AMERICOMM RESOURCES CORPORATION
First Place Tower
15 E. 5th Street, Suite 4000
Tulsa, Oklahoma 74103-4346
PROXY STATEMENT
Annual Meeting of Shareholders
September 24, 1998
This Proxy Statement and accompanying form of proxy
are furnished in connection with the solicitation of
proxies by the Board of Directors of Americomm Resources
Corporation, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Shareholders to be held on September 24,
1998 at 10 a.m. (local time) at the offices of the Company at First Place
Tower 15 E. 5th Street, Suite 4000, Tulsa, Oklahoma 74103, or any adjournment
or postponement thereof (the "Meeting").
A proxy in the accompanying form, which is properly executed,
duly returned to the Board of Directors and not revoked, will
be voted in accordance with the instructions contained in the
proxy. If no instructions are given with respect to any matter
specified in the Notice of Annual Meeting to be acted upon at the
Meeting, the proxy will vote the shares represented thereby in favor
of Items 1 and 2 as set forth in the Notice of Annual Meeting
and in accordance with his judgment on any matters which may
properly come before the Meeting. Each shareholder who has executed
a proxy and returned it to the Board of Directors may revoke
the proxy by notice in writing to the Secretary of the Company or
by attending the Meeting in person and requesting the return of
the proxy, in either case at any time prior to the voting of the
proxy. Presence at the Meeting does not by itself revoke the proxy.
The cost of the solicitation of proxies will be paid by the
Company. In addition to the solicitation of proxies by the use of the
mails, management of the Company may, without additional compensation
therefor, solicit proxies on behalf of the Company by personal
interviews, telephone, telegraph or other means, as appropriate.
The Company will, upon request, reimburse brokers and others
who are only record holders of the Company's Common Stock, par
value $.001 per share ("Common Stock"), for their reasonable
expenses in forwarding proxy material to, and obtaining voting
instructions from, the beneficial owners of such stock.
The Board of Directors has fixed the close of business on
August 17, 1998 the record date for determining the shareholders
entitled to notice of and to vote at the Meeting (the
"Record Date"). As of the Record Date, there were 13,879,589
shares of Common Stock issued and outstanding and entitled
to vote.
Each share of Common Stock entitles the holder thereof to
one vote. A majority of the shares of Common Stock issued
and outstanding and entitled to vote constitutes a quorum.
Abstentions and broker's non-votes are considered present for
purposes of determining whether the quorum requirement is met.
A broker's non-vote occurs when a nominee does not have
discretionary voting power and has not received instructions
from the beneficial owner. As directors are elected by a plurality
vote, the four nominees receiving the highest vote totals will
be elected and the outcome of the vote for directors will not be
affected by abstentions or broker's non-votes. As the proposal
to amend the 1995 Stock Option Plan must be approved by the
affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote at the Meeting, an
abstention will have the same effect as a vote against these
proposals. As broker's non-votes will not be considered entitled
to vote on these proposals, a broker's non-vote will not affect
the outcome of the vote on these proposals.
This Proxy Statement and the proxy in the accompanying form
are being sent on or about August 24, 1998 to shareholders of record
as of the close of business on the Record Date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows certain information, as of July 31,
1998, concerning ownership of the Company's only class of outstanding
securities, Common Stock, by each of the Company's directors and by
directors and the only executive officer as a group and by other
persons known to the Company to beneficially own more than five
percent thereof:
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Class
Directors:
Albert E. Whitehead 2,615,315 (2) 18.8%
2440 S. Terwilleger Blvd.
Tulsa, OK 74114-2707
George H. Plewes 266,666 1.9%
The Regency
Margaret Suite
22 Cavendish Road
Pembroke HM 19
Bermuda
John C. Kinard 311,331 2.2%
240 Cook Street
Denver, CO 80206-0590
Director & Executive Officer:
Thomas R. Bradley 800,000 (4) 5.7%
6617 South New Haven
Tulsa, OK 74136
Directors & Executive Officer
as a Group: (4 persons) 3,993,385 (5) 28.2%
Other Five Percent Owners:
Southwestern Gold Corporation 1,333,333 (6) 9.6%
P. O. Box 10102
#1650-701 West Georgia Street
Vancouver, B.C. V7Y 1C6
Canada
1) Except as set forth below, to the best of the Company's knowledge,
each beneficial owner has sole voting power and sole investment
power.
2) Includes 2,384,999 shares owned by a revocable trust for the benefit
of Mr. Whitehead and 230,389 shares owned by a revocable trust for the
benefit of Mr. Whitehead's spouse in which he disclaims any interest.
3) Does not include shares beneficially owned by Southwestern Gold
Corporation, of which Mr. Plewes is the Chairman.
