI's executives and/or
employees.
Columns regarding "Restricted Stock Awards" and "Long-Term Incentive Plan (LTIP)
Payouts" are excluded because no reportable payments were made to such executive
officers for the relevant years.
<PAGE>12
Summary Compensation Table
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Annual Compensation Compensation
Other Securities
Name and Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation
- ------------------------- ----- ------------- -------- ---------------- --------------- ----------------
Fred W. Thompson 1998 $ 180,000 $20,000 $ 8,005 - 0 - $235,691(2)
Chief Executive Officer 1997 $ 180,000(3) - 0 - $ 6,705 185,000
1996 $ 180,000(4) - 0 - $ 4,245 312,500
E.A. James Peretti 1998 $ 155,000 - 0 - $ 2,576 - 0 -
Chief Operating Officer 1997 $ 155,000 - 0 - $ 3,732 150,000
1996 $ 155,000 - 0 - $ 971 375,000
Randall Smith 1998 $72,917 - 0 - $ 1,798 - 0 - $ 52,083 (5)
Former Executive VP GEMS 1997 $ 125,000 - 0 - $ 2,385 87,500
1996 $ 125,000 - 0 - $ 2,216 125,500
Gregory T. Leger 1998 $ 93,230 $20,000 $ 1,914 125,000
Executive VP
Frederick R. Skillman, 1998 $ 110,000 - 0 - $ 2,512
Jr., Vice-President
</TABLE>
(1) Consists entirely of payment of insurance premiums.
(2) Represents $27,691 of pay in lieu of vacation and $208,000 of compensation
deferred in 1996 and 1997. (3) $80,000 paid in cash, $100,000 deferred
pursuant to his employment agreement. (4) $72,000 paid in cash, $108,000
deferred pursuant to his employment agreement. (5) In July 1998, the
Company agreed to a severance package with Mr. Smith consisting of $125,000
in cash payments to be made through July 1999 (of which $52,083 was paid in
1998) and the immediate vesting of all of Mr. Smith's unvested stock
options.
Compensation Pursuant to Stock Option Plan
DBSI has established a 1998 Stock Option Plan (the "Plan") to serve as a vehicle
to attract and retain the services of key employees and to help such key
employees realize a direct proprietary interest in DBSI. The Plan provides for
the grant of non-statutory and incentive stock options. The exercise price of
any incentive stock option granted under the Plan may not be less than 100% of
the fair market value of the common stock of DBSI on the date of grant. The fair
market value for which an option may be granted incentive stock options in any
calendar year may not exceed $100,000. Shares subject to options under the Plan
may be purchased for cash. Unless otherwise provided by the Board, an option
granted under the Plan is exercisable for a term of ten years (or for a shorter
period up to ten years). The Plan is administered by the Board of Directors and
its Compensation Committee, which has discretion to determine optionees, the
number of shares to be covered by each option, the exercise schedule, and other
terms of the options. The Plan may be amended, suspended, or terminated by the
Board, but no such action may impair rights under a previously granted option.
Each option is exercisable, during the lifetime of the optionee, only so long as
the optionee remains employed by DBSI. No option is transferable by the optionee
other than by will or the laws of descent and distribution.
<PAGE>13
DBSI intends to file one or more registration statements on Form S-8 under the
Securities Act to register shares of common stock subject to stock options, and,
if approved, the shares reserved for the 1999 Employee Stock Purchase Plan that
will permit the resale of such shares, subject to vesting restrictions with
DBSI.
Option Grants in the Year Ended December 31, 1998
Individual Grants
<TABLE>
<S> <C> <C> <C> <C>
Number of Securities % of Total Options
Underlying Options Granted to Employees
Granted 1998 in Fiscal Year 1998 Exercise or Base Price Expiration
Name ($/SHARE) Date
- --------------------------- ---------------------- ------------------------ ------------------------- --------------
Gregory T. Leger, 125,000 100% $.53 3/1/08
Executive Vice-President
</TABLE>
Fiscal Year-End Option Value
<TABLE>
<S> <C> <C>
Number of Securities Underlying Value(s) of Unexercised
Unexercised Options/SARs at FY End In-the-Money Options/SARs at FY End
(#) ($) *
Exercisable/Unexercisable Exercisable/Unexercisable
Name Options at December 31, 1998 Options at December 31, 1998
- ------------------------------- -------------------------------------- ---------------------------------------
Fred W. Thompson, 312,612 / 204,388 $1,328,601/ $868,649
President, CEO
E. A. James Peretti, 350,000 / 175,000 $1,487,500 / $743,750
CEO GEMS
Gregory T. Leger 65,000 / 60,000 $276,250 / $255,000
Executive Vice President,
Engineering
Frederick R. Skillman, Jr., 50,000 / 100,000 $212,500 / $425,000
Vice President,
Business Development
</TABLE>
* The value of unexercised in-the-money stock options is based on a per share
price of $4.25 as quoted on the OTC Bulletin Board on December 31, 1998.
