SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GROW BIZ INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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>
[LOGO]
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1998
------------------------------
TO THE SHAREHOLDERS OF GROW BIZ INTERNATIONAL, INC.
Notice is hereby given to the holders of the shares of Common Stock of
Grow Biz International, Inc. that the Annual Meeting of Shareholders of the
Company will be held at the Company's corporate offices, 4200 Dahlberg Drive,
Minneapolis, Minnesota, on Wednesday, May 6, 1998, at 4:00 p.m. Central Daylight
Time, to consider and act upon the following matters:
1. To set the number of members of the Board of Directors at six.
2. To elect six directors to serve for a term of one year.
3. To approve an amendment to the Company's 1992 Stock Option Plan
to increase the number of common shares authorized for issuance
thereunder by 300,000 shares.
4. To ratify the appointment of Arthur Andersen LLP as independent
auditors for the current fiscal year.
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on March 9, 1998 will
be entitled to vote at the meeting and adjournments of the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. EVEN IF YOU PLAN TO
ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE, AND RETURN THE PROXY AT ONCE IN
THE ENCLOSED ENVELOPE.
By the Order of the Board of Directors
Gaylen L. Knack
SECRETARY
Dated March 18, 1998
<PAGE>
GROW BIZ INTERNATIONAL, INC.
4200 DAHLBERG DRIVE
MINNEAPOLIS, MINNESOTA 55422-4837
ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1998
PROXY STATEMENT
GENERAL
The Annual Meeting of Shareholders of Grow Biz International, Inc.
("Company") will be held on Wednesday, May 6, 1998, at 4:00 p.m., Central
Daylight Time, at the Company's corporate offices, 4200 Dahlberg Drive,
Minneapolis, Minnesota, for the purposes set forth in the Notice of Annual
Meeting of Shareholders.
The enclosed proxy is solicited by the Board of Directors of the
Company. Such solicitation is being made by mail and may also be made by
directors, officers, and regular employees of the Company personally or by
telephone. Any proxy given pursuant to such solicitation may be revoked by the
shareholder at any time prior to the voting thereof by so notifying the Company
in writing at the above address, attention: Corporate Secretary, or by appearing
in person at the meeting. Shares represented by proxies will be voted as
specified in such proxies, and if no choice is specified, will be voted in favor
of (1) setting the number of members of the Board of Directors at six, (2) the
Board of Directors' nominees named in this proxy statement, (3) to approve an
amendment to the Company's 1992 Stock Option Plan, and (4) the appointment of
Arthur Andersen LLP as independent auditors for the current fiscal year.
Common Stock, no par value per share ("Common Stock"), of which there
were 5,945,841 shares outstanding on the record date, constitutes the only class
of outstanding voting securities issued by the Company. Each shareholder will be
entitled to cast one vote in person or by proxy for each share of Common Stock
held by the shareholder. Only shareholders of record at the close of business on
March 9, 1998, will be entitled to vote at the meeting.
The affirmative vote of the majority of shares present in person, or
represented by proxy, at this Annual Meeting of Shareholders is required to set
the number of directors, elect each director, approve the amendment to the
Company's 1992 Stock Option Plan and to approve Arthur Andersen LLP as
independent auditors for the current fiscal year. A quorum is achieved when 51%
of the outstanding shares are present in person or by proxy. Shares voted as
abstentions on any matter (or a "withhold authority" vote as to directors) will
be counted as present and entitled to vote for purposes of determining a quorum
and for purposes of calculating the vote with respect to such matter, but will
not be deemed to have been voted in favor of such matter. If a broker submits a
"non-vote" proxy, indicating that the broker does not have discretionary
authority to vote certain shares on a particular matter, those shares will be
counted as present for purposes of determining a quorum, but will not be
considered present and entitled to vote for purposes of calculating the vote
with respect to such matter.
All of the expenses involved in preparing, assembling, and mailing this
proxy statement and the material enclosed herewith will be paid by the Company.
The Company may reimburse banks, brokerage firms, and other custodians,
nominees, and fiduciaries for reasonable expenses incurred by them in sending
proxy material to beneficial owners of stock. This proxy statement and
accompanying form of proxy are first being mailed to shareholders on or about
March 18, 1998.
<PAGE>
ELECTION OF DIRECTORS
(Proposals #1 and #2)
At the meeting, the Board of Directors of the Company is to be elected
to hold office until the 1999 Annual Meeting or until successors are elected and
have qualified. The Bylaws of the Company provide that the number of directors
of the Company shall be fixed by the shareholders, subject to increase by the
Board of Directors. Currently the authorized size of the Board of Directors is
six. The Board recommends that the shareholders set the number of directors at
six and elect the nominees named below. Each nominee is currently a director of
the Company whose current term expires at the 1998 Annual Meeting.
Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the nominees named below, unless one
or more of such nominees should become unavailable for election, in which event
such shares shall be voted for the election of such substitute nominees as the
Board of Directors may propose. Each person nominated has agreed to serve if
elected, and the Company knows of no reason why any of the listed nominees would
be unavailable to serve.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE FOR PAST FIVE YEARS SINCE
------------ ------------------------------ -----
<S> <C> <C>
K. Jeffrey Dahlberg (1) Mr. Dahlberg has served as Chairman of the Board 1990
Age: 44 of Directors of the Company since January 1990.
Mr. Dahlberg served as President and Chief
Executive Officer of Dahlberg, Inc., a
publicly-held manufacturer and distributor of
hearing aids and franchisor of hearing aid retail
stores, from June 1988 to December 1992 and as a
director of Dahlberg, Inc. until July 1993. He has
served as Chairman of the Board of Franchise
Business Systems, Inc., a franchise consulting
firm, since July 1988.
Ronald G. Olson Mr. Olson has served as President, Chief Executive 1990
Age: 57 Officer and a Director of the Company since
January 1990. Mr. Olson has been President and
Chief Executive Officer of Franchise Business
Systems, Inc. since July 1988.
