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:
[x] Preliminary proxy statement
[ ] 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 transaction 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
DBS INDUSTRIES, INC.
100 Shoreline Highway, Suite 190A
Mill Valley, California 94941
Telephone: (415) 380-8055
Facsimile: (415) 380-8199
Website: 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" or the "Company") which will be held on May 22, 2000,
at 2:00 p.m. (PDT) at the Acqua Hotel, 555 Redwood Highway, Mill Valley,
California 94941.
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 three nominees for
election as Directors, an amendment to the Certificate of Incorporation to
increase the number of authorized shares of Common Stock and Preferred Stock,
and the adoption of the 2000 Stock Option 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,
April 14, 2000 Fred W. Thompson
Chairman and President
<PAGE>3
DBS INDUSTRIES, INC.
100 Shoreline Highway, Suite 190A
Mill Valley, California 94941
Telephone: (415) 380-8055
Facsimile: (415) 380-8199
Website: http://www.dbsindustries.com
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
DBS Industries, Inc., a Delaware corporation ("DBSI" or the "Company"), will be
held on May 22, 2000, at 2:00 p.m. (PDT) at the Acqua Hotel, 555 Redwood
Highway, Mill Valley, California 94941, for the following purposes, which are
more completely discussed in the accompanying Proxy Statement:
1. To elect three directors, to hold office for a three-year term
ending at the Annual Meeting of Stockholders in 2003 and until
their successors are elected and qualified;
2. To approve an amendment to the Company's Certificate of
Incorporation to (i) increase the number of authorized shares
of Common Stock from Fifty Million (50,000,000) to One Hundred
Million (100,000,000); and (ii) increase the number of
authorized shares of Preferred Stock from Five Million
(5,000,000) to Ten Million (10,000,000);
3. To approve the 2000 Stock Option Plan; and
4. 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 3, 2000,
are entitled to notice of and to vote at the Annual Meeting of the Stockholders.
By Order of the Board of Directors
April 14, 2000 Fred W. Thompson
Chairman and President
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, California 94941
Telephone: (415) 380-8055
Information Concerning the Solicitation
This Proxy Statement is furnished to the stockholders of DBS
Industries, Inc. ("DBSI"or the "Company") in connection with the solicitation of
proxies on behalf of the Company's Board of Directors for use at the Company's
Annual Meeting of the Stockholders (the "Meeting") to be held on May 22, 2000,
at 2:00 p.m. (PDT), at the Acqua Hotel, 555 Redwood Highway, Mill Valley,
California 94941, and at any and all adjournments thereof. Only stockholders of
record on April 3, 2000, will be entitled to notice of and to vote at the
Meeting.
The proxy solicited hereby, if properly signed and returned to the
Company 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 signed proxy received will be voted "FOR" the nominees for the
Board of Directors, "FOR" the amendment to the Certificate of Incorporation,
"FOR" the adoption of the 2000 Stock Option Plan 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 stockholder giving a proxy
has the power to revoke it at any time before it is exercised by (i) filing with
DBS Industries, Inc. written notice of its revocation addressed to: Secretary,
DBS Industries, Inc., 100 Shoreline Highway, Suite 190A, Mill Valley, California
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.
The Company 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 the Company may, without
additional compensation, solicit proxies by telephone or personal interview, the
cost of which the Company will also bear.
This Proxy Statement and form of proxy were first mailed to
stockholders on or about April 14, 2000.
Record Date and Voting Rights
The Company 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 3, 2000, ____________ shares of Common Stock were
issued and outstanding and ___ Series A Preferred Shares were issued and
outstanding. Each share of Common Stock shall be entitled to one vote on all
matters submitted for stockholder approval, including the election of directors.
Each share of Series A Preferred Shares is entitled to vote on each matter
submitted to shareholders and each Series A Preferred Share shall be counted for
the number of votes equal to the number of full shares of Common Stock to which
each share of Series A Preferred Stock is convertible which is ten shares of
Common Stock. The record date for determination of stockholders entitled to
notice of, and to vote at the Meeting, is April 3, 2000. The Company's
Certificate of Incorporation does not provide for cumulative voting.
One-third (1/3) of the outstanding shares of Common Stock of the
Company entitled to vote must be represented in person or by proxy at the
Meeting to constitute a quorum for the transaction of business. The Directors
shall be elected by a plurality of the votes of Common Shares and Series A
Preferred Shares, voting as a group, present in person or represented by proxy
at the Meeting and entitled to vote on the election of directors. The amendment
<PAGE>5
to the Certificate of Incorporation must be approved by the affirmative vote of
a majority of the outstanding shares of Common Stock and Series A Preferred
Shares, voting as a group, and the 2000 Stock Option Plan must be approved by a
majority of the votes of shares of Common Stock and Series A Preferred Shares,
voting as a group, present in person or represented by proxy at the Meeting.
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.
PROPOSAL ONE
ELECTION OF DIRECTORS
General Information
The Company 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 served
until the 1999 Annual Meeting of Stockholders. At the Meeting, stockholders will
be asked to elect Messrs. Jerome W. Carlson, Roy T. Grant, and Stanton C.
Lawson, all as of the first class to serve until the 2003 Annual Meeting of
Stockholders. Mr. Jerome W. Carlson has been a director since May 1997. Mr. Roy
T. Grant was appointed to the Board in August 1999 and Stanton Lawson was
appointed to the Board in December 1999.
Nominees for Directors
The nominees for directors have consented to being named as nominees in
this Proxy Statement and have agreed to serve as director if elected at the
Annual Meeting. In the event that any nominee is unable to serve, the person
named in the Proxy has 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 any of 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 Company's Restated Certificate of Incorporation, or until
their successors are elected and qualified.
The following sets forth the persons nominated by the Board of
Directors for election as a directors and certain information with respect to
that person.
Nominee Age Term
-------------------- ----- ---------
Jerome W. Carlson 63 2000-2003
Roy T. Grant 42 2000-2003
Stanton C. Lawson 42 2000-2003
Background of Nominees
Jerome W. Carlson, a Director appointed in May 1997, is currently
President of Raljer, Inc., a 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 20
years experience in both finance and general management positions with Hewlett
Packard. Since 1995, he has assisted a number of businesses in developing and
achieving certain strategic and tactical goals in their industries. Mr. Carlson
is a director of Valley Community Bank and Tri-Valley Business Council, as well
as director and advisor for several private companies. He earned a BS degree
from the University of California at Davis and an MBA from the Stanford Graduate
School of Business.
Roy T. Grant, a Director, appointed in August 1999. Previously from
November 1996 through April 1999, Mr. Grant was employed by Iridium, LLC, most
recently as Vice President and Chief Financial Officer. Iridium, LLC filed for
protection under the bankruptcy laws in 1999. Prior thereto, from 1992 to 1996,
Mr. Grant served as Finance Director for Edison Mission Energy, the largest
independent power developer in the United States. Mr. Grant also worked for
<PAGE>6
Marriott Corporation and American Airlines in various financial functions. Mr.
Grant is a director of Wayport, Inc., Datafusion, Inc., e-tel Corporation and
TheMovieSource.com. Mr. Grant earned a BS in Administration and Management
Science, Mathematics and Economics from Carnegie Mellon University, and an MBA
in Finance from the University of Chicago.
Stanton C. Lawson, a Director appointed in December 1999, has served
as Senior Vice President of Finance since October 18, 1999. Mr. Lawson has over
17 years of experience in international environments as a financial
professional. He was employed by Olivetti from 1981 to 1990 managing finance and
accounting functions of Olivetti's Italian and U.S. divisions as an internal
auditor, Controller and Finance Director. Mr. Lawson was Finance Director from
1990 to 1992 for Jackson Publishing Group in Milan, Italy. From 1992 to 1994, he
served as Director of Finance for Francesco Cinzano. From 1994 to 1997, Mr.
Lawson was president of Lawsons' Resort, a family owned beach resort located in
Marin County, California. From 1997 to 1999, Mr. Lawson worked as Finance
Manager for the Worldwide Information Systems Division of Autodesk, Inc. Mr.
Lawson holds a BA degree in Business Economics and Italian Literature from U.C.
Santa Barbara.
Vote Required
The plurality of votes of shares of Common Stock 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 TWO
----------------
The Board of Directors has concluded that it would be advisable to
amend the Company's Certificate of Incorporation to increase the authorized
number of shares of Common Stock from 50,000,000 to 100,000,000, and the
authorized number of shares of Preferred Stock from 5,000,000 to 10,000,000.
The availability of additional share capital is needed to provide the
Company with sufficient available equity to complete funding for the
construction and operations of its systems.
The Company is currently authorized to issue up to 50,000,000 shares of
Common Stock, par value $0.0004, of which 14,356,010 shares were issued and
outstanding as of December 31, 1999. Additionally, as of December 31, 1999,
there were outstanding options and warrants totaling 6,153,167. The Company is
currently authorized to issue up to 5,000,000 shares of Preferred Stock, par
value $0.0004, of which zero shares were issued and outstanding as of December
31, 1999. The proposed amendment will not change the number of outstanding
shares, although, as a result of the proposed amendment, more shares will be
available for future issuances.
Purpose and Effect of Amendment
The proposed amendment will authorize sufficient additional shares of
Common Stock and Preferred Stock to provide the Company the flexibility to make
such issuances as may be necessary in order to complete financings, acquisitions
or other corporate transactions and to issue shares in connection with the
Company's stock options, stock purchase and other existing employee benefit
plans.
We intend to utilize additional equity to raise capital to build the
NewStar System. The proposed amendment to the Certificate of Incorporation would
facilitate the Company's ability to accomplish these goals and other business
and financial objectives in the future without the necessity of delaying such
activities for further stockholder approval, except as may be required in
particular cases by the Company's charter documents, applicable law or the rules
of any stock exchange or other system on which the Company's securities may then
be listed. Future issuances of additional shares of Common Stock or securities
convertible into Common Stock, whether pursuant to an acquisition or other
corporate transaction, would have the effect of diluting the voting rights and
could have the effect of diluting earnings per share and book value per share of
existing stockholders. The availability for issuance of additional shares of
<PAGE>7
Common Stock could discourage or make more difficult efforts to obtain control
of the Company.
The Company has agreed to issue the equivalent of $5,000,000 of Common
Stock to Alcatel Space Industries on the effective date of its prime contract.