4) Includes 266,666 shares issuable upon exercise of vested stock
options.
5) Includes 266,666 shares issuable upon exercise of vested stock
options.
6) Shares are held by Southwestern Gold U.S.A., Inc., a wholly-owned
subsidiary of Southwestern Gold Corporation.
PROPOSAL NO. 1
Election of Directors
The Board of Directors has nominated four individuals whose
names are set forth below for election to the Board of Directors,
each to hold office until the next Annual Meeting of Shareholders
and until their successors are duly elected and qualified. Unless
otherwise specified, the enclosed proxy will be voted in favor of
the persons named below (all of whom are now directors of the Company).
If events not now known or anticipated make any of the nominees
unable to serve, it is intended that votes will be cast pursuant to
the accompanying proxy for such substitute nominees as the Board of
Directors may designate unless the Board of Directors reduces the
number of directors. The directors are to be elected by vote of the
holders of a plurality of shares of Common Stock entitled to vote and
present in person or represented by proxy at the Meeting.
The information set forth below, furnished to the Board of Directors
by the respective individuals, shows as to each nominee and each
director of the Company his name, age and principal position with the
Company.
Officer Director
Name Age Position Since Since
Thomas R. Bradley 74 President and March, 1985 March, 1985
Director
John C. Kinard 65 Director N/A June, 1998
George H. Plewes 59 Director N/A May, 1995
Albert E. Whitehead 68 Director N/A December, 1991
Mr. Bradley has served as President of the Company since December
1991 and served as Executive Vice President of the Company from March 1985
to December 1, 1991. Mr. Bradley is also the owner of Bradley &
Associates Marketing, a sole proprietorship consulting firm providing
domestic and foreign sales and marketing management services to small
manufacturers. From January 1987 to March 1990, Mr. Bradley was
also a partner in Capstone Communications, an industrial advertising
agency.
Mr. Kinard has served as President of the Remuda Corporation, a private
oil and gas exploration company, since 1967. From 1990 through December
1995, Mr. Kinard also served as President of Glen Petroleum, Inc., a private
oil and gas exploration company. Mr. Kinard has also served as the Chairman
of Envirosolutions UK Ltd., a private industrial wastewater treatment
company, since 1990.
Mr. Whitehead has served as Chairman of the Board since March 1998.
Mr. Whitehead is an investor and formerly served as the Chairman and Chief
Executive Officer of Seven Seas Petroleum Inc., a company engaged in
international oil and gas exploration. From April 1987 through January 1995,
Mr. Whitehead served as Chairman and Chief Executive Officer of Garnet
Resources Corporation, a publicly held oil and gas exploration and
development company.
Mr. Plewes has served as Chairman of Southwestern Gold Corporation,
Inc. since 1992. Mr. Plewes has served as Chairman of GHP Corporation,
an oil exploration and production company which is listed on the Toronto
Stock Exchange, since 1997 and as President of such company prior thereto.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company held two meetings during
1998. All directors attended more than 75% of the total of the
meetings of the Board of Directors. In May 1995, the Board of Directors
created a Stock Option and Compensation Committee (the "Compensation
Committee") consisting of Messrs. Plewes and Whitehead, its Chairman.
The Compensation Committee has all of the powers of the Board of
Directors in respect of any matters relating to compensation including
full authority to authorize the issuance of stock or other securities of
the Company in connection with compensatory matters and to administer
the Company's 1995 Stock Option Plan.
Director's Fees
No directors fees were paid during the fiscal year ended December
31, 1997. During the fiscal year ended December 31, 1996, the Company
granted each director an option to purchase 200,000 shares of the Company's
Common Stock at an exercise price of $0.6875 per share. If the proposed
amendment to the 1995 Plan is approved by the shareholders, each of Messrs.
Kinard, Plewes and Whitehead will receive an option to purchase 100,000
shares of the Company's Common Stock at an exercise price of $1.375 per share.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning all
compensation earned in each of the last three fiscal years by the
Company's Chief Executive Officer for all services rendered to the
Company. No other compensation was received by such person or by
any other officer of the Company.
Summary Compensation Table
Annual Compensation
Long Term
Name and Principal Other Annual Compensation
Position Year Salary Compensation(2) Options/SARs
Thomas R. Bradley 1997 36,000 $ 0 0
President (Chief) 1996 36,000 $ 0 200,000
Executive Officer) 1995 18,000(1) $ 3,000 66,666
1) Represents salary paid to Mr. Bradley for services performed from
July 1, 1995 through December 31, 1995.
2) With respect to 1995, the amount indicated represents fees for
consulting service for the period from January 1, 1995 through
June 30, 1995. In addition to the amounts listed above, in 1995,
Mr. Bradley received an aggregate of $8,000 in accrued consulting
fees for services which were performed in 1992 and 1994.
