SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sect. 240.14a11(c) or Sect. 240.14a12
Groen Brothers Aviation, Inc.
-----------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 011.
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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
<PAGE>
[ ] Fee paid previously with 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>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
Notice is hereby given that the next Annual Meeting of Shareholders of
Groen Brothers Aviation, Inc., a Utah corporation (the "Company"), will be held
at the Company's Utah offices, 2640 W. California Ave. Suite A, Salt Lake City,
Utah, 84104-4593 at 12:00 p.m., Mountain Daylight Savings Time, on Saturday, May
20, 2000 (the "Annual Meeting").
At the Annual Meeting, the shareholders will be asked to (i) consider
and vote for the election of directors, (ii) ratify the appointment of the firm
of Tanner+Co., independent certified public accountants, as the Company's
auditors, (iii) approve Amended and Restated Articles of Incorporation, that
include an increase in the number of authorized shares of the Company and a
limitation on the liability of directors under Section 841 of the Utah Revised
Business Corporations Act (the "Revised Act"), (iv) approve the number of shares
to be issued under the Company's 2000 Stock Option Plan, (v) approve a voting
process whereby shareholders can approve an action, without holding a meeting,
if a written consent setting forth the action is signed by a majority of the
shareholders (or such greater vote as may be required), and (vi) any other
business that may be lawfully brought before the Annual Meeting. The foregoing
items of business are more fully described in the Proxy Statement accompanying
this Notice. Only shareholders of record at the close of business on Thursday,
April 6, 2000 (the "Record Date"), are entitled to notice of and to vote at the
Annual Meeting, or at any continuance(s) or adjournment(s) thereof.
By Order of the Board of Directors
/s/ David L. Groen
------------------------------------
DAVID L. GROEN, President and
Chief Executive Officer
April 28, 2000
Please note: Your vote is important no matter how many shares you own. Even if
you plan to be present at the annual meeting, please fill in, date, sign, and
mail promptly the enclosed proxy to ensure that your shares are represented at
the Annual Meeting. If you attend the Annual Meeting in person, you may vote in
person if you wish to do so even though you have previously sent in your proxy.
Please mail your proxy promptly and save the Company the expense of additional
requests for proxies.
<PAGE>
Groen Brothers Aviation, Inc.
2640 W. California Ave. Suite A,
Salt Lake City, Utah, 84104-4593
(801) 973-0177
PROXY STATEMENT
---------------
General
This Proxy Statement is furnished to shareholders of Groen Brothers
Aviation, Inc., a Utah corporation (the "Company"), in connection with the
solicitation of proxies to be voted at the Company's next Annual Meeting of
Shareholders. The Annual Meeting will be held on Saturday, May 20, 2000, at
12:00 p.m., Mountain Daylight Savings Time, at the Company's Utah offices at
2640 W. California Ave. Suite A, Salt Lake City, Utah, 84104-4593. The
accompanying proxy is being solicited on behalf of the Board of Directors of the
Company. This Proxy Statement was first mailed on or about April 28, 2000, to
shareholders of record of the Company as of Thursday, April 6, 2000. Together
with the Proxy Statement, the Company also delivered to the shareholders (i) its
Form 10-KSB as filed with the Securities and Exchange Commission ("SEC") for its
fiscal year ended June 30, 1999, and (ii) its Form 10-QSB as filed with the SEC
for its fiscal quarter ended December 31, 1999.
At the meeting, the following matters will be considered and voted on:
1. Proposal No. 1. Elect David L. Groen, H. Jay Groen, and James P.
Mayfield III as directors to hold office until the 2001 Annual Meeting of
Shareholders or until their successors shall have been duly elected and
qualified (see "Proposal One - Election of Directors");
2. Proposal No. 2. Ratify the appointment by the Board of Directors of
Tanner+Co., certified public accountants, as independent auditors to the Company
for its fiscal year ended June 30, 2001 (see "Proposal Two - Appointment of
Independent Auditors");
3. Proposal No. 3. Approve Amended and Restated Articles of
Incorporation, that include an increase in the number of authorized shares of
the Company and a limitation on the liability of directors pursuant to Section
841 of the Utah Revised Business Corporations Act, as amended (the "Revised
Act") (see "Proposal Three - Approval of Amended and Restated Articles of
Incorporation");
4. Proposal No. 4. Approve the number of shares under the Company's
2000 Stock Option Plan (see "Proposal Four - Approval of Number of Shares Under
2000 Stock Option Plan");
5. Proposal No. 5. Approve a voting process whereby shareholders can
approve an action, without holding a meeting, if a written consent setting forth
the action is signed by a majority of the shareholders pursuant to Section 704
of the Revised Act (or such greater vote as may be required) (see "Proposal Five
- - Approval of Shareholder Action by Majority Written Consent"); and
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<PAGE>
6. Other Business. Such other business as may properly come before the
Annual Meeting.
The Board of Directors recommends that shareholders vote FOR all
nominees for director listed in Proposal No. 1 and FOR Proposals 2-5.
INFORMATION CONCERNING PROXY SOLICITATION AND VOTING
Voting Rights
The outstanding voting securities of the Company on April 6, 2000
consisted of 71,879,722 shares of common stock, par value $0.005 per share
("Common Stock"). Only holders of record of the Company's Common Stock
outstanding as of April 6, 2000 (the "Record Date") will be entitled to vote at
the Annual Meeting. Each shareholder has the right to one vote for each share of
the Company's Common Stock owned by the shareholder.
Voting and Revocation of Proxies
By completing and returning the accompanying proxy form, the
shareholder authorizes David L. Groen and H. Jay Groen, as designated on the
face of the proxy form (the "Proxy Holders"), to vote all shares for the
shareholder. All proxies returned to the Company that are properly signed and
dated will be voted by the Proxy Holders as the shareholder directs. If no
direction is given, valid proxies will be voted by the Proxy Holders FOR the
election of the persons nominated as directors, FOR the appointment of
Tanner+Co. as the Company's independent auditors for the fiscal year ended June
30, 2001, FOR the approval of the Amended and Restated Articles of
Incorporation, including an increase in the number of authorized shares of the
Company and a limitation on the liability of directors pursuant to Section 841
of the Revised Act, FOR the approval of the number of shares to be issued under
the Company's 2000 Stock Option Plan, and FOR the approval of a voting process
whereby the shareholders can approve an action, without holding a meeting, if a
written consent setting forth the action is signed by a majority of the
shareholders, pursuant to Section 704 of the Revised Act. Additionally, the
shares represented by a valid proxy will be voted by the Proxy Holders, in their
discretion, on any other matters that may properly come before the Annual
Meeting. The Board of Directors does not know of any matters to be considered at
the Annual Meeting other than the proposals described above. In the event that
any director nominee is unable to serve, the Proxies will be voted for a
substitute nominee, if any, to be designated by the Board of Directors. The
Board of Directors currently has no reason to believe that any nominee will be
unavailable or unwilling to serve.
A proxy may be revoked by (i) delivering a written statement to the
President of the Company stating that the proxy is revoked, (ii) by delivering
to the President of the Company or presenting at the Annual Meeting a new proxy
executed on a later date by or on behalf of the person or entity executing the
prior proxy, or (iii) by voting in person at the Annual Meeting. A revoked proxy
will not be voted.
Quorum and Voting Requirements
A quorum of the voting shares of the Company must be present at the
Annual Meeting for a vote to be taken. Under Utah law and the Company's Articles
of Incorporation and Bylaws, a quorum will be present if a majority of the
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<PAGE>
voting shares outstanding and entitled to vote at the meeting are present in
person or by proxy. Under Utah law and the Company's Articles of Incorporation
and Bylaws, abstentions and broker non-votes will be counted for the purposes of
determining whether a quorum is present at the Annual Meeting. With regard to
Proposal No. 1, directors are elected by a plurality of the shares present in
person or by proxy and voting at the Annual Meeting. Thus votes may be cast in
favor of one or more directors or withheld; votes that are withheld will be
excluded entirely from the vote and will have no effect. The appointment of
auditors under Proposal No. 2 requires the affirmative vote of a majority of the
votes cast at the Annual Meeting. The approval of the Amended and Restated
Articles of Incorporation under Proposal No. 3 requires the affirmative vote by
the holders of a majority of the current outstanding shares of the Company. The
approval of the number of shares to be issued under Stock Option Plan under
Proposal No. 4 requires the affirmative vote of a majority of the votes cast at
the Annual Meeting. The approval of a Shareholder Action by Majority Written
Consent under Proposal No. 5 requires the affirmative vote by the holders of a
majority of the current outstanding shares of the Company. With regard to
Proposal Nos. 2-5, abstentions and broker non-votes are not counted for purposes
of determining whether a proposal has been approved.