Randel S. Carlock (2) Mr. Carlock has served as a Director of the 1993
Age: 49 Company since September 1993. He currently serves
as a professor at the University of St. Thomas, a
position held since 1990 and served as Chairman of
the Board of Directors of Audio King, Inc., a
Minneapolis consumer electronics company, from
March 1990 to June 1997.
Dennis J. Doyle (1)(3) Mr. Doyle has served as a Director of the Company 1993
Age: 45 since June 1993. Since 1978, he has served as
President and Chief Executive Officer of Welsh
Companies, Inc., a real estate development and
management firm, Chairman of the Board of Welsh
Construction Corp., The Rottlund Company, Inc. and
a Director of PM Services.
<PAGE>
Bruce C. Sanborn(1)(3) Mr. Sanborn has served as a Director of the 1993
Age: 45 Company since June 1993. Since 1990, he has served
as Chairman of the Board of Directors of the North
Central Life Insurance Company and Financial Life
Companies, Inc.
Robert C. Pohlad (2) Mr. Pohlad has served as a Director of the Company 1993
Age: 43 since September 1993. Since 1987, he has served as
President and a Director of Pohlad Companies, a
Minneapolis based holding company active in
investments and soft drink manufacturing and
distribution. Mr. Pohlad currently serves as a
director of Mesaba Holdings, Inc., Delta Beverage
Group, Inc. and Airtran Holdings, Inc.
</TABLE>
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(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board of Directors of the Company has standing Executive, Audit,
and Compensation Committees which have a current membership as indicated in the
foregoing section. The Board of Directors has no standing Nominating Committee.
The Executive Committee may exercise all of the powers and authority of
the Board of Directors, except as otherwise provided under the Minnesota
Business Corporation Act. The Executive Committee was formed in December 1993
and held no meetings during fiscal 1997.
The Audit Committee makes recommendations as to the selection of
auditors and their compensation, and reviews with the auditors the scope of the
annual audit, matters of internal control and procedure, the audit results and
reports and other general matters relating to the Company's accounts, records,
controls and financial reporting. The Audit Committee was formed in July 1993
and held one meeting during fiscal 1997.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation guidelines for executive officers, other key
employees and nonemployee directors and the composition and levels of
participation in incentive compensation plans. The Compensation Committee
administers the Company's 1992 Stock Option Plan including determining the
participants, the number of shares subject to option and the terms and
conditions of exercise. During fiscal 1997, the Compensation Committee held two
meetings.
During fiscal 1997, the Board of Directors of the Company met six
times. All directors attended at least 85% of the meetings of the Board of
Directors and committees of the Board of Directors on which they served.
<PAGE>
DIRECTOR COMPENSATION
Each nonemployee director of the Company receives $500 for each Board
and committee meeting attended. Effective August 23, 1993, Dennis J. Doyle and
Bruce C. Sanborn, the only nonemployee directors at the time, were each granted
an option to purchase 25,000 common shares at an exercise price of $10.00 per
share. Effective September 24, 1993, the Board of Directors adopted the Stock
Option Plan for Nonemployee Directors ("Directors Plan") which provides for an
automatic grant of an option to purchase 25,000 common shares upon the initial
election as a director. Pursuant to this Plan, Randel S. Carlock and Robert C.
Pohlad were each granted an option to purchase 25,000 common shares at an
exercise price of $15.00 per share. Effective November 21, 1995, the options
granted to Messrs. Carlock and Pohlad were cancelled and replacement options to
purchase 25,000 common shares each at $10.00 per share, which was above the
market price on the effective date, were granted separate from the Directors
Plan. All options granted to nonemployee directors become exercisable in
increments through 1998, provided that the nonemployee director is still serving
as a director, and expire in 1999.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation earned or awarded during each of the last three fiscal years to the
Company's Chief Executive Officer and the other four most highly compensated
executive officers serving as executive officers at the end of Fiscal 1997 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION($)
------------------------------------
LONG-TERM
OTHER COMPENSATION
FISCAL ANNUAL OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(#) COMPENSATION($)
- --------------------------- ---- ------ ----- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg 1997 240,000 - - - 46,283(1)
Chairman of the Board 1996 220,000 - - - 44,392
1995 220,000 - - - 43,053
Ronald G. Olson 1997 260,000 - - - 45,181(1)
Chief Executive Officer 1996 220,000 - - - 43,505
and President 1995 220,000 - - - 42,721
Ted R. Manley 1997 126,000 90,750 - 10,000 5,610(2)
Executive Vice President 1996 115,000 - - 20,000 4,509
of Operations 1995 110,000 - - 10,000 931
Brad D. Tait(3) 1997 116,000 87,000 - 10,000 3,391(2)
President Disc Go Round and 1996 80,000 - - 30,000
It's About Games Division -
Gaylen L. Knack(3) 1997 125,000 50,000 - 10,000 1,058(2)
Secretary, Vice President 1996 45,000 - 25,000
and General Counsel - -
</TABLE>
- -----------------------
(1) Includes premiums paid in 1997 by the Company for term life insurance
coverage and the present value of the benefit to the executive of the
remainder of the premiums for split dollar life insurance coverage paid
by the Company on behalf of the named executive as follows: Mr.
Dahlberg - $37,342 and Mr. Olson - $36,240. Also includes 401(k)
Company matching contributions and profit sharing as follows: Mr.
Dahlberg - $8,941 and Mr. Olson - $8,941.
(2) Consists of 401(k) Company matching contributions and profit sharing.
(3) Mr. Knack and Mr. Tait joined the Company in 1996.