<PAGE>14
Employment Agreements with Executive Officers
Mr. Thompson entered into an employment agreement with DBSI on April 18, 1996
effective January 1, 1996. His annual salary under this agreement is $180,000,
and includes non-qualified stock options to purchase 312,500 shares of DBSI's
common stock. DBSI has maintained a key person insurance policy on Mr.
Thompson's life in the face amount of $2,000,000 and is the sole beneficiary of
such policy. In 1996, DBSI also entered into an employment contract with E.A.
James Peretti, CEO of GEMS, and Chief Operating Officer of DBSI. In March 1998,
DBSI entered into an employment contract with Gregory T. Leger, EVP and Chief
Engineer of DBSI. The compensation agreements included $155,000 annual salary
and 375,000 stock options for Mr. Peretti, and $125,000 annual salary and
125,000 stock options for Mr. Leger.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires
DBSI's officers and directors, and the persons who own more than ten percent of
a registered class of DBSI's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
Based solely upon a review of copies of such forms received by it, DBSI believes
that during fiscal 1998 all filing requirements applicable to officers,
directors and greater than ten percent stockholders were satisfied.
Principal Stockholders
The following table set forth certain information as of March 19, 1999,
with respect to the beneficial ownership of the Company's Common Stock for (i)
each director, (ii) all directors and officers of the Company as a group, and
(iii) each person known to the Company to own beneficially five percent (5%) or
more of the outstanding shares of the Company's Common Stock.
<TABLE>
<S> <C> <C>
Name and Address of Beneficially and
Beneficial Owner Record Owned(1) Percent of Class
------------------------------------------------------------------ ----------------------- ------------------------
Fred W. Thompson 868,267(2) 5.9%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
Michael T. Schieber 353,989(3) 2.5%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
E.A. James Peretti 425,000(4) 2.9%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
H. Tate Holt 156,379(5) 1.0%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
Jerome W. Carlson 106,250(6) .7%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
<PAGE>15
Jessie J. Knight 37,500(7) .2%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
Officers and Directors as a Group (6 1,947,385 13.0%*
persons)
Astoria Capital Partners, L.P. 1,000,000 7.0%
6600 Southwest 92nd Street, Suite 370
Portland, OR 97223
</TABLE>
* Total percentage amount does not reflect rounding of individual
ownership percentages.
(1) The persons named in the table have investment power with respect to
all of the Common Stock shown as beneficially owned by them, subject to
community property laws where applicable and the information contained
in the footnotes to this table.
(2) Includes (i) 15,418 shares held by Mr. Thompson; (ii) 474,558 shares
held in Thompson 1996 Revocable Trusts; and (iii) options to purchase
312,500 shares at $0.531 per share expiring January 1, 2006, and 4,125
and 61,666 shares of Common Stock exercisable at $0.584 per share and
expiring December 31, 2000 and December 31, 2002, respectively.
(3) Includes (i) 215,625 shares held jointly with spouse, Arlene Schieber,
(ii) 6,505 held solely by Mr. Schieber, (iii) 3,075 held solely by Ms.
Schieber, of which shares Mr. Schieber disclaims beneficial ownership,
and (iv) options to purchase 13,750, 12,534 and 37,500 shares of Common
Stock all exercisable at $1.4375 per share which expire on February 15,
2005, February 15, 2006 and April 30, 2006, respectively, and options
to purchase 27,500 shares of Common Stock exercisable at $0.60 per
share which expire May 13, 2007, and options to purchase 37,500 shares
of Common Stock at $2.1875 which expire on May 12, 2008.
(4) Options to purchase 375,000 and 50,000 shares of Common Stock
exercisable at $0.531 per share, and expiring
January 1, 2006 and December 31, 2007, respectively.