Adjournment of Annual Meeting
In the event that Proxies representing sufficient votes to constitute a
quorum are not received by the date of the Annual Meeting, the Proxy Holders may
propose one or more adjournments of the Annual Meeting to permit further
solicitation of proxies. At such adjournments the proxies will continue to be
valid and, once a quorum is present in person or by proxy, the Company will
conduct the business of the Annual Meeting. The Proxy Holders will vote in favor
of any such proposed adjournments.
Solicitation
The solicitation of proxies pursuant to this Proxy Statement will be
made primarily by mail. In addition, officers, employees, and representatives of
the Company may solicit proxies by telephone, mail, or personal interviews, and
arrangements will be made with banks, brokerage firms, and others to forward
solicitation materials to the beneficial owners of shares held of record by
them. The total cost of all such solicitation efforts, including reimbursement
of the expenses of brokers and other nominees, will be borne by the Company.
Shareholder Proposals For 2001 Annual Meeting
In order for a shareholder's proposal to be considered for inclusion in
the Company's proxy materials for the 2001 Annual Meeting of Shareholders (the
"2001 Annual Meeting"), the proposal must be received by the Company's President
at the above address no later than December 31, 2000, and must otherwise comply
with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 as
amended.
Proposals of shareholders submitted for consideration at the Company's
2001 Annual Meeting other than those submitted for inclusion in the Company's
proxy material pursuant to Rule 14a-8, must be delivered to the Company's
President no later than March 14, 2001. If such timely notice of a shareholder's
proposal is not given, the Company's Proxy Holders may exercise discretionary
voting authority to vote on the proposal when and if it is raised at the 2001
Annual Meeting.
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<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding ownership
of Common Stock as of April 6, 2000, with respect to (i) each person who is
known to the Company to beneficially own more than five percent of the
outstanding shares of Common Stock, (ii) the beneficial ownership of such
securities by each executive officer and director of the Company, and (iii) the
beneficial ownership of all such securities by all of the Company's directors
and executive officers as a group. Stock is considered "beneficially owned" by a
person if such person, directly or indirectly, through any contract,
arrangement, understanding or otherwise, has or shares: (i) voting power for the
stock; and/or (ii) investment power for the stock (including the power to
dispose of the stock). Such "beneficial ownership" also includes stock that a
person has the right to acquire within 60 days of April 6, 2000. Unless
otherwise indicated, the persons or entities named in the table have sole voting
and investment power with respect to all shares of stock beneficially owned by
them, subject to applicable community property laws. As of April 6, 2000, the
Company has 71,879,722 shares of outstanding Common Stock. The percentage
ownership for the named shareholder is calculated assuming that all the stock
that could be acquired by that shareholder within 60 days, by option exercise or
otherwise, has in fact been acquired and that no other shareholder has exercised
a similar right to acquire additional shares.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ------------------- -------------------- --------
<S> <C> <C>
David L. Groen 14,939,687(1) 19.5 %
2640 W. California Avenue
Salt Lake City, UT 84104
H. Jay Groen 9,963,399(2) 13.0 %
2640 W. California Avenue
Salt Lake City, UT 84104
James P. Mayfield III 1,095,760(3) 1.5 %
2640 W. California Avenue
Salt Lake City, UT 84104
Lyle Campbell 6,077,660(4) 8.3 %
c/o Chapman and Cutler
111 W. Monroe Street
Chicago, IL 60603
All directors and executive 25,998,846(1,2,3) 36.1 %
officers (3 persons) as a
Group
</TABLE>
1 President, Chief Executive Officer, Chief Financial Officer,
Treasurer, and Director of the Company. Includes 4,500,000 shares of common
stock issuable upon the exercise of options held by Mr. Groen that are currently
exercisable within 60 days.
2 Director of the Company. Includes 4,500,000 shares of common stock
issuable upon the exercise of options held by Mr. Groen that are currently
exercisable within 60 days.
4
<PAGE>
3 Vice President, Chief Operating Officer, Chief of Flight Operations
and Director of the Company. Includes 1,025,000 shares of common stock issuable
upon the exercise of options held by Mr. Mayfield that are currently exercisable
within 60 days.
4 Includes 826,000 shares of common stock issuable upon the exercise of
options held by Mr. Campbell that are currently exercisable within 60 days.
The Company knows of no arrangements, including any pledge by any
person of securities of the Company, the operation of which may, at a subsequent
date, result in a change in control of the Company.
PROPOSAL ONE - ELECTION OF DIRECTORS
Nominees
Pursuant to the Company's Articles of Incorporation and Bylaws, the
Company's Board of Directors may consist of from three to nine individuals as
determined by the Board of Directors. The Board currently consists of three
members, David L. Groen, H. Jay Groen, and James P. Mayfield III. At the Annual
Meeting, shareholders are being asked to elect these same three individuals,
David L. Groen, H. Jay Groen, and James P. Mayfield III, to serve until the next
annual meeting of shareholders and until their successors are duly elected and
qualified. In the event any nominee is unable to serve, the proxies will be
voted for a substitute nominee, if any, to be designated by the Board of
Directors. The biographies of these three individuals are as follows:
David L. Groen is currently the President, Chief Executive Officer,
Chief Financial Officer, and Treasurer of the Company and has been a Director
since March 1986. Immediately prior to forming the Company, David Groen was a
founding partner and Chief Financial Officer for Seagull Recycling Company.
Previously, he has held numerous executive positions in the helicopter industry
with Sales and Marketing, Safety Officer, Branch Manager, and Chief Pilot
responsibilities. Having extensive military and commercial experience in
helicopters, Mr. Groen has logged 7,000 hours in rotor-wing and fixed-wing
aircraft. Mr. Groen received his Certificate of Graduation in 1970 from the U.S.
Army Warrant Officer Flight Training School, was awarded Army Aviator Wings and
promoted to the rank of Warrant Officer. As a combat helicopter pilot and
aircraft Commander in Vietnam, he flew hundreds of combat sorties and was
awarded the Air Medal and Bronze Star. He is qualified as a pilot in most
American and French helicopters, and has attended Aerospatials factory schools
on the SA315B Lama and the SA316 and SA319 Alouette III helicopters. Over the
years, Mr. Groen's numerous commercial helicopter missions have involved such
work as EMS (emergency medical service hospital air ambulance), power line
construction and patrol, topographical survey, USGS map making, forest fire
fighting, long line seismic oil exploration, and wildcat on shore and off shore
oil drilling operations. David Groen is co-author, along with his brother Jay,
of a best selling novel entitle Huey.
H. Jay Groen has been a Director of the Company since March 1986.
Before joining the Company, Jay Groen co-founded Seagull Recycling Company, an
organization that developed an original supply of secondary paper fiber for sale
to domestic and Far East markets. Prior to this business venture, he was the
President of China West, Inc., a Washington D.C. based organization representing
U.S. firms in the Peoples Republic of China. In this role, Mr. Groen negotiated
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<PAGE>
joint venture and trade agreements in such diverse industries as machine
building, petroleum, coal, agriculture, light manufacturing, handicrafts, and
forest products. Early in his career, Mr. Groen spent ten years as an Economist
for the Central Intelligence Agency (CIA) doing original research on Asia, with
a particular interest on the People's Republic of China. As part of his
responsibilities with the CIA, Mr. Groen prepared written and oral briefs for
the White House staff and members of Congress, and lectured at the National War
College. Mr. Groen served in the U.S. Air Force as a Chinese Linguist in Vietnam
and Asia, logging more than 100 combat sorties. He is the co-author, along with
his brother David, of a best selling book entitled Huey, a novel about the
Vietnam War. Mr. Groen has also published several other writings including: 1)
"The Sweet and Sour China Market", China Under Four Modernizations; and, 2)
"Buying from China", U.S. - China Economic Relations: A reappraisal. Mr. Groen
has an M.A. in Economics from Virginia Polytechnic Institute, a B.A. in
Economics from the University of Utah and a Language Certificate in Mandarin
Chinese from Yale University. A private pilot with a practical background in
aeronautical design, Mr. Groen has added much innovation to the Hawk gyroplane.