Option Grants in Last Fiscal Year
There were no options granted in the 1997 fiscal year to the Company's
executive officer.
Option Exercise and Year-End Value Table
The following table sets forth option exercise activity in the
last fiscal year and fiscal year end option values with respect to
the Company's executive officer.
Value of
Number of Unexercised
Unexercised In the Money
Options at Options
FY-End (#) at FY-end($)(1)
Shares
Acquire on Value
Name Exer. (1) Real.($) Exer. Unexer. Exer. Unexe.
Thomas R. - - 266,666 - N/A N/A
Bradley
1) No value is set forth herein as the fair market value of a share
of the Company's Common Stock at December 31, 1997 was less than
the exercise price of the stock option.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
officers, directors and holders of more than 10% of the Company's
Common Stock (collectively, "Reporting Persons") to file reports of
ownership and changes in ownership of the Common Stock with the
Securities and Exchange Commission within certain time periods and
to furnish the Company with copies of all such reports. Based
solely on its review of the copies of such reports furnished to the
Company by such Reporting Persons or on the written representations
of such Reporting Persons, the Company believes that, during the year
ended December 31, 1997, all of the Reporting Persons complied
with their Section 16(a) filing requirements except that
Mr. Whitehead amended one Form 4 to report an additional transaction,
which transaction was reported late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 23, 1997, the Company borrowed $20,000 for a period of
one year from The Albert E. Whitehead Living Trust pursuant to a 6%
Convertible Note due September 23, 1998 issued to such trust to evidence
such indebtedness, which note was convertible at the option of the holder
thereof into shares of Common Stock of the Company at a purchase price of
$0.15 per share, and was so converted in April 1998.
PROPOSAL NO. 2
Proposal to Increase the Number of Shares Subject to the 1995 Stock
Option Plan.
The Company believes stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders'
interests over the long term and in attracting, retaining and
motivating directors, officers, employees, and other persons who
perform substantial services on behalf of the Company. The 1995 Stock Option
Plan ( the "1995 Plan") currently authorizes the issuance of up to 1,000,000
shares of the Company's Common Stock upon exercise of options issued
thereunder. As of the date hereof, an aggregate of 599,998 shares of Common
Stock have been issued upon exercise of options previously issued under the
1995 Plan, 276,666 shares of Common Stock are currently issuable upon
exercise of outstanding stock options held by the Company's executive officer
and employee, and 123,336 shares are available for issuance upon options
to be granted in the future. Thus, if the proposed amendment is approved
an additional 600,000 shares, with an aggregate fair market value as of
August 12, 1998 of $378,000, will be issuable upon exercise of options to be
granted in the future. In addition, the limit on the number of shares which
may be subject to options granted to an employee in any calendar year would
be increased to 200,000 shares from the current limit of 66,666 shares, which
increase is intended to enhance the ability of the Company to utilize
stock-based compensation to attract and retain employees in the future.
On July 9, 1998, the Compensation Committee approved the issuance of an
option to purchase 66,666 shares to Mr. Bradley, the Company's Chief
Executive Officer, and options to purchase 100,000 shares to each of Messrs.
Whitehead, Plewes and Kinard, the non-employee directors of the Corporation.
In each case, the options were granted with an exercise price equal to $1.375
per share, which was equal to the fair market value of a share of Common
Stock on that date, and each option is subject to the approval of the
amendment to the 1995 Plan by the shareholders of the Company.
As the Board of Directors believes it is beneficial to the
Company to have additional shares available for options to be
granted in the future, the Committee has approved, and recommends
that the shareholders approve, an amendment to the 1995 Plan to (i)
increase the number of shares subject to the 1995 Plan by 600,000
additional shares of Common Stock and (ii) increase the number of shares
which may be subject to options granted to an employee in any calendar
year from 66,666 shares to 200,000 shares. Thus, if the increase in the 1995
Plan is approved, 1,600,000 shares of Common Stock will be subject to the 1995
Plan, of which 1,000,002 will be issuable upon exercise of options granted
and to be granted under the 1995 Plan. The following description of the
1995 Plan is qualified in its entirety by reference to the copy of the
1995 Plan, as proposed to be amended, which is annexed hereto as Appendix A.
Description of the 1995 Plan
The general purpose of the 1995 Plan is to provide an incentive
to directors, officers, employees and other persons who perform
substantial services for or on behalf of the Company and thereby
enable such persons to share in the future growth of the business
of the Company. The Board of Directors believes that the granting
of stock options promotes continuity of management and increases
incentive and personal interest in the welfare of the Company by
those who are or may become primarily responsible for shaping and
carrying out the long-range plans of the Company and securing its
growth and financial success.