In January 2000, the Company began offering up to 500,000 shares of
Series A Convertible Preferred Shares in a private placement. The purpose of the
private placement is to finance the building of the NewStar System. The offering
price was $30.00 per share. Expenses were approximately $2.10 per share,
including commissions, out-of-pocket expenses and legal fees. Holders of Series
A Preferred Shares are entitled to receive, out of funds legally available,
cumulative dividends of $1.50 on December 31 of each year. Cumulative dividends
must be paid to Series A Preferred Shareholders before dividends may be paid to
holders of Common Stock. Holders of Series A Preferred Shares are entitled to a
Liquidation Preference of $30.00 per share. The holders of Series A Preferred
Shares are entitled to vote on any matters submitted to shareholders for a vote
and each Series A Preferred Share shall be counted for the number of votes equal
to the highest number of full shares of Common Stock to which each share of
Series A Preferred Shares is convertible.
Series A Preferred Shares are convertible into 10 shares of Common
Stock. Beginning three months from purchase, if the Common Stock is trading for
less than $3.00 per share, then the Series A Preferred Shares will be
convertible by the result of dividing $30.00 by the 5 day Average Trading Price.
The Company has the right to redeem the Series A Shares, if the average trading
price for the Common Stock is $6.00 or more for 20 consecutive trading days. The
holder of Series A shares may choose to convert his or her shares within 20 days
of notice of the Company's intention to redeem the Series A Shares. The
redemption price is $30.00 per share, plus any unpaid dividend. As of April 3,
2000, _____ shares of Series A Preferred Shares were outstanding.
Other than (1) its agreement to issue the equivalent of $5,000,000 of
Common Stock to Alcatel Space Industries pursuant to a construction contract,
(2) the outstanding options and warrants of 6,153,167 as of December 31, 1999,
and (3) the private placement for Series A Preferred Shares, the Company has no
material agreements or understandings to issue either Common Stock or Preferred
Stock.
Amended Certificate of Incorporation
Article V, Section 5.01(a) of the Company's Certificate of
Incorporation presently reads as follows:
The aggregate number of shares which the Company shall have
authority to issue is Fifty-Five Million (55,000,000). Fifty
Million (50,000,000) shares shall be designated "Common Stock"
and shall have a par value of $0.0004. Five Million
(5,000,000) shall be designated "Preferred Stock" and shall
have a par value of $0.0004. All shares of the Company shall
be issued for such consideration, expressed in dollars, as the
Board of Directors may, from time to time, determine.
If the amendment as proposed to the stockholders is approved, Article
V, Section 5.01(a) of the Certificate of Incorporation will be amended to read
as follows:
The aggregate number of shares which the Company shall have
authority to issue is One Hundred Ten Million (110,000,000).
One Hundred Million (100,000,000) shares shall be designated
"Common Stock" and shall have a par value of $0.0004. Ten
Million (10,000,000) shares shall be designated "Preferred
Stock" and shall have a par value of $0.0004. All shares of
the Company shall be issued for such consideration, expressed
in dollars, as the Board of Directors may, from time to time,
determine.
The foregoing proposed amendment to the Certificate of Incorporation
was unanimously adopted by the Board of Directors on February 29, 2000, who
directed that it would be submitted for stockholder approval at the Annual
Meeting. The amendment will not result in any changes to the issued and
outstanding shares of the Company and will only affect the number of shares
<PAGE>8
which may be issued by the Company. The terms of the shares of Common Stock
before and after the proposed amendment will be the same, and the proposed
amendment will not affect any stockholders' proportionate equity interest in the
Company or the rights, preferences or privileges of any stockholder. If at any
time the Board of Directors shall determine that additional authorized shares
are necessary, the Certificate of Incorporation may be further amended, after
receiving the required stockholder approval, to increase the number of
authorized shares. Issuing additional shares has the effect of potential
dilution to existing shareholders.
If Proposal Two is adopted, the Company's authorized capital will
increase and the Company will be subject to an increase in the Delaware
Franchise Tax. However, the Company believes the increase in the number of
authorized shares will not materially increase the Delaware Franchise Tax of the
Company.
The approval of the amendment to the Certificate of Incorporation
requires the affirmative vote of a majority of the outstanding shares of Common
Stock.
The Board of Directors recommends a vote "FOR" the amendment of the
Certificate of Incorporation. Proxies solicited by the Board of Directors will
be so voted unless stockholders specify otherwise.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION.
PROPOSAL THREE
ADOPTION OF THE DBSI
2000 STOCK OPTION PLAN
On February 29, 2000, subject to stockholder approval, the Board of
Directors approved of the DBS Industries, Inc. 2000 Stock Option Plan (herein
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 the Company. As discussed below, the Plan is a "dual plan" which provides for
the grant of both Non-Qualified Options and Incentive Stock Options. The Plan is
set forth in Exhibit "A" attached to this Proxy Statement.
<PAGE>9
Description of the Plan
Adoption of the Plan will not affect options previously granted under
prior plans, and the Company will no longer issue any options under the prior
plans. The Plan is intended to attract, retain and motivate officers, employees,
consultants and directors of the Company, or a subsidiary of the Company, by
giving them the opportunity to acquire stock ownership in the Company.
The Plan covers 1,750,000 shares of the Company's Common Stock, which
shares will be reserved upon confirmation of the Plan. The following is a
summary of the provisions of the Plan. The summary is not intended to be a
complete description of all terms and provisions of the Plan. The Plan is set
forth in Exhibit "A" to this Proxy Statement.
Eligibility. The Plan provides for the grant of options to employees,
directors, officers, consultants or other persons who the Board determines are
rendering valuable services to the Company (the "participants"). The Committee
(as defined below) determines which participants are to be granted options under
the Plan.
Administration. The Plan will be administered by the Board or the Board
may delegate the administration to the Compensation Committee, consisting of two
or more disinterested Board members (herein the "Committee"). The Board or the
Committee will be responsible for the operation of the Plan and, subject to the
terms thereof, will make all determinations regarding (i) participation in the
Plan by eligible persons, and (ii) the nature and extent of participation. The
interpretation and construction of any provisions of the Plan by the Board or
Committee shall be final. The Board may at any time remove a Committee member
and appoint a successor, provided the successor is a disinterested Board member.
Other than the ability to receive compensation individually as
directors or employees of the Company, Committee members shall serve without
compensation, unless otherwise determined by the Board, provided that the
Company shall pay the expenses of such members incurred in the administration of
the Plan, subject to approval of the Board.
Terms of Options. Each option will be evidenced by a stock option
agreement between the Company and the participants to whom such options may be
granted. Options granted shall have a term of up to 10 years, as determined by
the Committee, and shall be subject to the following additional terms and
conditions. In the case of a participant who owns more than 10% of the Company's
Common Stock, the term of any Incentive Stock Option shall not be more than five
years from the date of grant.
Number of Shares of Common Stock Subject to Any One Option. The
Committee shall determine the number of shares subject to an option grant.
However, the fair market value of the Common Stock to any Incentive Stock
Options granted to the employee in any calendar year may not exceed $100,000.
Exercise of the Option. Options shall become exercisable during a
period or during such periods as the Committee shall determine and may be
specifically conditioned upon achieving specified performance goals. An option
may be exercised by giving written notice of exercise to the Company specifying
the number of full shares of Common Stock to be purchased and tendering payment
of the purchase price to the Company. The option price of an Incentive Stock
Option or Non-Qualified Stock Option is payable in full upon exercise, and the
purchase price of stock purchased pursuant to a Purchase Right must be paid in
full upon the acceptance of the Purchase Right. Payment of the option price upon
exercise of a stock option or for shares purchased pursuant to a Purchase Right
may be made in cash, by check, by the delivery of shares of Common Stock (valued
at their fair market value as of the date of the exercise of an option or
Purchase Right), by the optionee's or purchaser's promissory note in a form and
on terms acceptable to the Administrator, by the cancellation of indebtedness of
the Company to the optionee or purchaser, by the waiver of compensation due or
accrued to the optionee or purchaser for services rendered, or by any
combination of the foregoing methods of payment. In addition, the option price
for options granted under the Plan may be made by a "same day sale" commitment
from the optionee and a broker-dealer that is a member of the National
Association of Securities Dealers, Inc. ("NASD Dealer") whereby the optionee
<PAGE>10
irrevocably elects to exercise his or her options and to sell a portion of the
shares so purchased to pay for the exercise price and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the Exercise Price
directly to the Company, by a "Margin" commitment from the optionee and an NASD
Dealer whereby the optionee irrevocably elects to exercise his or her option and
to pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the exercise price directly to the Company, or any combination of the
foregoing methods of payment.
Reload Option. The Administrator of the Plan may, in its discretion,
grant a participant a Reload Option. A participant with a Reload Option, who
pays for his or her stock in whole or in part, with stock owned by the
participant may be granted another option to purchase the number of shares
tendered at a price no less than the fair market value of the shares at the date
the additional option is granted. The purpose of a Reload Option is to incent
insiders to own stock in the Company.
Option Price. The option price of an Incentive Stock Option will be
determined by the Committee and shall be the fair market value of the Company's
Common Stock on the date of grant. In the case of an Incentive Stock Option
granted to a participant who owns more than 10% of the Common Stock, the
exercise price will be 110% of the fair market value.
Employment Agreement. The Committee may include in an option agreement
a condition that the participant shall agree to remain in the employ of the
Company for a specified period of time following the date of grant.
Termination of Status as an Employee. In the case of an Incentive Stock
Option, if the participant ceases to serve as an employee of the Company, other
than for permanent and total disability or death, all or part of the shares that
the optionee was entitled to exercise at the date of such termination may be
exercised within three months after the date employment ceases. After such
three-monthperiod, all unexercised options shall terminate. Non-Qualified Stock
Options are not limited to such three-month exercise period. Notwithstanding the
foregoing, in no event may an option be exercised after its term has expired.
Termination of Status as a Director or Consultant. If an optionee
ceases to serve as a director or consultant of the Company, any Non-Qualified
Stock Option held at the date of such termination may be exercised, in whole or
in part, at any time during the term of the option as set forth in the option
agreement and after such period of time all unexercised options shall terminate.
Notwithstanding the foregoing, in no event may an option be exercised after its
term has expired.
Death or Permanent Disability. If an optionee should die or become
permanently or totally disabled while serving as an employee, officer,
consultant or director of the Company, Incentive Stock Options held by the
participant may be exercised by the participant, the participant's estate, or
descendant at any time within 12 months after the death or permanent disability
and shall terminate thereafter. If a participant should die within one month
after ceasing to serve as an employee or officer of the Company, the options may
be exercised within 12 months after the death to the extent the option was
exercisable on the date of such death. Non-Qualified Stock Options shall not be
limited to such 12-month exercise period, and such options may be exercised
within the time specified in the option agreement. Notwithstanding the
foregoing, in no event may an option be exercised after its term has expired.
