<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
SUMmedia.com, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[SUMMEDIA.COM LOGO]
June 9, 2000
Dear Fellow Shareholder:
This year's Annual Meeting of Shareholders of SUMmedia.com Inc., a Colorado
corporation (the "Company"), will be held at Suite 1200, 1055 West Hastings
Street, Vancouver, British Columbia, Canada on July 17, 2000 at 10:30 a.m.,
local time. You are cordially invited to attend. The matters to be considered at
the meeting are described in the attached Proxy Statement and Notice of Annual
Meeting of Shareholders. The Company's Board of Directors recommends that you
vote: (i) FOR the election of management's seven nominees to serve as Class I,
II and III Directors of the Company, (ii) FOR the ratification of the selection
of PricewaterhouseCoopers LLP as the Company's independent auditors for the
fiscal year ending December 31, 2000, and (iii) FOR the approval of the
Company's 1999 Stock Option Plan.
To be certain that your shares are voted at the Annual Meeting, whether or not
you plan to attend in person, you should sign, date and return the enclosed
proxy as soon as possible. Your vote is important. At the Annual Meeting, I will
review the Company's activities during the past year and its plans for the
future. Shareholders will be given the opportunity to address questions to the
Company's management. I hope you will be able to join us.
Sincerely,
/s/ Grant M. Petersen
--------------------------------
Grant M. Petersen
CEO and Chairman of the Board
<PAGE> 3
SUMMEDIA.COM INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
to be held on July 17, 2000
TO THE SHAREHOLDERS OF SUMMEDIA.COM INC.:
Notice is hereby given that the Annual Meeting of Shareholders of SUMmedia.com
Inc., a Colorado corporation (the "Company"), will be held at 10:30 a.m., local
time, on July 17, 2000, at Suite 1200, 1055 West Hastings Street, Vancouver,
British Columbia, Canada for the following purposes:
1. To elect Class I, II and III Directors to hold office for periods of
three, two and one-year terms, respectively, expiring at the relevant
Annual Meeting of Shareholders or until the election and qualification
of their respective successors;
2. The ratification of the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31,
2000;
3. To approve the Company's 1999 Stock Option Plan; and
4. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on June 8, 2000 as the
record date for the determination of shareholders entitled to notice of, and to
vote at, the meeting. Only shareholders of record as of the close of business on
such date are entitled to notice of and to vote at the meeting.
We encourage you to take part in the affairs of your Company either in person or
by executing and returning the enclosed proxy.
By Order of the Board of Directors,
/s/ David R. Lewis
-----------------------------
David R. Lewis
Chief Financial Officer, Secretary and Treasurer
June 9, 2000
SHAREHOLDERS UNABLE TO ATTEND THIS MEETING ARE URGED TO DATE AND SIGN THE
ENCLOSED PROXY AND TO RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 4
SUMMEDIA.COM INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
to be held on July 17, 2000
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of SUMmedia.com Inc., a Colorado corporation (the
"Company"), for use at the Annual Meeting of Shareholders of the Company to be
held on July 17, 2000 at 10:30 a.m., local time, at Suite 1200, 1055 West
Hastings Street, Vancouver, British Columbia, Canada and at any adjournment
thereof.
A shareholder submitting the enclosed proxy may revoke it at any time before his
or her vote is cast at the Annual Meeting by delivery to the Secretary of the
Company of a written notice of termination of the proxy's authority or of a duly
executed proxy or ballot bearing a later date. Shares entitled to vote and
represented by properly completed proxies received prior to the Annual Meeting
and not revoked will be voted in the manner directed by the shareholder granting
such proxy. If no direction is made, the shares represented by the proxy will be
voted as recommended by the Board of Directors. This Proxy Statement is being
transmitted or delivered to holders of the Company's Common Stock ("Common
Stock") beginning on or before June 16, 2000, together with the Company's 1999
Annual Report to Shareholders.
Only shareholders of record at the close of business on June 8, 2000 are
entitled to notice of and to vote at the Annual Meeting or at any adjournment
thereof. As of such date, there were 18,889,700 shares of Common Stock
outstanding. Each share is entitled to one vote. Cumulative voting is not
permitted. Shares voted as abstentions on any matter (or a "withhold vote for"
as to a Director or the ratification of the Company's independent accountants)
will be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the Annual Meeting and as not voted,
although present and entitled to vote, for purposes of determining the approval
of each matter as to which the shareholder has abstained. If a broker submits a
proxy that indicates the broker does not have discretionary authority as to
certain shares to vote on one or more matters, those shares will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum at the meeting, but will not be considered as present and
entitled to vote with respect to such matters. The Company's bylaws provide that
the holders of not less than a majority of the shares entitled to vote at any
meeting of shareholders, present in person or represented by proxy, shall
constitute a quorum.
All expenses in connection with the solicitation of proxies will be paid by the
Company. The Company has not yet incurred any expenses related to this Proxy
Statement, and any such expenses are expected to be minimal. In addition to
solicitation by mail, officers, directors and regular employees of the Company,
who will receive no extra compensation for their services, may solicit proxies
by telephone calls or facsimile transmissions.
The Company's principal executive offices are located at 1055 West Hastings
Street, Suite 1200, Vancouver, British Columbia, Canada, V6E 2E9.
ACTIONS TO BE TAKEN UNDER THE PROXIES
I. ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of its
Board of Directors, which is comprised of seven members. Jihong Zhang, an
incumbent director, has not been nominated as a Director at the Annual Meeting.
The Board of Directors will be divided into three classes, and the members of
each class are initially elected to serve a one, two or three-year term, with
the terms of office of each class ending in successive years. The term of each
of the Directors expires at the Annual Meeting.
Class I, II and III Directors will be elected at the Annual Meeting, each to
hold office until the expiration of his term, or until his successor is elected
and qualified, or until his earlier death, resignation or retirement. Grant M.
Petersen and John E. Veltheer are nominees for Class I Directors, Arvid C.
Petersen and Philip Kunsberg are nominees for Class II Directors and, Johnson
Chan, Derrick Bulawa and Frank Palmer are nominees for Class III Directors. Each
of such nominees is an incumbent director whose current term expires at the 2000
Annual Meeting. The persons
<PAGE> 5
named as proxies in the enclosed form of proxy will vote the proxies received by
them for the election of Grant M. Petersen and John E. Veltheer as Class I
Directors, Arvid C. Petersen and Philip Kunsberg as Class II Directors, and
Johnson Chan, Derrick Bulawa and Frank Palmer as Class III Directors.
The Board of Directors recommends a vote FOR the election of Grant M. Petersen
and John E. Veltheer as Class I Directors, Arvid C. Petersen and Philip Kunsberg
as Class II Directors, and Johnson Chan, Derrick Bulawa and Frank Palmer as
Class III Directors.
The affirmative vote of a majority of the shares of Common Stock represented at
the Annual Meeting is required for the election of Grant M. Petersen and John E.
Veltheer as Class I Directors, Arvid C. Petersen and Philip Kunsberg as Class II
Directors and Johnson Chan, Derrick Bulawa and Frank Palmer as Class III
Directors.
Information regarding the Directors of the Company is set forth below:
<TABLE>
<CAPTION>
NAME AGE EXPIRATION OF TERM
---- --- ------------------
<S> <C> <C>
Grant M. Petersen (1) 43 2000
John E. Veltheer (1) 34 2000
Philip Kunsberg (1) (2) 50 2000
Johnson Chan (3) 33 2000
Arvid C. Petersen 48 2000
Derrick Bulawa (3) 36 2000
Frank Palmer (2) 59 2000
Jihong Zhang (4) 32 2000
</TABLE>
-------------
(1) Member of the Executive Committee of the Board of Directors.
(2) Member of the Audit Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
(4) Ms. Zhang has not been nominated as a director at the Annual Meeting.
DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000
GRANT M. PETERSEN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mr. Petersen, founder of SUMmedia.com, has been the Chief Executive Officer and
a Director of SUMmedia.com since August 1999. Mr. Petersen brings over 25 years
of entrepreneurial successes, ranging from the construction industry to the
automotive sector, to his role.