"Incentive stock options" ("Incentive Options") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), may be granted to employees, including
officers whether or not they are members of the Board of Directors,
and non-incentive stock options ("Non-incentive Options") may be granted
to any such employee or officer and to directors and to other persons
who perform substantial services for or on behalf of the Company, its
affiliates or any future subsidiary. Incentive Options and Non-
incentive Options are collectively referred to herein as "Options".
The Company currently has four directors, one executive officer
and one employee.
The 1995 Plan is administered by the Compensation Committee of
the Board of Directors. The Compensation Committee is vested with authority
to administer and interpret the 1995 Plan, to determine the terms
upon which Options may be granted, to prescribe, amend and rescind
such interpretations and determinations and to grant Options,
although no employee of the Company may currently be granted options in any
calendar year which entitle such employee to purchase more than
66,666 shares of Common Stock. If the proposed amendment is approved, this
limit would be increased to 200,000 shares. The Compensation Committee has
the power to terminate or amend the 1995 Plan from time to time in such
respects as it deems advisable, except that no termination or amendment shall
materially adversely affect any outstanding Option without the
consent of the grantee, and the approval of the Company's
shareholders is required in respect of any amendment which would
(i) increase the total number of shares subject to the 1995 Plan,
or (ii) change the designation of employees eligible to receive
Incentive Stock Options or the class of employees or other person
eligible to receive Options.
The price at which shares covered by an Option may be purchased
pursuant thereto is determined on the date of grant by the
Compensation Committee but shall be no less than the par value of
such shares and, in the case of Incentive Options, no less than
the fair market value of such shares on the date of grant (the
"Fair Market Value"). The Fair Market Value is equal to the last
sale price quoted for shares of the Company's Common Stock by the
National Association of Securities Dealers, Inc. on the date of
grant or, if last sale prices are not reported with respect to the
Common Stock, the mean of the high bid and low asked prices for
shares of Common Stock on the date of grant. If such prices are
not available on the date of grant, the average of the prices
for the next preceding and succeeding day for which such prices
are available shall be used.
The purchase price of shares issuable upon exercise of an
Option may be paid in cash or by delivery of shares with a
value equal to the exercise price of the Option. The number of
shares covered by an Option is subject to adjustment for stock
splits, mergers, consolidations, combinations of shares,
reorganizations and recapitalizations. Options are generally non-
transferable except by will or by the laws of descent and
distribution, and in the case of employees and directors with
certain exceptions, may be exercised only so long as the optionee
continues to be employed by, or to serve as a director of, the
Company. Non incentive Options may be exercised within a period
not exceeding 10 years and 30 days from the date of grant or
within one year of the date of death or disability, if longer.
The Compensation Committee may designate all or a part of an
Option as an Incentive Option. Incentive Options may be exercised
within a period not exceeding 5 years after the date of grant,
except that the term of Incentive Options granted to a person
possessing more than 10% of the total combined voting power of
all shares of stock of the Company, its parents or subsidiaries
may not exceed five years from the date of grant and the exercise
price thereof shall be no less than 110% of the Fair Market
Value on the date of grant. In addition, the aggregate Fair
Market Value (determined as of the date of grant) of shares
subject to Incentive Options which first become exercisable
during any calendar year under all stock option plans of
the Company, its parents and subsidiaries, may not exceed
$100,000. If, as a result of accelerated vesting provisions,
Incentive Options valued at (as of the date of grant) in
excess of $100,000 vest in any calendar year, the excess will
be considered a Non incentive Option.
The Company believes that under present Federal tax laws
the grant of an Option will create no tax consequences for a
grantee or the Company. The grantee will generally have no
taxable income upon exercising an Incentive Option (except
that the alternative minimum tax may apply) and the Company
will receive no deduction when an Incentive Option is exercised.
The grantee will generally have no taxable income even if
shares are applied in payment of the exercise price of an
Incentive Option, unless such shares were acquired by exercise
of an Incentive Option and are applied in payment of the
exercise price before the applicable Incentive Option holding
periods have been satisfied. The grantee must recognize a
specified amount of ordinary income with respect to the exercise
of a Non-incentive Option and the Company will generally be
entitled to a deduction for the same amount. Grantees who
utilize shares in payment of the exercise price of a Non-incentive
Option will generally not recognize gain or loss to the extent
that on the date of payment the Fair Market Value of the
shares recovered is equal to the Fair Market Value of the shares
surrendered. The tax treatment to a grantee of a disposition
of shares acquired under the 1995 Plan depends on how long the
shares have been held, whether the shares were acquired by
exercising an Incentive Option or a Non-incentive Option, and
whether shares were used in payment of the exercise price.