<PAGE>
OPTIONS GRANTED DURING FISCAL 1997
The following table provides information relating to options granted to
the Named Executive Officers during the Company's 1997 fiscal year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(1) FISCAL YEAR(#/sh) ($)(2) DATE 5%($)(3) 10%($)(3)
- ----------------------- ---------- ----------------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg 0 - - - -
Ronald G. Olson 0 - - - -
Ted R. Manley 10,000 7% 11.875 8/18/02 32,808 72,498
Brad D. Tait 10,000 7% 12.25 1/1/03 33,844 74,787
Gaylen L. Knack 10,000 7% 12.25 1/1/03 33,844 74,787
</TABLE>
- --------------------
(1) The number indicated is the number of common shares that can be
acquired upon exercise of the option. The Company has not granted any
stock appreciation rights. Each option is non-transferable, becomes
exercisable in four annual installments of 25% per year commencing on
the first anniversary of the date of grant, and provides for forfeiture
of any unvested portion upon termination of employment.
(2) Exercise prices are equal to the fair market value at the date of
grant.
(3) The assumed 5% and 10% annual rates of appreciation are hypothetical
rates selected by the Securities and Exchange Commission and are not
intended to, and do not, forecast or assume actual future stock prices.
AGGREGATED OPTION EXERCISES DURING FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to options exercised
by the Named Executive Officers during fiscal 1997 and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE YEAR-END(#) FISCAL YEAR-END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
K. Jeffrey Dahlberg 0 0 0 0
Ronald G. Olson 0 0 61,250/3,750 58,891/1,922
Ted R. Manley 0 0 22,500/37,500 40,781/77,969
Brad D. Tait 0 0 5,000/35,000 19,988/90,588
Gaylen L. Knack 0 0 5,000/30,000 21,563/80,000
</TABLE>
- ----------------------
(1) Options are "in-the-money" if the fair market value of the underlying
shares at fiscal year end is greater than the exercise price. The
amounts set forth represent the difference between the fair market
value of the common shares on December 27, 1997 and the option exercise
price multiplied by the number of shares subject to the option.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the 1934 Act requires the Company's directors,
executive officers, and persons who own more than ten percent of the Common
Stock of the Company to file with the Securities and Exchange Commission
("Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of common shares of the Company. Directors, officers, and
greater than ten percent shareholders are required by the regulations of the
Commission to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 27, 1997, all Form
3, Form 4 and Form 5 filing requirements were met, except Form 4s were filed
late for Ted R. Manley for the month of August and for K. Jeffrey Dahlberg for
the months of February and October and Form 5s for Fiscal 1997 were filed late
due to an
<PAGE>
administrative oversight by Ted R. Manley, Charles V. Kanan, Michael E. Flynn,
William L. Shell II, Brad D. Tait, Gaylan L. Knack and David J. Osdoba, Jr.
COMPENSATION COMMITTEE REPORT
COMPENSATION COMMITTEE CHARTER. The purpose of the Compensation
Committee of the Board of Directors is to oversee compensation of officers, key
employees and nonemployee directors of the Company. The Committee's policy is to
insure that compensation programs contribute directly to the success of the
Company including enhanced share value. The Compensation Committee is comprised
of two members of the Board of Directors, neither of whom is an employee of the
Company.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS. The Company's executive
compensation programs are designed to attract and retain qualified executives
and to motivate them to maximize shareholder investment by achieving strategic
Company goals. There are three basic components to the Company's executive
compensation program: base pay, annual incentive bonus, and long-term,
equity-based incentive compensation in the form of stock options. Each component
is established in light of individual and Company performance, comparable
compensation programs in the Minneapolis/St. Paul metropolitan area, equity
among employees and cost effectiveness. The initial recommendation with respect
to compensation of all executive officers was made by the Chief Executive
Officer and the Chairman of the Board.
Base Pay. Base pay is designed to be competitive, although
conservative as compared to salary levels for equivalent positions at
comparable companies in the Minneapolis/St. Paul metropolitan area. The
executive's actual salary within this competitive framework depends on
the individual's performance, responsibilities, experience, leadership
and potential future contribution.
Annual Incentive Bonus. In addition to base pay, each
executive is eligible to receive an annual cash bonus. For fiscal 1997,
the bonus for certain executives was tied directly to the earnings per
share of the Company. The bonus for the other executives was tied to
specific performance criteria which were weighted based on the
importance of such criteria to the specific job. The Committee believes
that it is not in the best interests of the Company to identify the
specific earnings measures. Executives were eligible for a bonus of up
to 100% of their base pay.
Long-Term, Equity-Based Incentive Compensation. The long-term,
equity-based compensation program is tied directly to shareholder
return. Under the current program, long-term incentive compensation
consists of stock options that generally do not fully vest until after
four years. Stock options are awarded with an exercise price equal to
the fair market value of the Company's common shares on the date of
grant. Accordingly, the executive is rewarded only if the shareholders
receive the benefit of appreciation in the price of the Common Stock.
Because long-term options vest over time, the Company
periodically (generally once each year) grants new options to provide
continuing incentives for future performance. The size of previous
grants and the number of options held are considered by the Stock
Option Committee, but are not entirely determinative of future grants.
Each executive's actual grants are based upon the individual's
performance, responsibilities, experience, leadership and potential
future contribution and any other factors deemed relevant by the
Committee.
<PAGE>
Stock options are designed to align the interests of the
Company's executives with those of shareholders by encouraging
executives to enhance the value of the Company and, hence, the price of
the Common Stock and the shareholders' investment. In addition, through
deferred vesting, this component of the compensation system is designed
to create an incentive for the executive to remain with the Company.
ANNUAL REVIEWS. Each year the Committee reviews its executive
compensation policies and programs and determines what changes, if any, are
appropriate for the following year. In addition, the Compensation Committee
reviews the individual performance of the Chief Executive Officer and the
Chairman of the Board.
CHIEF EXECUTIVE OFFICER. The Chief Executive Officer's compensation is
established by the Compensation Committee based on a subjective consideration of
his performance and the extent to which the Company achieves its strategic and
economic goals established at the beginning of the year and his current level of
compensation in comparison with the level of compensation paid the chief
executive officers of comparable companies in the Minneapolis/St. Paul
metropolitan area. The Chief Executive Officer is eligible for an annual
incentive bonus tied directly to the earnings of the Company. No bonus was paid
for fiscal 1997. The Compensation Committee also considers the Chief Executive
Officer's level of compensation as it relates to other executive officers of the
Company and to the Company's employees in general.