JOHN E. VELTHEER
PRESIDENT AND DIRECTOR
Dr. Veltheer has been the President and a Director of the SUMmedia.com since
August 1999. From 1998 to June 1999, Dr. Veltheer was manager of shareholder
relations at Softwex Technologies Inc., a Vancouver, British Columbia-based
software company, and remains the principal of Iridium Capital, a
Vancouver-based venture capital company. From September 1996 to 1998, he worked
on a consulting basis with numerous technology companies providing investor
relations, business planning and financial analysis services. From September
1995 to September 1996, Dr. Veltheer was a research associate at the University
of British Columbia. From September 1993 to August 1995, he was a post-doctoral
fellow at the University of California, Berkeley. Dr. Veltheer has a Ph.D. in
Chemistry from University of British Columbia.
PHILIP KUNSBERG
DIRECTOR
Mr. Kunsberg has been a Director of SUMmedia.com since January 2000. Mr.
Kunsberg is Managing Director and General Counsel of Hollinger Digital Inc., the
venture capital subsidiary of Hollinger International Inc. Since May 1997, Mr.
Kunsberg has been Executive Vice President and General Counsel of Hollinger
Digital and Vice
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2
<PAGE> 6
President (Legal). He is a member of the Board of Directors and the Executive
Committee of Hollinger Digital Inc. and serves on the board of several Internet
and new media companies. Before joining Hollinger, Mr. Kunsberg spent five years
at the Los Alamos National Laboratory in New Mexico, where his work focused on
computer modeling of complex systems and system dynamics analysis. During that
time, Mr. Kunsberg founded and acted as Executive Director of the Technology
Institute, a non-profit organization in Los Alamos dedicated to promoting
international collaboration in science and technology. Mr. Kunsberg received
Juris Doctor, Master of Arts in Philosophy, and Bachelor of Arts degrees from
Yale University.
JOHNSON CHAN
DIRECTOR
Mr. Chan has been a Director of SUMmedia.com since November 1999. Based in Hong
Kong, Mr. Chan is the chairman of GlobalNet Communications, a multinational
information technology group that has offices in Asia and North America. Mr.
Chan has a strong background in the Internet and wireless communications and was
the founder of one of the first Internet Service Providers in Hong Kong, SUNDAY
Communications Ltd. (NASDAQ: SDAY), a Hong Kong-based wireless communications
and internet services company with approximately 300,000 subscribers. In
addition to his responsibilities at GlobalNet, Mr. Chan is a Director of SUNDAY.
Educated in North America, Mr. Chan received a Bachelors degree in Accounting
from York University.
ARVID C. PETERSEN
DIRECTOR
Mr. Petersen has been a Director of SUMmedia.com since February 2000. Since
1995, Mr. Petersen has been the Managing Director and a co-owner of Study Group
Australia PTY. Limited, Australia's second largest private provider of education
and training. Mr. Petersen graduated from British Columbia Institute of
Technology.
DERRICK BULAWA
DIRECTOR
Mr. Bulawa has been a Director of SUMmedia.com since February 2000. Mr. Bulawa
is the CEO of e-KONG Group Limited, a Hong Kong-based company. Since 1998, Mr.
Bulawa has been the Chief Operating Officer of Unifi Communications Inc., a Hong
Kong-based company. From 1995 to 1999, Mr. Bulawa was the President of East
Asian operations of Unifi Communications Inc. Mr. Bulawa received a Bachelor of
Science degree in electronic engineering technology from Devry Institute of
Technology.
FRANK PALMER
DIRECTOR
Mr. Palmer has been a Director of SUMmedia.com since November 1999. Since 1998,
Mr. Palmer has been the Chairman and Chief Executive Officer of DDB Canada Group
(a division of Omnican Canada Inc.). He has been President of Palmer Jarvis DDB
(since DDB's merger with Palmer Jarvis) since 1998 and was President of Palmer
Jarvis (which he co-founded) from its inception in 1969. All of these companies
are in the advertising business. Mr. Palmer graduated from Vancouver School of
Art.
JIHONG ZHANG
DIRECTOR
Ms. Zhang has been a Director of SUMmedia.com since August 1999. Ms. Zhang was
Vice President, Offshore Expansion and Corporate Development from August 1999
until December 1999. From 1991 to 1999, Ms. Zhang founded and managed a number
of high-tech companies in China. Ms. Zhang received a modern physics degree from
the University Science and Technology in China. See "Certain Relationships and
Related Transactions" on page 11.
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3
<PAGE> 7
II. RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the Company's
independent accountants for the year ending December 31, 2000.
PricewaterhouseCoopers has no relationship with the Company other than that
arising from its engagement as independent accountants. Representatives of
PricewaterhouseCoopers will be present at the Annual Meeting. They will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions from shareholders.
The Board of Directors recommends a vote FOR the ratification of the appointment
of PricewaterhouseCoopers as the Company's independent accountants for the year
ending December 31, 2000. The affirmative vote of a majority of the outstanding
shares of Common Stock represented at the Annual Meeting is required to ratify
the appointment.
III. APPROVAL OF THE ADOPTION OF 1999 STOCK OPTION PLAN
The Board of Directors previously approved the 1999 Stock Option Plan (the "1999
Stock Option Plan"). A copy of the 1999 Stock Option Plan is attached to this
Proxy Statement as Exhibit A. The following is a brief summary of the 1999 Stock
Option Plan, which is qualified in its entirety by reference to Exhibit A.
GENERAL
Options granted under the 1999 Stock Option Plan are nonstatutory and incentive
stock options under the U.S. Internal Revenue Code 1986, as amended. The purpose
of the 1999 Stock Option Plan is to advance the interests of the Company and its
stockholders by aiding the Company in attracting and retaining personnel capable
of assuring the future success of the Company, to offer such personnel
incentives to put forth maximum efforts for the success of the Company's
business and to afford such personnel an opportunity to acquire a proprietary
interest in the Company.
AMOUNT OF COMMON STOCK SUBJECT TO OPTIONS UNDER THE 1999 STOCK OPTION PLAN.
The 1999 Stock Option Plan currently provides for the grant of stock options
covering an aggregate 2,900,000 shares of Common Stock. The number of shares of
Common Stock subject to options is subject to equitable adjustments for any
stock dividends, stock splits, reverse stock splits, combinations,
recapitializations, reclassifications or any other similar changes which may be
required in order to prevent dilution. Any option which is not exercised prior
to expiration or which otherwise terminates will thereafter be available for
further grant under the 1999 Stock Option Plan. As of May 31, 2000, there were
2,899,700 options outstanding under the 1999 Stock Option Plan.
ADMINISTRATION
The 1999 Stock Option Plan will be administered by the Compensation Committee
appointed by the Board of Directors consisting of members of the Board of
Directors (the "Committee"). Subject to the conditions set forth in the 1999
Stock Option Plan, the Compensation Committee has full and final authority to
determine the number of shares to be represented by each option, the individuals
to whom and the time or times at which such options shall be granted and
exercisable, their exercise prices and the terms and provisions of the
respective agreements to be entered into at the time of the grant. The 1999
Stock Option Plan is intended to be flexible and a significant amount of
discretion is vested in the Compensation Committee with respect to all aspects
of the options to be granted under the 1999 Stock Option Plan.
NEW PLAN BENEFITS: 1999 STOCK OPTION PLAN
The Company's Executive Group as a whole received options for 280,000 shares at
an exercise price of $3.44/share and options for 730,000 shares at an exercise
price of $3.125/share. Grant M. Petersen, Chairman and Chief Executive Officer,
received options for 280,000 shares at an exercise price of $3.44/share. John E.
Veltheer, President, received options for 200,000 shares at an exercise price of
$3.125/share. David R. Lewis, Chief Financial Officer, received options for
180,000 shares at an exercise price of $3.125/share. Andre Dragon, Chief
Operating Officer received options for 150,000 shares at an exercise price of
$3.125/share. Jihong Zhang, Vice-President,
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<PAGE> 8
Offshore Expansion and Corporate Development, received options for 200,000
shares at an exercise price of $3.125/share. The Non-Executive Director Group as
a whole received options for 300,000 shares at an exercise price of
$3.125/share, 50,000 shares at an exercise price of $3.25/share, 50,000 shares
at an exercise price of $5.25/share, and 200,000 shares at an exercise price of
$7.25/share. The Non-Executive Officer Employee Group received options for
1,289,700 shares at varying exercise prices.