(5) Includes (i) 21,488 shares held solely by Mr. Holt, and (ii) options to
purchase 7,808 and 75,000 shares of Common Stock all exercisable at
$1.4375 per share which expire December 31, 2006 and April 30, 2006,
respectively, and options to purchase 20,833 shares of Common Stock
exercisable at $0.60 per share which expire May 13, 2007, and options
to purchase 37,500 shares of Common Stock at $2.1875 per share which
expire May 12, 2008.
(6) Includes 37,500 shares held by Mr. Carlson, options to purchase 37,500
shares of Common Stock exercisable at $0.60 per share which expire
May 13, 2007, and options to purchase 37,500 shares of Common Stock
at $2.1875 per share which expire May 12, 2008.
(7) Options to purchase 37,500 shares of Common Stock exercisable at $5.50
per share which expire February 19, 2009.
<PAGE>16
OTHER MATTERS
Relationship With Independent Accountants
PricewaterhouseCoopers has served as DBSI's independent accountant since August
1994. DBSI has had no disagreements with the accountants on accounting and
financial disclosures. For the calendar year 1999, the Board of Directors
expects to retain PricewaterhouseCoopers but may seek competitive bids for its
annual audit. A representative of PricewaterhouseCoopers may be present at the
1999 Annual Meeting of Stockholders and, if present, will have the opportunity
to make a statement if he or she desires to do so and be available to respond to
appropriate questions from stockholders.
Other Matters
The Board of Directors of DBSI knows of no other matters that may or are likely
to be presented to the Meeting. However, if additional matters should properly
be presented at the Meeting, it is the intention of the persons named in the
enclosed proxy to vote such proxy in accordance with their best judgment on such
matters pursuant to the discretionary authority granted to them by the terms and
conditions of the proxy.
Shareholder Proposals
Proposals to be presented by shareholders and be included in DBSI's Proxy
Statement and Proxy for its 2000 Annual Meeting must be received by DBSI's
Secretary at 100 Shoreline Highway, Suite 190A, Mill Valley, CA, 94941, no later
than January 3, 2000.
If notice of a proposal intended to be presented by shareholders at the 2000
Annual Meeting is received by DBSI's secretary no later than March 19, 2000, and
if the proxy holders wish to maintain their discretionary authority to vote on
any such proposal, then DBSI must set forth in its Proxy Statement the nature of
the matter to which the proposal relates and how the proxy holders intend to
exercise their discretion to vote on the matter. If any such proposals are not
received on or before March 19, 2000, such proposal will not be included in
DBSI's Proxy Statement and the proxy holders shall use discretionary authority
in voting. Furthermore, pursuant to DBSI's Bylaws, any shareholder proposal that
is not delivered to DBSI's Secretary within 10 business days following the day
on which notice of the 2000 Annual Meeting is mailed or publicly announced, will
not be allowed to be presented at the meeting.
Additional Information
A copy of DBSI's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998, containing DBSI's 1998 audited financial statements, including the
report of its independent public accountants, accompanies this Proxy Statement.
Upon receipt of a written request, DBSI will furnish to any stockholder, without
charge, an additional copy of DBSI's 1998 Form 10-KSB. Stockholders should
direct any request to DBS Industries, Inc., 100 Shoreline Highway, Suite 190A,
Mill Valley, CA 94941, Attention: Secretary.
DBSI Industries, Inc.
By Order of the Board of Directors
Fred W. Thompson
Chairman and President
Mill Valley, California
May 4, 1999
<PAGE>17
DBS Industries, Inc.
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Fred W. Thompson and Michael T. Schieber, and
each of them, as proxies with the power to appoint his or their successor, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of common stock of DBS Industries, Inc. ("DBSI"), held of record by the
undersigned on April 27, 1999, at the Annual Meeting of Stockholders to be held
on June 8, 1999, at 2:00 p.m. (PDT), at Embassy Suites Hotel, 101 McInnis Road,
San Rafael, California 94903 and at any and all adjournments thereof.
1. Election of Directors to serve until the Annual Meeting of Stockholders for
the Year 2002.
FOR Fred W. Thompson ----- WITHHOLD AUTHORITY -----
FOR E.A. James Peretti ----- WITHHOLD AUTHORITY -----
FOR Jessie J. Knight, Jr. ----- WITHHOLD AUTHORITY -----
2. Approval of the DBSI 1999 Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR all the nominees.
Please sign exactly as your name appears on your share certificates. When shares
are held by joint tenants, all joint tenants should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If the signatory is a corporation, please sign the full corporate name
by the president or another authorized officer. If the signatory is a
partnership, please sign in the partnership name by an authorized person.