LIMITS ON DEDUCTIBLE COMPENSATION PAYABLE TO EXECUTIVE OFFICERS. The
Omnibus Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue
Code of 1986, as amended (the "Code") limiting corporate deductions to
$1,000,000 for certain compensation paid to the chief executive officer and each
of the four other most highly compensated executives of publicly held companies.
The Company does not believe it will pay "compensation" within the meaning of
Section 162(m) to such executive officers in excess of $1,000,000 in the
foreseeable future. Therefore, the Company does not have a policy at this time
regarding qualifying compensation paid to its executive officers for
deductibility under Section 162(m), but will formulate a policy if compensation
levels ever approach $1,000,000.
The foregoing report is submitted by Dennis J. Doyle and Bruce C.
Sanborn, the members of the Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS. The Compensation Committee of the
Board of Directors consists of two nonemployee directors, Dennis J. Doyle and
Bruce C. Sanborn. Mr. Sanborn is the Chief Executive Officer of North Central
Life Insurance Company and K. Jeffrey Dahlberg, the Company's Chairman serves on
the Board of North Central Life Insurance Company.
<PAGE>
STOCK PERFORMANCE GRAPH
Shown below is a line graph comparing the yearly dollar change in the
cumulative total shareholder return on the Company's Common Stock as against the
cumulative total return of the NASDAQ Total Return Index and the NASDAQ Retail
Stock Index. The graph and table assume the investment of $100 on August 25,
1993 in the Company's Common Stock and on July 31, 1993 in the NASDAQ Total
Return Index and the NASDAQ Retail Stock Index.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE
INITIAL PUBLIC OFFERING
[INSERT TABLE]
<TABLE>
<CAPTION>
----------- --------------- ------------- -------------- ------------- -------------
7/93 12/93 12/94 12/95 12/96 12/97
- --------------------- ----------- --------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Grow Biz $100 $118.3333 $70.8667 $64.2000 $58.3333 $80.4167
- --------------------- ----------- --------------- ------------- -------------- ------------- -------------
NASDAQ (US) 100 110.4295 107.9456 152.6624 187.7667 230.4150
- --------------------- ----------- --------------- ------------- -------------- ------------- -------------
NASDAQ Retail 100 110.8522 100.9939 111.2587 132.6433 156.3119
- --------------------- ----------- --------------- ------------- -------------- ------------- -------------
</TABLE>
PROPOSAL TO APPROVE AMENDMENTS TO THE 1992
STOCK OPTION PLAN
(Proposal #3)
On April 21, 1992, the Board of Directors and shareholders of the
Company adopted the 1992 Stock Option Plan (the "Plan"). The Board of Directors
amended the Plan to increase the number of shares reserved for issuance under
the Plan from 500,000 to 800,000 shares in March 1994, from 800,000 to 1,100,000
shares in March 1996 and from 1,100,000 to 1,400,000 shares in February 1998.
The purpose of the Plan is to attract and retain qualified officers and other
employees and consultants by furnishing them an incentive. The amendment is
subject to approval by the shareholders of the Company at the 1998 Annual
Meeting of Shareholders.
The Plan provides for the grant of incentive stock options and
non-qualified stock options to employees of the Company. "Incentive stock
options" are options that meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and non-qualified options are
options which do not meet the requirements of Section 422. The Plan, as amended,
increases the number of shares subject to the Plan to 1,400,000 shares. As of
December 27, 1997, an aggregate of 284,438 shares had been issued under the
Plan, 698,862 shares were subject to outstanding stock options and 116,700
shares were available for grant. As of December 27, 1997, the Company had
approximately 69 employees eligible to participate in the Plan. The closing
price of the common shares, as reported by the NASDAQ National Market System for
March 12, 1998, was $12-15/16.
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Plan gives broad powers to the Committee to
administer and interpret the Plan, including the authority to select the
individuals to be granted options, to determine the number of shares subject to
each option and to prescribe the particular form and conditions of each option
granted. The Plan requires that the option price of incentive stock options
granted under the Plan shall be not less than 100% of the fair market value of
the Company's Common Stock as of the date the option is granted and that the
terms of an incentive stock option may not exceed ten years. The exercise price
of any incentive stock option granted to an employee who owns common shares
representing more than 10% of the voting rights of the Company's outstanding
capital stock on the date of grant must be equal to at least 110% of the fair
market value on the date of grant. The Plan provides that non-qualified stock
options shall have an option price not less than 100% of the fair market value
of the Company's Common Stock on the date of grant unless otherwise determined
by the Committee. All options granted under the Plan are nontransferable and are
subject to various other conditions and restrictions. Shares subject to
cancelled options are available for options granted in the future under the
Plan.
Incentive stock options may be granted pursuant to the Plan through
August 20, 2002, ten years from the effective date of the Plan. Non-qualified
stock options may be granted pursuant to the Plan until the Plan is discontinued
or terminated by the Board of Directors.
Under the Code there is no taxable income to an employee when an
Incentive Stock Option is granted or when it is exercised. The excess, however,
of the fair market value of the underlying shares on the date of exercise over
the option exercise price will be an item of tax preference and, accordingly,
must be taken into account in determining whether an employee is subject to the
alternative minimum tax for the year of exercise. If the employee does not
dispose of the shares within the later of two years from the date of option
grant or one year from the date of exercise, any gain realized upon the
disposition will be taxable as capital gain. However, if the employee does not
satisfy the applicable holding periods, the excess of the fair market value of
the shares on the date of exercise over the option exercise price (but not
exceeding the amount by which the sale price of the shares exceeds the option
exercise price) will be taxable as ordinary income for the year in which the
shares are sold. Upon the exercise of a non-qualified stock option, the excess
of the fair market value of the underlying shares on the date of exercise over
the option exercise price for such shares will be taxable to the optionee as
ordinary income. The Company will be entitled to a corresponding tax deduction
for any amounts which are taxable to an optionee as ordinary income.
