SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
SCHEDULE 14A INFORMATION
------------------
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[XX] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UTOPIA MARKETING, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (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:
[ ] 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>
Utopia Marketing, Inc.
312 Clematis Street, Suite 500
West Palm Beach, Florida 33401
(561) 835-9998
August 28, 1999
To Our Shareholders:
On behalf of the Board of Directors of Utopia Marketing, Inc.
(the "Company"), I cordially invite you to attend the Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be
held at 312 Clematis Street, Suite 500, West Palm Beach, Florida
33401, on Tuesday, September 28, 1999, at 10:30 a.m. local time.
A Notice of the Annual Meeting, form of proxy, and a Proxy
Statement containing information about the matters to be acted upon
at the Annual Meeting are enclosed.
We urge you to attend the Annual Meeting. It is an excellent
opportunity for the Company's management to discuss the Company's
progress with you in person.
Whether in person or by proxy, it is important that your shares
be represented at the Annual Meeting. To ensure your participation
in the Annual Meeting, regardless of whether you intend to attend
in person, please complete, sign, date and return the enclosed
proxy promptly. If you attend the Annual Meeting, you may revoke
your proxy at that time and vote in person, even if you have
previously returned your form of proxy, by following the procedures
set forth in the Proxy Statement.
We look forward to seeing you on September 28.
Yours truly,
/s/ Samuel L. Edelman
Samuel L. Edelman
President and
Chief Executive Officer
<PAGE>
Utopia Marketing, Inc.
312 Clematis Street, Suite 500
West Palm Beach, Florida 33401
_________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on Tuesday, September 28, 1999
__________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
("Annual Meeting") of Utopia Marketing, Inc. (the "Company") will
be held at 312 Clematis Street, Suite 500, West Palm Beach, Florida
33401, on Tuesday, September 28, 1999, at 10:30 a.m., for the
following purposes:
1. To elect six directors of the Company to serve until the 2000
Annual Meeting of Shareholders;
2. To approve the Utopia Marketing, Inc. 1999 Long-Term
Incentive Plan;
3. To ratify the appointment of Rachlin, Cohen & Holtz LLP
as the Company's independent certified public accountants
for the fiscal year ending January 1, 2000; and
4. To transact such other business as may properly come
before the Meeting or any adjournment or postponements
thereof.
The Board of Directors has fixed the close of business on August
20, 1999, as the record date for determining those shareholders
entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof.
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE
RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY
NEVERTHELESS ATTEND THE ANNUAL MEETING, REVOKE THEIR PROXY, AND
VOTE THEIR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Samuel L. Edelman
SAMUEL L. EDELMAN
President and Chief Executive Officer
West Palm Beach, Florida
August 28, 1999
<PAGE>
Utopia Marketing, Inc.
312 Clematis Street, Suite 500
West Palm Beach, Florida 33401
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 28, 1999
________________
PROXY STATEMENT
________________
TIME, DATE, AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Utopia Marketing, Inc.
(the "Company") of proxies from the holders of the Company's Common
Stock, par value $.001 per share (the "Common Stock"), for use at
the Annual Meeting of Shareholders of the Company to be held at
10:30 a.m. on Tuesday, September 28, 1999, at 312 Clematis Street,
Suite 500, West Palm Beach, Florida 33401, and at any adjournments
or postponements thereof (the "Annual Meeting"), pursuant to the
enclosed Notice of Annual Meeting.
The approximate date this Proxy Statement and the enclosed
form of proxy are first being sent to shareholders is August 28,
1999. Shareholders should review the information provided in this
Proxy Statement in conjunction with the Company's Annual Report
to Shareholders, which accompanies this Proxy Statement. The
Company's principal executive offices are located at 312 Clematis
Street, Suite 500, West Palm Beach, Florida 33401, and its
telephone number is (561) 835-9998.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board
of Directors. The giving of a proxy does not preclude the right to
vote in person should any shareholder giving the proxy so desire.
Shareholders have an unconditional right to revoke their proxy at
any time prior to the exercise thereof, either in person at the
Annual Meeting or by filing with the Company's Secretary at the
Company's headquarters a written revocation or duly executed proxy
bearing a later date; however, no such revocation will be effective
until written notice of the revocation is received by the Company
at or prior to the Annual Meeting.
The cost of preparing, assembling, and mailing this Proxy
Statement, the Notice of Annual Meeting of Shareholders, and the
enclosed proxy will be borne by the Company. In addition to the use
of mail, employees of the Company may solicit proxies personally
and by telephone. The Company's employees will receive no
compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers, and other
custodians, nominees, and fiduciaries to forward copies of the
proxy material to their principals and to request authority for the
execution of proxies. The Company may reimburse such persons for
their expenses in so doing.
<PAGE> 1
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the Company's shareholders will consider
and act upon the following matters:
1. To elect six directors of the Company to serve until the
2000 Annual Meeting of Shareholders;
2. To approve the Utopia Marketing, Inc. 1999 Long-Term
Incentive Plan;
3. To ratify the appointment of Rachlin, Cohen & Holtz LLP
as the Company's independent certified public accountants for
the fiscal year ending January 1, 2000; and
4. To transact such other business as may properly come
before the Meeting or any adjournment or postponements
thereof.
Unless contrary instructions are indicated on the enclosed
proxy, all shares represented by valid proxies received pursuant to
this solicitation (and which have not been revoked in accordance
with the procedures set forth herein) will be voted (a) for the
election of the respective nominees for director named below, (b)
in favor of the Utopia Marketing, Inc. 1999 Long-Term Incentive
Plan and (c) in favor of the appointment of Rachlin, Cohen & Holtz
LLP as the Company's independent certified public accountants. In
the event a shareholder specifies a different choice by means of
the enclosed proxy, such shareholder's shares will be voted in
accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on August
20, 1999, as the record date (the "Record Date") for determining
shareholders of the Company entitled to notice of and to vote at
the Annual Meeting. As of the Record Date, there were 14,266,367
shares of Common Stock issued and outstanding, all of which are
entitled to be voted at the Annual Meeting. Each share of Common
Stock is entitled to one vote on each matter submitted to
shareholders for approval at the Annual Meeting.
The attendance, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting is necessary to constitute a quorum.
Directors will be elected by plurality of the votes cast by the
shares of Common Stock represented in person or by proxy at the
Annual Meeting. The affirmative votes of the holders of a majority
of the shares of Common Stock represented in person or by proxy at
the Annual Meeting will be required to approve the Utopia
Marketing, Inc. 1999 Long-Term Incentive Plan and to ratify the
appointment of Rachlin, Cohen & Holtz LLP as the Company's
independent certified public accountants for the year ending
January 1, 2000, and any other matter that may be submitted to a
vote of the shareholders. If less than a majority of the
outstanding shares entitled to vote are represented at the Annual
Meeting, a majority of the shares so represented may adjourn the
Annual Meeting to another date, time or place, and notice need not
be given of the new date, time or place if the new date, time or
place is announced at the Meeting before adjournment is taken.
<PAGE> 2
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the Meeting. Such inspector(s) shall
determine the number of shares of Common Stock represented at the
Meeting, the existence of a quorum, and the validity and effect of
proxies, and shall receive, count, and tabulate ballots and votes,
and determine the results thereof. Abstentions will be considered
as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not
be counted as votes cast for or against any given matter.
A broker or nominee holding shares registered in its name, or in
the name of its nominee, which are beneficially owned by another
person and for which it has not received instructions as to voting
from the beneficial owner, may have discretion to vote the
beneficial owner's shares with respect to the election of directors
and other matters addressed at the Annual Meeting. Any such shares
that are not represented at the Annual Meeting, either in person or
by proxy, will not be considered to have cast votes on any matters
addressed at the Annual Meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect
to beneficial ownership of the Common Stock as of August 20, 1999,
by: (i) each person known to the Company to beneficially own more
than 5% of the Common Stock; (ii) each executive officer and
director of the Company; and (iii) all directors and executive
officers of the Company as a group. The calculation of the
Percentage of Outstanding Shares is based on 14,266,367 shares
outstanding on August 20, 1999. Except as otherwise indicated, each
shareholder named has sole voting and investment power with respect
to such shareholder's shares.
<TABLE>
<CAPTION>
Amount of Beneficial Ownership
of Common Stock
Name of Beneficial Owner Beneficially Owned Outstanding
- ------------------------ ------------------ -----------
<S> <C> <C>
Samuel L. Edelman (1) . . . . . . . . . . 5,519,482 38.7%
Louise B. Edelman (2). . . . . . . . . . . 5,519,482 38.7%
Joel Solomon . . . . . . . . . . . . . . . 710,000 4.9%
Bruce Oberfest . . . . . . . . . . . . . . 0 *
Stuart Kreisler. . . . . . . . . . . . . . 1,165,500 8.2%
Robert Wildrick. . . . . . . . . . . . . . 0 *
Joe Wascura. . . . . . . . . . . . . . . . 0 *
All Executive Officers and Directors
as a group (6 persons) . . . . . . . . . . 7,394,982 51.8%
5% Shareholder:
Lane International Trading, Inc. . . . . . 1,358,608 9.5%
31284 San Antonio Street
Hayward, CA 94544
Braha Industries, Inc. . . . . . . . . . . 1,339,260 9.4%
1 East 33rd Street
New York, NY 10016
___________________________
* Less than 1%.
</TABLE>
<PAGE> 3
(1) Includes 2,538,250 shares owned by Louise B. Edelman over which
Mr. Edelman shares control, and 400,160 shares owned by Mr.
Edelman's relatives with respect to which he does not admit
beneficial ownership.
(2) Includes 2,521,072 shares owned by Samuel L. Edelman over which
Ms. Edelman shares control, and 400,160 shares owned by Ms.
Edelman's relatives with respect to which she does not admit
beneficial ownership.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Annual Meeting, six directors are to be elected to hold
office until the 2000 Annual Meeting of Shareholders and until
their successors have been elected and qualified. The six nominees
for election as directors are Samuel L. Edelman, Louise B. Edelman,
Joel Solomon, Bruce Oberfest, Robert Wildrick and Stuart Kreisler.
Each nominee is currently a member of the Board of Directors.
Information concerning each of the nominees is set forth below. The
persons named in the enclosed proxy card have advised that, unless
otherwise directed on the proxy card, they intend to vote FOR the
election of the nominees. Should any nominee become unable or
unwilling to accept nomination or election for any reason, votes
will be cast for a substitute nominee designated by the Board of
Directors, which has no reason to believe the nominees named will
be unable or unwilling to serve if elected.
Recommendation
The Board of Directors recommends a vote "FOR" each of the
nominees as directors to serve until the Company's 2000 Annual
Meeting of Shareholders and until their respective successors are
duly elected and qualified.