Suspension or Termination of Options. No option shall be exercisable by
any person after its expiration date. If the Committee reasonably believes that
a participant has committed an act of misconduct, the Committee may suspend the
participant's right to exercise any option pending a final determination by the
Committee. If the Committee determines a participant has committed an act of
embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the
Company, breach of fiduciary duty or deliberate disregard of the Company's
rules, or if a participant makes an unauthorized disclosure of any Company trade
secret or confidential information, engages in any conduct constituting unfair
competition, induces any of the Company's customers or contracting parties to
breach a contract with the Company, or induces any principal for whom the
Company acts as an agent to terminate such agency relationship, neither the
participant nor his or her estate shall be entitled to exercise any option
whatsoever. In making such determination, the Committee shall act fairly and in
good faith and shall give the participant an opportunity to appear and present
evidence on the participant's behalf at a hearing before the Committee. The
determination of the Committee shall be final and conclusive unless overruled by
the Board of Directors.
<PAGE>11
Transferability of Options. An Incentive Stock Option is
non-transferable, other than by will or the laws of descent and distribution,
and is exercisable only by the participant, his or her guardian or legal
representative during his or her lifetime, or, in the event of death, by the
executors, administrators, designated beneficiary, legatees or heirs of his or
her estate during the time period provided above. The Administrator may provide
for transfer of an option (other than an Incentive Stock Option), without
payment of consideration, to the following family members of the optionee,
including adoptive relationships: a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, sister-in-law, niece, nephew,
former spouse (whether by gift or pursuant to a domestic relations order), any
person sharing the employee's household (other than a tenant or employee), a
family-controlled partnership, corporation, limited liability company and trust,
or a foundation in which family members heretofore described control the
management of assets. The assigned portion may only be exercised by the person
or persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Administrator may deem
appropriate.
Compliance with Securities Laws. It is the intent of the Company that
the 2000 Stock Option Plan will comply with Rule 16b-3 of the Securities
Exchange Act of 1934, as amended.
Other Provisions. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Board or Committee.
U.S. Federal Tax Aspects
Options granted under the Plan may be either Incentive Stock Options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
Non-Qualified Options which are not intended to meet such requirements. The
federal income tax treatment for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For federal tax purposes, dispositions are
divided into two categories: (i) qualifying, and (ii) disqualifying. A
qualifying disposition occurs if the sale or other disposition is made after the
optionee has held the shares for more than two years after the option grant date
and more than one year after the exercise date. If either of these two holding
periods is not satisfied, then a disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will
recognize long-term capital gain in an amount equal to the excess of (i) the
amount realized upon the sale or other disposition of the purchased shares over
(ii) the exercise price paid for those shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market value of the
shares on the exercise date over (ii) the exercise price paid for those shares
will be taxable as ordinary income to the optionee. Any additional gain or loss
recognized upon the disposition will be taxable as a capital gain or loss.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction for the
taxable year in which such disposition occurs, equal to the excess of (i) the
fair market value of such shares on the option exercise date over (ii) the
exercise price paid for the shares. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the purchased
shares.
Non-Qualified Options. No taxable income is recognized by an optionee
upon the grant of a Non-Qualified Option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
<PAGE>12
If the shares acquired upon exercise of the Non-Qualified Option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised Non-Qualified Option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
Special Tax Election. The Administrator may, in its discretion, provide
one or more holders of Non-Qualified Options with the right to have the Company
withhold a portion of the shares otherwise issuable to such individuals in
satisfaction of the tax liability incurred by such individuals in connection
with the exercise of those options. Alternatively, the Administrator may allow
such individuals to deliver previously acquired shares of Common Stock in
payment of such tax liability.
Withholding Taxes. The Company is entitled to take appropriate measures
to withhold from the shares of Common Stock, or to otherwise obtain from the
recipients, sufficient sums in cash, check or shares of stock as the Company
deems necessary to satisfy any applicable federal, state and local withholding
taxes, including FICA taxes, before the delivery of the Common Stock to the
recipient.
Accounting Treatment
Option grants with an exercise price per share equal to 110% of the
fair market value of the shares at the time of grant will not result in any
direct charge to the Company's earnings. However, the fair value of those
options must be disclosed in the notes to the Company's financial statements, in
the form of proforma statements to those financial statements, the impact those
options would have upon the Company's reported earnings were the value of those
options at the time of grant treated as compensation expense. In addition, the
number of outstanding options may be a factor in determining the Company's
earnings per share on a diluted basis.
On March 31, 1999, the Financial Accounting Standards Board issued an
Exposure Draft of a proposed interpretation of APB Opinion 25, "Accounting for
Stock Issued to Employees." Under the proposed interpretation, as modified on
August 11, 1999, option grants made to non-employee consultants (but not
non-employee Board members) after December 15, 1998, will result in a direct
charge to the Company's reported earnings based upon the fair value of the
option measured initially as of the grant date and then subsequently on the
vesting date of each installment of the underlying option shares (if vesting
applies). Such charge will accordingly include the appreciation in the value of
the option shares over the period between the grant date of the option (or, if
later, the effective date of the final amendment) and the vesting date of each
installment of the option shares (if vesting applies).
Adjustment Upon Changes in Capitalization. In the event any change,
such as a stock split, is made in the Company's capitalization which results in
an exchange of Common Stock for a greater or lesser number of shares, an
appropriate adjustment shall be made in the option price and in the number of
shares subject to the option. In the event of the proposed dissolution or
liquidation of the Company, all outstanding options shall automatically
terminate, provided that the participant shall have the right, immediately prior
to the dissolution or liquidation, to exercise his or her options. In the event
of the sale of all or substantially all of the Company's assets or the merger of
the Company with or into another corporation, (i) if the Company is the
surviving corporation following a merger or consolidation each option shall,
upon exercise, entitle the holder to the issuance of securities to which a
holder of the number of shares of Common Stock subject to the option would be
entitled after the merger or consolidation, or (ii) all options shall otherwise
terminate, provided that the participant shall have the right, immediately prior
to the merger, consolidation, dissolution or liquidation to exercise his or her
options.
<PAGE>13
Amendment and Termination. The Board of Directors may amend the Plan to
materially increase the benefits accruing to the option holder without
stockholder approval, except to the extent that stockholder approval is required
to maintain the status of the Plan as an Incentive Stock Option Plan.
Notwithstanding the foregoing, no action by the Board of Directors or
stockholders may alter or impair any option previously granted under the Plan
without the consent of the participant.
Vote Required
The affirmative vote of a majority of the Common Stock represented and
voting at the Meeting is necessary to approve the adoption of the 2000 Stock
Option Plan. The Board of Directors recommends a vote "FOR" the adoption of the
2000 Stock Option Plan. Proxies solicited by the Board of Directors will be so
voted unless stockholders specify otherwise.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR THE ADOPTION
OF THE 2000 STOCK OPTION PLAN.
Directors and Executive Officers
Identification of the Company's Directors and Executive Officers. The
directors and executive officers of the Company, 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, Chief 57 December 1992 - present
Executive Officer
Michael T. Schieber Director 60 December 1992 - present
H. Tate Holt Director 48 February 1996 - present
President, NewStar Ltd. June 1999 - present
Jerome W. Carlson Director 63 May 1997 - present
Jessie J. Knight, Jr. Director 49 February 1999 - present
Roy T. Grant Director 42 August 1999 - present
Gregory T. Leger Executive Vice President Engineering 44 March 1998 - present
Frederick R. Skillman, Jr. Vice President, Operations 38 August 1995 - present
Stanton C. Lawson Director, Senior Vice President of 42 October 1999 - present
Finance, Chief Financial Officer
Randy Stratt Senior Vice President, General Counsel 43 November 1999 - present
and Secretary
</TABLE>
Background of Present Directors and Executive Officers
Fred W. Thompson, serves as our Chairman of the Board, President, and
CEO. From November 1993 to October 1999, Mr. Thompson also served as Chief
Financial Officer. 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 United States. From 1986 to
<PAGE>14
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 State University.
Michael T. Schieber has served as a Director of the Company since
December 1992. From 1987 to December 1992, Mr. Schieber was the Managing Partner
of Amador Telecommunications and since 1990 has been a partner in Columbia
Communications, both investors in nation-wide paging licenses. 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.
H. Tate Holt, a Director appointed in February 1996, has served since
1999 as President and CEO of NewStar, Ltd., our wholly-owned, operating
subsidiary, which will market, implement and manage the delivery of our proposed
services to our customers. Previously since July 1990, Mr. Holt was President of
Holt & Associates, a management consulting firm, assisting clients in developing
and achieving aggressive growth targets, both domestically as well as
internationally. 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-five years of experience in various senior
sales, marketing and general management positions with IBM, Triad Systems, and
ADP. Mr. Holt is also an active director of Onsite Energy and AremisSoft,
companies registered under the Exchange Act of 1934, as well as for several
private companies. Mr. Holt holds an AB from Indiana University.
Jerome W. Carlson, a Director appointed 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 in both finance and general management positions with Hewlett
Packard. Since 1995 he has assisted a number of businesses in developing and
achieving certain strategic and tactical goals in their industries. Mr. Carlson
is a director of Valley Community Bank and Tri-Valley Business Council, as well
as director and advisor for 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., a Director appointed in February 1999, is
President and Chief Executive Officer of the Greater San Diego Chamber of
Commerce. He was a Commissioner of the California Public Utilities Commission
from 1993 through December 1998. Appointed by former Governor Peter Wilson, he
was one of five individuals responsible for economic and regulatory oversight of
California's 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
publishing operation encompassing the San Francisco Chronicle and the San
Francisco Examiner. Mr. Knight is a director of Blue Shield of California and
serves 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.
Roy T. Grant has served as a Director since August 1999. Previously
from November 1996 through April 1999, Mr. Grant was employed by Iridium, LLC.,
most recently as Vice President and Chief Financial Officer. Iridium, LLC filed
for protection under the bankruptcy laws in 1999. Prior thereto, from 1992 to
1996, Mr. Grant served as Finance Director for Edison Mission Energy, the
largest independent power developer in the United States. Mr. Grant also worked
for Marriott Corporation and American Airlines in various financial functions.
Mr. Grant is a director of Wayport, Inc., Datafusion, Inc., e-tel Corporation
and TheMovieSource.com. Mr. Grant holds a BS in Administration and Management
Science, Mathematics and Economics from Carnegie Mellon University and an MBA in
Finance from the University of Chicago.