In the event of an increase or decrease in the number of common shares
resulting from a subdivision or consolidation of shares or the payment of a
share dividend or any other increase or decrease in the number of common shares
effected without receipt of consideration by the Company, the number of common
shares covered by each outstanding option and the price per share thereof shall
be equitably adjusted by the Board to reflect such change.
<PAGE>
In the event of the sale by the Company of substantially all of its
assets and the consequent discontinuance of its business, or in the event of a
merger, exchange, consolidation or liquidation of the Company, the Board shall,
in its sole discretion, provide for one or more of the following: (i) the
acceleration of the exercisability of any or all outstanding options; (ii) the
complete termination of the Plan and cancellation of outstanding options not
exercised prior to a date specified by the Board (which date shall give Optionee
reasonable notice) and provide the Optionees holding such options the right to
exercise their options as to an equivalent number of shares of stock of the
corporation succeeding the Company by reason of such sale, merger, exchange,
consolidation or liquidation.
The Board of Directors of the Company may from time to time amend,
suspend or discontinue the Plan; provided however, that no action of the Board
of Directors or of the Committee may (i) materially increase the number of
shares subject to the Plan; (ii) change the designation of the class of
employees eligible to receive options; (iii) decrease the price at which the
options may be granted; or (iv) materially increase the benefits accruing to
Optionees under the Plan unless such revision or amendment is approved by the
shareholders of the Company.
Approval of the amendment requires the affirmative vote of a majority
of the shares represented in person or by proxy at the Annual Meeting and voting
on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE 1992 STOCK OPTION PLAN.
APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal #4)
Based on the recommendation of the Audit Committee, the Board of
Directors has voted to retain Arthur Andersen LLP to serve as independent
auditors for the Company for fiscal year 1998 and is submitting its appointment
of such firm to the shareholders for ratification. Arthur Andersen LLP has
served as the Company's independent auditors since 1992. If the appointment is
not ratified, the Board of Directors will reconsider its selection.
Representatives of Arthur Andersen LLP will be present at the meeting, will have
the opportunity to make a statement if they desire and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THIS APPOINTMENT.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock
beneficially owned by (i) each person known by the Company to own 5% or more of
the outstanding shares of Common Stock, (ii) each Named Executive Officer, (iii)
each director of the Company and (iv) all directors and executive officers as a
group. All persons named in the table have sole voting and investment power with
respect to all shares of Common Stock owned, unless otherwise noted. The number
of shares listed is as of January 31, 1998 unless otherwise noted.
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
------------------ ------------------
K. Jeffrey Dahlberg
4200 Dahlberg Drive
Golden Valley, MN 55422 2,282,225(1) 38.3%
Ronald G. Olson
4200 Dahlberg Drive
Golden Valley, MN 55422 1,359,105(2)(3) 22.6%
Sheldon T. Fleck 707,000(4) 11.9%
1400 International Centre
900 Second Avenue South
Minneapolis, MN 55402
Ted R. Manley 28,047(3) 0.5%
Brad D. Tait 12,500(3) 0.2%
Gaylen L. Knack 6,250(3) 0.1%
Dennis J. Doyle 35,000(3) 0.6%
Bruce C. Sanborn 30,100(3)(5) 0.5%
Randel S. Carlock 20,000(3) 0.3%
Robert C. Pohlad 20,000(3) 0.3%
All directors
and executive officers
as a group (13 persons) 3,896,099(3) 62.7%
- -----------------------
(1) Includes 279,250 shares held in trust for minor children.
(2) Includes 17,900 shares held by Mr. Olson's adult children and 111,600
shares held in trust for these children and 1,500 shares held by Mr.
Olson's wife. Mr. Olson disclaims beneficial ownership of these shares.
(3) Includes the following shares which may be acquired within 60 days
through the exercise of stock options: Mr. Olson - 61,250; Mr. Manley -
27,500; Mr. Tait - 12,500, Mr. Knack - 6,250, Mr. Doyle - 20,000, Mr.
Sandborn - 15,000, Mr. Carlock - 20,000; Mr. Pohlad - 20,000, and all
directors and executive officers as a group - 261,000.
(4) Includes 80,000 shares held by Mr. Fleck's wife. Mr. Fleck disclaims
beneficial ownership of these shares.
(5) Includes 100 shares held by Mr. Sanborn's son. Mr. Sanborn disclaims
beneficial ownership of these shares.
CERTAIN TRANSACTIONS
During 1997, three Play It Again Sports franchises, a Once Upon A Child
franchise and a Computer Renaissance franchise, owned by relatives of K. Jeffrey
Dahlberg, paid $62,144 in royalties to the Company and purchased $187,850 of
merchandise through the Company's buying group. In 1996,
<PAGE>
the Company sold a company-owned Computer Renaissance store to a relative of K.
Jeffrey Dahlberg for $254,277. During 1997, the Company received principal
payments of $6,480 and interest of $5,988 on a $254,277 note receivable related
to the sale of the store. In May 1997, the relative opened a second Computer
Renaissance store. The Company received a $20,000 franchise fee related to the
second store opening and royalties of $31,335 from the two stores during the
year. The Company purchased the assets of these two Computer Renaissance stores
for total consideration of $451,700. The purchase price of the assets of the two
Computer Renaissance stores was based upon fair market value as negotiated
between the Company and such third party.
The Company leases from PIAS Holdings, a general partnership owned by
K. Jeffrey Dahlberg and Ronald G. Olson, certain real property which houses a
corporate owned retail store located at 3505 Hennepin Avenue, Minneapolis,
Minnesota. Pursuant to this lease, the Company is obligated to make lease
payments of $5,500 per month through September 2000. During fiscal 1997, the
Company made payments of $66,000 under this lease.