Directors Age Position With The Company
- --------- --- -------------------------
Samuel L. Edelman 47 Chairman of the Board,
President and Chief
Executive Officer (1)
Louise B. Edelman 46 Executive Vice President of
Corporate Development,
Secretary and Director
Joel Solomon 53 Chief Operating Officer and
Director
Bruce Oberfest 52 Director (1)(2)
Robert Wildrick 55 Director (1)(2)
Stuart Kreisler 53 Director (2)
___________________
(1) Member of the Compensation and Stock Option Committee
(2) Member of the Audit Committee
Samuel L. Edelman, a co-founder of the Company, has since the
Company's inception served as the Chairman of the Board, President
and Chief Executive Officer of the Company. From April 1983 to
July 1987, Mr. Edelman served as the President of the Esprit
Footwear Division of Esprit De Corps, an apparel and footwear
company ("Esprit"). Prior to April 1983, Mr. Edelman occupied
various executive positions, including Executive Vice-President of
Kenneth Cole Productions, a footwear company.
Louise B. Edelman, a co-founder of the Company, has served as a
director of the Company since its founding. She served as Senior
Vice President Image from the Company's founding until the second
quarter of 1992. Since that time, Ms. Edelman has served as
Executive Vice President Corporate Development. Prior to October
1987, Ms. Edelman held various positions, including National Sales
<PAGE> 4
Manager for Esprit Kids Shoes, Director of Public Relations for
Calvin Klein, Ltd., a fashion company, and Senior Fashion Editor of
Seventeen, Mademoiselle and Harper's Bazaar magazines.
Joel Solomon has served as a director of the Company since March
20, 1998 and as acting Chief Operating Officer of the Company since
February 1, 1999. During the past five years, Mr. Solomon was the
President, a director and principal shareholder of San Francisco
Shoe Works, Inc., an importer of lady's and children's footwear and
accessories to the United States for Esprit Shoes & Accessories Far
East, Ltd., of which he was a managing director.
Bruce Oberfest has served as a director of the Company since
October 6, 1997. He has been a Certified Public Accountant and
principal owner of the accounting and consulting firm of Bruce D.
Oberfest & Associates for more than the past five years.
Robert Wildrick has served as a director of the Company since
June 22, 1999. For more than five years prior to 1995, Mr.
Wildrick served as Executive Vice President of Belk Stores, a
national department store chain. From 1995 through 1998, Mr.
Wildrick was the Chairman, President and Chief Executive Officer of
Venture Stores, a national department store chain. Mr. Wildrick
also serves as a director for Joseph Banks, Inc., a retail clothing
store chain.
Stuart Kreisler has served as a director of the Company since
June 22, 1999. Prior to December 1996, Mr. Kreisler was a self-
employed private investor. From December 1996 through February
1999, Mr. Kreisler served as the President and Chief Operating
Officer of Moore's Retail Group, a men's retail and manufacturing
company.
Other Executive Officers
Name Age Position With The Company
- ---- --- -------------------------
Joe Wascura 51 Chief Financial Officer
Joe Wascura has served as the Company's Chief Financial Officer
since January 1, 1999. Prior to joining the Company, Mr. Wascura
served as Chief Financial Officer and a director of A. Marinelli
Shoes and Accessories from 1994 through 1998. Prior to 1994, Mr.
Wascura served as the Chief Financial Officer of Unisa Holding
Company.
With the exception of Sam Edelman and Libby Edelman, who are
married to each other, there is no family relationship among
directors or executive officers of the Company.
In January 1998, Venture Stores filed a petition under Chapter
11 of the federal bankruptcy laws. At the time of the Chapter 11
filing, Robert Wildrick was Chairman, President and Chief Executive
Officer of Venture Stores.
THE BOARD OF DIRECTORS AND BOARD COMMITTEES
During the year ended January 2, 1999, the Board of Directors
held three meetings. During such period, all directors attended at
least 75% of the meetings of the Company's Board of Directors and
committees of which they were a member. In addition to attending
<PAGE> 5
meetings, directors discharge their responsibilities through review
of Company reports to directors and correspondence and telephone
conferences with the Company's executive officers, key employees,
and others regarding matters of interest to the Company.
The Board of Directors has established two committees, a
Compensation and Stock Option Committee (the "Compensation
Committee") and an Audit Committee. The Compensation Committee
will be responsible for administering the Company's Stock Option
Plan (the "Option Plan") including, among other things, determining
the amount, exercise price and vesting schedule of stock options
awarded under the Option Plan. The Compensation Committee will
also administer the Company's other compensation programs and
perform such other duties as may from time to time be determined by
the Board of Directors. The Compensation Committee is comprised of
Mr. Edelman, Mr. Oberfest, and Mr. Wildrick.
The Audit Committee is responsible for reviewing the scope and
results of the annual audit of the Company's consolidated financial
statements conducted by the Company's independent accountants, the
scope of other services provided by the Company's independent
accountants, proposed changes in the Company's financial and
accounting standards and principles, and the Company's policies and
procedures with respect to its internal accounting, auditing and
financing controls. The Audit Committee also examines and
considers other matters relating to the financial affairs and
accounting methods of the Company, including recommendations
regarding the selection and retention of the Company's independent
auditors. The Audit Committee is comprised of Mr. Kreisler, Mr.
Oberfest and Mr. Wildrick.
Compensation of Directors
Each non-employee director of the Company is entitled to receive
a fee of $10,000 per year and $500 for attendance at each meeting
of the Board of Directors. In addition, each non-employee director
is entitled to receive $500 for attendance at each meeting of a
committee of the Board of Directors.
Each non-employee director of the Company is entitled to receive
options to purchase 5,000 shares of Common Stock upon their
appointment to the Board of Directors and is entitled to receive an
option to purchase 5,000 shares of Common Stock annually
thereafter, so long as they continue to serve on the Board of
Directors.
All directors are reimbursed for out of pocket expenses incurred
in connection with attending meetings of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") requires the Company's directors and executive
officers, and persons who beneficially own more than ten percent of
a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "Commission") initial
reports of beneficial ownership and reports of changes in
beneficial ownership of the Company's Common Stock. The rules
promulgated by the Commission under Section 16(a) of the Exchange
Act require those persons to furnish the Company with copies of all
reports filed with the Commission pursuant to Section 16(a).
<PAGE> 6
Based solely upon a review of Forms 3, Forms 4, and Forms 5
during the year ended January 2, 1999, all directors, executive
officers and greater-than-ten-percent beneficial owners have filed
with the Commission on a timely basis all reports required to be
filed under Section 16(a) of the Exchange Act.
EXECUTIVE COMPENSATION
The following table summarizes the compensation during the
fiscal years ended January 2, 1999, January 3, 1998, and December
28, 1996, earned by the Company's Chief Executive Officer.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
Awards Payouts
Other Securities All
Annual Restricted Underlying Other
Name & Annual Compen- Stock Options/ LTIP Compen-
Principal Position Year Salary($)(1) Bonus($) sation($) Award(s)($) SARs(#) Payouts($) sation($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Samuel L. Edelman 1998 0 - - - - - -
President & CEO 1997 0 - - - - - -
1996 $198,077 - - - - - -
</TABLE>
(1) Mr. Edelman did not receive a salary in connection with his efforts
on behalf of the Company from 1996 through the first quarter
of 1999. Mr. Edelman began accruing a salary of $150,000 as
of February 1, 1999.
Stock Option Plan
In September 1991, the Board of Directors approved the 1991
Stock Option Plan (the "1991 Plan"), which allows for the grant
of incentive stock options (as defined in Section 422 of the
Internal Revenue Code) to employees and nonstatutory stock
options to both employees and outside Directors. An aggregate of
1,500,000 shares of Common Stock have been reserved for issuance
under the 1991 Plan. The Company has issued 1,210,200 options
under the 1991 Plan of which 580,200 have been exercised.
Although the Company is authorized to grant up to 289,800
additional options under the 1991 Plan, the Board of Directors
has determined that upon the approval of the 1999 Long-Term
Incentive Plan, no additional options will be awarded under the
1991 Plan.
Under the 1991 Plan, stock options intended to qualify as
incentive stock options under Section 422 of the Internal Revenue
Code are granted to employees at prices not less than the fair
market value of the common stock on the date of grant. The 1991
Plan permits and the Company has granted, from time to time, non-
statutory stock options at exercise prices less than the fair
market value of the common stock on the date of grant. The 1991
Plan specifies that the Company's outside Directors are to
receive a stock option grant of 5,000 shares on the date first
elected to the Board and an additional 5,000 shares each year
thereafter that they continue to serve as directors. Such
options are granted at the fair market value of the common stock
on the date of the grant, vested over four years, and are
exercisable only while the outside Director remains a Director.
The 1991 Plan also permits the Company to grant rights to
purchase common stock at a price which is at least 50% of the
fair market value of the common stock on the date of grant. The
<PAGE> 7
offer of a right must be accepted within six months of its grant
by the execution of a restricted stock purchase agreement between
the Company and the offeree and the payment of the purchase price
of the shares.
Employment Agreements
The Company has no employment agreements with any of its
executive officers.
Compensation Committee Interlocks and Insider Participation
Prior to June 22, 1999, at which time the Board of Directors
established the Compensation Committee, Samuel Edelman, the
Company's President and Chief Executive Officer, and Louise
Edelman, the Company's Executive Vice-President, had
responsibility for all decisions with respect to executive
officer compensation. Beginning June 22, 1999, all decisions
regarding compensation of the Company's executive officers were
subject to the authority of the Compensation Committee. Mr.
Edelman is a member of the Compensation Committee.
Mr. Edelman did not receive any compensation between 1996
and January 31, 1999 in connection with his efforts on behalf of
the Company. Following the sale in 1996 of the Company's brand
names, trademarks, trade names and certain other intellectual
property rights to Maxwell Shoe Company, Inc. ("Maxwell"), the
Company ceased conducting any revenue generating business and was
primarily involved in the investigation of new business
opportunities. As a result, Mr. Edelman chose to forego any
compensation until February 1, 1999 when the Company began to
develop and commercialize a new line of footwear. On February 1,
1999, the Company began accruing an annual salary of $150,000 for
the benefit of Mr. Edelman. The Company will pay Mr. Edelman's
salary when determined to be appropriate by the Board of
Directors.
<PAGE> 8
PROPOSAL 2:
APPROVE THE UTOPIA MARKETING, INC.
1999 LONG-TERM INCENTIVE PLAN
The full text of the Utopia Marketing, Inc. 1999 Long-Term
Incentive Plan (the "Incentive Plan") is attached to this Proxy
Statement as Appendix A, and you are urged to refer to it for a
complete description of the Incentive Plan. The summary of the
principal features of the Incentive Plan, which follows, is
qualified by reference to Appendix A.