------------------------- --------------------------------
Name (Print) Name (Print) (if held jointly)
Dated: _________
Signature Signature (if held jointly)
------------------------- --------------------------------
(Address) (Address)
------------------------- --------------------------------
(City, State, Zip) (City, State, Zip)
I will ___ attend the meeting.
Number of persons to attend _____. I will not ____ attend the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
EXHIBIT A
DBS INDUSTRIES, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
1.01. Purpose
This DBS Industries, Inc. 1999 Employee Stock Purchase Plan (the
"Plan") is being established for the benefit of employees of DBS Industries,
Inc. and its subsidiary corporations (hereinafter referred to, unless the
context otherwise requires, as the "Company"). The Plan is intended to provide
the employees of the Company with an opportunity to purchase common shares,
$0.0004 par value, of the Company through accumulated payroll deductions. It is
the intention of the Company that the Plan qualify as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), and the provisions of the Plan shall be construed
in a manner consistent with the requirements of such Section of the Code.
ARTICLE II - DEFINITIONS
2.01. "Committee" means the individuals described in Article X.
2.02. "Common Stock" or "Stock" means the Common Stock, $0.0004 par
value, of the Company.
2.03. "Employee" means any person who is customarily employed on a
full-time or part-time basis by the Company and is regularly scheduled to work
more than 20 hours per week and more than 5 months per calendar year.
2.04 "Plan Administrator" shall be designated by the Committee.
2.05 "Subsidiary Corporation" shall mean any present or future
corporation which (i) would be a "subsidiary corporation" of DBSI as that term
is defined in ss.424 of the Code, and (ii) is designated as a Participant in the
Plan by the Committee as provided in Section 3.04.
2.06. "Total Compensation" means regular earnings, including payments
for overtime, shift premium, bonuses and other special payments, commissions and
other incentive payments.
<PAGE>
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility.
Except as otherwise provided in the Plan, each and every Employee of
the Company shall be eligible to participate in Offerings (as hereinafter
defined) which commence on or after the respective Employee's commencement date
of employment.
3.02. Leave of Absence.
For purposes of participation in the Plan, an Employee on leave of
absence shall be deemed to be an Employee for the first ninety days of such
leave of absence, and such Employee's employment shall be deemed to terminate at
the close of business on the 90th day of such leave of absence unless, (i) such
Employee shall have returned to regular full-time or part-time employment (as
the case may be) prior to the close of business on such 90th day; or (ii) such
Employee is guaranteed the right to return to work by contract or federal, state
or local law. Termination of any Employee's leave of absence, other than
termination of such leave of absence by return to full-time or part-time
employment, shall terminate an Employee's employment for all purposes of the
Plan, and shall terminate such Employee's participation in the Plan and right to
exercise any option hereunder.
3.03. Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted an option under the Plan if:
(a) immediately after the grant, such Employee would own
Common Stock and/or hold outstanding options to purchase Common Stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company (for purposes of this paragraph, the rules of
Section 424(d) of the Code shall apply in determining stock ownership of any
Employee); or
(b) such option permits such Employee's rights to purchase
Common Stock under all employee stock purchase plans of the Company to accrue at
a rate which exceeds $25,000.00 in fair market value of the Common Stock
(determined at the time such option is granted) for the calendar year in which
such option is outstanding.
3.04. Commencement of Participation.
An eligible Employee may become a Participant by completing an
authorization for a payroll deduction on the form provided by the Company and
delivering it to the Plan Administrator on or before the date set therefor by
the Committee, which date shall be prior to the Offering Commencement Date for
the Offering (as such terms are defined below). Payroll deductions for a
Participant shall commence on the applicable Offering Commencement Date when his
or her authorization for a payroll deduction becomes effective and shall end on
the Offering Termination Date (as hereinafter defined) of the Offering to which
such authorization is applicable, unless sooner terminated by the Participant as
provided in Article VIII.