Generally, there will be no tax consequence to the Company
in connection with a disposition of shares acquired under an
Option except that the Company will generally be entitled to a
deduction in the case of a disposition of shares acquired under
an Incentive Option before the applicable Incentive Option
holding periods have been satisfied.
Vote Required for Approval
Approval of the proposal to amend the 1995 Stock Option Plan
requires the affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the
Meeting on this Proposal No. 2.
Recommendation of the Board of Directors
The Company's Board of Directors recommends a vote FOR Proposal
No. 2. In assessing this recommendation, shareholders may wish to
consider that the directors have a personal interest in approving
the amended 1995 Plan as they are eligible to receive Options
under the 1995 Plan and have been granted options which are subject
to stockholder approval.
AUDITORS
The Board of Directors has selected Magee Rausch & Shelton,
independent public accountants, to audit the consolidated financial
statements of the Company for the year ending December 31, 1997.
Representatives of Magee Rausch & Shelton are expected to be present
at the Meeting and, while they are not expected to make a statement,
they will have the opportunity to do so if they desire. They will
also be available to respond to appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS
Any shareholder proposal submitted with respect to the Company's 1999
Annual Meeting of Shareholders, which proposal is submitted outside the
requirements of Rule 14a-8 under the Securities Exchange Act of 1934, will
be considered untimely for purposes of Rule 14a-4 and 14a-5 if notice
thereof is received by the Company after July 10, 1999.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB, as filed with the
Securities and Exchange Commission, is enclosed herewith. Additional
copies are available, without charge, on request and may be obtained
by writing to: Americomm Resources Corporation, First Place Tower,
15 E. 5th Street, Suite 4000, Tulsa, Oklahoma 74103-4346, Attention:
Thomas R. Bradley.
OTHER BUSINESS
The Board of Directors does not know of any matter to be brought
before the Meeting other than the matters specified in the Notice of
Annual Meeting accompanying this Proxy Statement. The persons named
in the form of proxy by the Board of Directors will vote all proxies
which have been properly executed. If any matters not set forth in the
Notice of Annual Meeting are properly brought before the Meeting, such
persons will vote thereon in accordance with their judgment.
By Order of the Board of Directors
Jane J. Bradley
Secretary
APPENDIX A
AMERICOMM RESOURCES CORPORATION
1995 STOCK OPTION PLAN
AS PROPOSED TO BE AMENDED
SECTION 1. Establishment. There is hereby established the
Americomm Resources Corporation 1995 Stock Option Plan ("Plan"),
pursuant to which directors, officers, employees and any other persons
who perform substantial services for or on behalf of AMERICOMM
RESOURCES CORPORATION (the "Company)", its subsidiaries and certain
other entities may be granted options to purchase shares of common
stock of the Company, par value $.001 per share ("Common Stock"), and
thereby share in the future growth of the business. The subsidiaries
of the Company included in this Plan (the "Subsidiaries") shall be any
subsidiary of the Company as defined in Section 424 of the Internal
Revenue Code of 1986, as amended (the "Code").
SECTION 2. Status of Options. The options which may be granted
pursuant to this Plan will constitute either incentive stock options
within the meaning of Section 422 of the Code ("Incentive Stock
Options") or options which are not Incentive Stock Options ("Non-
incentive stock Options"). Incentive Stock Options and Non-incentive
Stock Options shall be collectively referred to herein as "Options".
SECTION 3. Eligibility. All employees of the Company or any of
its Subsidiaries (including officers, whether or not they are members
of the Board of Directors) who are employed at the time of the adoption
of this Plan or thereafter, and any other persons who perform substantial
services for or on behalf of the Company or any of its Subsidiaries,
affiliates or any entity in which the Company has an interest
(collectively, the "Grantees") shall be eligible to be granted Non-
incentive Stock Options to purchase shares of Common Stock under
this Plan. All employees of the Company or any of its Subsidiaries who
are employed at the time of adoption of the Plan or thereafter shall be
eligible to be granted Incentive Stock Options under this Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights.
The total number of shares which may be issued and sold pursuant to
Options granted under this Plan shall be 1,600,000 shares of Common
Stock, (or the number and kind of shares of stock or other securities
which, in accordance with Section 9 of this Plan, shall be substituted
for such shares of Common Stock or to which said shares shall be adjusted;
hereinafter, all references to shares of Common Stock are deemed to be
references to said shares or shares so adjusted). The issuance of shares
upon exercise of an Option shall be free from any preemptive or
preferential right of subscription or purchase on the part of any
stockholder. If any outstanding Option granted under this Plan
expires or is terminated, for any reason, the shares of Common Stock
subject to the unexercised portion of the Option will again be available
for Options issued under this Plan.