The Incentive Plan provides for awards ("Awards") consisting
of grants of incentive stock options, nonstatutory stock options,
formula stock options, stock appreciation rights, restricted
stock, dividend equivalents, cash and performance awards to
employees, non-employee directors, and other persons who perform
services for the Company. Although the Incentive Plan authorizes
all such Awards, the Company anticipates granting Awards
consisting of primarily incentive, non-qualified and formula
stock options.
The Incentive Plan will be administered by the Company's
Compensation and Stock Option Committee (the "Compensation
Committee"). The Compensation Committee is authorized to select
the individuals to whom Awards will be granted, determine the
type, size and terms and conditions of Awards, construe and
interpret the Incentive Plan, and provide for the acceleration of
the date or dates on which an option becomes exercisable. The
Compensation Committee is authorized to delegate the Incentive
Plan administration responsibilities to one or more employees of
the Company.
The maximum number of shares of Common Stock that may be
made the subject of Awards granted under the Incentive Plan is
1,500,000. In the event of any change in capitalization of the
Company, however, the Compensation Committee shall adjust the
maximum number and class of shares which are subject to
outstanding Awards and the purchase price therefor. In addition,
if any Award expires or terminates without having been exercised,
the shares of Common Stock subject to the Award again become
available for grant under the Incentive Plan.
The Compensation Committee may grant Awards to any employee,
non-employee director, consultant, advisor, or independent
contractor of the Company ("Optionee"). The Compensation
Committee is authorized to grant to eligible persons options
("Options") to purchase a specified number of shares of Common
Stock at a stated price per share. An Option may be intended to
qualify as an incentive stock option ("ISO") pursuant to the
Internal Revenue Code, or may be intended to be a nonqualified
option ("NQO"). The term of an ISO cannot exceed 10 years, and
the exercise price of any ISO must be equal to or greater than
the fair market value of the shares of Common Stock on the date
of the grant. Any ISO granted to a holder of 10% or more of the
combined voting power of the capital stock of the Company must
have an exercise price equal to or greater than 110% of the fair
market value of the Common Stock on the date of grant and may not
have a term exceeding five years from the grant date. The
exercise price and the term of a NQO shall be determined by the
Compensation Committee on the date that the NQO is granted.
Options shall become exercisable in whole or in part by the
Optionee on the date or dates specified by the Compensation
Committee. The Compensation Committee may provide that an Option
<PAGE> 9
becomes exercisable in installments over a period of years or
upon the attainment of stated goals. The Compensation Committee,
in its sole discretion, may accelerate the date or dates on which
an Option becomes exercisable.
Each Option shall expire on such date or dates as the
Compensation Committee shall determine at the time the Option is
granted. Upon termination of an Optionee's employment with the
Company (including by reason of the Optionee's death), each
unexercised Option (whether or not then exercisable) shall
terminate and be forfeited, except that any such Options which
are then exercisable shall remain exercisable for such period
after termination of the Optionee's employment as the
Compensation Committee may have determined at the time the Option
was granted. If an Optionee's employment with the Company is
terminated for cause (as defined in the Incentive Plan), all of
such person's Options shall immediately terminate.
Payment for shares of Common Stock purchased upon exercise
of an Option must be made in full at the time of purchase.
Payment may be made in cash or in any other manner as may be
authorized by the Compensation Committee. Each Option shall be
evidenced by a written agreement containing such terms and
conditions consistent with the Incentive Plan as shall be
established by the Compensation Committee.
The Incentive Plan provides for automatic grants of NQOs to
non-employee directors ("Formula Options"). Each non-employee
director will receive: (I) a Formula Option to purchase 5,000
shares of Common Stock upon his or her initial election and
qualification as a member of the Board of Directors; and (ii) a
Formula Option to purchase 5,000 shares of Common Stock upon each
re-election and qualification as a member of the Board of
Directors. The per share exercise price of the Formula Option is
equal to 100% of the fair market value of the shares of Common
Stock on the date of grant. Each Formula Option becomes
exercisable with respect to 100% of the underlying shares on the
first anniversary of the date of grant. If a non-employee
director ceases to serve as a director of the Company, each
Formula Option shall expire on such date or dates as the
Compensation Committee shall determine at the time the Option is
granted. Payment for shares of Common Stock purchased upon
exercise of a Formula Option must be made in full at the time of
purchase. Payment may be made in cash or in any other manner as
may be authorized by the Compensation Committee. Each Formula
Option shall be evidenced by a written agreement containing such
terms and conditions consistent with the Incentive Plan as shall
be established by the Compensation Committee.
Recommendation
The Board of Directors recommends that the Company's
shareholders vote "FOR" the approval of the Utopia Marketing,
Inc. 1999 Long-Term Incentive Plan.
<PAGE> 10
PROPOSAL 3:
RATIFY THE APPOINTMENT OF THE COMPANY'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
The firm of Michael, Adest & Blumenkrantz, certified public
accountants, served as the Company's independent certified public
accountants for the year ended January 2, 1999. Effective as of
March 15, 1999, the Board of Directors determined that Michael,
Adest & Blumenkrantz (the "Former Accountant") would not continue
to serve as the Company's independent certified public accountants.
Effective as of such date, the Board of Directors engaged Rachlin,
Cohen & Holtz LLP to audit the Company's financial statements for
the fiscal year ended January 2, 1999 and to serve as the Company's
certified public accountants for the fiscal year ending January 1,
2000.
The Former Accountant's report on the financial statements of
the Company for the fiscal year ended January 3, 1998 did not
contain an adverse opinion or a disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Company's fiscal year ended January 2,
1999, and during the period January 3, 1999 through March 15, 1999,
there were no disagreements between the Company and the Former
Accountant on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure
which, if not resolved to the satisfaction of the Former
Accountant, would have caused the Former Accountant to refer to the
subject matter of the disagreement in connection with the report.
During the Company's fiscal year ended January 2, 1999, and during
the period January 3, 1999 through March 15, 1999: (i) the Former
Accountant did not advise the Company of the lack of internal
controls necessary to develop reliable financial statements; (ii)
the Former Accountant did not advise the Company that it could no
longer rely on representations of the Company's management or that
it was unwilling to be associated with the financial statements
prepared by the Company's management; (iii) the Former Accountant
did not advise the Company of the need to significantly expand the
scope of its audit or of the existence of information that if
further investigated could materially impact the fairness or
reliability of audited reports or financial statements or cause the
accountant to be unable to rely on management's representation; and
(iv) the Former Accountant did not advise the Company of
information that, in the opinion of the Former Accountant,
materially impacted the fairness or reliability of a previously
issued audit report or underlying financial statement.
The firm of Rachlin, Cohen & Holtz LLP has served as the
Company's independent certified public accountants since March 15,
1999. Rachlin, Cohen & Holtz LLP has advised the Company that the
firm does not have any direct or indirect financial interest in the
Company, nor has such firm had any such interest in connection with
the Company during the past year, other than in its capacity as the
Company's independent certified public accountants. The Board of
Directors has appointed Rachlin, Cohen & Holtz LLP as the Company's
independent certified public accountants for the fiscal year ending
January 1, 2000. Although the Board is not required to do so, it
is submitting its selection of the Company's independent certified
public accountants for ratification by the Shareholders at the
Annual Meeting, in order to ascertain the views of its
shareholders. The Board will not be bound by the vote of the
shareholders; however, if the selection is not ratified, the Board
will reconsider its selection. Representatives of Rachlin, Cohen
& Holtz LLP will be present at the Annual Meeting. These
representatives will have the opportunity to make a statement if
<PAGE> 11
they desire to do so and will be available to respond to
appropriate questions from shareholders.
Recommendation
The Board of Directors recommends that the Company's
shareholders vote "FOR" ratification of the appointment of Rachlin,
Cohen & Holtz LLP as the Company's independent certified public
accountants.
ANNUAL REPORT
The Company's 1998 Annual Report to Shareholders, including
financial statements for the year ended January 2, 1999, is being
distributed to all shareholders of the Company together with this
Proxy Statement, in satisfaction of the requirements of the
Securities and Exchange Commission. Additional copies of such
report are available free of charge upon request. To obtain such
additional copies, please contact the Company's Controller, Vance
Kistler, at (561) 835-9998.
SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, shareholders of
the Company may present proper proposals for inclusion in the
Company's Proxy Statement and for consideration at the next annual
meeting by submitting their proposals to the Company in a timely
manner. Any shareholder of the Company who wishes to present a
proposal for inclusion in the Proxy Statement for action at the
2000 Annual Meeting of Shareholders must comply with the Company's
Bylaws and the rules and regulations of the Securities and Exchange
Commission then in effect. Such proposal must have been mailed to
the Company at its offices at 312 Clematis Street, Suite 500, West
Palm Beach, Florida 33401, Attention: Secretary, and must be
received by the Company before April 30, 1999.
OTHER MATTERS
The Board of Directors is not aware of any other matters to come
before the Meeting. If, however, any other matters properly come
before the Annual Meeting, it is the intention of the persons named
in the enclosed form of proxy to vote said proxy in accordance with
their judgment.
<PAGE> 12
Appendix A
UTOPIA MARKETING, INC.
1999 LONG-TERM INCENTIVE PLAN
I. PURPOSE
The Utopia Marketing, Inc. 1999 Long-Term Incentive Plan is
adopted effective September 1, 1999. The Plan is designed to
attract, retain and motivate selected Key Employees and Key Non-
Employees of the Company and its Affiliates, and reward them for
making major contributions to the success of the Company and its
Affiliates. These objectives are accomplished by making long-term
incentive awards under the Plan that will offer Participants an
opportunity to have a greater proprietary interest in, and closer
identity with, the Company and its Affiliates and their financial
success.
The Awards may consist of:
1. Incentive Options;
2. Nonstatutory Options;
3. Formula Options;
4. Restricted Stock;
5. Rights;
6. Dividend Equivalents;
7. Performance Awards; or
8. Cash Awards.
or any combination of the foregoing, as the Committee may
determine.
II. DEFINITIONS
A. "Affiliate" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated association
or other entity (other than the Company) that, for purposes of
Section 422 of the Code, is a parent or subsidiary of the Company,
direct or indirect.
B. "Award" means the grant to any Key Employee or Key Non-
Employee of any form of Option, Restricted Stock, Right,
Performance Award, or Cash Award, whether granted singly, in
combination, or in tandem, and pursuant to such terms, conditions,
<PAGE> A-1
and limitations as the Committee may establish in order to fulfill
the objectives of the Plan.
C. "Award Agreement" means a written agreement entered into
between the Company and a Participant under which an Award is
granted and which sets forth the terms, conditions, and limitations
applicable to the Award.
D. "Board" means the Board of Directors of the Company.
D. "Cash Award" means an Award of cash, subject to the
requirements of Article XIII and such other restrictions as the
Committee deems appropriate or desirable.
F. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute thereto. References to
any provision of the Code shall be deemed to include regulations
thereunder and successor provisions and regulations thereto.