Gregory T. Leger has served as Executive Vice President
Engineering, since March 1998. Mr. Leger is responsible for the design and
construction of the NewStar System. Mr. Leger has more than 20 years' experience
<PAGE>15
in systems engineering, management and business planning. Prior to joining the
Company from 1989 to 1998, Mr. Leger worked for Seimac Limited as its Product
Development Manager, responsible for solutions encompassing electronics data
telemetry, software and packaging. Mr. Leger received both a BS degree in
Physics and an MS degree in Oceanography at Dalhousie University, and a degree
in Master Space Systems Engineering at Technical University of Delft,
Netherlands.
Frederick R. Skillman, Jr., joined the Company in August 1995 and
serves as Vice President, Operations for the Company. Mr. Skillman's duties
include managing the Company's project management, commercial negotiations and
the daily operations of the firm. Mr. Skillman has over 15 years of experience
working in the utility and the communication industries. Prior to joining the
Company, Mr. Skillman was an Electrical Engineer for the initial automatic meter
reading system installed for Pacific Gas & Electric Company in Marin County,
California. Mr. Skillman holds a BS degree in Electrical Engineering from
California Polytechnic State University and an MBA degree from the University of
San Francisco.
Stanton C. Lawson, a Director appointed in December 1999, has served
as Senior Vice President of Finance since October 18, 1999. Mr. Lawson has over
17 years of experience in international environments as a financial
professional. He was employed by Olivetti from 1981 to 1990 managing the finance
and accounting function of Olivetti's Italian and U.S. divisions as an internal
auditor, Controller and Finance Director. Mr. Lawson was Finance Director from
1990 to 1992 for Jackson Publishing Group in Milan, Italy. From 1992 to 1994, he
became Director of Finance for Francesco Cinzano. From 1994 to 1997, Mr. Lawson
was president of Lawsons' Resort, a family owned beach resort located in Marin
County, California. Just prior to joining DBSI, from 1997 to 1999, Mr. Lawson
worked as Finance Manager for the Worldwide Information Systems Division of
Autodesk, Inc. Mr. Lawson holds a BA degree in Business Economics and Italian
Literature from U.C. Santa Barbara.
<PAGE>16
Randy Stratt, Senior Vice President, General Counsel, joined the
Company in November 1999. Mr. Stratt has over 20 years of high-tech in-house
counsel and business development experience with both public and private firms.
Prior to joining the Company, Mr. Stratt was Director of Strategic Development
and Communications with Dresdner RCM Global Investors, and facilitated a 2-year
transformation of the firm from a single-office domestic operation to an
integrated global investment management firm with over $65 billion of assets
under management. From 1993 to 1996, Mr. Stratt co-founded and served as counsel
for Health Action Network, Inc., a 501(c)(3) non-profit organization, and also
served as outside counsel to a number of organizations. From 1987 to 1993, Mr.
Stratt was Senior Vice President and General Counsel of Spear Financial
Services, Inc., a California-based NASDAQ NMS financial services firm with
traditional and on-line broker-dealer operations. From 1980 to 1987, Mr. Stratt
was with Source Telecomputing Corporation, one of the first on-line consumer
services, which was eventually acquired by CompuServe and ultimately acquired by
America On-line. Mr. Stratt is a licensed attorney in California and three other
states. He holds a BA from Cornell University and received a JD from George
Washington University law school and an MS in Information Systems from George
Washington University Business School.
Board of Directors
The Board of Directors held four meetings during the year ending
December 31, 1999, and each eligible director attended all meetings. All current
members of the Board of Directors attended more than 75% of all meetings, during
their term of office.
Committees of the Board
The Board has an audit committee consisting of Messrs. Carlson
(Chairman), Schieber and Grant, a nominating committee consisting of Messrs.
Knight, Carlson and Thompson, and a compensation committee consisting of Messrs.
Schieber (Chairman), Carlson, Knight and Grant.
The primary functions of the audit committee are to review the scope
and results of audits by our independent auditors, our internal accounting
controls, non-audit services performed by the independent accountants and the
cost of accounting services. The audit committee held one meeting in 1999.
The nominating committee assists in the process of officer and director
nominations. The nominating committee will not consider nominees of the
shareholders. No meetings were held by the nominating committee in 1999.
The compensation committee administers our various stock option plans
and approves compensation, remuneration and incentive arrangements for our
officers of the Company. The compensation committee held four meetings in 1999.
Family Relationships
There are no family relationships between any director and executive
officer.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation of the Company's Chief Executive Officer and each employee of the
Company or its subsidiaries who earned in excess of $100,000 for the year ended
December 31, 1999.
<PAGE>17
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
- ---------------------------- --------------------------------------------------------- ---------------------------------
Other Securities
Name and Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation(2)
- ---------------------------- -------- ---------------- ---------- -------------------- ------------- -------------------
Fred W. Thompson 1999 $215,000 $45,000 $ 8,051 1,000,000 $ 6,789
President, CEO 1998 $180,000 $20,000 $ 8,005 - 0 - $235,691 (3)
1997 $180,000(4) -0- $ 6,705 185,000 -0-
- ---------------------------- -------- ---------------- ---------- -------------------- ------------- -------------------
H. Tate Holt 1999 $100,000 $50,000 $ 780 200,000 -0-
President, CEO NewStar Ltd.
- ---------------------------- -------- ---------------- ---------- -------------------- ------------- -------------------
Gregory T. Leger 1999 $106,000 $20,000 $13,560 125,000 $ 56,259 (5)
Executive VP Engineering 1998 $ 93,230 $20,000 $ 1,914 125,000 -0-
- ---------------------------- -------- ---------------- ---------- -------------------- ------------- -------------------
Frederick R. Skillman, Jr. 1999 $120,415 $54,500 $ 2,782 150,000 $ 4,667
Vice President, Operations 1998 $110,000 - 0 - $ 2,512 - 0 - -0-
- ---------------------------- -------- ---------------- ---------- -------------------- ------------- -------------------
E.A. James Peretti (6) 1999 $ 90,417 $38,800 $ 2,125 - 0 - $261,929 (7)
Former Chief Operating 1998 $155,000 - 0 - $ 2,576 - 0 -
Officer 1997 $155,000 - 0 - $ 3,732 150,000
- ---------------------------- -------- ---------------- ---------- -------------------- ------------- -------------------
</TABLE>
(1) Consists entirely of payment of insurance premiums.
(2) Except where noted, consists entirely of payment of contribution to IRA
Retirement Plan.
(3) Represents $27,691 of pay in lieu of vacation and $208,000 of compensation
deferred in 1996 and 1997.
(4) $80,000 paid in cash, $100,000 deferred pursuant to his employment
agreement.
(5) Includes $51,000 housing/car allowance for overseas living assistance and
payment of $5,259 for French Pension.
(6) Mr. Peretti resigned in July 1999.
(7) In July 1999, the Company agreed to a severance package with Mr. Peretti
including compensation of $219,583 and vacation payout of $35,770. This
amount also includes a contribution of $6,576 to Mr. Peretti's IRA
Retirement Plan.
Employment Agreements
Mr. Thompson entered into an employment agreement with us on April 18,
1996, effective January 1, 1996. His annual salary under the agreement was
$180,000, and included Non-qualified stock options to purchase 312,500 shares of
our Common Stock. In October 1998, we paid Mr. Thompson the amount of $208,000
related to his previously deferred compensation through December 31, 1997.
Effective July 1, 1999, Mr. Thompson's employment agreement was extended until
July 1, 2004. In connection with the extension, Mr. Thompson's annual salary was
increased to $250,000, and he was granted Non-qualified options to purchase
1,000,000 shares of Common Stock at an exercise price of $1.3496 based on a
formula. Options to purchase 250,000 shares of Common Stock vest immediately and
the remaining options to purchase 750,000 shares of Common Stock vest in 250,000
increments beginning on January 1, 2000, and each year thereafter. If Mr.
Thompson is terminated without cause during the term of his employment
agreement, his salary shall continue for 12 months following termination so long
as he does not compete with the Company. Upon such termination or in the event
of a change of control, all options granted to Mr. Thompson in connection with
<PAGE>18
his employment agreement shall vest immediately. We maintain a key person
insurance policy on Mr. Thompson's life in the face amount of $2,000,000, and we
are the sole beneficiary of such policy.
Effective March 1, 1998, we entered into a three-year employment
agreement with Mr. Gregory T. Leger to serve as Executive Vice President of
Engineering. Under the employment agreement, Mr. Leger's annual salary was
$120,000. He also received $20,000 upon the execution of the agreement and
received an additional $20,000 in March 1999, as a bonus. Mr. Leger also
received a Non-qualified option to purchase 125,000 shares of our Common Stock
subject to vesting requirements. Effective July 1, 1999, Mr. Leger's employment
agreement was extended until July 1, 2002. In connection with the extension, Mr.
Leger's annual salary was increased to $132,000 and he was granted Non-qualified
options to purchase 125,000 shares of Common Stock, subject to vesting, at an
exercise price of $1.3496 based on a formula. If Mr. Leger is terminated without
cause during the term of his employment agreement, his salary shall continue for
12 months following termination so long as he does not compete with the Company.
Upon such termination, all options granted to Mr. Leger in connection with his
employment agreement shall vest immediately.
Effective July 28, 1999, we entered into a one-year employment
agreement with Mr. Frederick R. Skillman, Jr., to serve as our Vice President,
Operation. Under the employment agreement, Mr. Skillman's annual salary is
$135,000. He also received $13,500 upon the execution of the agreement and an
additional $13,500 in November, 1999, as a bonus. Mr. Skillman also received a
Non-qualified option to purchase 150,000 shares of Common Stock subject to
vesting requirements at an exercise price equal to $.7573 per share based upon a
formula. If Mr. Skillman is terminated without cause during the term of his
employment agreement, he shall receive a lump sum cash payment of 12 months'
salary following termination so long as he does not compete with the Company.
Upon such termination, all options granted to Mr. Skillman in connection with
his employment agreement shall vest immediately.
Effective June 1, 1999, we entered into a one-year employment agreement
with Mr. H. Tate Holt to serve as President and Chief Executive Officer of
NewStar, Ltd. Under the employment agreement, Mr. Holt's annual salary is
$200,000. He also received $50,000 upon the execution of the agreement, as a
bonus. Mr. Holt also received a Non-qualified option to purchase 200,000 shares
of Common Stock subject to vesting requirements at an exercise price equal to
$1.1019 per share based upon a formula. If Mr. Holt is terminated without cause
during the term of his employment agreement, he shall receive a lump sum cash
payment equal to the remainder of his contract salary following termination.