ARTICLE IV - OFFERINGS
4.01. Semi-Annual Offerings.
The Plan will be implemented through four (4) semi-annual offerings
(the "Offerings" and each an "Offering") of the Company's Common Stock. The
initial Offering shall commence on July 1, 1999, and shall terminate on December
31, 1999. The subsequent Offerings shall commence on the first day of the
following January and on the first day of the following July, and shall
terminate on the 31st day of December and the 30th day of June, respectively,
with the last Offering commencing on January 1, 2001. The maximum number of
shares of the Company's Common Stock to be issued in each Offering shall be
12,500, plus unissued shares from any prior Offerings, whether offered or not.
As used in the Plan, "Offering Commencement Date" means July 1, or
January 1, as the case may be, on which the particular Offering begins and
"Offering Termination Date" means December 31 or June 30, as the case may be, on
which the particular Offering terminates.
ARTICLE V - PAYROLL DEDUCTIONS
5.01. Amount of Deduction.
At the time a Participant files his or her authorization for payroll
deduction, he or she shall elect to have deductions made from his or her pay on
each payday during the time he or she is a Participant in an Offering at a rate
not less than one percent (1%) and not more than ten percent (10%) of his or her
Total Compensation in effect at the Offering Commencement Date of such Offering.
5.02. Participant's Account.
All payroll deductions from Total Compensation made for a Participant
shall be credited to his or her account under the Plan (a "Plan Account"). A
Participant may not make any separate cash payment into his or her Plan Account
except when on leave of absence and then only as provided in Section 5.04.
5.03. Changes in Payroll Deductions.
A Participant may increase payroll deductions at the commencement date
of each offering period. An Employee may decrease or discontinue his or her
participation in the Plan any time during the six month offering period.
5.04. Leave of Absence.
<PAGE>
If a Participant goes on a leave of absence, such Participant shall
have the right to elect: (a) to withdraw the balance in his or her Plan Account
pursuant to Section 7.02; (b) to discontinue contributions to the Plan but
remain a Participant in the Plan; or (c) remain a Participant in the Plan during
such leave of absence and undertake to make cash payments to the Plan at the end
of each payroll period to the extent that amounts payable by the Company to such
Participant are insufficient to meet such Participant's authorized Plan
deductions.
5.05. Limitations on Plan Deductions.
Notwithstanding any provisions of the Plan to the contrary, no
deduction shall be made from an Employee's Total Compensation, and no
contribution to an Employee's Plan Account pursuant to Section 5.04 shall be
accepted, to the extent that such deduction or such contribution would cause the
balance in such Employee's Plan Account to exceed the sum of $10,000.00 at any
time.
ARTICLE VI - GRANTING OF OPTION
6.01. Number of Option Shares.
Subject to Section 5.05 hereof, on the Offering Commencement Date of
each Offering, a participating Employee shall be deemed to have been granted an
option to purchase a maximum number of shares of the Common Stock of the Company
equal to an amount determined as follows:
(a) that percentage of the Employee's Total Compensation which he or she has
elected to have deducted (but not in any case in excess of ten percent
[10%]), multiplied by the Employee's Total Compensation during the period
of the Offering,
(b) rollovers pursuant to Sections 7.01 and 7.03, and
(c) divided by the option price of Common Stock as defined in Section 6.02.
6.02. Option Price.
The option price of Common Stock purchased with payroll deductions made
during an Offering for a Participant therein shall be the lower of:
(a) 85% of the closing price of the Common Stock on the
Offering Commencement Date or the nearest prior business day on which trading
occurred; or
(b) 85% of the closing price of the Common Stock on the
Offering Termination Date or the nearest prior business day on which trading
occurred.
<PAGE>
If the Common Stock of the Company is not admitted to trading on any of
the aforesaid dates for which closing prices of the Common Stock are to be
determined, then reference shall be made to the fair market value of the Common
Stock on that date, as determined on such basis as shall be established or
specified for the purposes hereof by the Committee.
ARTICLE VII - EXERCISE OF OPTION
7.01. Automatic Exercise.
Unless a Participant gives written notice to the Company as hereinafter
provided, his or her option for the purchase of Common Stock with payroll
deductions made during any Offering will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such Offering, for
the purchase of the number of full shares of Common Stock which the accumulated
payroll deductions in his or her Plan Account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted to the Employee pursuant to Section 6.01), and any
excess in his or her Plan Account will roll forward to the next Offering period,
until the last Offering period when the excess will be returned to him or her.
7.02. Withdrawal of Plan Account.
By written notice to the Plan Administrator not less than 5 business
days prior to the Offering Termination Date applicable to any Offering, a
Participant may elect to withdraw with interest all the accumulated payroll
deductions in his or her Plan Account at such time.