SHAREHOLDER PROPOSALS
The Company will consider any shareholder proposals for inclusion in
the proxy materials for the 1999 Annual Meeting of Shareholders if such
proposals are received by the Company no later than November 16, 1998.
Proposals must also comply with all applicable statutes and regulations.
ANNUAL REPORTS
The Company's 1997 Annual Shareholder Report, including financial
statements, is being mailed with this proxy statement to shareholders entitled
to notice of the Annual Meeting. THE COMPANY WILL FURNISH WITHOUT CHARGE TO
SHAREHOLDERS A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR
1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UPON RECEIPT OF
WRITTEN REQUEST ADDRESSED TO: CORPORATE SECRETARY, GROW BIZ INTERNATIONAL, INC.,
4200 DAHLBERG DRIVE, MINNEAPOLIS, MINNESOTA 55422-4837.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
meeting. In the event any other business is presented at the meeting, the
persons named in the enclosed proxy will have authority to vote on that business
in accordance with their judgment.
By Order of the Board of Directors
Gaylen L. Knack
SECRETARY
<PAGE>
PROXY
GROW BIZ INTERNATIONAL, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS --
MAY 6, 1998
The undersigned shareholder(s) of Grow Biz International, Inc. (the
"Company") hereby appoints K. Jeffrey Dahlberg, Ronald G. Olson and Gaylen L.
Knack and each of them, as attorneys, agents and proxies of the undersigned with
full power of substitution in each of them, to vote, as designated below, in the
name and on behalf of the undersigned at the Annual Meeting of Shareholders of
the Company to be held on May 6, 1998, at 4:00 p.m., Central Daylight Time, at
the Company's corporate offices, 4200 Dahlberg Drive, Minneapolis, Minnesota,
and at all adjournments thereof, all of the common shares of the Company which
the undersigned would be entitled to vote if personally present, with the powers
the undersigned would possess if personally present:
I. Approving setting the number of members of the Board of Directors at
six;
[ ] GRANT [ ] WITHHOLD
II. Authority to vote for the election of K. Jeffrey Dahlberg, Ronald G.
Olson, Randel S. Carlock, Dennis J. Doyle, Robert C. Pohlad and Bruce C.
Sanborn. You may withhold authority to vote for a nominee by lining
through his name;
[ ] GRANT [ ] WITHHOLD
III. Approving an amendment to the Company's 1992 Stock Option Plan to
increase the number of common shares authorized for issuance thereunder
by 300,000 shares;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. Ratifying the appointment of Arthur Andersen LLP as independent auditors
for the current fiscal year;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED, AND TO BE SIGNED, ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
V. In their discretion, upon such other business as may properly come before
the meeting, all as set out in the Notice of Annual Meeting of Shareholders and
Proxy Statement dated March 18, 1998, receipt of which is hereby acknowledged.
ALL SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICES ARE SPECIFIED, THE
SHARES WILL BE VOTED FOR THE DIRECTORS AS SET FORTH IN THE PROXY STATEMENT, FOR
AMENDMENT TO THE COMPANY'S 1992 STOCK OPTION PLAN AND FOR ALL OTHER IDENTIFIED
MATTERS.
A majority of said attorneys or their substitutes who shall be present and
act, or if only one shall attend, then that one, shall have and may exercise all
the powers of said attorneys hereunder.
Dated:___________________________, 1998
(Please insert date)
_______________________________________
(Signature)
_______________________________________
(Joint Owner's Signature)
[Signature(s) should agree with
stenciled name(s).] When signing as
attorney, guardian, executor,
administrator or trustee, please give
title. If the signer is a corporation,
please give the full corporate name and
sign by a duly authorized officer,
showing the officer's title. EACH joint
owner is requested to sign.
PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY.
YOUR COOPERATION WILL BE APPRECIATED.
<PAGE>
APPENDIX
PLAY IT AGAIN SPORTS FRANCHISE CORPORATION
1992 STOCK OPTION PLAN
SECTION 1.
DEFINITIONS
As used herein, the following terms shall have the meanings indicated
below:
(a) The "Company" shall mean Play it Again Sports Franchise
Corporation, a Minnesota corporation.
(b) A "Subsidiary" shall mean any corporation of which fifty
percent (50%) or more of the total voting power of outstanding stock is
owned, directly or indirectly in an unbroken chain, by the Company.
(c) "Common Stock" shall mean the Common Stock of the Company,
subject to adjustment as described in Section 12.
(d) The "Plan" shall mean the Play It Again Sports Franchise
Corporation 1992 Stock Option Plan, as amended hereafter from time to
time, including the forms of Option Agreements as they may be modified
by the Board from time to time.
(e) The "Optionee" for purposes of Section 9 is an employee of
the Company or any Subsidiary to whom an incentive stock option has
been granted under the Plan. For purposes of Section 10, the "Optionee"
is the officer, employee, advisor or consultant of the Company or any
Subsidiary to whom a nonqualified stock option has been granted.
(f) "Committee" shall mean a Committee composed of not fewer
than the minimum number of persons required by Rule 16b-3 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended from time to time, who may be appointed by, and serve
at the pleasure of the Board and shall have such powers and authority
as are granted to it by the Board, including, without limitation, the
authority to grant stock options hereunder. Each of the members of the
Committee shall be a "disinterested" person within the meaning of Rule
16b-3, as then in effect. Effective as of September 1, 1992, except to
the extent an earlier effective date applies under the phase-in rules
of new Rule 16b-3, a "disinterested" person under Rule 16b-3 means a
person who, among other things, has not at any time within one year
prior to appointment to the Committee been granted or awarded equity
securities pursuant to the Plan or any other plan of
<PAGE>
the Company or its affiliates, except to the extent such participation
does not disqualify such director from being a disinterested person
under Rule 16b-3.