G. "Committee" means the committee to which the Board delegates
the power to act under or pursuant to the provisions of the Plan,
or the Board if no committee is selected. If the Board delegates
powers to a committee, and if the Company is or becomes subject to
Section 16 of the Exchange Act, then, if necessary for compliance
therewith, such committee shall consist initially of not less than
two (2) members of the Board, each member of which must be a "non-
employee director", within the meaning of the applicable rules
promulgated pursuant to the Exchange Act. If the Company is or
becomes subject to Section 16 of the Exchange Act, no member of the
Committee shall receive any Award pursuant to the Plan or any
similar plan of the Company or any Affiliate while serving on the
Committee, unless the Board determines that the grant of such an
Award satisfies the then current Rule 16b-3 requirements under the
Exchange Act. Notwithstanding anything herein to the contrary, and
insofar as it is necessary in order for compensation recognized by
Participants pursuant to the Plan to be fully deductible to the
Company for federal income tax purposes, each member of the
Committee also shall be an "outside director" (as defined in
regulations or other guidance issued by the Internal Revenue
Service under Code Section 162(m)).
H. "Common Stock" means the common stock, par value $.001, of
the Company.
I. "Company" means Utopia Marketing, Inc., a Florida
corporation, and includes any successor or assignee corporation or
corporations into which the Company may be merged, changed, or
consolidated; any corporation for whose securities the securities
of the Company shall be exchanged; and any assignee of or successor
to substantially all of the assets of the Company.
<PAGE> A-2
J. "Disability" or "Disabled" means a permanent and total
disability as defined in Section 22(e)(3) of the Code.
K. "Dividend Equivalent" means an Award subject to the
requirements of Article XI.
L. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute thereto.
References to any provision of the Exchange Act shall be deemed to
include rules thereunder and successor provisions and rules
thereto.
M. "Fair Market Value" means, if the Shares are listed on any
national securities exchange, the closing sales price, if any, on
the largest such exchange on the valuation date, or, if none, on
the most recent trade date immediately prior to the valuation date
provided such trade date is no more than thirty (30) days prior to
the valuation date. If the Shares are not then listed on any such
exchange, the fair market value of such Shares shall be the closing
sales price if such is reported, or otherwise the mean between the
closing "Bid" and the closing "Ask" prices, if any, as reported in
the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") for the valuation date, or if none, on the most
recent trade date immediately prior to the valuation date provided
such trade date is no more than thirty (30) days prior to the
valuation date. If the Shares are not then either listed on any
such exchange or quoted in NASDAQ, or there has been no trade date
within such thirty (30) day period, the fair market value shall be
the mean between the average of the "Bid" and the average of the
"Ask" prices, if any, as reported in the National Daily Quotation
System for the valuation date, or, if none, for the most recent
trade date immediately prior to the valuation date provided such
trade date is no more than thirty (30) days prior to the valuation
date. If the fair market value cannot be determined under the
preceding three sentences, it shall be determined in good faith by
the Committee.
N. "Formula Option" means a Nonstatutory Option granted
automatically to a Non-Employee Board Member upon his or her
initial election, and any subsequent re-election, as a Non-Employee
Board Member.
O. "Incentive Option" means an Option that, when granted, is
intended to be an "incentive stock option", as defined in
Section 422 of the Code.
P. "Key Employee" means an employee of the Company or of an
Affiliate who is designated by the Committee as being eligible to
be granted one or more Awards under the Plan.
Q. "Key Non-Employee" means a Non-Employee Board Member,
consultant, advisor or independent contractor of the Company or of
an Affiliate who is designated by the Committee as being eligible
to be granted one or more Awards under the Plan.
<PAGE> A-3
R. "Non-Employee Board Member" means a director of the Company
who is not an employee of the Company or any of its Affiliates.
S. "Nonstatutory Option" means an Option that, when granted, is
not intended to be an "incentive stock option", as defined in
Section 422 of the Code.
T. "Option" means a right or option to purchase Common Stock,
including Restricted Stock if the Committee so determines.
U. "Participant" means a Key Employee or Key Non-Employee to whom
one or more Awards are granted under the Plan.
V. "Performance Award" means an Award subject to the requirements
of Article XII, and such performance conditions as the Committee
deems appropriate or desirable.
W. "Plan" means the Utopia Marketing, Inc. 1999 Long-Term
Incentive Plan, as amended from time to time.
X. "Restricted Stock" means an Award made in Common Stock or
denominated in units of Common Stock and delivered under the Plan,
subject to the requirements of Article IX, such other restrictions
as the Committee deems appropriate or desirable, and as awarded in
accordance with the terms of the Plan.
Y. "Right" means a stock appreciation right delivered under the
Plan, subject to the requirements of Article X and as awarded in
accordance with the terms of the Plan.
Z. "Shares" means the following shares of the capital stock of
the Company as to which Options or Restricted Stock have been or
may be granted under the Plan and upon which Rights or units of
Restricted Stock may be based : treasury or authorized but unissued
Common Stock of the Company, or any shares of capital stock into
which the Shares are changed or for which they are exchanged within
the provisions of Article XIX of the Plan.
III. SHARES SUBJECT TO THE PLAN
The aggregate number of Shares as to which Awards may be
granted from time to time (subject to adjustment for stock splits,
stock dividends, and other adjustments described in Article XIX
hereof) shall be 1,500,000.
From time to time, the Committee and appropriate officers of
the Company shall take whatever actions are necessary to file
required documents with governmental authorities and stock
exchanges so as to make Shares available for issuance pursuant to
the Plan. Shares subject to Awards that are forfeited, terminated,
expire unexercised, canceled by agreement of the Company and the
Participant, settled in cash in lieu of Common Stock or in such
manner that all or some of the Shares covered by such Awards are
<PAGE> A-4
not issued to a Participant, or are exchanged for Awards that do
not involve Common Stock, shall immediately become available for
Awards. Awards payable in cash shall not reduce the number of
Shares available for Awards under the Plan.
Except as otherwise set forth herein, the aggregate number of
Shares as to which Awards may be granted shall be subject to change
only by means of an amendment of the Plan duly adopted by the
Company and approved by the shareholders of the Company within one
year before or after the date of the adoption of the amendment.
IV. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. A majority
of the Committee shall constitute a quorum at any meeting thereof
(including by telephone conference) and the acts of a majority of
the members present, or acts approved in writing by a majority of
the entire Committee without a meeting, shall be the acts of the
Committee for purposes of this Plan. The Committee may authorize
one or more of its members or an officer of the Company to execute
and deliver documents on behalf of the Committee. A member of the
Committee shall not exercise any discretion respecting himself or
herself under the Plan. The Board shall have the authority to
remove, replace or fill any vacancy of any member of the Committee
upon notice to the Committee and the affected member. Any member
of the Committee may resign upon notice to the Board. The
Committee may allocate among one or more of its members, or may
delegate to an officer of the Company, such responsibility and
authority as it determines. Subject to the provisions of the Plan,
the Committee is authorized to:
A. Interpret the provisions of the Plan and any Award or Award
Agreement, and make all rules and determinations that it deems
necessary or advisable to the administration of the Plan;
B. Determine which employees of the Company or an Affiliate shall
be designated as Key Employees and which of the Key Employees shall
be granted Awards;
C. Determine the Key Non-Employees to whom Awards, other than
Incentive Options and Performance Awards for which Key Non-
Employees shall not be eligible, shall be granted;
D. Determine whether an Option to be granted shall be an
Incentive Option or Nonstatutory Option;
E. Determine the number of Shares for which an Option or
Restricted Stock shall be granted;
F. Determine the number of Rights, the Cash Award or the
Performance Award to be granted;
<PAGE> A-5
G. Provide for the acceleration of the right to exercise any
Award; and
H. Specify the terms, conditions, and limitations upon which
Awards may be granted;
provided, however, that with respect to Incentive Options, all such
interpretations, rules, determinations, terms, and conditions shall
be made and prescribed in the context of preserving the tax status
of the Incentive Options as incentive stock options within the
meaning of Section 422 of the Code.
The Committee may delegate to one or more employees of the
Company or its Affiliates any duty, responsibility or authority of
the Committee under the Plan pursuant to such conditions or
limitations as the Committee may establish except that only the
Committee may select and grant Awards to Participants who are
subject to Section 16 of the Exchange Act. All determinations of
the Committee shall be made by a majority of its members. No member
of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Award.
The Committee shall have the authority at any time to cancel
Awards for reasonable cause and to provide for the conditions and
circumstances under which Awards shall be forfeited.
Any determination made by the Committee pursuant to the
provisions of the Plan shall be made in its sole discretion, and in
the case of any determination relating to an Award, may be made at
the time of the grant of the Award or, unless in contravention of
any express term of the Plan or an Agreement, at any time
thereafter. All decisions made by the Committee pursuant to the
provisions of the Plan shall be final and binding on all persons,
including the Company and the Participants. No determination shall
be subject to de novo review if challenged in court.
V. ELIGIBILITY FOR PARTICIPATION
Awards may be granted under this Plan only to Key Employees
and Key Non-Employees of the Company or its Affiliates. The
foregoing notwithstanding, each Participant receiving an Incentive
Option must be a employee of the Company or of a corporation that
is an Affiliate corporation at the time the Incentive Option is
granted.
The Committee may at any time and from time to time grant one
or more Awards to one or more Key Employees or Key Non-Employees
and may designate the number of Shares, if applicable, to be
subject to each Award so granted, provided, however that no
Incentive Option shall be granted after the expiration of ten (10)
years from the earlier of the date of the adoption of the Plan by
the Company or the approval of the Plan by the shareholders of the
Company, and provided further, that the Fair Market Value of the
Shares (determined at the time the Option is granted) as to which
Incentive Options are exercisable for the first time by any Key
Employee during any single calendar year (under the Plan and under
any other incentive stock option plan of the Company or an
<PAGE> A-6
Affiliate) shall not exceed One Hundred Thousand Dollars
($100,000). To the extent that the Fair Market Value of such
Shares exceeds One Hundred Thousand Dollars ($100,000), the Shares
subject to Option in excess of One Hundred Thousand Dollars
($100,000) shall, without further action by the Committee,
automatically be converted to Nonstatutory Options.
Notwithstanding any of the foregoing provisions, the Committee
may authorize the grant of an Award to a person not then in the
employ of, or engaged by, the Company or of an Affiliate,
conditioned upon such person becoming eligible to be granted an
Award at or prior to the execution of the Award Agreement
evidencing the actual grant of such Award.
VI. AWARDS UNDER THIS PLAN
As the Committee may determine, the following types of Awards
may be granted under the Plan on a stand alone, combination, or
tandem basis:
A. Incentive Option
An Award in the form of an Option that shall comply with the
requirements of Section 422 of the Code.
B. Nonstatutory Option
An Award in the form of an Option that shall not be intended
to comply with the requirements of Section 422 of the Code.