Upon such termination or in the event of a change of control, all options
granted to Mr. Holt in connection with his employment agreement shall vest
immediately.
Effective October 18, 1999, we entered into a three-year employment
agreement with Mr. Stanton C. Lawson to serve as our Senior Vice President of
Finance. Under the employment agreement, Mr. Lawson's annual salary is $180,000.
Mr. Lawson also received a Non-qualified option to purchase 180,000 shares of
Common Stock at an exercise price equal to $1.0952 per share based upon a
formula. If Mr. Lawson is terminated without cause during the term of his
employment agreement, his salary shall continue for 12 months following
termination so long as he does not compete with the Company. Upon such
termination, all options granted to Mr. Lawson in connection with his employment
agreement shall vest immediately.
Effective November 18, 1999, we entered into a three-year employment
agreement with Mr. Randy Stratt to serve as a Senior Vice President and our
General Counsel. Under the employment agreement, Mr. Stratt's annual salary is
$165,000. Mr. Stratt also received a Non-qualified option to purchase 160,000
shares of Common Stock at an exercise price equal to $1.0797 per share based
upon a formula. If Mr. Stratt is terminated without cause during the term of his
employment agreement, his salary shall continue for 12 months following
termination so long as he does not compete with the Company. Upon such
termination, all options granted to Mr. Stratt in connection with his employment
agreement shall vest immediately.
<PAGE>19
Stock Option Plans
The Company has established the 1999 Employee Stock Purchase Plan (the
"1999 Plan"), which was approved by the stockholders in June 1999 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 the Company. Under the 1999
Plan, employees, including officers, who do not beneficially own stock and/or
options totaling 5% or more of the voting power of the Company, will be eligible
to participate. However, 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. An aggregate of 50,000 shares of Common
Stock of the Company were reserved for issuance under the 1999 Plan. Employees
electing to participate in the 1999 Plan are allowed to deduct from 1% to 10% of
their compensation to the purchase shares of Common Stock. Twice a year, the
employees' accumulated payroll deductions will be used to purchase shares of
Common Stock at a price equal to 85% of the closing price of the Common Stock on
either the first business day or last business day of the offering period,
whichever is lower. The 1999 Plan is administered by the Board of Directors and
its Compensation Committee. The 1999 Plan may be amended, suspended, or
terminated by the Board, but may not increase the maximum number of shares
issuable, increase the benefits accruing participants, or modify the eligibility
requirement under the 1999 Plan without stockholder approval.
The Company has established the 1998 Stock Option Plan (the "1998
Plan") which was approved by the stockholders in May 1998 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 the Company. The 1998 Plan
provides for the grant of up to 500,000 Non-Qualified and Incentive Stock
Options. Under the 1998 Plan, officers, directors, consultants and employees of
the Company will be eligible for participation. The exercise price of any
Incentive Stock Option granted under the 1998 Plan may not be less than 100% of
the fair market value of our Common Stock on the date of grant. The aggregate
Fair Market Value (determined as of the Grant Date) of the shares for which
Incentive Stock Options may first become exercisable by Optionee during any
calendar year under this Plan, together with that of shares subject to Incentive
Stock Options first exercisable by such Optionee under any other of our plans,
cannot exceed $100,000. Shares subject to options under the 1998 Plan may be
purchased for cash. Unless otherwise provided by the Board, an option granted
under the 1998 Plan is exercisable for a term of ten years (or for a shorter
period up to ten years). The 1998 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 1998 Plan may be amended, suspended, or terminated by
the Board, but no such action may impair rights under a previously granted
option. No option is transferable by the optionee other than by will or the laws
of descent and distribution. As of December 31, 1999, options to acquire 227,011
shares of Common Stock were outstanding.
The Company previously established a 1996 Stock Option Plan (the "1996
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 us. The
1996 Plan provided for the grant of up to 1,650,000 Non-Qualified and Incentive
Stock Options of which 691,486 were outstanding as of December 31, 1999. Under
the 1996 Plan, officers, directors, consultants and employees of ours are
eligible for participation. The exercise price of any Incentive Stock Option
granted under the 1996 Plan may not be less than 100% of the fair market value
of our Common Stock on the date of grant. The aggregate Fair Market Value
(determined as of the Grant Date) of the shares for which Incentive Stock
Options may first become exercisable by Optionee during any calendar year under
this Plan, together with that of shares subject to Incentive Stock Options first
exercisable by such Optionee under any other of our plans, cannot exceed
$100,000. Shares subject to options under the 1996 Plan may be purchased for
cash. Unless otherwise provided by the Board, an option granted under the 1996
Plan is exercisable for a term of ten years (or for a shorter period up to ten
years). The 1996 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 1996 Plan may be amended, suspended, or terminated by the
Board, but no such action may impair rights under a previously granted option.
No option is transferable by the optionee other than by will or the laws of
descent and distribution.
The Company also previously developed three stock option plans to award
certain employees, directors, and consultants with the opportunity to purchase
the Company's Common Stock. Under our 1993 Incentive Stock Option Plan ("1993
ISO Plan") options to purchase up to 69,644 shares of Common Stock were issued
<PAGE>20
to eligible employees. Under the Non-Qualified Stock Option Plan for
Non-Employee Directors ("Director's Plan") options to purchase up to 48,750
shares of Common Stock were granted to non-employee directors. Under the
Non-Qualified Stock Option Plan for Consultants ("Consultant's Plan") options to
purchase up to 14,625 shares of Common Stock were granted to certain
consultants. As of December 31, 1999, options to acquire 24,875, 42,500, and
14,625 shares of Common Stock were outstanding under the 1993 ISO Plan,
Director's Plan and Consultant's Plan, respectively.
On August 25, 1999, the Company's Board of Directors approved the
reservation of Non-Qualified Stock Options for issuance to our new employees and
new employees of our subsidiaries to purchase 500,000 shares of Common Stock
and, on December 9, 1999, increased the reservation to 540,000 shares. The per
share exercise price will be calculated based upon a formula taking into
consideration the current price of a share of Common Stock, term of the option,
anticipated growth rate and the risk free rate. As of December 31, 1999, options
to purchase all 540,000 shares of Common Stock were granted.
<PAGE>21
The following table shows for the fiscal year ended December 31, 1999,
certain information regarding options granted during the fiscal year to the
executive officers of the Company named in the Summary Compensation Table under
"Executive Compensation".
Option Grants In The Fiscal Year Ended December 31, 1999
<TABLE>
<S> <C> <C> <C> <C>
Number of
Securities
Underlying % of Total Options Granted
Options Granted to Employees in Fiscal Year Exercise or Base Expiration
Name 1999 1999 Price ($/SHARE) Date
- -------------------------------- ------------------ ----------------------------- --------------------- ---------------
Fred Thompson 1,000,000 49.6% $1.3496 9/1/2009
President, CEO
- -------------------------------- ------------------ ----------------------------- --------------------- ---------------
H. Tate Holt 200,000 9.9% $1.1019 9/1/2009
President, NewStar, Ltd.
- -------------------------------- ------------------ ----------------------------- --------------------- ---------------
Gregory T. Leger, 125,000 6.2% $1.3496 9/1/2009
Executive Vice President
- -------------------------------- ------------------ ----------------------------- --------------------- ---------------
Frederick R Skillman, Jr. 150,000 7.4% $0.7573 9/1/2009
Vice President
- -------------------------------- ------------------ ----------------------------- --------------------- ---------------
</TABLE>
<PAGE>22
The following table shows for the fiscal year ended December 31, 1999,
certain information regarding options exercised by and held at year-end by the
executive officers of the Company named in the Summary Compensation Table under
"Executive Compensation".
Aggregated Option/SAR Exercises in Last FY
And FY-End Individual Values
<TABLE>
<S> <C> <C> <C> <C>
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Option/Sars at
Options/SARs at FY-END FY-End(1)
# $
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ---------------------------- ----------------- ----------------------- ------------------------- -----------------------
Fred W. Thompson, 12,625 $56,541 941,332/563,043 $1,113,725/$502,416
President, CEO
- ---------------------------- ----------------- ----------------------- ------------------------- -----------------------
H. Tate Holt 16,667 $69,168 191,141/150,000 $ 144,649/$158,145
President, NewStar Ltd.
- ---------------------------- ----------------- ----------------------- ------------------------- -----------------------
Gregory T. Leger, 30,000 $163,164 126,250/93,750 $ 179,695/$75,619
Executive Vice President
- ---------------------------- ----------------- ----------------------- ------------------------- -----------------------
Frederick R. Skillman, - 0 - - 0 - 162,500/137,500 $ 247,122/$206,492
Jr., Vice President
- ---------------------------- ----------------- ----------------------- ------------------------- -----------------------
E.A. James Peretti 150,000 $356,288 375,000/-0- $ 609,450/-0-
Former Chief Operating
Officer
- ---------------------------- ----------------- ----------------------- ------------------------- -----------------------
</TABLE>
(1) The value of unexercised in-the-money stock options is based on a per share
price of $2.1562 as quoted on the OTC Bulletin Board on December 31, 1999.
Compensation of Directors
On September 1, 1999, our Board of Directors adopted a directors'
compensation plan. Under the compensation plan, each non-employee director shall
receive an annual retainer of $12,000 plus a fee of $1,000 and reasonable travel
expenses for attendance at each Board meeting. Each committee chairman shall
receive $2,500 annually for each year of service as committee chairman, and each
committee member shall receive $500 for attendance at each committee meeting. In
lieu of cash compensation, non-employee directors may elect to receive either
the Company's Common Stock or stock options to purchase Common Stock, the value
of which under either election, shall not exceed $20,000 annually. If either
Common Stock or stock options is elected, the price will be determined by the
average closing price for the five trading days of the Common Stock at the
beginning of a six-month period ending either June 30 or December 31. Further,
with respect to stock options elected as compensation, the cash equivalent
number of stock options will be determined based upon a number of factors,
including but not limited to, vesting periods, estimated growth rates and
risk-free rates.
In addition, each non-employee director shall receive an annual grant
of non-qualified options to purchase 10,000 shares of Common Stock in accordance
with the 1998 Plan. The exercise price shall be determined by the closing price
of the Common Stock of the five trading days up to and including the date of the
Annual Stockholders Meeting, subject to discounting pursuant to a formula
adopted by the Board. These options shall vest one year from date of grant.