James P. Mayfield III is currently the Vice President, Chief Operating
Officer, and Chief of Flight Operations of the Company. On October 13, 1998, Mr.
Mayfield replaced Philip Cannon as a Director of the Company. Mr. Mayfield, one
of only a handful of individuals certified as a gryoplane pilot examiner by the
FAA, brings to the Company more than 3,300 hours of flight time in gyroplanes.
As the Company Chief Test Pilot, Mr. Mayfield was recently honored by being
inducted into "The Society of Experimental Test Pilots," an elite world-wide
organization of only 1800 pilots, whose distinguished membership include Chuck
Yeager, Deke Slayton, Scott Crossfield, and Jimmy Doolittle II. Mr. Mayfield has
logged more than 13,000 hours flight time that includes extensive experience
test flying a wide range of aircraft. A career U.S. Marine Corps officer, Mr.
Mayfield retired from the Marines in 1989 following nearly 25 years of
distinguished service. His last tour of duty was in the Operations Department at
Camp Pendleton, California, responsible for the safety and security of Special
Weapons in the Pacific region. With a staff of 400 people reporting to him, he
was responsible for training, outfitting, and evaluating the First Marine
Division (30,000 Marines) in Special Weapons employment and defense. Mr.
Mayfield has two baccalaureate degrees, psychology and sociology, bestowed by
the University of New York.
Directors and Executive Officers of the Company
The following table sets forth certain information concerning directors
and executive officers of the Company, including the nominees for director.
<TABLE>
<CAPTION>
Began Service as an
Name Age Positions Held Officer or Director
- ---- --- -------------- -------------------
<S> <C> <C> <C>
David L. Groen 49 President, CEO, CFO, 1986
Treasurer, and Director
H. Jay Groen 56 Director 1986
James P. Mayfield III 52 Vice President, COO, Chief of 1998
Flight Operations, and Director
</TABLE>
David L. Groen and H. Jay Groen are brothers. No other family
relationship exists among any of the directors or officers. All directors hold
office until the next Annual Meeting of shareholders or until their successors
are duly elected and qualified. Officers serve at the pleasure of the Board of
Directors.
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<PAGE>
Executive Compensation
The following table sets forth information concerning all cash
compensation paid by the Company for services in all capacities to the Company's
Chief Executive Officer during the three-year period ended June 30, 1999. The
Company has no other officers whose total cash compensation exceeded $100,000
for the year. The Company has no plans that will require the Company to
contribute to or to provide pension, retirement or similar benefits to directors
or officers of the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------------------------------- -----------------------------------
Pay-
Awards outs
------------------------- -----
Other All
Name Annual Restricted LTIP Other
and Compen Stock Options/ Pay- Compen
Position Year Salary Bonus sation Awards SARs outs sation
-------- ---- ------ ----- ------ ---------- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David L. Groen, Fiscal $59,000 -0- -0- -0- 2,025,000 -0- -0-
President, CEO, 1999
CFO, Treasurer,
and Director Fiscal $59,000 -0- -0- -0- -0- -0- -0-
1998
Fiscal $59,000 -0- -0- -0- -0- -0- -0-
1997
</TABLE>
Stock Options/SARs
The following table sets forth the stock option and SAR grants to the
named executive officers in fiscal year ended June 30, 1999:
Option/SAR Grants in Fiscal Year Ended June 30, 1999
Individual Grants
<TABLE>
<CAPTION>
Number of Percent of total
securities options/SARs
underlaying granted to
options/SARs employees in Exercise or base
Name and Position granted fiscal year price ($/Sh) Expiration date
- ----------------- ------------ ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
David L. Groen 2,025,000 27% $0.50 to $1.00 11/2/2003 to
President, CEO, CFO, 3/1/2004
Treasurer, and Director
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Number of Percent of total
securities options/SARs
underlaying granted to
options/SARs employees in Exercise or base
Name and Position granted fiscal year price ($/Sh) Expiration date
- ----------------- ------------ ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
H. Jay Groen 2,025,000 27% $0.50 to $1.00 11/2/2003 to
Director 3/1/2004
James P. Mayfield III 1,025,000 14% $0.50 11/2/2003 to
Vice President, COO, 4/6/2004
Chief of Flight
Operations, and
Director
</TABLE>
Aggregated Stock Option/SAR Exercises
The following table sets forth the aggregated Common Stock options
exercised by the named executive officers in fiscal year ended June 30, 1999,
and the year-end value of unexercised options:
Aggregated Option/SAR Exercises in Fiscal Year Ended June 30, 1999
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of
Number of unexercised in-
unexercised the-money
options/SARs at options/SARs at
FY-end (#) FY-end ($)
Shares acquired Value realized exercisable/ exercisable/
Name and Position on exercise (#) ($) unexercisable unexercisable(4)
- ----------------- --------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
David L. Groen -0- -0- 4,500,000(1)/ $5,639,750/
-0- -0-
H. Jay Groen -0- -0- 4,500,000(2)/ $5,639,750/
-0- -0-
James P. Mayfield III -0- -0- 1,025,000(3)/ $1,281,250/
-0- -0-
</TABLE>
1 Includes: (i) options for 2,475,000 shares of Common Stock
exercisable at $0.09 per share which expire July 8, 2003; (ii) options for
2,000,000 shares of Common Stock exercisable at $1.00 per share which expire
November 2, 2003; and (iii) options for 25,000 shares of Common Stock
exercisable at $0.50 per share, which expire March 1, 2004.
2 Includes: (i) options for 2,475,000 shares of Common Stock
exercisable at $0.09 per share which expire July 8, 2003; (ii) options for
2,000,000 shares of Common Stock exercisable at $1.00 per share which expire
November 2, 2003; and (iii) options for 25,000 shares of Common Stock
exercisable at $0.50 per share, which expire March 1, 2004.
3 Includes: (i) options for 500,000 shares of Common Stock exercisable
at $0.50 per share which expire November 2, 2003; (ii) options for 25,000 shares
of Common Stock exercisable at $0.50 per shares, which expire March 1, 2004; and
(iii) options for 500,000 shares of Common Stock exercisable at $0.50 per share
which expire April 6, 2004.
4 The value per share of option stock is calculated by subtracting the
exercise price from the closing sales price on OTC Bulletin Board Market on June
30, 1999 ($1.75).
8
<PAGE>
Director Compensation
The Company does not compensate any of the directors of the Company.
Employment Agreements with Executive Officers and Key Employees
On July 1, 1999, the Company entered into employment agreements with
David L. Groen and James P. Mayfield. Under these employment agreements, David
L. Groen and James P. Mayfield are "at will" employees of the Company. These
employment agreements contain no specific commitment by the Company to pay any
compensation to any executive officer, however, these employment agreements
contain non-disclosure provisions, confidentially provisions and non-competition
provisions.
On July 1,1999, the Company entered into an employment agreement with
H. Jay Groen, a director and key employee of the Company. The employment
agreement contains no specific job description, title or specific commitment by
the Company to pay a salary, however, Mr. Groen has been given the title of
Special Advisor to the Board. Mr. Groen is an employee of the Company and not an
executive officer.
Certain Relationships and Related Transactions
As indicated in the discussion above, David L. Groen, H. Jay Groen, and
James P. Mayfield III have stock option agreements with the Company. Also, as
explained above, David L. Groen, H. Jay Groen and James P. Mayfield III have
employment agreements with the Company.