PARTICIPANTS
Incentive options may be granted under the 1999 Stock Option Plan only to
persons who are employees of the Company or any of its subsidiaries.
Nonstatutory options may be granted to non-employee Directors, consultants and
others. As of May 31, 2000, the Company and all its subsidiaries had
approximately 200 employees. As of May 31, 2000, incentive stock options had
been granted to purchase 2,899,700 shares of the Company's Common Stock at
exercise prices ranging from $3.125 U.S. to $10.00 U.S. per share through March
31, 2010, all of which were outstanding and were granted to employees and
directors of the Company and its subsidiaries. Of such options, options to
purchase approximately 695,928 shares were exercisable on May 31, 2000. The
maximum number of shares of stock that may be covered by options granted to any
eligible participant under the 1999 Stock Option plan is 280,000 shares.
EXERCISE PRICE
The exercise price of each nonstatutory option granted under the 1999 Stock
Option Plan will be determined by the Compensation Committee. The exercise price
of each incentive option granted under the 1999 Stock Option Plan will, in no
event, be less than 100% (110% in the case of a person who owns directly or
indirectly more than 10% of Common Stock) of the fair market value of the
Company's shares on the date of grant. The exercise price of each nonstatutory
option granted under the 1999 Stock Option Plan, will, in no event, be less than
85% of the fair market value of the Company's shares on the date of grant. Fair
market value is determined by the Board of Directors or the Committee in
accordance with the 1999 Stock Option Plan and such determination is binding
upon the Company and upon the holder. The closing sale price of the Common Stock
on June 6, 2000, was $3.593 per share.
TERMS OF OPTIONS
Options may be granted for a term of up to ten (10) years (or five (5) years in
the case of incentive options granted to a person who owns directly or
indirectly more than 10% of the Company's outstanding Common Stock), which may
extend beyond the term of the 1999 Stock Option Plan.
NONTRANSFERABILITY
Options granted under the 1999 Stock Option Plan are not transferable or
assignable, other than by will or law of descent and distribution and, during
the lifetime of the holder, incentive options are exercisable only by the
holder.
AMENDMENT AND TERMINATION
The Compensation Committee may at any time and from time to time amend or
terminate the 1999 Stock Option Plan, but may not, without the approval at a
stockholders' meeting or representing a majority of the voting power present at
a stockholders' meeting and entitled to vote thereon, or by unanimous consent of
the stockholders, amend the 1999 Stock Option Plan in a manner that would (i)
cause Rule 16(b)-3 to become unavailable with respect to the 1999 Stock Option
Plan; (ii) violate the rules or regulations of the Nasdaq market, any other
securities exchange or the National Association of Securities Dealers, Inc. that
are applicable to the Company; or (iii) cause the Company to be unable, under
the Internal Revenue Code of 1986, as amended, to grant incentive stock options
under the 1999 Stock Option Plan. No amendment or termination of the 1999 Stock
Option Plan by the Compensation Committee may alter or impair any of the rights
under any option previously granted under the 1999 Stock Option Plan without the
holder's written consent.
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5
<PAGE> 9
EFFECTIVE DATE AND TERM
Options may be granted under the 1999 Stock Option Plan during its 10-year term,
which commenced on November 4, 1999. The 1999 Stock Option Plan is being
submitted for ratification by the Company's shareholders at the 2000 Annual
Meeting.
CERTAIN US FEDERAL INCOME TAX CONSEQUENCES
Incentive options: the Company believes that, with respect to incentive options
granted under the 1999 Stock Option Plan to residents of the US, no income will
generally be recognized by an optionee for federal income tax purposes at the
time such an option is granted or at the time it is exercised. If the optionee
makes no disposition of the shares so received within two years from the date
the incentive option was granted and one year from the receipt of the shares
pursuant to the exercise of the incentive option, the optionee will generally
recognize long-term capital gain or loss upon disposition of the shares.
If the optionee disposes of shares acquired by exercise of an incentive option
before the expiration of the applicable holding period, any amount realized from
such a disqualifying disposition will be taxable as ordinary income in the year
of disposition, generally to the extent that the lesser of the fair market value
of the shares on the date the option was exercised or the fair market value at
the time of such disposition exceeds the exercise price. Any amount realized
upon such a disposition in excess of the fair market value of the shares on the
date of exercise generally will be treated as long-term or short-term capital
gain, depending on the holding period of the shares. A disqualifying disposition
will include the use of shares acquired upon exercise of an incentive option in
satisfaction of the exercise price of another option prior to the satisfaction
of the applicable holding period.
The Company will not be allowed a deduction for federal income tax purposes at
the time of the grant or exercise of an incentive option. At the time of a
disqualifying disposition by an optionee, the Company will be entitled to a
deduction for federal income tax purposes equal to the amount taxable to the
optionee as ordinary income in connection with such disqualifying disposition
(assuming that such amount constitutes reasonable compensation).
CERTAIN CANADIAN FEDERAL INCOME TAX CONSEQUENCES
Incentive options: the Company believes that, with respect to incentive options
granted under the 1999 Stock Option Plan to residents of Canada, no income will
be recognized by an optionee for federal income tax purposes at the time such an
option is granted. At the time the option is exercised, an employment benefit
equal to the fair market value of the stock at the date of exercise less the
exercise price will be realized by the optionee. The Company believes that the
optionee will be entitled to a deduction of one-third of this employment
benefit, which results in the employment benefit being taxed similar to a
capital gain. At the time the stocks are disposed, the optionee will realize a
capital gain (loss) to the extent that the proceeds received exceed (are less
than) the fair market value at the exercise date.
The Canadian subsidiary of the Company will not be allowed a deduction for
Canadian federal income tax purposes at any time for amounts related to stock
option compensation.
NONSTATUTORY OPTIONS
The Company believes that the grant of a nonstatutory option under the 1999
Stock Option Plan will not be subject to federal income tax. Upon exercise, the
optionee generally will recognize ordinary income, and the Company will be
entitled to a corresponding deduction for federal income tax purposes (assuming
that such compensation is reasonable), in an amount equal to the excess of the
fair market value of the shares on the date of exercise over the exercise price.
Gain or loss on the subsequent sale of shares received on exercise of a
nonstatutory option generally will be long term or short term capital gain or
loss, depending on the period of the shares.
The Board of Directors recommends a vote FOR the approval of the 1999 Stock
Option Plan. The affirmative vote of a majority of the outstanding shares of
Common Stock represented at the Annual Meeting is required to approve the 1999
Stock Option Plan.
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6
<PAGE> 10
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
During the fiscal year ended December 31, 1999, the Board of Directors did not
hold any meetings. The Board of Directors and its committees also may act from
time to time by unanimous written consent in lieu of meetings. The Board of
Directors did not act by written consent during the 1999 fiscal year.
As of May 2000, the Company created standing Audit, Compensation and Executive
Committees, each of which have the current membership as indicated in the
director table on page two hereof. The Board of Directors has no standing
nominating committee.
The Audit Committee is intended to aid management in the establishment and
supervision of the Company's financial controls, to evaluate the scope of the
annual audit, to review audit results, to consult with management and the
Company's independent accountants prior to the presentation of financial
statements to shareholders, to initiate, as appropriate, inquiries into aspects
of the Company's financial affairs and to perform such other functions as the
Board of Directors may direct.
As the Audit Committee was created in May 2000, it has not yet had an
opportunity to review and discuss the audited financial statements with
management, to discuss with the independent accountants the matters required to
be discussed by SAS 61, as may be modified or supplemented, or to discuss with
the independent accountants the independent accountants' independence based on
the written disclosures and the letter from the independent accountants required
by Independence Standards Board Standard No. 1, as may be modified or
supplemented. Similarly, the Audit Committee has not yet had an opportunity to
make any recommendation to the Board of Directors regarding inclusion of the
audited financial statements in the company's Annual Report on Form 10-KSB. The
Board of Directors has not adopted a written charter for the Audit Committee.