<PAGE>23
Further, upon either the first-time appointment or election to the Board, a new
non-employee director shall receive options to acquire 10,000 shares of Common
Stock, the exercise price of which will be determined by a formula adopted by
the Board. These options shall vest immediately.
In 1999, Michael T. Schieber was awarded options to purchase 10,000
common shares at $0.7235 per share and options to purchase 4,391 at $2.8625 per
share; Jerome W. Carlson was awarded options to purchase 10,000 common shares at
$0.7235 per share and options to purchase 4,391 at $2.8625 per share; Jessie J.
Knight, Jr. was awarded options to purchase 37,500 common shares at $5.50 per
share, options to purchase 12,500 common shares at $2.8125 per share, options to
purchase 10,000 common shares at $0.7235 per share, and options to purchase
4,160 common shares at $2.8625 per share; and Roy Grant was awarded options to
purchase 8,333 common shares at $0.7235 per share, options to purchase 10,000
common shares at $0.3897 per share, and options to purchase 3,236 common shares
at $2.8625 per share.
The directors' compensation plan was prepared following a report by an
independent compensation firm. It was recommended by the compensation committee
and adopted by the Board.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange
Commission (the "SEC"). Such executive officers, directors and 10% stockholders
are also required by SEC rules to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon its review of copies of such forms
received by it, or on written representations from certain reporting persons
that no other filings were required for such persons, the Company believes that,
during the year ended December 31, 1999, its executive officers, directors and
10% stockholders complied with all applicable Section 16(a) filing requirements.
Principal Stockholders
The following table sets forth certain information as of March 13, 2000,
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 1,391,308 (2) 8.6%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
Stanton C. Lawson 60,000 (3) *
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
Michael T. Schieber 360,380 (4) 2.2%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
H. Tate Holt 212,629 (5) 1.3%
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
Jerome W. Carlson 116,891 (6) *
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
<PAGE>24
Jessie J. Knight, Jr. 54,160 (7) *
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
Roy T. Grant 17,923 (8) *
100 Shoreline Highway, Suite 190A
Mill Valley, CA 94941
- ------------------------------------------------- ------------------------------------ --------------------------------
Officers and Directors as a Group 2,567,874 15.9%
(10 Persons)
- ------------------------------------------------- ------------------------------------ --------------------------------
Astoria Capital Partners, L.P. 1,000,000 6.2%
6600 Southwest 92nd St., Suite 370
Portland, Oregon 97223
- ------------------------------------------------- ------------------------------------ --------------------------------
Eurockot Launch Services GMBH 1,333,334 8.2%
Hunefeldstrasse 1-5
D-28199 Bremen, Germany
</TABLE>
o Less than 1%.
(1) The persons named in the table have sole voting or 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) 434,558 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 5,500 and 123,332
shares of Common Stock exercisable at $0.584 per share and expiring
December 31, 2000 and December 31, 2002, respectively and options to
purchase 500,000 shares of Common Stock at $1.3496 per share expiring
September 1, 2009.
(3) Options to Purchase 60,000 shares of Common Stock at $1.0952 per share
expiring October 7, 2009.
<PAGE>25
(4) Includes (i) 230,625 shares of Common Stock held jointly with spouse,
Arlene Schieber, (ii) 7,505 shares of Common held solely by Mr. Schieber,
(iii) 4,075 shares of Common Stock 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, options to purchase 27,500 shares of
Common Stock exercisable at $0.60 per share which expire May 13, 2007,
options to purchase 22,500 shares of Common Stock at $2.1875 which expire
on May 12, 2008, and options to purchase 4,391 shares of Common Stock at
$2.8625 per share expiring December 31, 2009.
(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 15, 2006 and April 30, 2006, respectively,
options to purchase 20,833 shares of Common Stock exercisable at $0.60 per
share which expire May 13, 2007, options to purchase 37,500 shares of
Common Stock at $2.1875 per share which expire May 12, 2008, and options to
purchase 50,000 shares of Common Stock at $1.1019 expiring September 1,
2009.
(6) Includes (i) 37,500 shares of Common Stock held by Mr. Carlson, and (ii)
options to purchase 37,500 shares of Common Stock exercisable at $0.60 per
share which expire May 13, 2007, options to purchase 37,500 shares of
Common Stock at $2.1875 per share which expire May 12, 2008, and options to
purchase 4,391 shares of Common Stock at $2.8625 per share expiring
December 31, 2009.
(7) Options to purchase 37,500 shares of Common Stock exercisable at $5.50 per
share which expire February 19, 2009, options to purchase 12,500 shares of
Common Stock exercisable at $2.8125 per share expiring August 25, 2009, and
options to purchase 4,160 shares of Common Stock exercisable at $2.8625
expiring December 31, 2009.
(8) Includes (i) 4,687 shares of Common Stock held by Mr. Grant, and (ii)
options to purchase 10,000 shares of Common Stock at $.7235 per share
expiring September 1, 2009, and options to purchase 3,236 shares of Common
Stock at $2.8625 which expire December 31, 2009.
OTHER MATTERS
Relationship With Independent Accountants. PricewaterhouseCoopers LLP
has served as the Company's independent accountant since August 1994. The
Company has had no disagreements with the accountants on accounting and
financial disclosures. For the calendar year 2000, 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
2000 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 the Company 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 stockholders and to
be included in the Company's Proxy Statement and Proxy for its 2001 Annual
Meeting must be received by the Company's Secretary at 100 Shoreline Highway,
Suite 190A, Mill Valley, California 94941, not less than 60 days nor more than
90 days prior to the 2001 Annual Meeting date.
If notice of a proposal intended to be presented by stockholders at the
2001 Annual Meeting is received by the Company's Secretary no later than 60 days
prior to the 2001 Annual Meeting, and if the proxy holders wish to maintain
their discretionary authority to vote on any such proposal, then the Company
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
<PAGE>26
to vote on the matter. If any such proposals are not received on or before 60
days prior to the meeting date, such proposal will not be included in the
Company's Proxy Statement and the proxy holders shall use discretionary
authority in voting. Furthermore, pursuant to the Company's Bylaws, any
stockholder proposal that is not delivered to the Company's Secretary within 10
business days following the day on which Notice of the 2001 Annual Meeting is
mailed or publicly announced, will not be allowed to be presented at the
Meeting.
Additional Information. A copy of Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999, containing the Company's 1999 audited
financial statements, including the report of its independent public
accountants, accompanies this Proxy Statement. Upon receipt of a written
request, the Company will furnish to any stockholder, without charge, an
additional copy of the Company's 1999 Form 10-KSB. Stockholders should direct
any request to DBS Industries, Inc., 100 Shoreline Highway, Suite 190A, Mill
Valley, California 94941, Attention: Secretary. The Company's Form 10-KSB may
also be accessed on the Internet at http://www.dbsindustries.com.
DBS Industries, Inc.
By Order of the Board of Directors
Fred W. Thompson
Chairman and President
Mill Valley, California
April 14, 2000
<PAGE>27
DBS Industries, Inc.
100 Shoreline Highway, Suite 190A
Mill Valley, California 94941
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Fred W. Thompson and Randy Stratt, 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 3, 2000, at the Annual Meeting of Stockholders, to be held
on May 22, 2000, at 2:00 p.m. (PDT), at the Acqua Hotel, 555 Redwood Highway,
Mill Valley, California 94941, and at any and all adjournments thereof.
1. Election of Directors to serve until the Annual Meeting of
Stockholders for the Year 2003:
FOR Jerome W. Carlson____ WITHHOLD AUTHORITY ____
FOR Roy T. Grant ____ WITHHOLD AUTHORITY ____
FOR Stanton C. Lawson____ WITHHOLD AUTHORITY ____
2. Approval of Amendment to the Certificate of Incorporation.
FOR ____ AGAINST ____ ABSTAIN ____
3. Approval of the DBSI 2000 Stock Option Plan.
FOR ____ AGAINST ____ ABSTAIN ____
4. 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 stockholder. If no direction is made, this Proxy will
be voted FOR the nominees and FOR Proposals Two and Three.
<PAGE>28
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 other 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 (Print)
------------------------------
Signature (if held jointly)
Address: ____________________
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.
<PAGE>29
EXHIBIT "A"
DBS INDUSTRIES, INC.
2000 STOCK OPTION PLAN
1. Purpose; Definitions.
(a) Purpose. The purpose of the Plan is to attract, retain and
motivate employees, officers, directors, and consultants of the Company, or a
subsidiary of the Company, by giving them the opportunity to acquire Stock
ownership in the Company.
(b) Definitions. For purposes of the Plan, the following terms have
the following meanings:
(i) "Administrator" means the Compensation Committee referred
to in Section 4 in its capacity as administrator of the Plan, or the Board in
the event that it abolishes the Compensation Committee and reinvests in the
Board the administration of the Plan.
(ii) "Board" means the Board of Directors of the Company.
(iii) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(iv) "Commission" means the Securities and Exchange
Commission and successor agency.
(v) "Company" means DBS Industries, Inc., a Delaware
corporation and its subsidiaries.
(vi) "Director" shall mean a member of the Board.
(vii) "Effective Date" has the meaning set forth in
Section 2.
(viii) "Eligible Person" means, in the case of the grant of an
Incentive Stock Option Plan, all employees of the Company or a subsidiary of the
Company and, in the case of a Non-qualified Stock Option, any director, officer
or employee of the Company or other person who, in the opinion of the Board, is
rendering valuable services to the Company, including without limitation, an
independent contractor, outside consultant, or advisor to the Company.
(ix) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
<PAGE>30
(x) "Fair Market Value" means (i) if the stock is listed or
admitted to trade on a national securities exchange, the closing price of the
Stock on the Composite Tape, as published in the Western Edition of the Wall
Street Journal, of the principal national securities exchange on which the Stock
is so listed or admitted to trade, on such date, or, if there is no trading of
the Stock on such date, then the closing price of the Stock as quoted on such
Composite Tape on the next preceding date on which there was trading in such
Stock; (ii) if the Stock is not listed or admitted to trade on a national
securities exchange, the closing price for the Stock on such date, as furnished
by the National Association of Securities Dealers, Inc. ("NASD") through the
NASDAQ National Market System or a similar organization if the NASD is no longer
reporting such information; (iii) if the stock is not reported on the National
Market System, the mean between the closing bid and asked prices for the stock
on such date, as furnished by the NASD, and if no bid and asked prices are
quoted on such date, the bid and asked prices on the next preceding day on which
such prices were quoted; and (iv) if the stock is not reported on the National
Market System and if bid and asked prices for the stock are not furnished by the
NASD or a similar organization, the value established by the Administrator for
purposes of granting options under the Plan.