C. Formula Option
An Award in the form of an Option granted to a Non-Employee
Board Member at the time of his or her initial election to the
Board, or any subsequent re-election.
D. Restricted Stock
An Award made to a Participant in Common Stock or denominated
in units of Common Stock, subject to future service and such other
restrictions and conditions as may be established by the Committee,
and as set forth in the Award Agreement, including but not limited
to continuous service with the Company or its Affiliates,
achievement of specific business objectives, increases in specified
indices, attaining growth rates, and other measurements of Company
or Affiliate performance.
E. Stock Appreciation Right
An Award in the form of a Right to receive the excess of the
Fair Market Value of a Share on the date the Right is exercised
over the Fair Market Value of a Share on the date the Right was
granted.
<PAGE> A-7
F. Dividend Equivalents
An Award in the form of and based upon the value of dividends
of Shares.
G. Performance Awards
An Award made to a Participant that is subject to performance
conditions specified by the Committee, including but not limited to
continuous service with the Company or its Affiliates, achievement
of specific business objectives, increases in specified indices,
attaining growth rates, and other measurements of Company or
Affiliate performance.
H. Cash Awards
An Award made to a Participant and denominated in cash, with
the eventual payment subject to future service and such other
restrictions and conditions as may be established by the Committee,
and as set forth in the Award Agreement.
Each Award under the Plan shall be evidenced by an Award
Agreement. Delivery of an Award Agreement to each Participant
shall constitute an agreement between the Company and the
Participant as to the terms and conditions of the Award.
VII. TERM AND CONDITIONS OF INCENTIVE OPTIONS AND NONSTATUTORY
OPTIONS
Each Option shall be set forth in an Award Agreement, duly
executed on behalf of the Company and by the Participant to whom
such Option is granted. Except for the setting of the Option price
under Paragraph A, no Option shall be granted and no purported
grant of any Option shall be effective until such Award Agreement
shall have been duly executed on behalf of the Company and by the
Participant. Each such Award Agreement shall be subject to at
least the following terms and conditions:
A. Option Price
The purchase price of the Shares covered by each Option
granted under the Plan shall be determined by the Committee. The
Option price per share of the Shares covered by each Nonstatutory
Option shall be at such amount as may be determined by the
Committee in its sole discretion on the date of the grant of the
Option. In the case of an Incentive Option, if the Participant
owns directly or by reason of the applicable attribution rules ten
percent (10%) or less of the total combined voting power of all
classes of share capital of the Company, the Option price per share
of the Shares covered by each Incentive Option shall be not less
than the Fair Market Value of the Shares on the date of the grant
of the Incentive Option. In all other cases of incentive Options,
the Option price shall be not less than one hundred ten percent
(110%) of the Fair Market Value on the date of grant.
<PAGE> A-8
B. Number of Shares
Each Option shall state the number of Shares to which it
pertains.
C. Term of Option
Each Incentive Option shall terminate not more than ten (10)
years from the date of the grant thereof, or at such earlier time
as the Award Agreement may provide, and shall be subject to earlier
termination as herein provided, except that if the Option price is
required under Paragraph A of this Article VII to be at least one
hundred ten percent (110%) of Fair Market Value, each such
Incentive Option shall terminate not more than five (5) years from
the date of the grant thereof, and shall be subject to earlier
termination as herein provided. The Committee shall determine the
time at which a Nonstatutory Option shall terminate.
D. Date of Exercise
Upon the authorization of the grant of an Option, or at any
time thereafter, the Committee may, subject to the provisions of
Paragraph C of this Article VII, prescribe the date or dates on
which the Option becomes exercisable, and may provide that the
Option become exercisable in installments over a period of years,
or upon the attainment of stated goals. The Committee, in its
discretion, shall have the power to accelerate the date or dates on
which the Option becomes exercisable.
E. Medium of Payment
The Option price shall be payable upon the exercise of the
Option, as set forth in Paragraph A of this Article VII. It shall
be payable in such form (permitted by Section 422 of the Code in
the case of Incentive Options) as the Committee shall, either by
rules promulgated pursuant to the provisions of Article IV of the
Plan, or in the particular Award Agreement, provide.
F. Termination of Employment
1. A Participant who ceases to be an employee or Key Non-
Employee of the Company or of an Affiliate for any reason other
than death, Disability, or termination "for cause", as defined in
subparagraph 2. below, may exercise any Option granted to such
Participant, to the extent that the right to purchase Shares
thereunder has become exercisable on the date of such
termination, but only until the earlier of (i) the expiration of
three (3) months after such date, or (ii) the expiration of the
originally prescribed term of the Option. A Participant's
employment shall not be deemed terminated by reason of a transfer
to another employer that is the Company or an Affiliate, except
that in the case of an Incentive Option such Affiliate must be a
corporation.
2. A Participant who ceases to be an employee or Key Non-
Employee of the Company or of an Affiliate "for cause" shall,
upon such termination, cease to have any right to exercise any
Option. For purposes of this Plan, cause shall mean (i) a
<PAGE> A-9
Participant's theft or embezzlement, or attempted theft or
embezzlement, of money or property of the Company or of an
Affiliate, a Participant's perpetration or attempted perpetration
of fraud, or a Participant's participation in a fraud or
attempted fraud, on the Company or an Affiliate or a
Participant's unauthorized appropriation of, or a Participant's
attempt to misappropriate, any tangible or intangible assets or
property of the Company or an Affiliate; (ii) any act or acts of
disloyalty, dishonesty, misconduct, moral turpitude, or any other
act or acts by a Participant injurious to the interest, property,
operations, business or reputation of the Company or an
Affiliate; (iii) a Participant's commission of a felony or any
other crime the commission of which results in injury to the
Company or an Affiliate; or (iv) any violation of any restriction
on the disclosure or use of confidential information of the
Company or an Affiliate, or client, prospect, or merger or
acquisition target, or on competition with the Company or an
Affiliate or any of its businesses as then conducted. The
determination of the Committee as to the existence of cause shall
be conclusive and binding upon the Participant and the Company.
3. A Participant who is absent from work with the Company
or an Affiliate because of temporary disability (any disability
other than a Disability), or who is on leave of absence, shall
not, during the period of any such absence, be deemed, by virtue
of such absence alone, to have terminated his or her employment
or relationship with the Company or with an Affiliate, except as
the Committee may otherwise expressly provide or determine.
4. Paragraph F.1. shall control and fix the rights of a
Participant who ceases to be an employee or Key Non-Employee of
the Company or of an Affiliate for any reason other than
Disability, death, or termination "for cause", and who
subsequently becomes Disabled or dies. Nothing in Paragraphs Q
and H of this Article VII shall be applicable in any such case
except that, in the event of such a subsequent Disability or
death within the three (3) month period after the termination of
employment or, if earlier, within the originally prescribed term
of the Option, the Participant or the Participant's estate or
personal representative may exercise the Option permitted by this
Paragraph F within twelve (12) months after the date of
Disability or death of such Participant, but in no event beyond
the originally prescribed term of the Option.
G. Total and Permanent Disability
A Participant who ceases to be an employee or Key Non-Employee
of the Company or of an Affiliate by reason of Disability may
exercise any Option granted to such Participant (i) to the extent
that the right to purchase Shares thereunder has become exercisable
on or before the date such Participant becomes Disabled as
determined by the Committee, and (ii) if the Option becomes
exercisable periodically, to the extent of any additional rights
that would have become exercisable had the Participant not become
so Disabled until after the close of business on the next periodic,
exercise date.
<PAGE> A-10
A Disabled Participant shall exercise such rights, if at all,
only within a period of not more than twelve (12) months after the
date that the Participant became Disabled as determined by the
Committee (notwithstanding that the Participant might have been
able to exercise the Option as to some or all of the Shares on a
later date if the Participant had not become Disabled) or, if
earlier, within the originally prescribed term of the Option.
H. Death
In the event that a Participant to whom an Option has been
granted ceases to be an employee or Key Non-Employee of the Company
or of an Affiliate by reason of such Participant's death, such
Option, to the extent that the right is exercisable but not
exercised on the date of death, may be exercised by the
Participant's estate or personal representative within twelve (12)
months after the date of death of such Participant or, if earlier,
within the originally prescribed term of the Option,
notwithstanding that the decedent might have been able to exercise
the Option as to some or all of the Shares on a later date if the
Participant were alive and had continued to be an employee or Key
Non-Employee of the Company or of an Affiliate.
I. Exercise of Option and Issuance of Stock
Options shall be exercised by giving written notice to the
Company. Such written notice shall: (i) be signed by the person
exercising the Option; (ii) state the number of Shares with respect
to which the Option is being exercised; (iii) contain the warranty
required by paragraph M of this Article VII, if applicable; and
(iv) specify a date (other than a Saturday, Sunday or legal
holiday) not less than five (5) nor more than ten (10) days after
the date of such written notice, as the date on which the Shares
will be purchased. Such tender and conveyance shall take place at
the principal office of the Company during ordinary business hours,
or at such other hour and place agreed upon by the Company and the
person or persons exercising the Option. On the date specified in
such written notice (which date may be extended by the Company in
order to comply with any law or regulation that requires the
Company to take any action with respect to the Option Shares prior
to the issuance thereof), the Company shall accept payment for the
Option Shares in cash, by bank or certified check, by wire
transfer, or by such other means as may be approved by the
Committee and shall deliver to the person or persons exercising the
Option in exchange therefor an appropriate certificate or
certificates for fully paid nonassessable Shares or undertake to
deliver certificates within a reasonable period of time. In the
event of any failure to take up and pay for the number of Shares
specified in such written notice on the date set forth therein (or
on the extended date as above provided), the right to exercise the
Option shall terminate with respect to such number of Shares, but
shall continue with respect to the remaining Shares covered by the
Option and not yet acquired pursuant thereto.
If approved in advance by the Committee, payment in full or in
part also may be made (i) by delivering Shares already owned by the
Participant having a total Fair Market Value on the date of such
delivery equal to the Option price; (ii) by the execution and
<PAGE> A-11
delivery of a note or other evidence of indebtedness (and any
security agreement thereunder) satisfactory to the Committee;
(iii) by authorizing the Company to retain Shares that otherwise
would be issuable upon exercise of the Option having a total Fair
Market Value on the date of delivery equal to the Option price;
(iv) by the delivery of cash or the extension of credit by a
broker-dealer to whom the Participant has submitted a notice of
exercise or otherwise indicated an intent to exercise an Option (in
accordance with part 220, Chapter II, Title 12 of the Code of
Federal Regulations, a so-called "cashless" exercise); or (v) by
any combination of the foregoing.
J. Rights as a Shareholder
No participant to whom an Option has been granted shall have
rights as a shareholder with respect to any Shares covered by such
Option except as to such Shares as have been registered in the
Company's share register in the name of such Participant upon the
due exercise of the Option and tender of the full Option price.