The Compensation Committee is intended to make recommendations to the Board of
Directors concerning salaries and incentive compensation for the Company's
officers and employees, to administer the Company's 1999 Stock Option Plan and
to perform such other functions as the Board of Directors may direct.
The Executive Committee is authorized to exercise certain of the powers of the
Board of Directors, subject to ratification by the full Board of Directors, and
will meet as needed, usually in situations where it is not feasible to take
action by the full Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires executive officers and
directors and persons who beneficially own more than 10% of the Common Stock to
file initial reports of ownership on Form 3 and reports of changes in ownership
on Forms 4 and 5 with the SEC. Executive officers, directors, and greater than
10% beneficial owners are required by SEC 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,
each of Company's directors, officers and beneficial owners of more than 10% of
the Common Stock have filed all forms required by Section 16 of the Exchange Act
in fiscal 1999, except Jihong Zhang, Derrick Bulawa and Johnson Chan, who failed
to file Forms 3.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AND POSITION AGE HELD POSITION SINCE
----------------- --- -------------------
<S> <C> <C>
Grant M. Petersen, Chairman of the Board and Chief Executive Officer 43 1999
Dennis Molloy, Co-Chairman of the Board 46 1999
John E. Veltheer, President and Director 34 1999
David R. Lewis, Chief Financial Officer 55 1999
Andre Dragon, Chief Operating Officer 41 1999
David R. Noble, Chief Information Officer 38 1999
</TABLE>
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<PAGE> 11
EXECUTIVE COMPENSATION
During the year ended December 31, 1998, no executive officer of the Company
received any compensation. The following table sets forth information concerning
compensation earned in the years ended December 31, 1999 and December 31, 1998
by Patrick Brooks, SUMmedia.com's President and only officer to June 1999, and
by Julia A. Petersen, the Company's President and only officer from June 1999 to
August 1999. The following table also sets forth information concerning
compensation earned by the Company's Chief Executive Officer ("CEO") in fiscal
year 1999 and the Company's four most highly compensated executive officers,
other than the CEO (collectively, with the CEO, the "Named Executive Officers"),
who were serving as executive officers for fiscal year 1999. The information in
the table includes salaries, bonuses, stock options granted and other
miscellaneous compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATI0N AWARDS
---------------------- -------------------------- ALL OTHER
SALARY BONUS SECURITIES UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) OPTIONS (#) ($)
------------------------------------- ---------------------- ----------- -------------------------- -----------------
<S> <C> <C> <C> <C> <C>
Patrick Brooks, President 1999 -- -- -- --
to June 1999(3) 1998 -- -- -- --
Julia A. Petersen, President(4) 1999 -- -- -- --
June 1999 to August 1999
Grant M. Petersen, Chairman and 1999 90,789 -- 280,000 --
Chief Executive Officer from
August 1999(5)
John E. Veltheer, President 1999 84,852 -- 200,000 --
David R. Lewis, Chief Financial 1999 64,562 -- 180,000 --
Officer
Andre Dragon, Chief Operating 1999 44,388 -- 150,000 --
Officer
Jihong Zhang, Vice President, 1999 36,660 -- 200,000 --
Offshore Expansion and
Corporate Development
</TABLE>
---------------
(1) Actual salary earned in each respective fiscal year.
(2) Actual bonus earned in each respective fiscal year.
(3) Mr. Brooks did not receive any compensation in 1998 or 1999 as the Company
was inactive and Mr. Brooks did not actively conduct any day-to-day
operations. The fair value of his services is considered to be zero.
(4) Julia A. Petersen is the spouse of Grant M. Petersen. Ms. Petersen did not
receive any compensation in 1999 as the Company was inactive until the
share exchange with SUM Media Corp. Ms. Petersen had no active day-to-day
duties. Subsequent to the share exchange, Ms. Petersen ceased to be an
officer of the Company. The fair value of her services is considered to be
zero.
(5) Mr. Petersen's salary was paid to 505362 British Columbia Ltd., a company
wholly owned by Mr. Petersen and his spouse, Julia A. Petersen.
OPTION GRANTS IN 1999
The following table summarizes individual grants of stock options made during
the 1999 fiscal year to each of the Named Executive Officers:
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8
<PAGE> 12
OPTION GRANTS IN 1999 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF TOTAL EXERCISE STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED 0R BASE FOR OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
----------------------- ------------------ ------------------- ----------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Grant M. Petersen 280,000 12.18% $3.44 2004 266,114 588,043
John E. Veltheer 200,000 8.70% 3.125 2009 393,059 996,089
David R. Lewis 180,000 7.83% 3.125 2009 353,753 896,480
Andre Dragon 150,000 6.52% 3.125 2009 294,764 747,067
Jihong Zhang 200,000 8.70% 3.125 2009 393,059 996,089
</TABLE>
OPTION EXERCISES IN 1999 AND FISCAL YEAR-END OPTION VALUE
The following table summarizes, on an aggregate basis, each exercise of stock
options during the 1999 fiscal year by each of the Named Executive Officers and
the 1999 fiscal year-end value of their unexercised options.
AGGREGATED OPTION EXERCISES IN 1999 FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE
SHARES UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL YEAR
ACQUIRED VALUE OPTIONS AT FISCAL YEAR END (#) END ($)
ON EXERCISE REALIZED -------------------------------- ---------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------- -------------- ------------ --------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Grant M. Petersen 0 0 67,200 212,800 436,800 1,383,200
John E. Veltheer 0 0 48,000 152,000 312,000 988,000
David R. Lewis 0 0 43,200 136,800 280,800 889,200
Andre Dragon 0 0 36,000 114,000 234,000 741,000
Jihong Zhang 0 0 48,000 152,000 312,000 988,000
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company have not historically received cash compensation for
their services as Directors or members of committees of the Board of Directors,
but are reimbursed for their reasonable expenses incurred in attending meetings
of the Board of Directors.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
In June 1999, the Company entered into an employment agreement with Andre Dragon
pursuant to which he is entitled to a base salary of $100,000 (CDN). Under this
agreement, if Mr. Dragon is terminated other than for cause, he will be entitled
to the payment equal to three months of his base salary.
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth information with respect to beneficial ownership
of Common Stock as of May 31, 2000 for:
o each person or entity known by the Company to beneficially own more than 5%
of its outstanding Common Stock;
o each of its directors and named executive officers; and
o all of the Company's directors and Named Executive Officers as a group.
Unless otherwise indicated by footnote, the address for each of the individuals
listed in the table is care of SUMmedia.com, 1200 - 1055 West Hastings Street,
Vancouver, British Columbia, V6E 2E9, Canada. Unless
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9
<PAGE> 13
otherwise indicated by footnote, the persons named in the table has sole voting
and sole investment power with respect to all shares of Common Stock shown as
beneficially owned by him or her.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER OR
NAME OF OFFICER OR DIRECTOR AMOUNT OF BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
----------------------------------------------------- ----------------------------------------- ---------------------------
<S> <C> <C>
Grant M. Petersen(2) 4,951,493 26.2%
John E. Veltheer(3) 163,000 *
Philip Kunsberg(4) 60,000 *
Frank Palmer(5) 58,100 *
Derrick Bulawa(6) 12,000 *
Arvid C. Petersen(7) 36,500 *
Johnson Chan(8) 24,000 *
Jihong Zhang (9) 48,000 *
All Officers and Directors as a group (7 persons) 5,290,093 28.0%
Dennis Molloy(10) 4,932,293 26.1%
e-Kong Services Limited(11) 2,016,000 10.7%
Hollinger Digital Inc.(12) 2,000,000 10.6%
</TABLE>
--------------------
* Less than one percent.
(1) Percentage of beneficial ownership is based on 18,889,700 shares of Common
Stock issued and outstanding as of May 31, 2000.