(xi) "Grant Date" means the date of grant of any Option.
(xii) "Incentive Stock Option" means an option which is an
option within the meaning of Section 422 of the Code, the award of which
contains such provisions as are necessary to comply with that section.
(xiii) "NASD Dealer" means a broker-dealer that is a member of
the National Association of Securities Dealers.
(xiv) "Non-Employee Director" has the meaning set forth in
Rule 16-3.
(xv) "Non-qualified Stock Option" means an option which
is designated a Non-qualified Stock Option.
(xvi) "Officer" means an officer of the Company and an
officer who is subject to Section 16 of the Exchange Act.
(xvii) "Option" means an option to purchase Common Stock under
this Plan. An Option shall be designated by the Committee as an Incentive Stock
Option or a Non-qualified Stock Option.
(xviii) "Option Agreement" means the written option agreement
covering an Option.
(xix) "Optionee" means the holder of an option.
(xx) "Plan" means this DBS Industries, Inc. 2000 Stock
Option Plan as amended from time to time.
(xxi) ARule 16b-3" means Rule 16b-3 under Section 16 (b) of
the Exchange Act, as amended from time to time, and any successor rule.
(xxii) "Stock" means the Common Stock, par value $0.0004,
of the Company, and any successor entity.
(xxiii) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if, at the time of granting of
an Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(xxiv) "Tax Date" means the date defined in Section 7.
(xxv) "Vesting Date" means the date on which an Option becomes
wholly or partially exercisable, as determined by the Administrator in its sole
discretion.
2. Effective Date; Term of Plan. The Effective Date of this Plan shall be
upon shareholder approval of this Plan within 12 months of the date of Board
approval. Any Options granted prior to shareholder approval of the Plan, shall,
upon shareholder approval, be deemed issued as of the grant date. This Plan, but
not Options already granted, shall terminate automatically ten years after its
adoption by the Board, unless terminated earlier by the Board under Section 13.
No Options shall be granted after termination of this Plan but all Options
granted prior to termination shall remain in effect in accordance with their
terms.
3. Number and Source of Shares of Stock Subject to the Plan. Subject to
the provisions of Section 8, the total number of shares of Stock with respect to
which Options may be granted under this Plan is One Million Seven Hundred Fifty
Thousand (1,750,000) shares of Stock. The shares of Stock covered by any
canceled, expired or terminated Option or the unexercised portion thereof shall
become available again for grant under this Plan. The shares of Stock to be
issued hereunder upon exercise of an Option may consist of authorized and
unissued shares or treasury shares.
<PAGE>31
4. Administration of the Plan. Authority to control and manage the
operation and administration of the Plan shall be vested in the Board, which may
delegate such responsibilities in whole or in part to a committee consisting of
two (2) or more members of the Board, all of whom shall be Non-Employee
Directors (the "Compensation Committee"). Members of the Compensation Committee
may be appointed from time to time by, and shall serve at the pleasure of, the
Board. As used herein, the term "Administrator" means the Board or, with respect
to any matter as to which responsibility has been delegated to the Compensation
Committee, the term Administrator shall mean the Compensation Committee.
Subject to the express provisions of this Plan, the Administrator shall
have the authority to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and Optionees under this
Plan; to further define the terms used in this Plan; to correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any Option
Agreement; to provide for rights of refusal and/or repurchase rights; to amend
outstanding Option Agreements to provide for, among other things, any change or
modification which the Administrator could have provided for upon the grant of
an Option or in furtherance of the powers provided for herein; to prescribe,
amend and rescind rules and regulations relating to the administration of this
Plan; to determine the duration and purposes of leaves of absence which may be
granted to Optionees without constituting a termination of their employment for
purposes of this Plan; to accelerate the vesting of any Option; and to make all
other determinations necessary or advisable for the administration of this Plan.
Any decision or action of the Administrator in connection with this Plan
or Options granted or shares of Stock purchased under this Plan shall be final
and binding. The Administrator shall not be liable for any decision, action or
omission respecting this Plan, or any Options granted or shares of Stock sold
under this Plan. The Board at any time may abolish the Compensation Committee
and reinvest in the Board the administration of the Plan.
To the extent permitted by applicable law in effect from time to time, no
member of the Compensation Committee or the Board of Directors shall be liable
for any action or omission of any other member of the Compensation Committee or
the Board of Directors nor for any act or omission on the member's own part,
excepting only the member's own willful misconduct or gross negligence, arising
out of or related to the Plan. The Company shall pay expenses incurred by, and
satisfy a judgment or fine rendered or levied against, a present or former
director or member of the Compensation Committee or Board in any action against
such person (whether or not the Company is joined as a party defendant) to
impose liability or a penalty on such person for an act alleged to have been
committed by such person while a director or member of the Compensation
Committee or Board arising with respect to the Plan or administration thereof or
out of membership on the Compensation Committee or Board or by the Company, or
all or any combination of the preceding; provided, the director or Compensation
Committee member was acting in good faith, within what such director or
Compensation Committee member reasonably believed to have been within the scope
of his or her employment or authority and for a purpose which he or she
reasonably believed to be in the best interests of the Company or its
stockholders. Payments authorized hereunder include amounts paid and expenses
incurred in settling any such action or threatened action. The provisions of
this section shall apply to the estate, executor, administrator, heirs, legatees
or devisees of a director or Compensation Committee member, and the term
"person" as used on this section shall include the estate, executor,
administrator, heirs, legatees, or devisees of such person.
5. Grant of Options; Terms and Conditions of Grant.
(a) Grant of Options. One or more Options may be granted to any
Eligible Person. Subject to the express provisions of the Plan, the
Administrator shall determine from the Eligible Persons those individuals to
whom Options under the Plan may be granted. Each Option so granted shall be
designated by the Administrator as either a Non-qualified Stock Option or an
Incentive Stock Option.
Subject to the express provisions of the Plan, the Administrator shall
specify the Grant Date, the number of shares of Stock covered by the Option, the
exercise price and the terms and conditions for exercise of the Options. If the
Administrator fails to specify the Grant Date, the Grant Date shall be the date
of the action taken by the Administrator to grant the Option. As soon as
practicable after the Grant Date, the Company will provide the Optionee with a
written Option Agreement in the form approved by the Administrator, which sets
out the Grant Date, the number of shares of Stock covered by the Option, the
exercise price and the terms and conditions for exercise of the Option.
<PAGE>32
The Administrator may, in its absolute discretion, grant Options under
this Plan at any time and from time to time before the expiration of ten years
from the Effective Date to an Eligible Person.
(b) General Terms and Conditions. Except as otherwise provided
herein, the Options shall be subject to the following terms and conditions and
such other terms and conditions not inconsistent with this Plan as the
Administrator may impose:
(i) Exercise of Option. In order to exercise all or any
portion of any Option granted under this Plan, an Optionee must remain as an
officer, employee, consultant or director of the Company, or a Subsidiary, until
the Vesting Date. The Option shall be exercisable on or after each Vesting Date
in accordance with the terms set forth in the Option Agreement.
(ii) Option Term. Each Option and all rights or obligations
thereunder shall expire on such date as shall be determined by the
Administrator, but not later than 10 years after the grant of the Option (5
years in the case of an Incentive Stock Option when the Optionee owns more than
10% of the total combined voting power of all classes of stock of the Company),
and shall be subject to earlier termination as hereinafter provided.
(iii) Exercise Price. The Exercise Price of any Option shall
be determined by the Administrator, but in the case of Incentive Stock Options
shall not be less than 100% (110% in the case of an Optionee who owns more than
10% of the total combined voting power of all classes of stock of the Company)
of the Fair Market Value of the Stock on the date the Incentive Stock Option is
granted.
(iv) Method of Exercise. To the extent the right to purchase
shares of Stock has vested, Options may be exercised, in whole or in part, from
time to time in accordance with their terms by written notice from the Optionee
to the Company stating the number of shares of Stock with respect to which the
Option is being exercised. Payment of the exercise price may be made in cash or,
in the discretion of the Administrator, subject to any legal restrictions, by:
(a) check; (b) the surrender of shares of Stock owned by the Optionee that have
been held by the Optionee for at least six (6) months, which surrendered shares
shall be valued at Fair Market Value as of the date of such exercise; (c) the
Optionee's promissory note in a form and on terms acceptable to the
Administrator; (d) the cancellation of indebtedness of the Company to the
Optionee; (e) provided that a public market for the Stock exists, a "same day
sale" commitment from the Optionee and an NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to sell a portion of the shares so
purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the Exercise Price directly to
the Company; or (f) any combination of the foregoing methods of payment or any
other consideration or method of payment as shall be permitted by applicable
corporate law. The Administrator may, in its discretion, provide, in an
Agreement or otherwise, that an Optionee who exercises an Option and pays the
exercise price in whole or in part with Stock then owned by the Optionee will be
entitled to receive another Option covering the same number of shares tendered
and with a price of no less than Fair Market Value on the date of grant of such
additional Option ("Reload Option"). Unless otherwise provided in the Agreement,
an Optionee, in order to be entitled to a Reload Option, must pay with Stock
that has been owned by the Optionee for at least the preceding 180 days.
(v) Restrictions on Stock; Option Agreement. At the time it
grants Options under this Plan, the Company may retain, for itself or others,
rights to repurchase the shares of Stock acquired under the Option or impose
other restrictions on such shares. The terms and conditions of any such rights
or other restrictions shall be set forth in the Option Agreement evidencing the
Option. No Option shall be exercisable until after execution of the Option
Agreement by the Company and the Optionee.
(vi) Transferability of Options. Except as otherwise provided
below for Non-qualified Stock Options, no Option shall be transferable other
than by will or by the laws of descent and distribution and during the lifetime
of an Optionee, only the Optionee, his guardian or legal representative may
exercise an Option. An Optionee may designate a beneficiary to exercise his or
her Options after the Optionee's death. The Administrator may provide for
transfer of an Option (other than an Incentive Stock Option), without payment of
consideration, to the following family members of the Optionee, including
adoptive relationships: a child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law, niece, nephew, former spouse
<PAGE>33
(whether by gift or pursuant to a domestic relations order), any person sharing
the employee's household (other than a tenant or employee), a family-controlled
partnership, corporation, limited liability company and trust, or a foundation
in which family members heretofore described control the management of assets.
The assigned portion may only be exercised by the person or persons who acquire
a proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Administrator may deem appropriate.
(vii) Exercise After Certain Events.