The Company has an accrued deferred salary obligation of $256,083.75
payable to David L. Groen and $241,625.30 payable to H. Jay Groen. In addition
the Company, has loaned $84,313.27 to David L. Groen and $27,000 to H. Jay
Groen.
The Company entered into a promissory note totaling $180,000 with
interest of 12% per annum with Hawk Autogyro, Inc., which is controlled by David
L. Groen, who is a President, CEO, CFO, Treasurer and Director of the Company
and H. Jay Groen, who is a Director of the Company. The note is due on demand
and has accrued interest of $112,200 as of March 31, 2000.
The Company borrowed money under several promissory notes with Lyle
Campbell, a shareholder of the Company. The Company entered into the following
notes on (i) April 2, 1999, for $154,500 at 18% per annum with principal and
accrued interest due in full on June 2, 1999, (ii) June 2, 1999, for $301,900 at
18% per annum with principal and accrued interest due on demand, and (iii) May
5, 1999, for $500,000 at 18% per annum with principal and accrued interest due
on demand. On June 23, 1999, Mr. Campbell purchased a Groen Brothers Aviation
Charter Dealership in Phoenix, Arizona for $413,000 by the cancellation of both
principal and interest on the April 2nd and June 2nd notes, leaving a balance of
$54,881, which was evidenced by the issuance of a June 30,1999, demand
promissory note with an interest rate of 18% per annum. On October 5, 1999, Mr.
Campbell purchased an option for $50,000 by the cancellation of both principal
and interest on the May 5th and June 30th, leaving a balance of $545,005. The
option is to acquire 826,000 shares of Common Stock of the Company for $0.50 per
share for a one year period ending June 30, 2000. Also, on October 5, 1999, Mr.
Campbell purchased 1,090,010 shares of Common Stock for $545,005 by the
cancellation of the remaining principal and interest on the May 5th and June
30th notes.
9
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Committees of the Board of Directors
The Company currently has no standing audit, nominating or compensation
committee of the Board of Directors.
Meetings of the Board of Directors
The Board of Directors held four (4) meetings during the last fiscal
year.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires that
the Company's executive officers and directors, and persons who beneficially own
more than ten percent of the Company's common stock, file initial reports of
stock ownership and reports of changes in stock ownership with the Securities
and Exchange Commission. Officers, directors, and greater than ten- percent
owners are required by applicable regulations to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely on a review of the copies of such forms furnished to the
Company or by oral representations from certain persons, the Company believes
that during the Company's fiscal year ended June 30,1999, all filing
requirements applicable to its current officers and directors (some of which are
also ten-percent beneficial owners of the Company) were met by such persons
except as follows: David L. Groen filed 3 forms late describing 12 transactions,
H. Jay Groen filed 2 forms late describing 19 transactions, and James P.
Mayfield filed 2 forms late describing 8 transactions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF ALL THREE
NOMINEES TO THE BOARD OF DIRECTORS NAMED ABOVE.
PROPOSAL TWO - APPOINTMENT OF INDEPENDENT AUDITORS
Tanner+Co. has been the Company's independent auditors since June 30,
1990. Proposal No. 2 is to reappoint Tanner+Co. as the Company's independent
public auditors for the fiscal year ending June 30, 2001. No representative of
Tanner+Co is expected to be present at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPOINTMENT OF
TANNER+CO. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE
30, 2001.
PROPOSAL THREE - APPROVAL OF AMENDED AND RESTATED
ARTICLES OF INCORPORATION
Changes Generally
The Company's Board of Directors has approved a resolution to amend and
restate the Company's Articles of Incorporation in the form attached hereto as
Exhibit A. On July 1, 1992, the Utah legislature adopted the Revised Business
10
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Corporations Act (the "Revised Act"). The Company's current Articles of
Incorporation were adopted under the prior Utah corporation statute. The Revised
Act allows for substantially abbreviated Articles of Incorporation than those
customarily adopted under the prior law. Accordingly, in addition to the
amendments specifically set forth below, the Board of Directors has approved the
removal of certain sections, including a section denying "preemptive rights,"
which are no longer required under the Revised Act. The par value of the
Company's common and preferred stock has also been changed to no par value as a
par value for such stock is no longer required under the Revised Act.
Increase in Authorized Common Stock
In addition to the general changes to the Company's Amended and
Restated Articles of Incorporation as described in the preceding paragraph, the
Board of Directors has also approved an increase in the authorized capital. On
February 23, 2000, the Company's Board of Directors unanimously approved a
resolution to amend the Company's Articles of Incorporation to increase the
number of authorized shares of the Company's Common Stock from 100,000,000, the
number of shares currently authorized, to 200,000,000, having no par value. This
provision increasing the authorized number of shares of Common Stock is set
forth in Article III of the Company's Amended and Restated Articles of
Incorporation. The Board of Directors believe that the availability of the
proposed amount of additional authorized shares of common stock will provide the
Company with the flexibility to issue common stock in connection with possible
future equity financing, stock options, or other appropriate general corporate
purposes, without the expense and delay of a special meeting of the
shareholders. At this time, the Company has no present plans, understandings or
agreements for the issuance or use of the proposed additional shares of common
stock.
The Company has 200,000,000 authorized shares of preferred stock with
none outstanding. The Board of Directors reserves the right to set the rights,
preferences, privileges and reductions and other matters relating to the
preferred stock of the Company without shareholder approval. The number of
authorized preferred stock is not being changed by the Amended and Restated
Articles of Incorporation. The preferred stock, however, will now have no par
value.
Limitation of Liability For Directors
In addition to the general changes to the Company's Amended and
Restated Articles of Incorporation as described in the preceding paragraphs, the
Board of Directors has also approved a limitation on the liability of directors.
On February 23, 2000, the Company's Board of Directors unanimously approved a
resolution to amend the Company's Articles of Incorporation to add a provision
to limit the liability of members of the Board of Directors as permitted by the
Revised Act. This provision is set forth in Article IV of the proposed Amended
and Restated Article of Incorporation.
Section 841 of the Utah Revised Business Corporation Act specifies that
a company's articles of incorporation may include a provision eliminating or
limiting the personal liability of a director to the corporation or to its
shareholders for monetary damages for any action taken or any failure to take
any action as a director, except liability for: (a) the amount of a financial
benefit received by a director to which he is not entitled; (b) an intentional
infliction of harm on the corporation or the shareholders; (c) a violation of
the Utah law imposing liability for unlawful distributions; (d) an intentional
violation of criminal law.
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The Utah legislature enacted this provision in response to changes in
the market for directors' liability insurance, including the significant
increase in the number and magnitude of lawsuits against directors and the
unavailability of insurance on traditional terms, or on any terms at all. The
Utah Legislature considered this development a threat to the quality and
stability of the governance of Utah corporations, because of the unwillingness
of directors to serve without the protections traditionally available to them
against claims arising out of their services and because of the deterrent effect
on entrepreneurial decision-making by directors who do serve.
The proposed amendment to the Articles of Incorporation does not
eliminate a director's fiduciary duty to the Company; it only eliminates
monetary damage awards occasioned by a breach of that duty. Thus, if the
amendment to the Articles of Incorporation is approved, a breach of the duty
would remain a valid basis for a suit seeking to stop a proposed transaction
from occurring. After the transaction has occurred, however, the stockholders
would no longer have a claim against directors for money damages based on the
breach of the duty, even if that breach involved gross negligence relating to
business decisions involving takeover proposals.
The proposed amendment to the Articles of Incorporation provides that
liability of directors shall be limited to the maximum extent provided by law.
The proposed amendment to the Articles of Incorporation further provides that
any repeal or modification of this provision by the Company's stockholders will
not adversely affect any right or protection of a director existing at the time
of such repeal of modification.
The proposed amendment to the Articles of Incorporation limits director
liability only for future conduct and does not limit liability for conduct which
predates the date of filing of the proposed amendment to the Articles of
Incorporation. The Company is not aware of any pending or threatened claim which
would be covered by the proposed amendment to the Articles of Incorporation, nor
has there been any litigation in the recent past which would have been affected
had this amendment been in place at the time of the conduct referred to in such
litigation.