(2) Includes stock options for 67,200 shares currently exercisable, or
exercisable within 60 days and warrants for 500,000 shares currently
exercisable or exercisable within 60 days. Includes 3,029,294 shares owned
of record on August 6, 1999 by nominees for Mr. Petersen as to which shares
Mr. Petersen possesses sole voting and investment powers. None of such
nominee relationships were initially embodied in formal written agreements.
Mr. Petersen subsequently obtained stock powers covering 786,439 shares
formerly owned of record by certain of the nominees.
(3) Includes options for 48,000 shares currently exercisable or exercisable
within 60 days.
(4) Mr. Kunsberg's address is Suite 600, 270 Lafayette St., New York, NY.
Includes options for 60,000 shares currently exercisable or exercisable
within 60 days.
(5) Mr. Palmer's address is Suite 600, 777 Hornby St., Vancouver, BC.
(6) Mr. Bulawa's address is Suite 2101-3, K. Wah Centre, 191 Java Road, North
Point, Hong Kong. Includes options for 12,000 shares currently exercisable
or exercisable within 60 days.
(7) Mr. Petersen's address is 6 Carrington Ave., Mosman, NSW, Australia.
Includes options for 24,000 shares currently exercisable or exercisable
within 60 days.
(8) Mr. Chan's address is Suite 1276, 1 Trademart Drive, Kowloon Bay, Hong
Kong. Includes options for 24,000 shares currently exercisable or
exercisable within 60 days.
(9) To the Company's knowledge, Ms. Zhang's shareholdings consist of this
vested portion of her stock options. Refer to "Section 16(a) Beneficial
Ownership Reporting Compliance" on page 7.
(10) Mr. Molloy's address is 24446 80th Avenue, Langley, British Columbia,
Canada. Includes 48,000 shares underlying stock options currently
exercisable, or exercisable within 60 days and warrants for 500,000 shares
currently exercisable or exercisable within 60 days. Includes 3,029,294
shares owned of record on August 6, 1999 by nominees for Mr. Molloy as to
which shares Mr. Molloy possesses sole voting and investment powers. None
of such nominee relationships were initially embodied in formal written
agreements. Mr. Molloy subsequently obtained stock powers covering 786,439
shares formerly owned of record by certain of the nominees.
(11) e-Kong Services Limited's address is Suite 2101-3, K. Wah Centre, 191 Java
Road, North Point, Hong Kong. Includes warrants for 1,008,000 shares
currently exercisable or exercisable within 60 days. e-Kong Services
Limited is a wholly owned subsidiary of e-Kong Group Limited, a company
traded on the Hong Kong Stock Exchange. The address of e-Kong Group Limited
is Suite 2101-3 K. Wah Center 191 Java Point, Hong Kong.
(12) Hollinger Digital Inc.'s address is Suite 600, 270 Lafayette St., New York,
NY. Includes warrants for 1,000,000 shares currently exercisable or
exercisable within 60 days. Hollinger Digital Inc. is a wholly owned
subsidiary of Hollinger International Inc., a company traded on the New
York Stock Exchange. Hollinger International Inc. is partially owned, and
controlled by Hollinger Inc., a company traded on the Toronto Stock
Exchange.
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10
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 1999, Grant M. Petersen, the Chief Executive
Officer and a Director of the Company and Dennis Molloy, Co-Chairman together
loaned SUMmedia.com $56,436 without interest and without stated terms of
repayment.
During the fiscal year ended December 31, 1999, the Company paid $133,458 for
management consulting and related services to 505362 British Columbia Ltd.,
wholly owned by Mr. Petersen and his spouse Julia A. Petersen.
Arvid C. Petersen is the brother of Grant M. Petersen.
On January 31, 2000, Jihong Zhang, a former officer and an incumbent director of
the Company, commenced legal proceedings by filing a Writ of Summons in the
Supreme Court of British Columbia, Canada against SUMmedia.com Inc., SUM Media
Corp. and Grant Petersen, Chairman of the Board and Chief Executive Officer. In
her suit, Ms. Zhang alleges that the defendants failed to pay her compensation
amounting to 150,000 restricted and 100,000 unrestricted shares of Common Stock
and option to purchase 200,000 shares of Common Stock. In addition, Ms. Jihong
claims wrongful breach of her employment contract with the defendants and
related tortious acts. Ms. Jihong is seeking costs and such relief as is deemed
necessary by the Court.
PROPOSALS OF STOCKHOLDERS
Proposals which stockholders wish to be considered for inclusion in the Proxy
Statement and proxy card for the 2001 Annual Meeting of Stockholders must be
received by the Secretary of the Company by January 15, 2001 and must comply
with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934,
as amended.
1999 ANNUAL REPORT TO STOCKHOLDERS
Included with this Proxy Statement is the Company's 1999 Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999. The Company will provide,
without charge, an additional copy of the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1999, as required to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, upon written request to David R. Lewis, Secretary, at the
Company's principal offices, 1055 W. Hastings St., Suite 1200, Vancouver, BC,
V6E 2E9, Canada. Each request must set forth a good faith representation that,
as of June 8, 2000, the person making the request was a beneficial owner of the
Common Stock. The exhibits to the Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999 may be obtained by any stockholder upon written
request to David R. Lewis. The Company's filings can also be found at
http://www.sec.gov.
OTHER MATTERS
The Board of Directors knows of no matters other than those that are described
in this Proxy Statement that may be brought before the meeting. However, if any
other matters are properly brought before the Annual Meeting, persons named in
the enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
Whether or not you plan to attend the Annual Meeting, please mark, sign, date
and promptly return the enclosed proxy in the enclosed return envelope.
By Order of the Board of Directors,
/s/ David R. Lewis
----------------------------
David R. Lewis
Chief Financial Officer, Secretary and Treasurer
Dated: June 9, 2000
--------------------------------------------------------------------------------
11
<PAGE> 15
EXHIBIT A: 1999 STOCK OPTION PLAN
SUMMEDIA.COM INC.
1999 STOCK OPTION PLAN
1. Purpose; Effectiveness of the Plan.
(a) The purpose of this Plan is to advance the interests of the Company and
its stockholders by helping the Company obtain and retain the services
of employees, officers, consultants, and directors, upon whose
judgment, initiative and efforts the Company is substantially
dependent, and to provide those persons with further incentives to
advance the interests of the Company.
(b) This Plan will become effective on the date of its adoption by the
Board, provided the Plan is approved by the stockholders of the Company
(excluding holders of shares of Stock issued by the Company pursuant to
the exercise of options granted under this Plan) within twelve months
before or after that date. If the Plan is not so approved by the
stockholders of the Company, any options granted under this Plan will
be rescinded and will be void. This Plan will remain in effect until it
is terminated by the Board or the Committee (as defined hereafter)
under section 9 hereof, except that no ISO (as defined herein) will be
granted after the tenth anniversary of the date of this Plan's adoption
by the Board. This Plan will be governed by, and construed in
accordance with, the laws of the State of Colorado.