SECTION 5. Administration.
(a) This Plan shall be administered by the Compensation
Committee of the Board of Directors (the "Committee"). Subject to the
express provisions of this Plan, the Committee shall have complete
authority, in its discretion, to interpret this Plan, to prescribe,
amend and rescind rules and regulations relating to it, to determine the
terms and provisions of the respective option agreements (which need
not be identical), to determine the Grantees to whom, and the times
and the prices at which, Options shall be granted, the option periods,
the number of shares of the Common Stock to be subject to each Option
and whether each Option shall be an Incentive Stock Option or a Non-
incentive Stock Option, and to make all other determinations necessary
or advisable for the administration of the Plan. Each Option shall be
clearly identified at the time of grant as to its status as an Incentive
Stock Option or a Non-incentive Stock Option. In making such
determinations, the Committee may take into account the nature of the
services rendered by the respective Grantees, their present and
potential contributions to the success of the Company and such other
factors as the Committee, in its discretion, shall deem relevant.
Nothing contained in this Plan shall be deemed to give any Grantee
any right to be granted an Option to purchase shares of Common Stock
except to the extent and upon such terms and conditions as may be
determined by the Committee. The Committees determination on all of
the matters referred to in this Section 5 shall be conclusive.
(b) The Committee shall consist of two (2) or more individuals
who shall be appointed by the Board, which may at any time and from
time to time remove any member of the Committee, with or without cause,
appoint additional members to the Committee and fill vacancies, however
caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall
be made by a majority of the members present at a duly constituted
meeting or by a written consent signed by all of the members of the
Committee.
(c) The Committee may at its election provide in any option
agreement covering the grant of Options under this Plan that, upon
the exercise of such Options, the Company will loan to the holder
thereof such amount as shall equal the purchase price of the shares
of Common Stock issuable upon such exercise, such loan to be on terms
and conditions deemed appropriate by the Committee.
SECTION 6. Terms of Incentive Stock Options. Each Incentive
Stock Option granted under this Plan shall be evidenced by an
Incentive Stock Option Agreement which shall be executed by the
Company and by the person to whom such Incentive Stock Option is
granted, and shall be subject to the following terms and conditions:
(a) The price at which shares of Common Stock covered by each
Incentive Stock Option may be purchased pursuant thereto shall be
determined in each case on the date of grant by the Committee,
but shall be an amount not less than the par value of such shares
and not less than the fair market value of such shares on the date
of grant. For purposes of this Section, the fair market value
of shares of Common Stock on any day shall be (i) in the event the
Common Stock is not publicly traded, the fair market value on such
day as determined in good faith by the Committee or (ii) in the
event the Common Stock is publicly traded, the last sale price of
a share of Common Stock as reported by the principal quotation
service of which the Common Stock is listed, if available, or, if
last sale prices are not reported with respect to the Common Stock,
the mean of the high bid and low asked prices of a share of Common
Stock as reported by such principal quotation service, or, if there
is no such report by such quotation service for such day, such
fair market value shall be the average of (i) the last sale price
(or, if last sale prices are not reported with respect to the Common
Stock, the mean of the high bid and low asked prices) on the day next
preceding such day for which there was a report and (ii) the last sale
price (or, if last sale prices are not reported with respect to the
Common Stock, the mean of the high bid and low asked prices) on the day
next succeeding such day for which there was a report, or as otherwise
determined by the Committee in its discretion pursuant to any
reasonable method contemplated by Section 422 of the Code and any
regulations issued pursuant to that Section.
(b) The option price of the shares to be purchased pursuant to
each Incentive Stock Option shall be paid in full in cash, or by
delivery (i.e. surrender) of shares of Common Stock of the Company
then owned by the Grantee, at the time of the exercise of the
Incentive Stock Option. Shares of Common Stock so delivered will
be valued on the day of delivery for the purpose of determining
the extent to which the option price has been paid thereby, in the
same manner as provided for the purchase price of Incentive Stock
Options as set forth in paragraph (a) of this Section, or as otherwise
determined by the Committee, in its discretion, pursuant to any
reasonable method contemplated by Section 422 of the Code and any
regulations issued pursuant to that Section.