The Board of Directors believes that the proposed amendment to the
Articles of Incorporation is in the best interest of the Company and its
stockholders, by maintaining the Company's ability to attract and retain
qualified individuals to serve as directors by assuring directors (and potential
directors) that their good faith decisions will not be second-guessed by a court
evaluating decisions with the benefit of hindsight. This proposed amendment, if
approved, will benefit the directors of the Company at the potential expense of
its shareholders in the event of a breach by one of the directors of his
fiduciary duty to the Company. In such cases, those stockholders' only remedy
would be to sue to stop the completion of the Board's action. In many
situations, this remedy may not be effective due to completion of the Board's
action.
The Board of Directors believes that the diligence exercised by
directors stems primarily from their desire to act in the best interest of the
Company, and not from a fear of monetary damage awards. Consequently, the Board
believes that the level of scrutiny and care exercised by directors will not be
lessened by the adoption of the proposed amendment to the Articles of
Incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF
THE AMENDED AND RESTATED ARTICLES OF INCORPORATION IN THE FORM ATTACHED HERETO
AS EXHIBIT "A".
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PROPOSAL FOUR - APPROVAL OF NUMBER OF SHARES UNDER
2000 STOCK OPTION PLAN
The Board of Directors has approved the 2000 Stock Option Plan (the
"Plan") for the Company in the form attached hereto as Exhibit B. The purpose of
the Plan is to provide stock option incentives to directors, officers, other
employees, consultants, and advisors of the Company (or any future subsidiary or
parent company of the Company). The Company is seeking shareholder approval of
the Plan because such approval is required under Internal Revenue Service
regulations in order to allow the Company to award incentive stock options
("ISOs") under the Plan. Described below are the material features of the Plan.
General
The Plan provides for the grant of a ISOs qualified under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code") and non-qualified
stock options ("NSOs"). The Plan is administered either by the Board of
Directors or one or more committees of the Board of Directors (the
"Administrator"). Option grants are made in the discretion of the Administrator
and may be made to Company officers, directors, employees, consultants and other
persons as determined by the Administrator. Presently, there are two (2)
executive officers, and numerous other employees currently employed by the
Company, all of whom (as well as all future employees) are eligible to
participate in the Plan.
The Plan currently provides that a maximum of thirty (30) million
shares of Common Stock may be issued under the Plan (subject to adjustment in
the event of stock split or other changes in the Common Stock as provided in the
Plan). To the extent that: (i) options expire or terminate for any reason prior
to exercise, or (ii) options are canceled and replaced by the Administrator, the
shares of Common Stock underlying such options will again be available for award
under the Plan.
Shares issued under the Plan will be "restricted" as defined under
Securities and Exchange Commission ("SEC") Rule 144, until such time as the
Company determines in its discretion, if at all, to register such shares under
the Securities Act of 1933. Cash proceeds from the exercise of option grants
will be used for general corporate purposes.
The Administrator
As mentioned above, the Administrator of the Plan will be the Board of
Directors or, if delegated by the Board of Directors in its discretion, one or
more committees of the Board of Directors. The Administrator has full authority
and discretion in the administration of the Plan, including adopting rules for
administration of the Plan and determining the designation of those persons
receiving option grants, the type of option granted, the number of shares to be
covered by options, the exercise price, and other options terms. The
Administrator's decisions in the administration of the Plan are final and
binding on all persons for all purposes.
Option Terms
The Company may grant ISOs under the Plan only to employees of the
Company. Such grants must be at an exercise price per share not less than 100%
of the fair market value of the Common Stock at the date of the grant (110% for
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<PAGE>
optionees holding 10% of more of the Company's Common Stock). The Plan limits
grants of ISOs that may be exercised for the first time by the holder during any
calendar year to $100,000 in market value. ISOs must expire within five years
from the date of grant. For optionees holding more than 10% of the Company's
Common Stock and 10 years from the date of grant for other option holders, ISOs
are exercisable during a recipient's lifetime only by such recipient and are
transferable only upon death by will or the laws of descent and distribution
following the recipient's death.
The Company may grant NSOs under the Plan to directors, employees,
consultants and advisors. Such NSOs are not subject to the requirements of the
Code and, therefore, may not contain the same restrictions as ISOs issued under
the Plan. NSOs must, however, have an exercise price not lower than the fair
market value of the Common Stock on the date of grant. Additionally, no NSO, may
have a term of more than 10 years from the date of grant.
The exercise price for options may be paid to the Company, in the
discretion of the Administrator, in cash, shares of Common Stock, payments over
time, or through a sale and remittance procedure implemented by the Company with
a brokerage firm. Generally, an option right may be exercised only by the holder
within three months after his or her termination of employment (twelve months if
termination is due to disability). An option generally may be exercised no later
than twelve months following an active employee's death or disability. Also, an
option usually is terminated immediately upon termination of an employee for
material misconduct. These general rules regarding exercise following
termination may be varied by the Administrator, but in no event may an option be
exercised later than the date of expiration of the option.
NSOs are transferable, in whole or in part, only (i) during the
recipient's lifetime if in connection with the recipient's estate plan to one or
more members of the recipient's immediate family (spouse and children) or to a
trust established exclusively for the benefit of one or more such immediate
family members, or (ii) by will or the laws of descent and distribution
following the recipient's death.
Options may or may not be subject to a vesting schedule, whereby the
options become exercisable by the recipient in portions. Such vesting may be
based on the passing of time, performance goals, or some other criteria
determined by the Administrator. Such vesting may be accelerated by the
Administrator in its discretion in the event of a major corporation transaction
(such as a merger or sale of all assets) or certain changes in control of the
Company.
Amendments
The Board of Directors can increase the number of shares that may be
awarded under the Plan subject to approval by the shareholders if the Board of
Directors desires to issue additional ISOs. The Administrator may otherwise
amend the Plan at any time and in any manner, subject to the rights of the
holders of outstanding options as specified in their option agreements.
Federal Income Tax Consequences of the 2000 Stock Option Plan
The following describes the general federal income tax consequences of
the option grants for grant recipients and the Company. A recipient will not
realize any income at the time an ISO is granted nor upon exercise of an ISO.
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<PAGE>
However, the difference between the option exercise price and the Common Stock's
fair market value at the time of exercise will be taken into account for
purposes of the recipient's alternative minimum income tax, if any.
Upon the subsequent disposition of shares of Common Stock acquired by
the exercise of an ISO more than (i) two years after the ISO is granted and (ii)
one year after the transfer of shares of Common Stock upon the exercise of such
option, the recipient will realize capital gain or loss upon such disposition.
The option exercise price will be the recipient's basis for determining the gain
or loss. If the subsequent disposition of stock occurs before the special
holding requirements describe above are met, the recipient generally will
recognize ordinary income upon such disposition equal to the excess of the fair
market value of the shares at the time the option was exercised over the
exercise price.
A recipient will not realize any income at the time a NSO is granted.
Upon the recipient's exercise of a NSO, the difference between the fair market
value of the Common Stock at the time of exercise and the option price will be
ordinary income to the employee.
With an NSO, at the time the recipient realizes ordinary income, the
Company will be entitled to a deduction in the same amount as the ordinary
income realized by the recipient. No such deduction or other tax consequence is
applicable to the Company upon grant or exercise of an ISO.
The foregoing is only a summary of the effect of federal income
taxation upon a recipient with respect to the grant and exercise of options
under the Plan. This summary does not purport to be complete and does not
discuss the income tax laws of any state or foreign country in which an employee
may reside.
Outstanding Stock Options
As of April 6, 2000, stock options for 14,774,271 shares of Common
Stock were outstanding. These options have not been issued pursuant to any plan,
although it is the Company's intention to seek the consent of the existing
option holders to roll their existing options under the Plan. All options shares
are currently exercisable. No outstanding options have been exercised. The stock
options outstanding are summarized below:
Option Holder Shares Subject to Options
- ------------- -------------------------
David L. Groen 4,500,000
James P. Mayfield III 1,025,000
Current Executive Officers 5,525,000
As a Group
Current Directors Who Are 4,500,000
Not Executive Officers
All Employees Who Are 4,749,271
Not Executive Officers
Total 14,774,271
15
<PAGE>
Based on the closing price of the Company's Common Stock on OTC
Bulletin Board as of April 6, 2000 ($1.59), the total market value of the
14,774,271 shares underlying outstanding grants under the Plan is $23,491,091.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE TO APPROVE THE NUMBER OF
SHARES TO BE ISSUED UNDER THE 2000 STOCK OPTION PLAN ATTACHED HERETO AS EXHIBIT
"B".