(1) Termination of
Employment/Consulting/Directorship. If for any reason other than permanent and
total disability or death (as defined below) an Optionee ceases to be employed
by or to be a consultant or director of the Company, or a Subsidiary, Incentive
Stock Options held at the date of such termination (to the extent then
exercisable) may be exercised, in whole or in part, at any time within three
months after the date of such termination or such lesser period specified in the
Option Agreement (but in no event after the earlier of (i) the expiration date
of the Option as set forth in the Option Agreement, and (ii) ten years from the
Grant Date) and Non-qualified Stock Options held at the date of such termination
(to the extent then exercisable) may be exercised, in whole or in part, at any
time within the period specified in the Option Agreement (but in no event after
the earlier of (i) the expiration date of the Option as set forth in the Option
Agreement, and (ii) ten years from the Grant Date), or such lesser period
specified by the Administrator.
If an Optionee granted an Incentive Stock
Option terminates employment but continues as a consultant, advisor or in a
similar capacity to the Company or a Subsidiary, Optionee need not exercise the
Option within three months of termination of employment but shall be entitled to
exercise within three months of termination of services to the Company or the
Subsidiary (one year in the event of permanent disability or death). However, if
Optionee does not exercise within three months of termination of employment, the
Option will not qualify as an Incentive Stock Option.
(2) Permanent Disability and Death. If an
Optionee becomes permanently and totally disabled (within the meaning of Section
22(e)(3) of the Code), or dies while employed by the Company, or while acting as
an officer, consultant or director of the Company, or a Subsidiary, (or, if the
Optionee dies within the period that the Option remains exercisable after
termination of employment or affiliation), Incentive Stock Options then held (to
the extent then exercisable) may be exercised by the Optionee, the Optionee's
personal representative, or by the person to whom the Incentive Stock Option is
transferred by will or the laws of descent and distribution, in whole or in
part, at any time within one year after the disability or death or any lesser
period specified in the Option Agreement (but in no event after the earlier of
(i) the expiration date of the Option as set forth in the Option Agreement, and
(ii) ten years from the Grant Date). Non-qualified Stock Options shall not be
limited to such one year exercise period upon permanent disability or death and
may be exercised at any time specified in the Option Agreement (but in no event
after the earlier of (i) the expiration date of the Option as set forth in the
Option Agreement, and (ii) ten years from the Grant Date) or such lesser period
specified by the Administrator.
(viii) Compliance with Securities Laws. The Company shall not
be obligated to issue any shares of Stock upon exercise of an Option unless such
shares are at that time effectively registered or exempt from registration under
the federal securities laws and the offer and sale of the shares of Stock are
otherwise in compliance with all applicable securities laws. Upon exercising all
or any portion of an Option, an Optionee may be required to furnish
representations or undertakings deemed appropriate by the Company to enable the
offer and sale of the shares of Stock or subsequent transfers of any interest in
such shares to comply with applicable securities laws. Evidences of ownership of
shares of Stock acquired upon exercise of Options shall bear any legend required
by, or useful for purposes of compliance with, applicable securities laws, this
Plan or the Option Agreement evidencing the Option.
<PAGE>34
6. Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the Grant Date)
of the Stock for which Incentive Stock Options may first become exercisable by
any Optionee during any calendar year under this Plan, together with that of
Stock subject to Incentive Stock Options first exercisable (other than as a
result of acceleration pursuant to Section 9(a)) by such Optionee under any
other plan of the Company or any Subsidiary, shall not exceed $100,000.
(b) There shall be imposed in the Option Agreement relating to
Incentive Stock Options such terms and conditions as are required in order that
the Option be an "incentive stock option" as that term is defined in Section 422
of the Code.
(c) No Incentive Stock Option may be granted to any person who, at
the time the Incentive Stock Option is granted, owns shares of outstanding Stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, unless the exercise price of such Option is at least 110%
of the Fair Market Value of the Stock (determined as of the Grant Date) subject
to the Option and such Option by its terms is not exercisable after the
expiration of five years from the Grant Date.
(d) No Incentive Stock Option may be granted to any person who is not
an employee of the Company or a Subsidiary of the Company.
7. Payment of Taxes. Upon the disposition by an Optionee or other person
of shares of an Option prior to satisfaction of the holding period requirements
of Section 422 of the Code, or upon the exercise of a Non-qualified Stock
Option, the Company shall have the right to require such Optionee or such other
person to pay by cash, or check payable to the Company, the amount of any
required withholding on applicable federal, state, and local taxes and FICA with
respect to such transactions. Any such payment must be made promptly when the
amount of such obligation becomes determinable (the "Tax Date"). To the extent
permissible under applicable tax, securities and other laws, the Administrator
may, in its sole discretion and upon such terms and conditions as it may deem
appropriate, permit an Optionee to satisfy his or her obligation to pay any such
tax, in whole or in part, up to an amount not greater than the Optionee's
estimated withholding, by (a) directing the Company to apply shares of Stock to
which the Optionee is entitled as a result of the exercise of an Option, or (b)
delivering to the Company shares of Stock owned by the Optionee. The shares of
Stock so applied or delivered in satisfaction of the Optionee's tax withholding
obligation shall be valued at their Fair Market Value as of the date of
measurement of the amount of income subject to withholding.
8. Adjustment for Changes in Capitalization. The existence of outstanding
Options shall not affect the Company's right to effect adjustments,
recapitalizations, reorganizations or other changes in its or any other
corporation's capital structure or business, any merger or consolidation, any
issuance of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock, the dissolution or liquidation of the Company's or any
other corporation's assets or business or any other corporate act whether
similar to the events described above or otherwise. Subject to Section 9, if the
outstanding shares of the Stock are increased or decreased in number or changed
into or exchanged for a different number or kind of securities of the Company or
any other corporation by reason of a recapitalization, reclassification, stock
split, combination of shares, stock dividend or other event, an appropriate
adjustment of the number and kind of securities with respect to which Options
may be granted under this Plan, the number and kind of securities as to which
outstanding Options may be exercised, and the exercise price at which
outstanding Options may be exercised will be made.
9. Dissolution, Liquidation, Merger.
(a) Company Not The Survivor. In the event of a dissolution or
liquidation of the Company, a merger, consolidation, combination or
reorganization in which the Company is not the surviving corporation, or a sale
of substantially all of the assets of the Company (as determined in the sole
discretion of the Board of Directors), the Administrator, in its absolute
discretion, may cancel each outstanding Option upon payment in cash to the
Optionee of the amount by which any cash and the fair market value of any other
property which the Optionee would have received as consideration for the shares
of Stock covered by the Option if the Option had been exercised before such
liquidation, dissolution, merger, consolidation, combination, reorganization or
<PAGE>35
sale exceeds the exercise price of the Option or negotiate to have such option
assumed by the surviving corporation. In addition to the foregoing, in the event
of a dissolution or liquidation of the Company, or a merger, consolidation,
combination or reorganization, in which the Company is not the surviving
corporation, the Administrator, in its absolute discretion, may accelerate the
time within which each outstanding Option may be exercised or negotiate to have
such option assumed by the surviving corporation.
(b) Company is the Survivor. In the event of a merger, consolidation,
combination or reorganization in which the Company is the surviving corporation,
the Board of Directors shall determine the appropriate adjustment of the number
and kind of securities with respect to which outstanding Options may be
exercised, and the exercise price at which outstanding Options may be exercised.
The Board of Directors shall determine, in its sole and absolute discretion,
when the Company shall be deemed to survive for purposes of this Plan.
10. Change of Control. If there is a "change of control" in the Company,
all outstanding Options shall fully vest immediately upon the Company's public
announcement of such a change. A "change of control" shall mean an event
involving one transaction or a related series of transactions, in which (i) the
Company issues securities equal to 25% or more of the Company's issued and
outstanding voting securities, determined as a single class, to any individual,
firm, partnership, limited liability company, or other entity, including a
"group" within the meaning of SEC Exchange Act Rule 13d-3, (ii) the Company
issues voting securities equal to 25% or more of the issued and outstanding
voting stock of the Company in connection with a merger, consolidation other
business combination, (iii) the Company is acquired in a merger or other
business combination transaction in which the Company is not the surviving
company, or (iv) all or substantially all of the Company's assets are sold or
transferred. See Section 9 with respect to Options vesting upon the occurrence
of either of the events described in (iii) or (iv) of this Section 10 and the
result upon the non-exercise of the Options.
11. Suspension and Termination. In the event the Board or the
Administrator reasonably believes an Optionee has committed an act of misconduct
including, but limited to acts specified below, the Administrator may suspend
the Optionee's right to exercise any Option granted hereunder pending final
determination by the Board or the Administrator. If the Administrator determines
that an Optionee has committed an act of embezzlement, fraud, breach of
fiduciary duty or deliberate disregard of the Company rules or rules made by a
supervisor, or if an Optionee makes an unauthorized disclosure of any Company
trade secret or confidential information, engages in any conduct constituting
unfair competition, induces any Company customer to breach a contract with the
Company or induces any principal for whom the Company acts as agent to terminate
such agency relationship, neither the Optionee nor his estate shall be entitled
to exercise any Option hereunder. In making such determination, the Board or the
Administrator shall give the Optionee an opportunity to appear and present
evidence on the Optionee's behalf. The determination of the Board or the
Administrator shall be final and conclusive.
12. No Rights as Shareholder or to Continued Employment. An Optionee
shall have no rights as a shareholder with respect to any shares of Stock
covered by an Option. An Optionee shall have no right to vote any shares of
Stock, or to receive distributions of dividends or any assets or proceeds from
the sale of Company assets upon liquidation until such Optionee has effectively
exercised the Option and fully paid for such shares of Stock. Subject to
Sections 8 and 9, no adjustment shall be made for dividends or other rights for
which the record date is prior to the date title to the shares of Stock has been
acquired by the Optionee. The grant of an Option shall in no way be construed so
as to confer on any Optionee the rights to continued employment by the Company,
or a Subsidiary.
13. Termination; Amendment. The Board may amend, suspend or terminate
this Plan at any time and for any reason, but no amendment, suspension or
termination shall be made which would impair the right of any person under any
outstanding Options without such person's consent not unreasonably withheld.
Further, the Board may also amend this Plan to materially increase the benefits
accruing to existing Option holders under this Plan; provided, however, that any
such amendment shall be subject to the approval of the Company's stockholders if
so required to maintain the status of the Plan as an Incentive Stock Option
Plan.
14. Governing Law. This Plan and the rights of all persons under this
Plan shall be construed in accordance with and under applicable provisions of
the laws of the State of California.