(c) Each Incentive Stock Option Agreement shall provide that such
Incentive Stock Option may be exercised by the Grantee, in such parts
and at such times as may be specified in such Agreement, within a period
not exceeding ten years after the date on which the Incentive Stock Option
is granted (hereinafter call the "Incentive Stock Option Period") and, in
any event, only during the continuance of the employee's employment by
the Company or any of its Subsidiaries or during the period of three
months after the termination of such employment to the extent that the
right to exercise such Incentive Stock Option had accrued at the date of
such termination; provided, however, that if Incentive Stock Options as
to 100 or more shares are held by a Grantee, then such Incentive Stock
Options may not be exercised for less than 100 shares at any one time,
and if Incentive Stock Options for less than 100 shares are held by a
Grantee, then Incentive Stock Options for all such shares must be
exercised at one time; and provided, further, that, if the Grantee,
while still employed by the Company or any of its Subsidiaries, shall
die within the Incentive Stock Option Period, the Incentive Stock Option
may be exercised, to the extent specified in the Incentive Stock Option
Agreement, and as herein provided, but only prior to the first to occur
of:
(i) the expiration of the period of one year after the date of
the Grantee's death, or
(ii) the expiration of the Incentive Stock Option Period, by the
person or persons entitled to do so under the Grantee's will, or, if
the Grantee shall fail to make testamentary disposition of said Incentive
Stock Option, or shall die intestate, by the Grantee's legal representative
or representatives.
(d) Each Incentive Stock Option granted under this Plan shall by
its terms be non-transferable by the Grantee except by will or by the
laws of descent and distribution, and each Incentive Stock Option shall
by its terms be exercisable during the Grantee's lifetime only by him.
(e) Notwithstanding the foregoing, if an Incentive Stock Option is
granted to a person at any time when such person owns, within the
meaning of Section 424 (d) of the Code, more than 10% of the total
combined voting power of all classes of stock of the employer corporation
(or a parent or subsidiary of such corporation within the meaning
of Section 424 of the Code) the price at which each share of Common
Stock covered by such Incentive Stock Option may be purchased pursuant
to such Incentive Stock Option shall not be less than 110% of the fair
market value (determined as in paragraph (a) of this Section) of the
shares of Common Stock at the time the Incentive Stock Option is granted,
and such Incentive Stock Option must be exercised within a period specified
in the Incentive Stock Option Agreement which does not exceed five years
after the date on which such Incentive Stock Option is granted.
(f) The Incentive Stock Option Agreement entered into pursuant
hereto may contain such other terms, provisions and conditions not
inconsistent herewith as shall be determined by the Committee including,
without limitation, provisions (i) requiring the giving of satisfactory
assurances by the Grantee that the shares are purchased for investment
and not with a view to resale in connection with a distribution of such
shares, and will not be transferred in violation of applicable securities
laws, (ii) restricting the transferability of such shares during a
specified period and (iii) requiring the resale of such shares to the
Company at the option price if the employment of the employee terminates
prior to a specified time. In addition, the Committee, in its discretion,
may afford to holders of Incentive Stock Options granted under this Plan
the right to require the Company to cause to be registered under the
Securities Act of 1933, as amended, for public sale by the holders thereof,
shares of Common Stock subject to such Incentive Stock Options upon such
terms and subject to such conditions as the Committee may determine to
be appropriate.
(g) In the discretion of the Committee, a single stock option
agreement may include both Incentive Stock Options and Non-incentive
Stock Options, or those options may be included in separate stock option
agreements.
SECTION 7. Terms of Non-incentive Stock Options. Each Non-incentive
Stock Option granted under this Plan shall be evidenced by a Non-
incentive Stock Option Agreement which shall be executed by the Company
and by the person to whom such Non-incentive Stock Option is granted, and
shall be subject to the following terms and conditions:
(a) The price at which shares of Common Stock covered by each Non-
incentive Stock Option may be purchased pursuant thereto shall be an
amount not less than the par value of such shares.
(b) Each Non-incentive Stock Option Agreement shall provide that
such Non-incentive Stock Option may be exercised by the Grantee, in such
parts and at such times as may be specified in such Agreement, within
a period up to and including ten years and thirty days after the date
on which the Non-incentive Stock Option is granted.
(c) Each Non-incentive Stock Option granted under this Plan shall
by its terms be nontransferable by the optionee except by will or by the
laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by Code or Title I of the Employee Retirement
Income Security Act, or the rules thereunder.
(d) The Non-incentive Stock Option Agreement entered into pursuant
hereto may contain such other terms, provisions and conditions not
inconsistent herewith as shall be determined by the Committee, in its
sole discretion, including without limitation the terms, provisions and
conditions set forth in Section 6(f) with respect to Incentive Stock
Option Agreements.
SECTION 8. Limit on Option Amount.
(a) Notwithstanding any provision contained herein, the aggregate
fair market value (determined under Section 6(a) as of the time such
Incentive Stock Options are granted) of the shares of Common Stock with
respect to which Incentive Stock Options are first exercisable by any
employee during any calendar year (under all stock option plans of the
employee's employer corporation and its parent and Subsidiary corporation
within the meaning of Section 424 of the Code) shall not exceed $100,000.