(g) The "Internal Revenue Code" is the Internal Revenue Code
of 1986, as amended from time to time.
SECTION 2.
PURPOSE
The purpose of the Plan is to promote the success of the Company and
its Subsidiaries by facilitating the employment and retention of competent
personnel and by furnishing incentive to officers (including directors who are
also officers), employees and consultants upon whose efforts the success of the
Company and its Subsidiaries will depend to a large degree.
It is the intention of the Company to carry out the Plan through the
granting of stock options which will qualify as "incentive stock options" under
the provisions of Section 422A of the Internal Revenue Code, and through the
granting of nonqualified stock options pursuant to Section 10 of this Plan.
Adoption of this Plan shall be and is expressly subject to the condition of
approval by the shareholders of the Company within twelve (12) months before or
after the adoption of the Plan by the Board of Directors.
SECTION 3.
EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date it is adopted by the Board
of Directors of the Company.
SECTION 4.
ADMINISTRATION
The Plan shall be administered by the Board of Directors of the Company
(the "Board") or, to the extent empowered by the Board, by a Stock Option
Committee (hereinafter referred to as the "Committee" and as defined in Section
1(f) of this Plan) which may be appointed by the Board from time to time. The
Board shall have all of the powers vested in it under the provisions of the
Plan, including but not limited to exclusive authority (where applicable and
within the limitations described herein) to determine, in its sole discretion,
whether an incentive stock option or nonqualified stock option shall be granted,
the individuals to whom, and the time or times at which, options shall be
granted, the number of shares subject to each option and the option price, terms
and conditions of each option. The Committee shall have such powers as are
granted to it by the Board. The Board, or the Committee if so empowered by the
Board, shall have full power and authority to administer and interpret the Plan,
to make and amend rules, regulations and guidelines for administering the Plan,
to prescribe the form and conditions of the respective stock option agreements
(which may vary from Optionee to Optionee) evidencing each option and to make
all other determinations necessary or advisable for the administration of the
<PAGE>
Plan. The Board's interpretation of the Plan, or the Committee's interpretation
if so empowered by the Board, and all actions taken and determinations made by
the Board pursuant to the power vested in it hereunder, or by the Committee to
the extent empowered by the Board, shall be conclusive and binding on all
parties concerned. No member of the Board or the Committee shall be liable for
any action taken or determination made in good faith in connection with the
administration of the Plan.
In the event the Board appoints a Committee as provided hereunder, any
action of the Committee with respect to the administration of the Plan shall be
taken pursuant to a majority vote of the Committee members or pursuant to the
written resolution of all Committee members.
SECTION 5.
PARTICIPANTS
The Board, or the Committee if so empowered by the Board, shall from
time to time, at its discretion and without approval of the shareholders,
designate those officers (including directors who are also officers), employees,
consultants or advisors of the Company or of any Subsidiary to whom nonqualified
stock options shall be granted; provided, however, that consultants or advisors
shall not be eligible to receive stock options hereunder unless such consultant
or advisor renders bona fide services to the Company or Subsidiary and such
services are not in connection with the offer or sale of securities in a
capital-raising transaction. The Board, or the Committee if so empowered by the
Board, shall also designate those employees of the Company or of any Subsidiary
to whom incentive stock options shall be granted.
The Board, or the Committee if so empowered by the Board, may grant
additional incentive stock options or nonqualified stock options to some or all
participants then holding options or may grant such options solely or partially
to new participants. In designating participants, the Board, or the Committee if
so empowered by the Board, shall also determine the number of shares to be
optioned to each such participant.
SECTION 6.
STOCK
The Stock to be optioned under this Plan shall consist of authorized
but unissued shares of Common Stock. Five Hundred Thousand (500,000) shares of
Common Stock shall be reserved and available for options under the Plan;
provided, however, the total number of shares of Common Stock reserved for
options under this Plan shall be subject to adjustment as provided in Section 12
of the Plan. In the event that any outstanding option granted under the Plan for
any reason expires or is terminated prior to the exercise thereof, the shares of
Common Stock allocable to the unexercised portion of such option shall continue
to be reserved for options under the Plan and may be optioned hereunder.
<PAGE>
SECTION 7.
DURATION OF PLAN
Incentive stock options may be granted pursuant to this Plan from time
to time during a period of ten (10) years from the earlier of the date the Plan
is approved by the Board of Directors or the date it is approved by the
shareholders of the Company. Nonqualified stock options may be granted pursuant
to the Plan from time to time after the date the Plan is adopted by the Board of
Directors and until the Plan is discontinued or terminated by the Board.
SECTION 8.
PAYMENT
Optionees may pay for shares upon exercise of options granted pursuant
to this Plan with cash, certified check or Common Stock of the Company valued at
such stock's then "fair market value" as defined in Section 9 below.
SECTION 9.
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS
Each incentive stock option granted pursuant to the Plan shall be
evidenced by a written stock option agreement (the "Option Agreement") . The
Option Agreement shall be in such form as may be approved from time to time by
the Board or the Committee (if so empowered by the Board) and may vary from
Optionee to Optionee; provided, however, that each Optionee and each Option
Agreement shall comply with and be subject to the following terms and
conditions:
(a) Number of Shares and Option Price. The Option Agreement
shall state the total number of shares covered by the incentive stock
option. The option price per share shall not be less than one hundred
percent (100%) of the fair market value of the Common Stock per share
on the date the Board, or the Committee if so empowered by the Board,
grants the option; provided, however, that, if an Optionee owns stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of its parent. or any
Subsidiary, the option price per share of an incentive stock option
granted to such Optionee shall not be less than one hundred ten percent
(110%) of the fair market value of the Common Stock per share on the
date of the grant of the option. For purposes hereof, if such stock is
then reported in the national market system or listed upon an
established exchange or exchanges, "fair market value" of the Common
Stock per share shall be the highest closing price of such stock in
such national market system or on such stock exchange or exchanges on
the date the option is granted or, if no sale of such stock shall have
occurred on that date, on the next preceding day on which there was a
sale of stock. If such stock is not so reported in the national market
system or listed upon an exchange, "fair market value" shall be the
mean between the "bid" and "asked" prices on the date the option is
granted or, if there are no quoted "bid" and "asked" prices on
<PAGE>
such date, on the next preceding date for which there are such quotes.