K. Assignability and Transferability of Option
Unless otherwise permitted by the Code and by Rule 16b-3 of
the Exchange Act, if applicable, and approved in advance by the
Committee, an Option granted to a Participant shall not be
transferable by the Participant and shall be exercisable, during
the Participant's lifetime, only by such Participant or, in the
event of the Participant's incapacity, his guardian or legal
representative. Except as otherwise permitted herein, such Option
shall not be assigned, pledged, or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to
execution, attachment, or similar process and any attempted
transfer, assignment, pledge, hypothecation or other disposition of
any Option or of any rights granted thereunder contrary to the
provisions of this Paragraph K, or the levy of any attachment or
similar process upon an option or such rights, shall be null and
void.
L. Other Provisions
The Award Agreement for an Incentive Option shall contain such
limitations and restrictions upon the exercise of the Option as
shall be necessary in order that such Option can be an "incentive
stock option" within the meaning of Section 422 of the Code.
Further, the Award Agreements authorized under the Plan shall be
subject to such other terms and conditions including, without
limitation, restrictions upon the exercise of the Option, as the
Committee shall deem advisable and which, in the case of Incentive
Options, are not inconsistent with the requirements of Section 422
of the Code.
M. Purchase for Investment
If Shares to be issued upon the particular exercise of an
Option shall not have been effectively registered under the
Securities Act of 1933, as now in force or hereafter amended, the
Company shall be under no obligation to issue the Shares covered by
<PAGE> A-12
such exercise unless and until the following conditions have been
fulfilled. The person who exercises such Option shall warrant to
the Company that, at the time of such exercise, such person is
acquiring his or her Option Shares for investment and not with a
view to, or for or in connection with, the distribution of any such
Shares, and shall make such other representations, warranties,
acknowledgments, and affirmations, if any, as the Committee may
require. In such event, the person acquiring such Shares shall be
bound by the provisions of the following legend (or similar legend)
which shall be endorsed upon the certificate(s) evidencing his or
her Option Shares issued pursuant to such exercise.
"The shares represented by this
certificate have been acquired for investment
and they may not be sold or otherwise
transferred by any person, including a
pledgee, in the absence of an effective
registration statement for the shares under
the Securities Act of 1933 or an opinion of
counsel satisfactory to the Company that an
exemption from registration is then
available."
Without limiting the generality of the foregoing, the Company may
delay issuance of the Shares until completion of any action or
obtaining any consent that the Company deem necessary under any
applicable law (including without limitation state securities or
"blue sky" laws).
VIII. FORMULA OPTIONS
A. Each Non-Employee Board Member shall be granted
automatically a Formula Option to purchase 5,000 Shares upon his
or her initial election and qualification as a Non-Employee Board
Member, and, thereafter, shall be granted automatically a Formula
Option to purchase 5,000 Shares upon each re-election and
qualification as a Non-Employee Board Member.
B. The purchase price of the Shares subject to the Formula
Option shall be equal to one hundred percent (100%) of the Fair
Market Value as of the date of grant.
C. The Shares subject to the Formula Option granted to a Non-
Employee Board Members shall become exercisable cumulatively, in
accordance with the following schedule:
Percentage of
Years Elapsed Shares for Which Exercised
Since Date of Grant Option May Be Exercised
------------------- -----------------------
Less than 1 0%
1 or more 100%
<PAGE> A-13
The foregoing schedule notwithstanding, if a Non-Employee Board
Member shall cease to be a director of the Company because of death
or Disability, all Shares for which a Formula Option has been
granted shall become immediately exercisable and shall be
exercisable in accordance with Paragraphs G and H of Article VII.
If a Non-Employee Board Member ceases to be a director of the
Company for any reason other than death or Disability, his or her
right to exercise the Formula Option, and the timing of such
exercise, shall be governed by the applicable provisions of
Paragraph F of Article VII.
Formula Options shall be evidenced by an Award Agreement which
shall conform to the requirements of the Plan, and may contain such
other provisions not inconsistent therewith, as the Committee shall
deem advisable. The provisions of Article VII governing
Nonstatutory Options, and the exercise and issuance thereof, shall
apply to Formula Options to the extent such provisions are not
inconsistent with this Article VIII.
IX. TERMS AND CONDITIONS OF RESTRICTED STOCK
A. The Committee may from time to time grant an Award in Shares
of Common Stock or grant an Award denominated in units of Common
Stock, for such consideration, if any, as the Committee deems
appropriate (which amount may be less than the Fair Market Value
of the Common Stock on the date of the Award), and subject to
such restrictions and conditions and other terms as the Committee
may determine at the time of the Award (including, but not
limited to, continuous service with the Company or its
Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other
measurements of Company or Affiliate performance), and subject
further to the general provisions of the Plan, the applicable
Award Agreement and the following specific rules.
B. If Shares of Restricted Stock are awarded, such Shares
cannot be assigned, sold, transferred, pledged, or hypothecated
prior to the lapse of the restrictions applicable thereto, and,
in no event, absent Committee approval, prior to six (6) months
from the date of the Award. The Company shall issue, in the name
of the Participant, stock certificates representing the total
number of Shares of Restricted Stock awarded to the Participant,
as soon as may be reasonably practicable after the grant of the
Award, which certificates shall be held by the Secretary of the
Company as provided in Paragraph G.
C. Restricted Stock issued to a Participant under the Plan
shall be governed by an Award Agreement that shall specify
whether Shares of Common Stock are awarded to the Participant, or
whether the Award shall be one not of Shares of Common Stock but
one denominated in units of Common Stock, any consideration
required thereto, and such other provisions as the Committee
shall determine.
D. Subject to the provisions of Paragraphs B and E hereof and
the restrictions set forth in the related Award Agreement, the
Participant receiving an Award of Shares of Restricted Stock
<PAGE> A-14
shall thereupon be a shareholder with respect to all of the
Shares represented by such certificate or certificates and shall
have the rights of a shareholder with respect to such Shares,
including the right to vote such Shares and to receive dividends
and other distributions made with respect to such Shares. All
Common Stock received by a Participant as the result of any
dividend on the Shares of Restricted Stock, or as the result of
any stock split, stock distribution, or combination of the Shares
affecting Restricted Stock, shall be subject to the restrictions
set forth in the related Award Agreement.
E. Restricted Stock or units of Restricted Stock awarded to a
Participant pursuant to the Plan will be forfeited, and any
Shares of Restricted Stock or units of Restricted Stock sold to a
Participant pursuant to the Plan may, at the Company's option, be
resold to the Company for an amount equal to the price paid
therefor, and in either case, such Restricted Stock or units of
Restricted Stock shall revert to the Company, if the Company so
determines in accordance with Article XIV or any other condition
set forth in the Award Agreement, or, alternatively, if the
Participant's employment with the Company or its Affiliates
terminates, other than for reasons set forth in Article XIV,
prior to the expiration of the forfeiture or restriction
provisions set forth in the Award Agreement.
F. The Committee, in its discretion, shall have the power to
accelerate the date on which the restrictions contained in the
Award Agreement shall lapse with respect to any or all Restricted
Stock awarded under the Plan.
G. The Secretary of the Company shall hold the certificate or
certificates representing Share of Restricted Stock issued under
the Plan, properly endorsed for transfer, on behalf of each
Participant who holds such Shares, until such time as the Shares
of Restricted Stock are forfeited, resold to the Company, or the
restrictions lapse. Any Restricted Stock denominated in units of
Common Stock, if not previously forfeited, shall be payable in
accordance with Article XVI as soon as practicable after the
restrictions lapse.
H. The Committee may prescribe such other restrictions,
conditions, and terms applicable to Restricted Stock issued to a
Participant under the Plan that are neither inconsistent with nor
prohibited by the Plan or the Award Agreement, including, without
limitation, terms providing for a lapse of the restrictions of
this Article or any Award Agreement in installments.
X. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS
If deemed by the Committee to be in the best interests of the
Company, a Participant may be granted a Right. Each Right shall be
granted subject to such restrictions and conditions and other terms
as the Committee may specify in the Award Agreement at the time the
<PAGE> A-15
Right is granted, subject to the general provisions of the Plan,
and the following specific rules.
A. Rights may be granted, if at all, either singly, in
combination with another Award, or in tandem with another Award.
At the time of grant of a Right, the Committee shall specify the
base price of Common Stock to be used in connection with the
calculation described in Paragraph B below, provided that the
base price shall not be less than one hundred percent (100%) of
the Fair Market Value of a Share of Common Stock on the date of
grant, unless approved by the Board.
B. Upon exercise of a Right, which shall be not less than six
(6) months from the date of the grant, the Participant shall be
entitled to receive in accordance with Article XVI, and as soon
as practicable after exercise, the excess of the Fair Market
Value of one Share of Common Stock on the date of exercise over
the base price specified in such Right, multiplied by the number
of Shares of Common Stock then subject to the Right, or the
portion thereof being exercised.
C. Notwithstanding anything herein to the contrary, if the
Award granted to a Participant allows him or her to elect to
cancel all or any portion of an unexercised Option by exercising
an additional or tandem Right, then the Option price per Share of
Common Stock shall be used as the base price specified in
Paragraph A to determine the value of the Right upon such
exercise and, in the event of the exercise of such Right, the
Company's obligation with respect to such Option or portion
thereof shall be discharged by payment of the Right so exercised,
In the event of such a cancellation, the number of Shares as to
which such Option was canceled shall become available for use
under the Plan, less the number of Shares, if any, received by
the Participant upon such cancellation in accordance with
Article XVI.
D. A Right may be exercised only by the Participant (or, if
applicable under Article XV, by a legatee or legatees of such
Right, or by the Participant's executors, personal
representatives or distributees).
XI. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENTS
A Participant may be granted an Award in the form of Dividend
Equivalents. Such an Award shall entitle the Participant to
receive cash, Shares, other Awards or other property equal in value
to dividends paid with respect to a specified number of Shares.
Dividend Equivalents may be awarded on a free-standing basis or in
connection with another Award. The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Shares,
Awards or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the
Committee may specify.
<PAGE> A-16
XII. TERMS AND CONDITIONS OF PERFORMANCE AWARDS
A. A Participant may be granted an Award that is subject to
performance conditions specified by the Committee. The Committee
may use business criteria and other measures of performance it
deems appropriate in establishing any performance conditions
(including, but not Limited to, continuous service with the
Company or its Affiliates, achievement of specific business
objectives, increases in specified indices, attaining growth
rates, and other measurements of Company or Affiliate
performance), and may exercise its discretion to reduce or
increase the amounts payable under any Award subject to
performance conditions, except as otherwise limited under
Paragraphs C and D, below, in the case of a Performance Award
intended to qualify under Code Section 162(m).