An option may be granted which exceeds this $100,000 limitation, as long
as under then applicable law the portion of such an option which is
exercisable for shares of Common Stock in excess of the $100,000
limitation shall be treated as a Non-incentive Stock Option. The limit
in this paragraph shall not apply to options which are designated as
Non-incentive Stock Options, and, except as otherwise provided herein,
there shall be no limit on the amount of such options which may be
first exercisable in any year.
(b) Notwithstanding any provision contained herein, grants of
Options under this Plan to any one optionee who is an employee of the
Company shall be limited to Options to purchase no more than 200,000
shares of Common Stock per calendar year.
SECTION 9. Adjustment of Number of Shares. In the event that a
dividend shall be declared upon the shares of Common Stock payable in
shares of Common Stock, the number of shares of Common Stock then subject
to any Option granted hereunder, and the number of shares reserved for
issuance pursuant to this Plan but not yet covered by an Option, shall
be adjusted by adding to each of such shares the number of shares which
would be distributable thereon if such share has been outstanding on the
date fixed for determining the stockholders entitled to receive such
stock dividend. In the event that the outstanding shares of Common
Stock shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, then there
shall be substituted for each share of Common Stock subject to any such
Option and for each share of Common Stock reserved for issuance pursuant
to the Plan but not yet covered by an Option, the number and kind of
shares of stock or other securities into which each outstanding share
of Common Stock shall be so changed or for which each such share shall
be exchanged; provided, however, that in the event that such change or
exchange results from a merger or consolidation, and in the judgment
of the Committee such substitution cannot be effected or would be
inappropriate, or if the Company shall sell all or substantially all of
its assets, the Company shall use reasonable efforts to effect some
other adjustment of each then outstanding Option which the Committee,
in its sole discretion, shall deem equitable. In the event that there
shall be any change, other than as specified above in this Section 9, in
the number or kind of outstanding shares of Common Stock or of any stock
or other securities into which such shares of Common Stock shall have
been changed or for which they shall have been exchanged, then, if the
Committee shall determine that such change equitably requires an
adjustment in the number or kind of shares theretofore reserved for
issuance pursuant to the Plan but not yet covered by an Option and of
the shares then subject to an Option or Options, such adjustment shall
be made by the Committee and shall be effective and binding for all
purposes of this Plan and of each stock option agreement.
Notwithstanding the foregoing, if any adjustment in the number of shares
which may be issued and sold pursuant to Options is required by the Code
or regulations issued pursuant thereto to be approved by the stockholders
in order to enable the Company to issue Incentive Stock Options pursuant
to this Plan, then no such adjustment shall be made without the approval
of the stockholders. In the case of any such substitution or adjustment
as provided for in this Section, the option price in each stock option
agreement for each share covered thereby prior to such substitution or
adjustment will be the total option price for all shares of stock or
other securities which shall have been substituted for each such share
or to which such share shall have been adjusted pursuant to this Section
9. No adjustment or substitution provided for in this Section 9 shall
require the Company, in any stock option agreement, to sell a fractional
share, and the total substitution or adjustment with respect to each stock
option agreement shall be limited accordingly. Notwithstanding the
foregoing, in the case of Incentive Stock Options, if the effect of
the adjustments or substitution is to cause the Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option or to
cause a modification, extension or renewal of such Incentive Stock
Option within the meaning of Section 424 of the Code, the Committee shall
use reasonable efforts to effect such other adjustment of each then
outstanding option as the Committee, in its sole discretion, shall deem
equitable.
SECTION 10. Amendments. This Plan may be terminated or amended
from time to time by vote of the Committee; provided, however, that no
such termination or amendment shall materially adversely affect or
impair any then outstanding Option without the consent of the Grantee
thereof and no amendment which shall (i) change the total number of
shares which may be issued and sold pursuant to Options granted under
this Plan, or (ii) change the designation of employees eligible to
receive Incentive Stock Options or the class of employees or other
persons eligible to receive Options, shall be effective without the
approval of the stockholders. Notwithstanding the foregoing, the Plan
may be amended by the Committee to incorporate any amendments made to
the Code or regulations promulgated thereunder which the Committee deems
to be necessary or desirable to preserve (a) incentive stock option status
for outstanding Incentive Stock Options and the ability to issue Incentive
Stock Options pursuant to this Plan and (b) the deductibility by the
Company pursuant to Section 162(m) of the Code of amounts taxed to Plan
participants as ordinary compensation income.
SECTION 11. Termination. Except to the extent necessary to
govern outstanding Options, this Plan shall terminate on, and no
additional Options shall be granted after, ten years from the date the
Plan is adopted, or ten years from the date the Plan is approved by a
the stockholders, whichever is earlier.