PROPOSAL FIVE - APPROVAL OF SHAREHOLDER ACTION
BY MAJORITY WRITTEN CONSENT
Prior to July 1, 1992, the Utah Business Corporations Act allowed
shareholders to take action by written consent in lieu of a meeting, but only if
the consent was unanimous. Section 704 of the Revised Act now provides that any
action which could be taken at any annual or special meeting of shareholders
(except for the election of directors) may be taken by written consents signed
by the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take the action at a meeting at
which all shares entitled to vote were present and voted. Directors may be
elected by written consent only if the consent is unanimous. The purpose of the
change under the Revised Act was to permit companies greater flexibility in
obtaining shareholder approval.
Section 704 does not apply automatically to corporations in existence
prior to July 1, 1992. Instead, such corporations may opt into the new system of
shareholder action. To opt into the new system, a company must obtain approval
of a majority of the company's shareholders.
The Company's Board of Directors recommends that, pursuant to the
Revised Act, the shareholders approve a voting process whereby action which may
be taken without a meeting and without prior notice so long as one or more
consents in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having the minimum number of votes that would be necessary
to authorize or take the action at a meeting at which all shares entitled to
vote were present and voted. At a minimum, this will require the consent of a
majority of the outstanding shares entitled to vote. To the extent any
shareholder action is approved with less than unanimous consent, the Company
must give the non-consenting shareholders at least 10 days notice prior to the
effectiveness of the action so approved. The Board is recommending this change
to allow the Company's shareholder to act without a need to hold a meeting in
every instance.
If the shareholders approve this voting mechanism, it is the intension
of the Company's Board of Directors to amend the Company's Bylaws to allow the
shareholders to vote in this manner.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL ALLOWING
FOR SHAREHOLDERS TO ACT BY WITHOUT A MEETING BY MAJORITY WRITTEN CONSENT.
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OTHER MATTERS
The Board of Directors presently knows of no other matters which are
likely to be presented at the Annual Meeting. If other matters should properly
come before the Annual Meeting, it is intended that the Proxy Holders will vote
thereon in their discretion.
OTHER ITEMS
Annual Report on Form 10-KSB
With this Proxy Statement, the Company is delivering to the
shareholders its Form 10-KSB as filed with the Securities and Exchange
Commission ("SEC") for its fiscal year ended June 30, 1999, and (ii) its Form
10-QSB as filed with the SEC for its fiscal quarter ended December 31, 1999,
except exhibits thereto. Copies of the Form 10-KSB and Form 10-QSB can also be
obtained by searching the "EDGAR Archives" for the Company's name on the SEC's
web page at http:/www. sec.gov. The Company will provide copies of the exhibits,
should they be requested by eligible shareholders, and the Company may impose a
reasonable fee for providing such exhibits.
Date: April 28, 2000 By Order of the Board of Directors
/s/ David L. Groen
----------------------------------
DAVID L. GROEN, President
17
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EXHIBIT A
---------
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
GROEN BROTHERS AVIATION, INC.
The undersigned, being a duly appointed officer and director of Groen
Brothers Aviation, Inc., a Utah corporation (the "Corporation"), hereby
certifies the following:
1. The Articles of Incorporation of the Corporation have been amended
and restated in their entirety to read as follows:
ARTICLE I - NAME
---------------
The name of the corporation is Groen Brothers Aviation, Inc. (the
"Corporation").
ARTICLE II - PURPOSES
---------------------
The Purpose of the Corporation shall be to conduct any or all lawful
business for which corporations may be organized under the Utah Revised Business
Corporation Act (the "Revised Act").
ARTICLE III - STOCK
-------------------
Four Hundred Million (400,000,000) shares, having no par value, of
which Two Hundred Million (200,000,000) is designated "Common Stock" and Two
Hundred Million (200,000,000) is designated "Preferred Stock." The Common Stock
shall have unlimited voting rights, with each share of Common Stock being
entitled to one vote. The Corporation's Board of Directors shall have the
authority, without shareholder approval, to set the rights, preferences, and
privileges relating to the Preferred Stock of the Corporation and take all
further actions with respect thereto as may be allowed by Section 602 of the
Revised Act.
ARTICLE IV - LIMITATION OF LIABILITY
------------------------------------
To the fullest extent permitted by Section 841 of the Revised Act, a
director of the Company shall not be personally liable to the Company or its
shareholders for monetary damages for any action taken or any failure to take
any action as a director, except liability for: (i) the amount of a financial
benefit received by a director to which such director is not entitled; (ii) an
intentional infliction of harm on the Company or the shareholders; (iii) a
violation of Section 842 of the Revised Act; or (iv) an intentional violation of
criminal law. If the laws of the State of Utah are amended after the adoption of
these Articles of Incorporation to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Company shall be eliminated or limited to the fullest
extent permitted by the laws of the State of Utah, as so amended. Any repeal or
18
<PAGE>
modification of the foregoing paragraph by the shareholders of the Company shall
not adversely affect any right or protection of a director of the Company
existing at the time of such repeal or modification.
[End of Amended and Restated Articles]
2. These Amended and Restated Articles of Incorporation (this
"Amendment") were approved by the Board of Directors of the Corporation by
unanimous written consent dated February 23, 2000, and submitted to the
shareholders of the Corporation for their approval. The Corporation has
71,879,722 shares of outstanding Common Stock that were entitled to vote on this
Amendment. Of that number, ______ shares of Common Stock were present in person
or by proxy at the Annual Meeting of Shareholders held on May 20, 2000. The
total number of votes cast for the Amendment was __________, and _____ shares
were voted against the Amendment.
IN WITNESS WHEREOF, the undersigned has executed these Amended and
Restated Articles of Incorporation as of the _____ day of May, 2000.
GROEN BROTHERS AVIATION, INC.
By----------------------------------
Its---------------------------------
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EXHIBIT B
----------
GROEN BROTHERS AVIATION, INC.
2000 STOCK OPTION PLAN
Effective February 23, 2000
ARTICLE 1.
GENERAL PROVISIONS
------------------
1.1. PURPOSE OF THE PLAN
This 2000 Stock Option Plan (the "Plan") is intended to
promote the interests of Groen Brothers Aviation, Inc., a Utah corporation (the
"Corporation"), by providing eligible persons with the opportunity to acquire or
increase their proprietary interest in the Corporation as an incentive for them
to remain in the Service of the Corporation.
Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.
1.2. ADMINISTRATION OF THE PLAN
a. The Plan shall be administered by the Board or, to the
extent required under applicable Stock Exchange requirements or if desired by
the Board, a committee of the Board. If administered by a committee, the Primary
Committee shall have sole and exclusive authority to administer the Plan with
respect to Section 16 Insiders. The authority to administer the Plan with
respect to persons other than Section 16 Insiders may be vested in either the
Primary Committee or a Secondary Committee, as determined by the Board.
b. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may terminate the functions of any
Secondary Committee at any time and delegate all powers and authority previously
delegated to such committee to the Primary Committee. To the extent committee
administration is no longer required by applicable law, regulation, or Stock
Exchange requirement, the Board may also terminate the functions of any
committee at any time and reassume all powers and authority previously delegated
to such committee.
c. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of the Plan and any outstanding options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any option thereunder.
d. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
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<PAGE>
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.
e. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine which eligible persons are to receive
option grants, the time or times when such option grants are to be made, the
number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares, the acceleration of such vesting schedule,
and all other terms and conditions of the option grants.
1.3. ELIGIBILITY
The following persons shall be eligible to participate in the
Plan:
a. Employees,
b. non-employee members of the Board or the board of directors
of any Parent or Subsidiary, and
c. consultants and other independent advisors who provide
Services to the Corporation or any Parent or Subsidiary.