B. Any Performance Award will be forfeited if the Company so
determines in accordance with Article XV or any other condition
set forth in the Award Agreement, or, alternatively, if the
Participant's employment with the Company or its Affiliates
terminates, other than for reasons set forth in Article XIV,
prior to the expiration of the time period over which the
performance conditions are to be measured.
C. If the Committee determines that a Performance Award to be
granted to a Key Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant
and/or settlement of such Performance Award shall be contingent
upon achievement of preestablished performance goals and other
terms set forth in this Paragraph C.
1. Performance Goals Generally. The performance goals for
such Performance Awards shall consist of one or more business
criteria and a targeted level or levels of performance with
respect to such criteria, as specified by the Committee
consistent with this Paragraph C. Performance goals shall be
objective and shall otherwise meet the requirements of Code
Section 162(m), including the requirement that the level or
levels of performance targeted by the Committee result in the
performance goals being "substantially uncertain". The Committee
may determine that more than one performance goal must be
achieved as a condition to settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to
any one Participant or to different Participants.
2. Business Criteria. One or more of the following
business criteria for the Company, on a consolidated basis,
and/or for specified Affiliates or business units of the Company
(except with respect to the total shareholder return and earnings
per share criteria), shall be used exclusively by the Committee
in establishing performance goals for such Performance Awards:
(a) total shareholder return; (b) such total shareholder return
as compared to the total return (on a comparable basis) of a
publicly available index such as, but not limited to, the
Standard & Poor's 500 or the Nasdaq-U.S. Index; (c) net income;
(d) pre-tax earnings; (e) EBITDA; (f) pre-tax operating earnings
after interest expense and before bonuses, service fees, and
<PAGE> A-17
extraordinary or special items; (g) operating margin;
(h) earnings per share; (i) return on equity; (j) return on
capital; (k) return on investment; (l) operating income,
excluding the effect of charges for acquired in-process
technology and before payment of executive bonuses; (m) earnings
per share, excluding the effect of charges for acquired in-
process technology and before payment of executive bonuses;
(n) working capital; (o) sales; and (p) total revenues. The
foregoing business criteria also may be used in establishing
performance goals for Cash Awards granted under Article XII
hereof.
D. Achievement of performance goals in respect of such
Performance Awards shall be measured over such periods as may be
specified by the Committee. Performance goals shall be
established on or before the dates that are required or permitted
for "performance-based compensation" under Code Section 162(m).
E. Settlement of Performance Awards may be in cash or Shares,
or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such
Performance Awards, but may not exercise discretion to increase
any such amount payable in respect of a Performance Award that is
subject to Code Section 162(m).
XIII. TERMS AND CONDITIONS OF CASH AWARDS
A. The Committee may from time to time authorize the award of
cash payments under the Plan to Participants, subject to such
restrictions and conditions and other terms as the Committee may
determine at the time of authorization (including, but not
limited to, continuous service with the Company or its
Affiliates, achievement of specific business objectives,
increases in specified indices, attaining growth rates, and other
measurements of Company or Affiliate performance), and subject to
the general provisions of the Plan, the applicable Award
Agreement, and the following specific rules.
B. Any Cash Award will be forfeited if Company so determines
in accordance with Article XIII or any other condition set forth
in the Award Agreement, or, alternatively, if the Participant's
employment or engagement with the Company or its Affiliates
terminates, other than for reasons set forth in Article XIV,
prior to the attainment of any goals set forth in the Award
Agreement or prior to the expiration of the forfeiture or
restriction provisions set forth in the Award Agreement,
whichever is applicable.
C. The Committee, in its discretion, shall have the power to
change the date on which the restrictions contained in the Award
Agreement shall lapse, or the date on which goals are to be
measured, with respect to any Cash Award.
<PAGE> A-18
D. Any Cash Award, if not previously forfeited, shall be
payable in accordance with Article XVI as soon as practicable
after the restrictions lapse or the goals are attained.
E. The Committee may prescribe such other restrictions,
conditions, and terms applicable to the Cash Awards issued to a
Participant under the Plan that are neither inconsistent with nor
prohibited by the Plan or the Award Agreement, including, without
limitation, terms providing for a lapse of the restrictions, or a
measurement of the goals, in installments.
XIV. TERMINATION OF EMPLOYMENT
Except as may otherwise be (i) provided in Article VII for
Options, (ii) provided for under the Award Agreement, or
(iii) permitted pursuant to Paragraphs A through C of this
Article XIV (subject to the limitations under the Code for
Incentive Options), if the employment of a Participant terminates,
all unexpired, unpaid, unexercised, or deferred Awards shall be
canceled immediately.
A. Retirement Under a Company or Affiliate Retirement Plan.
When a Participant's employment terminates as a result of
retirement as defined under a Company or Affiliate retirement
plan, the Committee may permit Awards to continue in effect
beyond the date of retirement in accordance with the applicable
Award Agreement, and/or the exercisability and vesting of any
Award may be accelerated.
B. Resignation In the Best Interests of the Company or an
Affiliate. When a Participant resigns from the Company or an
Affiliate and, in the judgment of the chief executive officer or
other senior officer designated by the Committee, the
acceleration and/or continuation of outstanding Awards would be
in the best interests of the Company, the Committee may
(i) authorize, where appropriate, the acceleration and/or
continuation of all or any part of Awards granted prior to such
termination and (ii) permit the exercise, vesting, and payment of
such Awards for such period as may be set forth in the applicable
Award Agreement, subject to earlier cancellation pursuant to
Article XV or at such time as the Committee shall deem the
continuation of all or any part of the Participants Awards are
not in the Company's or its Affiliate's best interests.
C. Death or Disability of a Participant.
1. In the event of a Participant's death, the
Participant's estate or beneficiaries shall have a period up to
the earlier of (i) the expiration date specified in the Award
Agreement, or (ii) the expiration date specified in Paragraph H
of Article VII, within which to receive or exercise any
outstanding Awards held by the Participant under such terms as
may be specified in the applicable Award Agreement. Rights to
any such outstanding Awards shall pass by will or the laws of
descent and distribution in the following order: (a) to
beneficiaries so designated by the Participant; (b) to a legal
<PAGE> A-19
representative of the Participant; or (c) to the persons entitled
thereto as determined by a court of competent jurisdiction.
Awards so passing shall be made at such times and in such manner
as if the Participant were living.
2. In the event a Participant is determined by the Company
to be Disabled, and subject to the limitations of Paragraph G of
Article VII, Awards may be paid to, or exercised by, the
Participant, if legally competent, or by a legally designated
guardian or other representative if the Participant is legally
incompetent by virtue of such Disability.
3. After the death or Disability of a Participant, the
Committee may in its sole discretion at any time (i) terminate
restrictions in Award Agreements; (ii) accelerate any or all
installments and rights; and/or (iii) instruct the Company to pay
the total of any accelerated payments in a lump sum to the
Participant, the Participant's estate, beneficiaries or
representative, notwithstanding that, in the absence of such
termination of restrictions or acceleration of payments, any or
all of the payments due under the Awards ultimately might have
become payable to other beneficiaries.
V. CANCELLATION AND RESCISSION OF AWARDS
Unless the Award Agreement specifies otherwise, the Committee
may cancel any unexpired, unpaid, unexercised, or deferred Awards
at any time if the Participant is not in compliance with the
applicable provisions of the Award Agreement, the Plan, or with the
following conditions:
A. A Participant shall not breach any protective agreement
entered into between him or her and the Company or any
Affiliates, or render services for any organization or engage
directly or indirectly in any business which, in the judgment of
the chief executive officer of the Company or other senior
officer designated by the Committee, is or becomes competitive
with the Company, or which organization or business, or the
rendering of services to such organization or business, is or
becomes otherwise prejudicial to or in conflict with the
interests of the Company. For a Participant whose employment has
terminated, the judgment of the chief executive officer shall be
based on terms of the protective agreement, if applicable, or on
the Participant's position and responsibilities while employed by
the Company or its Affiliates, the Participant's post-employment
responsibilities and position with the other organization or
business, the extent of past, current, and potential competition
or conflict between the Company and the other organization or
business, the effect of the Participants assuming the post
employment position on the Company's or its Affiliates customers,
suppliers, investors, and competitors, and such other
considerations as are deemed relevant given the applicable facts
and circumstances. A Participant may, however, purchase as an
investment or otherwise, stock or other securities of any
organization or business so long as they are listed upon a
recognized securities exchange or traded over-the-counter, and
such investment does not represent a substantial investment to
<PAGE> A-20
the Participant or a greater than one percent (1%) equity
interest in the organization or business.
B. A Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company or its
Affiliates, or use in other than the Company's or Affiliate's
business, any confidential information or materials relating to
the business of the Company or its Affiliates, acquired by the
Participant either during or after employment or engagement with
the Company or its Affiliates.
C. A Participant shall disclose promptly and assign to the
Company all right, title, and interest in any invention or idea,
patentable or not, made or conceived by the Participant during
employment with the Company or an Affiliate, relating in any
manner to the actual or anticipated business, research, or
development work of the Company or its Affiliates, and shall do
anything reasonably necessary to enable the Company or its
Affiliates to secure a patent, trademark, copyright, or other
protectable interest where appropriate in the United States and
in foreign countries.
D. Upon exercise, payment, or delivery pursuant to an Award, the
Participant shall certify on a form acceptable to the Committee
that he or she is in compliance with the terms and conditions of
the Plan, including the provisions of Paragraphs A, B and C of this
Article XV. Failure to comply with the provisions of Paragraphs A,
B or C of this Article XV prior to, or during the one (1) year
period after, any exercise, payment, or delivery pursuant to an
Award shall cause such exercise, payment, or delivery to be
rescinded. The Company shall notify the Participant in writing of
any such rescission within two (2) years after such exercise,
payment, or delivery. Within ten (10) days after receiving such a
notice from the Company, the Participant shall pay to the Company
the amount of any gain realized or payment received as a result of
the rescinded exercise, payment, or delivery pursuant to the Award.
Such payment shall be made either in cash or by returning to the
Company the number of Shares of Common Stock that the Participant
received in connection with the rescinded exercise, payment, or
delivery.
XVI. PAYMENT OF RESTRICTED STOCK, RIGHTS, PERFORMANCE AWARDS AND
CASH AWARDS
Payment of Restricted Stock, Rights, Performance Awards and
Cash Awards may be made, as the Committee shall specify, in the
form of cash, Shares of Common Stock, or combinations thereof;
provided, however, that a fractional Share of Common Stock shall be
paid in cash equal to the Fair Market Value of the fractional Share
of Common Stock at the time of payment
XVII. WITHHOLDING
Except as otherwise provided by the Committee,
<PAGE> 21
A. The Company shall have the power and right to deduct or
withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes
required by law to be withheld with respect to any grant,
exercise, or payment made under or as a result of this Plan; and
B. In the case of payments of Awards, or upon any other taxable
event hereunder, a Participant may elect, subject to the approval
in advance by the Committee, to satisfy the withholding
requirement, if any, in whole or in part, by having the Company
withhold Shares of Common Stock that would otherwise be
transferred to the Participant having a Fair Market Value, on the
date the tax is to be determined, equal to the minimum marginal
tax that could be imposed on the transaction. All elections
shall be made in writing and signed by the Participant.