7.03. Fractional Shares.
Fractional shares will not be issued under the Plan and any balance in
an Employee's Plan Account which would have been used to purchase fractional
shares will roll forward to the next Offering period, until the last Offering
period when the excess will be returned to the Participant.
7.04. Transferability of Option.
During a Participant's lifetime, options held by the Participant shall
be exercisable only by the Participant.
7.05. Delivery of Stock.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each Participant the Common Stock
purchased upon exercise of his or her option.
<PAGE>
ARTICLE VIII - WITHDRAWAL
8.01. In General.
As indicated in Section 7.02, a Participant may withdraw payroll
deductions credited to his or her Plan Account no later than 5 business days
prior to the Offering Termination Date applicable to any Offering. Upon the
Company's timely receipt of the withdrawal notice, the Participant's payroll
deductions credited to his or her Plan Account will be paid to him or her with
interest promptly, and no further payroll deductions will be made from his or
her pay during such Offering.
8.02. Effect on Subsequent Participation.
Unless a Participant expressly indicates to the contrary in the
withdrawal notice, a Participant's withdrawal from any Offering will not have
any effect upon Participant's participation in any succeeding Offering, or in
any similar plan which may hereafter be adopted by the Company.
8.03. Termination of Employment.
Upon termination of the Participant's employment for any reason,
including retirement (but excluding death while in the employ of the Company),
the payroll deductions credited to Participant's Plan Account will be returned
to Participant with interest or, in the case of death subsequent to the
termination of employment, to the person or persons entitled thereto under
Section 11.01.
8.04. Termination of Employment Due to Death.
Upon termination of the Participant's employment due to death,
Participant's beneficiary (as defined in Section 11.01) shall have the right to
elect, by written notice given to Plan Administrator prior to the earlier of the
Offering Termination Date or the expiration of a period of sixty (60) days
commencing with the date of the death of the Participant, either:
(a) to receive all of the payroll deductions with
interest credited to the Participant's Plan Account under the Plan, or
(b) to exercise the Participant's option for the purchase of stock on the
Offering Termination Date next following the date of the Participant's death for
the purchase of the number of full shares of stock which the accumulated payroll
deductions in the Participant's account at the date of the Participant's death
will purchase at the applicable purchase price, and any excess in such account
will be returned to said beneficiary, with interest.
In the event that no such written notice of election shall be duly
received by the Plan Administrator, the beneficiary shall automatically be
deemed to have elected, pursuant to paragraph (b), to exercise the Participant's
option.
8.05. Leave of Absence.
<PAGE>
A Participant on leave of absence may, pursuant to Section 5.04, elect
to continue to participate in the Plan so long as the Participant is an Employee
for purposes of the Plan. A Participant who has been on leave of absence for a
period longer than described in Section 3.02 and who therefore is no longer an
Employee for purposes of the Plan shall not be eligible to participate in the
Plan after the Participant ceases to be an Employee.
ARTICLE IX - STOCK
9.01. Maximum Shares.
The maximum number of shares which shall be issued under the Plan,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 11.04, shall be 50,000 shares. The maximum number of shares which
shall be offered in each six month Offering shall be 12,500 shares, plus in each
Offering all unissued shares from prior Offerings, whether offered or not, not
to exceed 50,000 shares for all Offerings. If the total number of shares for
which options are exercised on any Offering Termination Date in accordance with
Article V exceeds the maximum number of shares for the applicable offering, the
Company shall make a pro rata allocation of the shares available for delivery
and distribution in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of payroll deductions credited
to the Plan Account of each Participant shall be returned to him or her with
interest as promptly as possible.
9.02 Participant's Interest in Option Stock.
The Participant will have no interest in Common Stock covered by his or
her option until such option has been exercised.
9.03. Registration of Stock.
Stock to be delivered to a Participant under the Plan will be
registered in the name of the Participant, or, if the Participant so directs by
written notice to the Plan Administrator prior to the Offering Termination Date
applicable thereto, in the names of the Participant and one such other person as
may be designated by the Participant, as joint tenants with rights of
survivorship, or in community property, or as tenants by the entirety, to the
extent permitted by applicable law.