1.4. STOCK SUBJECT TO THE PLAN
a. The stock issuable under the Plan shall be shares of
authorized but unissued Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed Thirty Million
(30,000,000), which number of shares may be changed from time to time in
accordance with Article 3.4 below.
b. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent (i) the
options expire or terminate for any reason prior to exercise in full or (ii) the
options are canceled in accordance with the cancellation-regrant provisions of
Article 2.4. However, should the Exercise Price be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
c. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities for which
any one person may be granted options per calendar year, and (iii) the number
and/or class of securities and the Exercise Price in effect under each
outstanding option in order to prevent the dilution or enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
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ARTICLE 2.
OPTION GRANT PROGRAM
--------------------
2.1. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of Article
2.2 of the Plan, below.
a. Exercise Price
(1) The Exercise Price shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the Grant Date.
(2) The Exercise Price shall become immediately due
upon exercise of the option and shall, subject to the documents evidencing the
option, be payable in one or more of the forms specified below:
(a) cash or check made payable to the
Corporation,
(b) a promissory note, payable to the
Corporation, but only to the extent authorized by the Administrator
pursuant to Section 3.1 of the Plan,
(c) shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date, or
(d) to the extent the option is exercised
for vested shares, through a special sale and remittance procedure
pursuant to which the Optionee shall concurrently provide irrevocable
written instructions to (i) a Corporation-designated brokerage firm to
effect the immediate sale of the Purchased Shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Exercise Price payable for the
Purchased Shares plus all applicable federal, state and local income
and employment taxes required to be withheld by the Corporation by
reason of such exercise; and (ii) the Corporation to deliver the
certificates for the Purchased Shares directly to such brokerage firm
in order to complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the Exercise Price for the Purchased Shares must be made on
the Exercise Date.
b. Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the Grant Date.
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c. Effect of Termination of Service
(1) The following provisions shall govern the
exercise of any options held by the Optionee at the time of cessation of
Service:
(a) Any option outstanding at the time of
the Optionee's cessation of Service for any reason except death,
Permanent Disability or Misconduct shall remain exercisable for a three
(3) month period thereafter, provided no option shall be exercisable
after the Expiration Date.
(b) Any option outstanding at the time of
the Optionee's cessation of Service due to death or Permanent
Disability shall remain exercisable for a twelve (12) month period
thereafter, provided no option shall be exercisable after the
Expiration Date. Subject to the foregoing, any option exercisable in
whole or in part by the Optionee at the time of death may be exercised
subsequently by the personal representative of the Optionee's estate or
by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and
distribution.
(c) Should the Optionee's Service be
terminated for Misconduct, then all outstanding options held by the
Optionee shall terminate immediately and cease to be outstanding.
(d) The option shall, immediately upon the
Optionee's cessation of Service, terminate and cease to be outstanding
to the extent the option is not otherwise at that time exercisable.
During the applicable post-Service exercise period, the option may not
be exercised in the aggregate for more than the number of shares for
which the option is exercisable on the date of the Optionee's cessation
of Service. Upon the expiration of the applicable exercise period or
(if earlier) upon the Expiration Date, the option shall terminate and
cease to be outstanding for any shares for which the option has not
been exercised.
(2) The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(a) extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of
Service from the period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the Expiration Date, and/or
(b) permit the option to be exercised,
during the applicable post- Service exercise period, not only with
respect to the number of shares of Common Stock for which such option
is exercisable at the time of the Optionee's cessation of Service but
also with respect to one or more additional shares that would have
vested under the option had the Optionee continued in Service.
d. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the Exercise Price, and become a
holder of record of the Purchased Shares.
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e. Limited Transferability of Options. During the lifetime of
the Optionee, Incentive Options may be exercised only by the Optionee, and shall
not be assignable or transferable except by will or the laws of descent and
distribution following the Optionee's death. Non-Statutory Options may be
assigned or transferred in whole or in part only (i) during the Optionee's
lifetime if in connection with the Optionee's estate plan to one or more members
of the Optionee's immediate family (spouse and children) or to a trust
established exclusively for the benefit of one or more such immediate family
members, or (ii) by will or the laws of descent and distribution following the
Optionee's death. 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 Plan Administrator may
deem appropriate.
2.2. INCENTIVE OPTIONS
The terms specified below shall apply to all Incentive
Options. Except as modified by the provisions of this Article 2.2, all the
provisions of this Plan shall apply to Incentive Options. Options specifically
designated as Non-Statutory Options when issued under the Plan shall not be
subject to the terms of this Article 2.2.
a. Eligibility. Incentive Options may only be granted to
Employees.
b. Exercise Price. The Exercise Price shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the Grant Date.
c. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied in the
order in which such options are granted.
d. 10% Stockholder. If an Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the Exercise Price shall not be less than
one hundred ten percent (110%) of the Fair Market Value per share of Common
Stock on the Grant Date, and the option term shall not exceed five (5) years
measured from the Grant Date.
e. Holding Period. Shares purchased pursuant to an option
shall cease to qualify for favorable tax treatment as Incentive Option Shares if
and to the extent Optionee disposes of such shares within two (2) years of the
Grant Date or within one (1) year of Optionee's purchase of said shares.
2.3. CORPORATE TRANSACTION/CHANGE IN CONTROL
a. In the event of any Corporate Transaction, the Plan
Administrator shall have the sole discretion to elect that any outstanding
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option shall automatically accelerate so that such option shall, immediately
prior to the effective date of the Corporate Transaction, becomes fully
exercisable for all or a greater portion of the shares of Common Stock at the
time subject to such option. The Plan Administrator's discretion under this
Article 2.3.a. shall be exercisable either at the time the option is granted or
at any time while the option remains outstanding.
b. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities that would have been
issuable to the Optionee in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction, (ii) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same and (iii) the maximum number of securities
and/or class of securities for which any one person may be granted stock
options.
c. The Plan Administrator shall have the discretion,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of any options
assumed or replaced in a Corporate Transaction that do not otherwise accelerate
at that time in the event the Optionee's Service should subsequently terminate
by reason of an Involuntary Termination within eighteen (18) months following
the effective date of such Corporate Transaction. Any options so accelerated
shall remain exercisable for shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one-year period measured from the
effective date of the Involuntary Termination.
d. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of one
or more outstanding options upon the occurrence of a Change in Control or (ii)
condition any such option acceleration upon the subsequent Involuntary
Termination of the Optionee's Service within a specified period (not to exceed
eighteen (18) months) following the effective date of such Change in Control.
Any options accelerated in connection with a Change in Control shall remain
fully exercisable until the expiration of the option term.
e. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option shall be
exercisable as a Non- Statutory Option under the federal tax laws.
f. The grant of options under the Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
2.4. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect,
with the consent of the Optionee, the cancellation of any outstanding options
and to grant in substitution new options covering the same or different number
of shares of Common Stock, but with an exercise price per share based on the
Fair Market Value per Share of Common Stock on the new Grant Date.
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ARTICLE 3.
MISCELLANEOUS
-------------
3.1. FINANCING
The Plan Administrator may permit any Optionee to pay the
option Exercise Price by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. In all events, the maximum credit available to the Optionee
may not exceed the sum of (i) the aggregate option Exercise Price payable for
the Purchased Shares plus (ii) the amount of any federal, state and local income
and employment tax liability incurred by the Optionee in connection with the
option exercise.
3.2. TAX WITHHOLDING
a. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.
b. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options under the Plan with the right to use
shares of Common Stock in satisfaction of all or part of the Taxes incurred by
such holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:
(1) Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise
issuable upon the exercise of such Non-Statutory Option, a portion of
those shares with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%))
designated by the holder.
(2) Stock Delivery: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised, one or
more shares of Common Stock previously acquired by such holder (other
than in connection with the option exercise triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
3.3. EFFECTIVE DATE AND TERM OF THE PLAN
a. The Plan shall become effective on the Plan Effective Date.