2. Certain Definitions. Unless the context otherwise requires, the following
defined terms (together with other capitalized terms defined elsewhere in
this Plan) will govern the construction of this Plan, and of any stock
option agreements entered into pursuant to this Plan:
(a) "10% Stockholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions set forth
in Section 424(d) of the Code at the time he or she is granted an
Option, stock possessing more than ten percent (10%) of the total
combined voting power or value of all classes of stock of the Company
and/or of its subsidiaries;
(b) "1933 Act" means the federal Securities Act of 1933, as amended;
(c) "1934 Act" means the federal Securities Exchange Act of 1934, as
amended;
(d) "Board" means the Board of Directors of the Company;
(e) "Called for under an Option," or words to similar effect, means
issuable pursuant to the exercise of an Option;
(f) "Code" means the Internal Revenue Code of 1986, as amended (references
herein to Sections of the Code are intended to refer to Sections of the
Code as enacted at the time of this Plan's adoption by the Board and as
subsequently amended, or to any substantially similar successor
provisions of the Code resulting from recodification, renumbering or
otherwise);
(g) "Committee" means a committee of two or more Disinterested Directors,
appointed by the Board, to administer and interpret this Plan; provided
that the term "Committee" will refer to the Board during such times as
no Committee is appointed by the Board;
(h) "Company" means Summedia.com Inc., a Colorado corporation;
(i) "Disability" has the same meaning as "permanent and total disability,"
as defined in Section 22(e)(3) of the Code;
(j) "Disinterested Director" means a member of the Board who is not during
the period of one year prior to his or her service as an administrator
of the Plan, or during the period of such service, granted or awarded
--------------------------------------------------------------------------------
12
<PAGE> 16
Stock, options to acquire Stock, or similar equity securities of the
Company under this Plan or any similar plan of the Company;
(k) "Eligible Participants" means persons who, at a particular time, are
employees, officers or directors of the Company or its subsidiaries,
and shall include:
(i) an individual who is considered an employee under the Income Tax
Act (Canada) (ie. for whom deductions must be made at source);
(ii) an individual who is a full-time dependent contractor, that is
one who works full-time for the Company providing services
normally provided by an employee and is subject to the same
control and direction by the Company over the detail and methods
of work as an employee of the Company, but for whom income tax
deduction are not made at source; and
(iii) a part-time dependent contractor, that is an individual who works
for the Company on a continuing and regular basis for a minimum
amount of time per week providing services normally provided by
an employee and is subject to the same control and direction by
the Company over the details and methods of work as an employee
of the Company, but for whom income tax deductions are not made
at source;
(l) "Fair Market Value" means, with respect to the Stock and as of the date
an ISO is granted hereunder, the market price per share of such Stock
determined by the Committee, consistent with the requirements of
Section 422 of the Code and to the extent consistent therewith, as
follows:
(i) If the Stock was traded on a stock exchange on the date in
question, then the Fair Market Value will be equal to the closing
price reported by the applicable composite-transactions report
for such date;
(ii) If the Stock was traded over-the-counter on the date in question
and was classified as a national market issue, then the Fair
Market Value will be equal to the last-transaction price quoted
by the NASDAQ system for such date;
(iii) If the Stock was traded over-the-counter on the date in question
but was not classified as a national market issue, then the Fair
Market Value will be equal to the average of the last reported
representative bid and asked prices quoted by the NASDAQ system
for such date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value will be determined by the Committee in good faith on
such basis as it deems appropriate.
(m) "ISO" has the same meaning as "incentive stock option," as defined in
Section 422 of the Code;
(n) "Just Cause Termination" means a termination by the Company of an
Optionee's employment by and/or service to the Company (or if the
Optionee is a Director, removal of the Optionee from the Board by
action of the stockholders or, if permitted by applicable law and the
by-laws of the Company, the other Directors), in connection with the
determination by the Company (or of the Company's stockholders if the
Optionee is a Director and the removal of the Optionee from the Board
is by action of the stockholders, but in either case excluding the vote
of the Optionee if he or she is a Director or a stockholder) that the
Optionee has engaged in any acts involving dishonesty or moral
turpitude or in any acts that materially and adversely affect the
business, affairs or reputation of the Company or its subsidiaries;
(o) "NSO" means any option granted under this Plan whether designated by
the Committee as a "non-qualified stock option," a "non-statutory stock
option" or otherwise, other than an option designated by the Committee
as an ISO, or any option so designated but which, for any reason, fails
to qualify as an ISO pursuant to Section 422 of the Code and the rules
and regulations thereunder;
--------------------------------------------------------------------------------
13
<PAGE> 17
(p) "Option" means an option granted pursuant to this Plan entitling the
option holder to acquire shares of Stock issued by the Company pursuant
to the valid exercise of the option;
(q) "Option Agreement" means an agreement between the Company and an
Optionee, in form and substance satisfactory to the Committee in its
sole discretion, consistent with this Plan;
(r) "Option Price" with respect to any particular Option means the exercise
price at which the Optionee may acquire each share of the Option Stock
called for under such Option;
(s) "Option Stock" means Stock issued or issuable by the Company pursuant
to the valid exercise of an Option;
(t) "Optionee" means an Eligible Participant to whom Options are granted
hereunder, and any transferee thereof pursuant to a Transfer authorized
under this Plan;
(u) "Plan" means this 1999 Stock Option Plan of the Company;
(v) "QDRO" has the same meaning as "qualified domestic relations order" as
defined in Section 414(p) of the Code;
(w) "Stock" means shares of the Company's Common Stock, $.01 par value;
(x) "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code;
(y) "Transfer," with respect to Option Stock, includes, without limitation,
a voluntary or involuntary sale, assignment, transfer, conveyance,
pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or
levy of such Option Stock, including without limitation an assignment
for the benefit of creditors of the Optionee, a transfer by operation
of law, such as a transfer by will or under the laws of descent and
distribution, an execution of judgment against the Option Stock or the
acquisition of record or beneficial ownership thereof by a lender or
creditor, a transfer pursuant to a QDRO, or to any decree of divorce,
dissolution or separate maintenance, any property settlement, any
separation agreement or any other agreement with a spouse (except for
estate planning purposes) under which a part or all of the shares of
Option Stock are transferred or awarded to the spouse of the Optionee
or are required to be sold; or a transfer resulting from the filing by
the Optionee of a petition for relief, or the filing of an involuntary
petition against such Optionee, under the bankruptcy laws of the United
States or of any other nation.
(z) All references to currency in this Plan shall refer to United States
dollars.
3. Eligibility. The Company may grant Options under this Plan only to persons
who are Eligible Participants as of the time of such grant. Subject to the
provisions of sections 4(d), 5 and 6 hereof, there is no limitation on the
number of Options that may be granted to an Eligible Participant.
4. Administration.
(a) Committee. The Committee, if appointed by the Board, will administer
this Plan. If the Board, in its discretion, does not appoint such a
Committee, the Board itself will administer this Plan and take such
other actions as the Committee is authorized to take hereunder;
provided that the Board may take such actions hereunder in the same
manner as the Board may take other actions under the Company's Articles
of Incorporation and by-laws generally.
(b) Authority and Discretion of Committee. The Committee will have full and
final authority in its discretion, at any time and from time to time,
subject only to the express terms, conditions and other provisions of
the Company's Articles of Incorporation, by-laws and this Plan, and the
specific limitations on such discretion set forth herein:
--------------------------------------------------------------------------------
14
<PAGE> 18
(i) to select and approve the persons who will be granted Options
under this Plan from among the Eligible Participants, and to
grant to any person so selected one or more Options to purchase
such number of shares of Option Stock as the Committee may
determine;
(ii) to determine the period or periods of time during which Options
may be exercised, the Option Price and the duration of such
Options, and other matters to be determined by the Committee in
connection with specific Option grants and Options Agreements as
specified under this Plan;
(iii) to interpret this Plan, to prescribe, amend and rescind rules and
regulations relating to this Plan, and to make all other
determinations necessary or advisable for the operation and
administration of this Plan; and
(iv) to delegate all or a portion of its authority under subsections
(i) and (ii) of this section 4(b) to one or more Directors of the
Company who are executive officers of the Company, but only in
connection with Options granted to Eligible Participants who are
not subject to the reporting and liability provisions of Section
16 of the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, and subject to such
restrictions and limitations (such as the aggregate number of
shares of Option Stock called for by such Options that may be
granted) as the Committee may decide to impose on such delegate
Directors.
(c) Limitation on Authority. Notwithstanding the foregoing, or any other
provision of this Plan, the Committee will have no authority to grant
Options to any of its members, unless such grant is also approved by a
majority of the Board of Directors who are not members of the
Committee.
(d) Designation of Options. Except as otherwise provided herein, the
Committee will designate any Option granted hereunder either as an ISO
or as an NSO. To the extent that the Fair Market Value (determined at
the time the Option is granted) of Stock with respect to which all ISOs
are exercisable for the first time by any individual during any
calendar year (pursuant to this Plan and all other plans of the Company
and/or its subsidiaries) exceeds $100,000, such option will be treated
as an NSO. Notwithstanding the general eligibility provisions of
section 3 hereof, the Committee may grant ISOs only to persons who are
employees of the Company and/or its subsidiaries.