9.04. Restrictions on Exercise.
The Board of Directors may, in its discretion, require as conditions to
the exercise of any option that the shares of Common Stock reserved for issuance
upon the exercise of the option shall have been duly listed, upon official
notice of issuance, on NASDAQ or another stock exchange, and that either:
(a) a registration statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or
(b) the Participant shall have represented at the time of
purchase, in form and substance satisfactory to the
Company, that it is his or her intention to purchase
the shares for investment and not for resale or
distribution.
<PAGE>
9.05. Payment of Interest
No interest will be paid or allowed on any money paid into the Plan or
credited to the Plan Account of any Participant Employee; provided, however,
that interest shall be paid on any and all money which is distributed to an
Employee or his or her beneficiary pursuant to the provisions of 7.02, 8.01,
8.03, 8.04 and 9.01. Such distributions shall bear simple interest during the
period from the date of withholding to the date of return at the regular
passbook savings account rates per annum in effect at the bank to which
authorized payroll deductions shall be deposited, during the applicable offering
period.
ARTICLE X - ADMINISTRATION
10.01. Appointment of Committee.
The Plan shall be administered by the Compensation Committee of the
Board of Directors (hereinafter called the "Committee").
10.02. Authority of Committee.
Subject to the express provisions of the Plan, the Committee shall have
plenary authority in its discretion to interpret and construe any and all
provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive and binding upon all Plan Participants.
10.03. Rules Governing the Administration of the Committee.
The Board of Directors may from time to time appoint members of the
Committee in substitution for, or in addition to, members previously appointed
and may fill vacancies, however caused, in the Committee. The Committee may
select one of its members as its Chairman and shall hold its meetings at such
time and places as it shall deem advisable and may hold telephonic meetings. A
majority of the Committee's members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. The
Committee may correct any defect or omission or reconcile any inconsistency in
the Plan, in the manner and to the extent it shall deem desirable. Any decision
or determination reduced to writing and signed by a majority of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
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ARTICLE XI - MISCELLANEOUS
11.01. Designation of Beneficiary.
A Participant may file a written designation of a beneficiary who is to
receive any Common Stock and/or cash under the Plan. Such designation of
beneficiary may be changed by the Participant at any time or by written notice
to the Plan Administrator. Upon the death of a Participant and upon receipt by
the Company of proof of identity and existence at the Participant's death of a
beneficiary validly designated by him or her under the Plan, the Company shall
deliver such Common Stock and/or cash to such beneficiary. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company shall deliver such Common Stock and/or cash to the executor or
administrator of the estate of the Participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such Common Stock and/or cash to the spouse or to
any one or more dependents of the Participant as the Company may designate. No
beneficiary shall, prior to the death of the Participant by whom he or she has
been designated, acquire any interest in the Common Stock and/or cash credited
to the Participant under the Plan.
11.02. Transferability.
Neither payroll deductions credited to a Participant's Plan Account nor
any rights with regard to the exercise of an option or to receive Common Stock
under the Plan may be assigned, transferred, pledged, or otherwise disposed of
in any way by the Participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Section 7.02.
11.03. Use of Funds.
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose and the Company shall not
be obligated to segregate such payroll deductions.
11.04. Adjustment Upon Changes in Capitalization.
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(a) If, while any options are outstanding under the Plan, the
outstanding shares of Common Stock of the Company have increased, decreased,
changed into, or been exchanged for a different number of kind of shares or
securities of the Company through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split or similar transaction,
appropriate and proportionate adjustment may be made by the Committee in the
number and/or kind of shares which are subject to purchase under outstanding
options and to the option exercise price or prices applicable to such
outstanding options. In addition, in any event, the number and/or kind of shares
which may be offered in the Offerings described in Article IV hereof shall also
be proportionately adjusted. No adjustments shall be made for stock dividends.
For the purposes of this Section 11.04, any distribution of shares to
Stockholders in an amount aggregating twenty percent (20%) or more of the
outstanding shares shall be deemed a stock split and any distributions of shares
aggregating less than twenty percent (20%) of the outstanding shares shall be
deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation (any of such transaction being hereinafter referred to as a
"Terminating Transaction"), the holder of each option then outstanding under the
Plan will thereafter be entitled to receive at the next Offering Termination
Date upon the exercise of such option for each share as to which such option
shall be exercised, as nearly as reasonably may be determined, the cash,
securities and/or property which a holder of one share of the Common Stock was
entitled to receive upon and at the time of such Terminating Transaction. The
Board of Directors shall take such steps in connection with any such Terminating
Transaction as the Board shall deem necessary to ensure that the provisions of
this Section 11.04 shall thereafter be applicable, as nearly as reasonably may
be determined, in relation to the said cash, securities, and/or property as to
which such holder of such option might thereafter be entitled to receive.