However, no shares shall be issued under the Plan pursuant to Incentive Options
until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all Incentive Options previously granted under this Plan
shall automatically convert into Non-Statutory Options.
b. The Plan shall terminate upon the earliest of (i) February
23, 2010, (ii) the date on which all shares available for issuance under the
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Plan shall have been issued, or (iii) the termination of all outstanding options
in connection with a Corporate Transaction. Upon such Plan termination, all
outstanding options shall continue to have force and effect in accordance with
the provisions of the documents evidencing such options.
3.4. AMENDMENT OF THE PLAN
a. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects, or to cancel any
grants made thereunder; provided, however, that no such amendment, modification,
or cancellation shall adversely affect any rights and obligations with respect
to options at the time outstanding under the Plan unless each affected Optionee
consents to such amendment, modification, or cancellation. In addition,
amendments to the Plan shall be subject to approval of the Corporation's
stockholders to the extent required by applicable laws, regulations, or Stock
Exchange requirements.
b. Options to purchase shares of Common Stock may be granted
under the Plan that are in each instance in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued are held in escrow until there is obtained Board approval (and
shareholder approval if required by applicable laws, regulations, or Stock
Exchange requirements) of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan.
3.5. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
3.6. REGULATORY APPROVALS
a. The implementation of the Plan, the granting of any option
under the Plan, and the issuance of any shares of Common Stock upon the exercise
of any option shall be subject to the Corporation's obtaining all approvals and
permits required by regulatory authorities having jurisdiction over the Plan and
the options and shares of Common Stock issued pursuant to the Plan.
b. No shares of Common Stock shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of federal and state securities laws and all applicable
listing requirements of any Stock Exchange on which Common Stock is then listed
for trading.
3.7. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee to terminate
such person's Service at any time for any reason, with or without cause.
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APPENDIX
--------
The following definitions shall be in effect under the Plan
and the Plan Documents:
1. Board shall mean the Corporation's Board of Directors.
2. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation's stockholders,
which the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at
the time the Board approved such election or nomination.
3. Code shall mean the Internal Revenue Code of 1986, as amended.
4. Common Stock shall mean the Corporation's common stock.
5. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of all
or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
6. Corporation shall mean Groen Brothers Aviation, Inc., a Utah
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Groen Brothers Aviation, Inc., which shall assume the
Plan by appropriate action.
7. Eligible Director shall mean a non-employee Board member eligible to
participate in the Plan.
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8. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
9. Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise pursuant to the Stock Option
Exercise Notice and Purchase Agreement.
10. Exercise Price shall mean the exercise price per share as specified
in the Stock Option Grant.
11. Expiration Date shall mean the date on which the option expires as
specified in the Stock Option Grant.
12. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is traded at the time on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) If the Common Stock is not listed on any Stock
Exchange nor traded on the Nasdaq National Market, then the Fair Market
Value shall be determined by the Plan Administrator after taking into
account such factors as the Plan Administrator shall deem appropriate.
13. Grant Date shall mean the date on which the option is granted to
Optionee as specified in the Stock Option Grant.
14. Incentive Option shall mean an option which satisfies the
requirements of an "incentive stock option" under Code Section 422.
15. Involuntary Termination shall mean the termination of the Service
of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or
discharge by the Corporation for reasons other than Misconduct, or
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(ii) such individual's voluntary resignation
following (A) a change in his or her position with the Corporation
which materially reduces his or her level of responsibility, (B) a
reduction in his or her level of compensation (including base salary,
fringe benefits and participation in corporate-performance based bonus
or incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation
is effected by the Corporation without the individual's consent.
16. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).
17. 1933 Act shall mean the Securities Act of 1933, as amended.
18. 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.
19. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of an "incentive stock option" under Code Section 422.
20. Optionee shall mean any person to whom an option is granted under
Plan.
21. Option Shares shall mean the number of shares of Common Stock
subject to the option as specified in the Stock Option Grant.
22. Parent shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one or the other corporations
in such chain.
23. Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
24. Plan shall mean the Corporation's 2000 Stock Option Plan as set
forth herein.
25. Plan Administrator shall mean the particular entity, whether the
Board or a committee of the Board, which is authorized to administer the Plan
with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under the Plan with respect
to the persons under its jurisdiction.
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26. Plan Documents shall mean the Plan, the Stock Option Grant, and
Stock Option Exercise Notice and Purchase Agreement, collectively.
27. Plan Effective Date shall mean February 23, 2000, the date on which
the Plan was adopted by the Board.
28. Primary Committee shall mean the committee of two (2) or more
non-employee Board members (as defined in the regulations to Section 16 of the
1934 Act) appointed by the Board to administer the Plan with respect to Section
16 Insiders.
29. Purchased Shares shall mean the shares purchased upon exercise of
the Option pursuant to the Stock Option Exercise Notice and Purchase Agreement.
30. SEC shall mean the Securities and Exchange Commission.
31. Secondary Committee shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Plan with respect to eligible
persons other than Section 16 Insiders.
32. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
33. Service shall mean the performance of services to the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
34. Stock Exchange shall mean either the American Stock Exchange, the
New York Stock Exchange, another regional stock exchange, or the Nasdaq market
as established by the National Association of Securities Dealers.
35. Stock Option Exercise Notice and Purchase Agreement shall mean the
agreement of said title in substantially the form of Exhibit A to the Stock
Option Grant, pursuant to which Optionee gives notice of his intent to exercise
the option.
36. Stock Option Grant shall mean the Stock Option Grant document,
pursuant to which Optionee has been informed of the terms of the option granted
under the Plan.
37. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, 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.
38. Taxes shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options in connection
with the exercise of those options.
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39. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
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GROEN BROTHERS PROXY
AVIATION, INC. This Proxy is Solicited on Behalf
2640 W. California Ave. Suite A, of the Board of Directors
Salt Lake City, Utah, 84104-4593
The undersigned shareholder hereby appoints David L. Groen and H. Jay
Groen as Proxies, each with the power to appoint his substitute, and hereby
authorizes them, or either of them, to represent and to vote, as designated
below, all the shares of common stock of Groen Brothers Aviation, Inc. held of
record by the undersigned and/or all of the votes to which the undersigned is
entitled pursuant to the terms of common stock, held by the undersigned on April
6, 2000 (the record date), at the Annual Meeting of Shareholders to be held on
May 20, 2000, or at any continuation(s) or adjournment(s) thereof. The proposals
listed below are made by the Board of Directors.
1. ELECTION OF DIRECTORS
----- FOR all nominees listed below ------ WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
(To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
David L. Groen H.Jay Groen James P. Mayfield III
2. APPOINTMENT OF TANNER+CO. AS INDEPENDENT CERTIFIED AUDITORS
FOR THE FISCAL YEAR ENDING JUNE 30, 2001
FOR AGAINST ABSTAIN
3. APPROVAL OF THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION
FOR AGAINST ABSTAIN
4. APPROVAL OF THE NUMBER OF SHARES UNDER THE 2000 STOCK OPTION
PLAN
FOR AGAINST ABSTAIN
5. APPROVAL OF SHAREHOLDER ACTION BY MAJORITY WRITTEN CONSENT,
WITHOUT A MEETING
FOR AGAINST ABSTAIN
This Proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is given, then this
Proxy will be voted FOR all nominees for director listed in Proposal 1 and FOR
Proposal Nos. 2-5.
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Please sign exactly as your name appears on the records of the
Company's transfer agent. When shares are held by joint tenants, both should
sign. When signing as attorney, or as executor, administrator, trustee, or
guardian, please give your full title as such. If a corporation, please sign in
the full corporate name by the President or other authorized officer. If a
partnership, please sign in the partnership name by an authorized person.
Please mark, sign, date and return this proxy promptly. By signing below, the
undersigned also acknowledges receipt of the Company's Proxy Statement and
Annual Report accompanying this proxy.
- ------------------------------------ ------------------------------------
DATE: Name of entity which owns the share
if other than an individual
- ------------------------------------ By:---------------------------------
Signature (if signing individually) Signature of authorized signer
- ------------------------------------ ------------------------------------
Additional signature if held jointly Title of authorized signer
34