(e) Option Agreements. If an Option Agreement is not executed and delivered
by the Optionee and a duly authorized officer of the Company within 30
days after the date of grant of the subject Options, such Options will
be deemed cancelled and of no effect.
5. Shares Reserved for Options.
(a) Limit on Grants to Eligible Participants . The aggregate number of
shares of Option Stock that may be issued pursuant to the exercise of
Options granted under this Plan shall not exceed Two million, Nine
Hundred Thousand (2,900,000) (the "Option Pool"). Shares of Option
Stock that would have been issuable pursuant to Options, but that are
no longer issuable because all or part of those Options have terminated
or expired, will be deemed not to have been issued for purposes of
computing the number of shares of Option Stock remaining in the Option
Pool and available for issuance. The maximum number of shares of Stock
that may be covered by Options granted to any Eligible Participant
during the term of the Plan is 280,000.
6. Terms of Stock Option Agreements. Each Option granted pursuant to this Plan
will be evidenced by an agreement (an "Option Agreement") between the
Company and the person to whom such Option is granted, in form and
substance satisfactory to the Committee in its sole discretion, consistent
with this Plan. Without limiting the foregoing, each Option Agreement
(unless otherwise stated therein) will be deemed to include the following
terms and conditions:
(a) Covenants of Optionee. At the discretion of the Committee, the person
to whom an Option is granted hereunder, as a condition to the granting
of the Option, must execute and deliver to the Company a confidential
information agreement approved by the Committee. Nothing contained in
this Plan, any Option Agreement or in any other agreement executed in
connection with the granting of an Option under
--------------------------------------------------------------------------------
15
<PAGE> 19
this Plan will confer upon any Optionee any right with respect to the
continuation of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its
subsidiaries.
(b) Vesting Periods. Except as otherwise provided herein, each Option
Agreement may specify the period or periods of time within which each
Option or portion thereof will first become exercisable (the "Vesting
Period") with respect to the total number of shares of Option Stock
called for thereunder (the "Total Award Option Stock"). Such Vesting
Periods will be fixed by the Committee in its discretion, and may be
accelerated or shortened by the Committee in its discretion.
(c) Exercise of the Option.
(i) Mechanics and Notice. An Option may be exercised to the extent
exercisable (1) by giving written notice of exercise to the
Company, specifying the number of full shares of Option Stock to
be purchased and accompanied by full payment of the Option Price
thereof and the amount of withholding taxes pursuant to
subsection 6(c)(ii) below; and (2) by giving assurances
satisfactory to the Company that the shares of Option Stock to be
purchased upon such exercise are being purchased for investment
and not with a view to resale in connection with any distribution
of such shares in violation of the 1933 Act; provided, however,
that in the event the Option Stock called for under the Option is
registered under the 1933 Act, or in the event resale of such
Option Stock without such registration would otherwise be
permissible, this second condition will be inoperative if, in the
opinion of counsel for the Company, such condition is not
required under the 1933 Act, or any other applicable law,
regulation or rule of any governmental agency.
(ii) Withholding Taxes. As a condition to the issuance of the shares
of Option Stock upon full or partial exercise of an Option
granted under this Plan, the Optionee will pay to the Company in
cash, or in such other form as the Committee may determine in its
discretion, the amount of the Company's tax withholding liability
(if any) required in connection with such exercise. For purposes
of this subsection 6(c)(ii), "tax withholding liability" will
mean all federal, provincial and state income taxes, social
security tax, and any other taxes applicable to the compensation
income arising from the transaction required by applicable law to
be withheld by the Company.
(d) Payment of Option Price. Each Option Agreement will specify the Option
Price with respect to the exercise of the Option thereunder, to be
fixed by the Committee in its discretion, but in no event will the
Option Price for an ISO granted hereunder be less than the Fair Market
Value (or, in case the Optionee is a 10% Stockholder, one hundred ten
percent (110%) of such Fair Market Value) of the Option Stock at the
time such ISO is granted, and in no event will the Option Price for an
NSO granted hereunder be less than the 85% of Fair Market Value. The
Option Price will be payable to the Company in United States dollars in
cash or by check or, such other legal consideration as may be approved
by the Committee, in its discretion.
(i) For example, the Committee, in its discretion, may permit a
particular Optionee to pay all or a portion of the Option Price,
and/or the tax withholding liability set forth in subsection
6(c)(ii) above, with respect to the exercise of an Option either
by surrendering shares of Stock already owned by such Optionee or
by withholding shares of Option Stock, provided that the
Committee determines that the fair market value of such
surrendered Stock or withheld Option Stock is equal to the
corresponding portion of such Option Price and/or tax withholding
liability, as the case may be, to be paid for therewith.
(ii) If the Committee permits an Optionee to pay any portion of the
Option Price and/or tax withholding liability with shares of
Stock with respect to the exercise of an Option (the "Underlying
Option") as provided in subsection 6(d)(i) above, then the
Committee, in its discretion, may grant to such Optionee (but
only if Optionee remains an Eligible Participant at that time)
additional NSOs, the number of shares of Option Stock called for
thereunder to be equal to all or a portion of the Stock so
surrendered or withheld (a "Replacement Option"). Each
Replacement Option will be evidenced by an Option Agreement.
Unless otherwise set forth therein, each Replacement Option will
be immediately exercisable upon such grant (without any Vesting
Period) and will be coterminous with the Underlying
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<PAGE> 20
Option. The Committee, in its sole discretion, may establish such other
terms and conditions for Replacement Options as it deems appropriate.
(e) Termination of the Option. Except as otherwise provided herein, each
Option Agreement will specify the period of time, to be fixed by the
Committee in its discretion, during which the Option granted therein
will be exercisable, not to exceed ten years from the date of grant in
the case of an ISO (the "Option Period"); provided that the Option
Period will not exceed five years from the date of grant in the case of
an ISO granted to a 10% Stockholder. To the extent not previously
exercised, each Option will terminate upon the expiration of the Option
Period specified in the Option Agreement; provided, however, that,
except as otherwise provided in an Option Agreement, each such Option
will terminate, if earlier:
(i) ninety days after the date that the Optionee ceases to be an
Eligible Participant for any reason, other than by reason of
death or disability or a Just Cause Termination;
(ii) twelve months after the date that the Optionee ceases to be an
Eligible Participant by reason of such person's death or
disability; or
(iii) immediately as of the date that the Optionee ceases to be an
Eligible Participant by reason of a Just Cause Termination.
(f) Options Nontransferable. Except as otherwise provided in an Option
Agreement, Options will not be transferable by the Optionee otherwise
than by will or the laws of descent and distribution, or in the case of
an NSO, pursuant to a QDRO. During the lifetime of the Optionee, the
Option will be exercisable only by him or her, or the transferee of an
NSO if it was transferred pursuant to a QDRO.
(g) Qualification of Stock. The right to exercise an Option will be further
subject to the requirement that if at any time the Board determines, in
its discretion, that the listing, registration or qualification of the
shares of Option Stock called for thereunder upon any securities
exchange or under any state or federal law, or the consent or approval
of any governmental regulatory authority, is necessary or desirable as
a condition of or in connection with the granting of such Option or the
purchase of shares of Option Stock thereunder, the Option may not be
exercised, in whole or in part, unless and until such listing,
registration, qualification, consent or approval is effected or
obtained free of any conditions not acceptable to the Board, in its
discretion.
(h) Additional Restrictions on Transfer. By accepting Options and/or Option
Stock under this Plan, the Optionee will be deemed to represent,
warrant and agree as follows:
(i) Investment Intent. Unless a registration statement is in effect
with respect to the sale of Option Stock obtained through
exercise of Options granted hereunder (which the Company is under
no obligation to effect): (1) the shares of Option Stock have not
been registered under the 1933 Act, and that such shares are not
freely tradeable and must be held indefinitely unless an
exemption from such registration is available; (2) upon exercise
of any Option, the Optionee will purchase the Option Stock for
his or her own account and not with a view to distribution within
the meaning of the 1933 Act, other than as may be effected in
compliance with the 1933 Act and the rules and regulations
promulgated thereunder; (3) no one else will have any beneficial
interest in the Option Stock; and (4) he or she has no present
intention of disposing of the Option Stock at any particular
time.