XVIII. SAVINGS CLAUSE; COMPLIANCE WITH LAW
This Plan is intended to comply in all respects with
applicable law and regulations, including, (1) with respect to
those Participants who are officers or directors for purposes of
Section 16 of the Exchange Act, Rule 16b-3 of the Securities and
Exchange Commission, if applicable, and (ii) with respect to
executive officers, Code Section 162(m). In case any one or more
provisions of this Plan shall be held invalid, illegal, or
unenforceable in any respect under applicable law and regulation
(including Rule 16b-3 and Code Section 162(m)), the validity,
legality, and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby and the invalid,
illegal, or unenforceable provision shall be deemed null and void;
however, to the extent permitted by law, any provision that could
be deemed null and void shall first be construed, interpreted, or
revised retroactively to permit this Plan to be construed in
compliance with all applicable law (including Rule 16b-3 and Code
Section 162(m)) so as to foster the intent of this Plan.
Notwithstanding anything herein to the contrary, with respect to
Participants who are officers and directors for purposes of
Section 16 of the Exchange Act, if applicable; and if required to
comply with rules promulgated thereunder, no grant of, or Option to
purchase, Shares shall permit unrestricted ownership of Shares by
the Participant for at least six (6) months from the, date of grant
or Option, unless the Board determines that the grant of, or Option
to purchase, Shares otherwise satisfies the then current Rule 16b-3
requirements.
The Committee may grant Awards and the Company may deliver
Shares under the Plan only in compliance with all applicable
federal and state laws and regulations and the rules of all stock
exchanges on which the Company's stock is listed at any time. An
Option is exercisable only if either (i) a registration statement
pertaining to the Shares to be issued upon exercise of the Option
has been filed with and declared effective by the Securities and
Exchange Commission and remains effective on the date of exercise,
or (ii) an exemption from the registration requirements of
applicable securities laws is available. The Company is not
required to file such a registration statement or to assure the
availability of such exemptions.
<PAGE> A-22
XIX. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS
In the event that the outstanding Shares of the Company are
changed into or exchanged for a different number or kind of shares
or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation,
recapitalization, spin-off, reclassification, change in par value,
stock split, combination of shares or dividends payable in capital
stock, or the like, appropriate adjustments to prevent dilution or
enlargement of the Awards granted to, or available for,
Participants shall be made in the manner and kind of Shares for the
purchase of which Awards may be granted under the Plan, and, in
addition, appropriate adjustment shall be made in the number and
kind of Shares and in the Option price per share subject to
outstanding Options. The foregoing notwithstanding, no such
adjustment shall be made in an Incentive Option which shall, within
the meaning of Section 424 of the Code, constitute such a
modification, extension, or renewal of an Option as to cause it to
be considered as the grant of a new Option.
Notwithstanding anything herein to the contrary, the Company
may, in its sole discretion, accelerate the timing of the exercise
provisions of any Award in the event of a tender offer for the
Company's Shares, the adoption of a plan of merger or consolidation
under which a majority of the Shares of the Company would be
eliminated, or a sale of all or any portion of the Company's assets
or capital stock. Alternatively, the Company may, in its sole
discretion, cancel any or all Awards upon any of the foregoing
events and provide for the payment to Participants in cash of an
amount equal to the value or appreciated value, whichever is
applicable, of the Award, as determined in good faith by the
Committee, at the close of business on the date of such event. The
preceding two sentences of this Article XX notwithstanding, the
Company shall be required to accelerate the timing of the exercise
provisions of any Award if (i) any such business combination is to
be accounted for as a pooling-of-interests under APB Opinion 16 and
(ii) the timing of such acceleration does not prevent such pooling-
of-interests treatment.
Upon a business combination by the Company or any of its
Affiliates with any corporation or other entity through the
adoption of a plan of merger or consolidation or a share exchange
or through the purchase of all or substantially all of the capital
stock or assets of such other corporation or entity, the Board or
the Committee may, in its sole discretion, grant Options pursuant
hereto to all or any persons who, on the effective date of such
transaction, hold outstanding options to purchase securities of
such other corporation or entity and who, on and after the
effective date of such transaction, will become employees or
directors of, or consultants or advisors to, the Company or its
Affiliates. The number of Shares subject to such substitute
Options shall be determined in accordance with the terms of the
transaction by which the business combination is effected.
Notwithstanding the other provisions of this Plan, the other terms
of such substitute Options shall be substantially the same as or
economically equivalent to the terms of the options for which such
Options are substituted, all as determined by the Board or by the
<PAGE> A-23
Committee, as the case may be. Upon the grant of substitute
Options pursuant hereto, the options to purchase securities of such
other corporation or entity for which such Options are substituted
shall be canceled immediately.
XX. DISSOLUTION OR LIQUIDATION OF THE COMPANY
Upon the dissolution or liquidation of the Company other than
in connection with a transaction to which Article XX is applicable,
all Awards granted hereunder shall terminate and become null and
void; provided, however, that if the rights of a Participant under
the applicable Award have not otherwise terminated and expired, the
Participant may, if the Committee, in its sole discretion so
permits, have the right immediately prior to such dissolution or
liquidation to exercise any Award granted hereunder to the extent
that the right thereunder has become exercisable as of the date
immediately prior to such dissolution or liquidation.
XXI. TERMINATION OF THE PLAN
The Plan shall terminate ten (10) years from the earlier of
the date of its adoption by the Board or the date of its approval
by the shareholders. The Plan may be terminated at an earlier date
by vote of the shareholders or the Board; provided, however, that
any such earlier termination shall not affect any Award Agreements
executed prior to the effective date of such termination.
Notwithstanding anything in this Plan to the contrary, any Options
granted prior to the effective date of the Plan's termination may
be exercised until the earlier of (i) the date set forth in the
Award Agreement, or (ii) in the case of an Incentive Option, ten
(10) years from the date the Option is granted; and the provisions
of the Plan with respect to the full and final authority of the
Committee under the Plan shall continue to control.
XXII. AMENDMENT OF THE PLAN
The Plan may be amended by the Board and such amendment shall
become effective upon adoption by the Board; provided, however,
that any amendment shall be subject to the approval of the
shareholders of the Company at or before the next annual meeting of
the shareholders of the Company if such shareholder approval is
required by the Code, any federal or state law or regulation, the
rules of any stock exchange or automated quotation system on which
the Shares may be listed or quoted, or if the Board, in its
discretion, determines to submit such changes to the Plan to its
shareholders for approval.
XXIII. EMPLOYMENT RELATIONSHIP
Nothing herein contained shall be deemed to prevent the
Company or an Affiliate from. terminating the employment of a
Participant, nor to prevent a Participant from terminating the
Participant's employment with the Company or an Affiliate.
<PAGE> A-24
XXIV. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they
may have as directors or as members of the Committee, the members
of the Committee shall be indemnified by the Company against all
reasonable expenses, including attorneys' fees, actually and
reasonably incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action
taken by them as directors or members of the Committee and against
all amounts paid by them in settlement thereof (provided such
settlement is approved by the Board) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that the director or Committee
member is liable for gross negligence or willful misconduct in the
performance of his or her duties. To receive such indemnification,
a director or Committee member must first offer in writing to the
Company the opportunity, at its own expense, to defend any such
action, suit or proceeding.
XXV. UNFUNDED PLAN
Insofar as it provides for payments in cash in accordance with
Article XVI, or otherwise, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Common Stock, or rights
thereto under the Plan, any such accounts shall be used merely as
a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash,
Common Stock, or rights thereto, nor shall the Plan be construed as
providing for such segregation, nor shall the Company, the Board,
or the Committee be deemed to be a trustee of any cash, Common
Stock, or rights thereto to be granted under the Plan. Any
liability of the Company to any Participant with respect to a grant
of cash, Common Stock, or rights thereto under the Plan shall be
based solely upon any contractual obligations that may be created
by the Plan and any Award Agreement; no such obligation of the
Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any
security or bond for the performance of any obligation that may be
created by the Plan.
XXVI. MITIGATION OF EXCISE TAX
If any payment or right accruing to a Participant under this
Plan (without the application of this Article XXVI), either alone
or together with other payments or rights accruing to the
Participant from the Company or an Affiliate, would constitute a
"parachute payment" (as defined in Section 280G of the Code and
regulations thereunder), such payment or right shall be reduced to
the largest amount or greatest right that will result in no portion
of the amount payable or right accruing under the Plan being
subject to an excise tax under Section 4999 of the Code or being
disallowed as a deduction under Section 280G of the Code. The
determination of whether any reduction in the rights or payments
under this Plan is to apply shall be made by the Company. The
<PAGE> A-25
Participant shall cooperate in good faith with the Company in
making such determination and providing any necessary information
for this purpose.
XXVII. GOVERNING LAW
This Plan shall be governed by the laws of the State of
Florida and construed in accordance therewith.
Adopted effective as of this ________ day of September, 1999.
<PAGE> A-26
UTOPIA MARKETING, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 28, 1999
Joseph Wascura and Vance Kistler, or either of them, each with full power of
substitution, are hereby authorized to represent and vote as designated on the
reverse side all of the shares of the undersigned at the Annual Meeting of
Shareholders of Utopia Marketing, Inc. to be held on Tuesday, September 28,
1999, at 10:30 a.m. local time, at 312 Clematis Street, Suite 500, West Palm
Beach, FL 33401, or at any adjournment or postponement of the Annual Meeting,
with all powers that the undersigned would possess if personally present with
respect to the following matters and with discretionary authority as to any
and all other matters that may properly come before the meeting.
Shares represented by this proxy will be voted as directed by the shareholder.
If no directions are indicated, the proxies will have authority to vote FOR
the Election of Directors and FOR Proposals 2 and 3.
(Continued on reverse side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3
Please mark
your votes as [X]
indicated in
this example
1. FOR all nominees WITHHOLD Louise Edelman, Samuel Edelman,
listed to the right AUTHORITY Stuart Kreisler, Bruce Oberfest,
(except as marked to vote for all Joel Solomon, Robert Wildrick
to the contrary) nominees listed
to the right
[ ] [ ]
2. To ratify the selection 3. To approve the 4. To transact such
of Rachlin Cohen & Holtz establishment of the other business
LLP as independent auditors Utopia Marketing, Inc. as may properly
of the Company for its Long-Term Incentive come before the
fiscal year ending Plan. meeting or any
January 1, 2000 adjournment or
postponement
thereof.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
Signature____________________ Signature_________________ Date_____________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, trustee or guardian, please give full
title as such.
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FOLD AND DETACH HERE