11.05. Amendment and Termination.
The Board of Directors shall have complete power and authority to
terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without approval of the Stockholders of the Corporation, (i) increase
the maximum number of shares which may be issued under the Plan (except pursuant
to Section 11.04); (ii) increase the benefits accruing to Participants under the
Stock Purchase Plan; or (iii) amend the requirements as to the class of
Employees eligible to purchase Common Stock under the Plan. No termination,
modification, or amendment of the Plan, may without the consent of an Employee
then having an option under the Plan to purchase Common Stock, adversely affect
the rights of such Employee under such option.
11.06. Effective Date.
The Plan shall be effective (the "Effective Date") on July 1, 1999 upon
adoption by the Company's Board of Directors subject to the Plan being approved
by the Stockholders as set forth in Section 11.10(c) hereof.
11.07. No Employment Rights.
The Plan does not, directly or indirectly, create any right for the
benefits of any Employee or class of Employees to purchase any shares under the
Plan, or create in any Employee or class of Employees any right with respect to
continuation of employment by the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an Employee's employment at any time.
<PAGE>
11.08. Effect of Plan.
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each Employee
participating in the Plan including, without limitation, such Employee's estate
and the executors, administrators or trustees thereof, heirs and legatees, and
any receiver, trustee in bankruptcy or representative of creditors of such
Employee.
11.09. Withholding of Taxes.
By electing to participate in the Plan, each Employee acknowledges that
the Company and its participating subsidiaries are required to withhold taxes
with respect to the amounts deducted from the Employee's compensation and
accumulated for the benefit of the Employee under the Plan, and each Employee
agrees that the Company and its participating subsidiaries may deduct additional
amounts from the Employee's compensation, when amounts are added to the
Employee's Plan Account, used to purchase Common Stock, or refunded, in order to
satisfy such withholding obligations. If the Participant makes a disposition,
within the meaning of Section 424(c) of the Code and regulations promulgated
thereunder, of any Common Stock issued to such Participant pursuant to such
Participant's exercise of an option, and such disposition occurs within the two
(2) year period commencing on the day after the Offering Commencement Date or
within the one (1) year period commencing on the day after the Offering
Termination Date, such Participant shall, within ten (10) days of such
disposition, notify the Company thereof and thereafter immediately deliver to
the Participant's Employer any amount of federal, state or local income taxes
and other amounts which the Company informs the Participant the Company is
required to withhold. The Participant's Employer may also satisfy any applicable
withholding amounts by deducting the necessary amounts of withholding from the
Participant's wages and, in the Committee's sole discretion, any other amounts
owed to or held for the account of the Participant.
11.10. Regulations and Other Approvals; Governing Law; Section 16
Compliance.
(a) This Plan and the rights of all persons claiming hereunder
shall be construed and determined in accordance with the laws of the State of
Delaware without giving effect to the choice of law principles thereof, except
to the extent that such law is preempted by federal law.
(b) The obligation of the Company to sell or deliver Common
Stock with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(c) To the extent applicable hereto, the Plan is intended to
comply with Rule 16b-3 under the Exchange Act, and the Committee shall interpret
and administer the provisions of the Plan in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan. This Plan shall be subject to approval by Stockholders
of the Company owning a majority of the issued and outstanding shares of Common
Stock present or represented and entitled to vote at a meeting duly held in
accordance with applicable law.
(d) Common Stock shall not be issued unless such issuance and
delivery shall comply with all applicable provisions of law, domestic or
foreign, and the requirements of any stock exchange upon which the Common Stock
may then be listed, including, in each case the rules and regulations
promulgated thereunder, and shall be further subject to the approval of counsel
for the Company with respect to such compliance, which may include a
representation and warranty from the Participant that the Common Stock is being
purchased only for investment and without any present intention to sell or
distribute such Common Stock.
(e) Nothing contained in this Plan, or any modification or
amendment to the Plan, or in the creation of any account, or the execution of
any subscription agreement, or the issuance of any Common Stock under the Plan,
shall give any Employee any right against the Company or any subsidiary, or any
officer, director, or employee thereof, except as expressly provided by the
Plan.