(ii) Other Applicable Laws. The Optionee further understands that
Transfer of the Option Stock requires full compliance with the
provisions of all applicable laws.
(i) Compliance with Law. Notwithstanding any other provision of this Plan,
Options may be granted pursuant to this Plan, and Option Stock may be
issued pursuant to the exercise thereof by an Optionee, only after
there has been compliance with all applicable federal, provincial and
state securities laws, and all of the same will be subject to this
overriding condition. The Company will not be required to register or
qualify Option Stock with the Securities and Exchange Commission or any
State agency, except that the Company will register with, or as
required by local law, file for and secure an exemption from such
registration
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17
<PAGE> 21
requirements from, the applicable securities administrator and other
officials of each jurisdiction in which an Eligible Participant would
be granted an Option hereunder prior to such grant.
(j) Stock Certificates. Certificates representing the Option Stock issued
pursuant to the exercise of Options will bear all legends required by
law and necessary to effectuate this Plan's provisions. The Company may
place a "stop transfer" order against shares of the Option Stock until
all restrictions and conditions set forth in this Plan and in the
legends referred to in this section 6(k) have been complied with.
(k) Notices. Any notice to be given to the Company under the terms of an
Option Agreement will be addressed to the Company at its principal
executive office, Attention: Corporate Secretary, or at such other
address as the Company may designate in writing. Any notice to be given
to an Optionee will be addressed to the Optionee at the address
provided to the Company by the Optionee. Any such notice will be deemed
to have been duly given if and when enclosed in a properly sealed
envelope, addressed as aforesaid, registered and deposited, postage and
registry fee prepaid, in a post office or branch post office regularly
maintained by the United States Government or the Canadian Government.
(l) Adjustments Upon Changes in Stock. In the event that the Committee
shall determine that any dividend or other distribution (whether in the
form of cash, Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Stock or other securities of the Company, issuance of
warrants or other rights to purchase Stock or other securities of the
Company or other similar corporate transaction or event affects the
interest in the Company represented by the Option Stock such that an
adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the
number and type of Option Stock (or other securities or other property)
which thereafter may be made the subject of grants under the Plan and
Eligible Participants under Section 5(a) hereof, (ii) the number and
type of Option Stock (or other securities or other property) subject to
outstanding grants, (iii) the purchase or exercise price with respect
to any grant; and (iv) any other rights and matters determined on a
personal basis under this Plan or any Option Agreement, provided,
however, that the number of shares of Option Stock covered by any grant
or to which such grant relates shall always be a whole number. Any such
adjustments hereunder will be made only by the Committee, in all events
in accordance with Section 424 of the Code, and when so made will be
effective, conclusive and binding for all purposes with respect to this
Plan and all Options then outstanding. No such adjustments will be
required by reason of the issuance or sale by the Company for cash or
other consideration of additional shares of Stock or securities
convertible into or exchangeable for shares of Stock.
(m) Other Provisions. The Option Agreement may contain such other terms,
provisions and conditions, including such special forfeiture
conditions, rights of repurchase, rights of first refusal and other
restrictions on Transfer of Option Stock issued upon exercise of any
Options granted hereunder, not inconsistent with this Plan, as may be
determined by the Committee in its sole discretion.
7. Proceeds from Sale of Stock. Cash proceeds from the sale of shares of
Option Stock issued from time to time upon the exercise of Options granted
pursuant to this Plan will be added to the general funds of the Company and
as such will be used from time to time for general corporate purposes.
8. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of this Plan, the Committee may
modify, extend or renew outstanding Options granted under this Plan, or
accept the surrender of outstanding Options (to the extent not theretofore
exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the
foregoing, however, no modification of any Option will, without the consent
of the holder of the Option, alter or impair any rights or obligations
under any Option theretofore granted under this Plan.
9. Amendment and Discontinuance. The Board may amend, suspend or discontinue
this Plan at any time or from time to time; provided that no action of the
Board will cause ISOs granted under this Plan not to comply with Section
422 of the Code unless the Board specifically declares such action to be
made for that purpose and provided further that no such action may, without
the approval of the stockholders of the Company, materially
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18
<PAGE> 22
increase (other than by reason of an adjustment pursuant to section 5(b)
hereof) the maximum aggregate number of shares of Option Stock in the
Option Pool that may be issued under Options granted pursuant to this Plan
or materially increase the benefits accruing to Plan participants or
materially modify eligibility requirements for the participants. Moreover,
no such action may alter or impair any Option previously granted under this
Plan without the consent of the holder of such Option.
10. Copies of Plan. A copy of this Plan will be delivered to each Optionee at
or before the time he or she executes an Option Agreement.
* * *
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19
<PAGE> 23
PROXY
for Annual Meeting of Shareholders
July 17, 2000
Solicited on behalf of the Board of Directors
SUMMEDIA.COM INC.
The undersigned hereby constitutes and appoints Grant M. Peterson and
John E. Veltheer, and each of them with full power to act alone, as
attorneys-in-fact and proxies of the undersigned, with full power of
substitution for and in the name, place and stead of the undersigned to appear
at the Annual Meeting of Shareholders of SUMmedia.com Inc. (the "Company"), to
be held on the 17th day of July, 2000, and at any postponement or adjournment
thereof, and to vote all of the shares of Common Stock of the Company which the
undersigned is entitled to vote, with all the powers and authority the
undersigned would possess if personally present. The undersigned directs that
this proxy be voted as indicated on the reverse side of this proxy. The proxy
agents present and acting in person or by their substitute (or, if only one is
present and acting, then that one) may exercise all the powers conferred by this
proxy.
(To be Completed and Signed on Reverse Side)
|X| Please mark your votes as in this example.
1. Election of the list of nominees listed below as directors of the company
to serve for terms expiring upon the annual meeting of shareholders in 2001
for Class III directors, in 2002 for Class II directors and in 2003 for
Class I directors or until their respective successors shall have been duly
elected and qualified.
<TABLE>
<S> <C> <C> <C>
Class I Nominees: Grant M. Petersen John E. Veltheer
Class II Nominees: Arvid C. Petersen Philip Kunsberg
Class III Nominees: Frank Palmer Johnson Chan Derrick Bulawa
____ For all nominees listed (except as ____ Withhold authority to vote for
marked to the contrary below). nominees.
</TABLE>
To withhold authority to vote for any individual nominee or nominees, write
the name of the nominee or nominees on the space provided below.
--------------------------------------
2. Ratification of the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
Fiscal Year ending December 31, 2000.
<TABLE>
<S> <C> <C> <C>
----- ------ -------
For Against Abstain
</TABLE>
3. Approval of the Company's 1999 Stock Option Plan
<TABLE>
<S> <C> <C> <C>
----- ------ -------
For Against Abstain
</TABLE>
<PAGE> 24
4. In their discretion, to transact such other business as may properly come
before this meeting or any postponement or adjournment thereof.
This proxy, when properly executed, will be voted as directed. The Board of
Directors recommends a vote FOR all nominees listed in Item 1 and FOR the
proposals listed in Items 2 and 3. If no directions to the contrary are
indicated, the persons named herein intend to vote FOR the election of the named
nominees for director, FOR the ratification of PricewaterhouseCoopers LLP as the
Company's independent accountants for the current fiscal year, and FOR the
approval of the Company's 1999 Stock Option Plan.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
The undersigned hereby acknowledges receipt of the Company's 1999 Annual Report
to Shareholders, Notice of the Company's 2000 Annual Meeting of Shareholders and
the Proxy Statement relating thereto.
NAME DATE
-------------------------------------- ---------------------------
(Joint Shareholders Sign Below)
NAME DATE
-------------------------------------- ---------------------------
INSTRUCTION: Please sign above personally. Signature of the shareholder(s)
should correspond exactly with the name(s) in which the shares are registered.
If the shares are registered in more than one name, each joint owner or
fiduciary should sign personally. Only authorized officers can sign for a
corporation.