If such stock is not publicly traded as of the date the option is
granted, the "fair market value" of the Common Stock shall be
determined by the Board or the Committee in its sole discretion by
applying principles of valuation with respect to all such options. The
Board, or the Committee, as the case may be, shall have full authority
and discretion in establishing the option price and shall be fully
protected in so doing.
(b) Term and Exercisability of Incentive Stock Option. The
term during which any incentive stock option granted under the Plan may
be exercised shall be established in each case by the Board, or the
Committee if so empowered by the Board, but in no event shall any
incentive stock option be exercisable during a term of more than ten
(10) years after the date on which it is granted. The Option Agreement
shall state when the incentive stock option becomes exercisable and
shall also state the maximum term during which the option may be
exercised. In the event an incentive stock option is exercisable
immediately, the manner of exercise of the option in the event it is
not exercised in full immediately shall be specified in the Option
Agreement. The Board, or the Committee if so empowered by the Board,
may accelerate the exercise date of any incentive stock option granted
hereunder which is not immediately exercisable as of the date of grant.
(c) Other Provisions. The Option Agreement authorized under
this Section 9 shall contain such other provisions as the Board, or the
Committee if so empowered by the Board, shall deem advisable. Any such
Option Agreement shall contain such limitations and restrictions upon
the exercise of the option as shall be necessary to ensure that such
option will be considered an "Incentive Stock Option" as defined in
Section 422A of the Internal Revenue Code or to conform to any change
therein.
(d) Holding Period. The sale or other disposition of any
shares of Common Stock acquired by an Optionee pursuant to the exercise
of an option described above shall be eligible for the favorable
taxation treatment of Section 421(a) of the Internal Revenue Code if no
disposition of such shares is made by the Optionee within two (2) years
from the date of the granting of the option under which the shares were
acquired nor within one year after the acquisition of such shares
pursuant to the exercise of such option, or such other periods as may
be prescribed by the Internal Revenue Code. In the event of an
Optionee's death, such holding period shall not be applicable pursuant
to Section 421(c)(1) of the Internal Revenue Code.
<PAGE>
SECTION 10.
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
Each nonqualified stock option granted pursuant to the Plan shall be
evidenced by a written Option Agreement. The Option Agreement shall be in such
form as may be approved from time to time by the Board or the Committee (if so
empowered by the Board), and may vary from Optionee to Optionee; provided,
however, that each Optionee and each Option Agreement shall comply with and be
subject to the following terms and conditions:
(a) Number of Shares and Option Price. The Option Agreement
shall state the total number of shares covered by the nonqualified
stock option. Unless otherwise determined by the Board of Directors, or
the Committee if so empowered by the Board, the option price per share
shall be equal to one hundred percent (100%) of the fair market value
of the Common Stock per share on the date the Board or the Committee
grants the option. For purposes hereof, the "fair market value" of a
share of Common Stock shall have the same meaning as set forth under
Section 9(a) herein.
(b) Term and Exercisability of Nonqualified Stock Option. The
term during which any nonqualified stock option granted under the Plan
may be exercised shall be established in each case by the Board, or the
Committee if so empowered by the Board. The Option Agreement shall
state when the nonqualified stock option becomes exercisable and shall
also state the maximum term during which the option may be exercised.
In the event a nonqualified stock option is exercisable immediately,
the manner of exercise of the option in the event it is not exercised
in full immediately shall be specified in the stock option agreement.
The Board, or the Committee if so empowered by the Board, may
accelerate the exercise date of any nonqualified stock option granted
hereunder which is not immediately exercisable as of the date of grant.
(c) Withholding. In the event the Optionee is required under
the Option Agreement to pay to the Company, or make arrangements
satisfactory to the Company respecting payment of, any federal, state,
local or other taxes required by law to be withheld with respect to the
option's exercise, the Board or the Committee may, in its discretion
and pursuant to such rules as it may adopt, permit the Optionee to
satisfy such obligation, in whole or in part, by electing to have the
Company withhold shares of Common Stock otherwise issuable to the
Optionee as a result of the option's exercise equal to the amount
required to be withheld for tax purposes. Any stock elected to be
withheld shall be valued at its "fair market value," as provided under
Section 9(a) hereof, as of the date the amount of tax to be withheld is
determined under applicable tax law. The Optionee's election to have
shares withheld for this purpose shall be made on or before the date
the option is exercised or, if later, the date that the amount of tax
to be withheld is determined under applicable tax law. Such election
shall also comply with such rules as may be adopted by the Board or the
Committee to
<PAGE>
assure compliance with Rule 16b-3, as then in effect, of the General
Rules and Regulations under the Securities Exchange Act of 1934, if
applicable.
(d) Other Provisions. The Option Agreement authorized under
this Section 10 shall contain such other provisions as the Board, or
the Committee, as the case may be, shall deem advisable.
SECTION 11.
TRANSFER OF OPTION
No option shall be transferable, in whole or in part, by the Optionee
other than by will or by the laws of descent and distribution and, during the
Optionee's lifetime, the option may be exercised only by the Optionee. If the
Optionee shall attempt any transfer of any option granted under the Plan during
the Optionee's lifetime, such transfer shall be void and the option, to the
extent not fully exercised, shall terminate.
SECTION 12.
RECAPITALIZATION, SALE, MERGER, EXCHANGE
CONSOLIDATION OR LIQUIDATION
In the event of an increase or decrease in the number of shares of
Common Stock resulting from a subdivision or consolidation of shares or the
payment of a stock dividend or any other increase or decrease in the number of
shares of Common Stock effected without receipt of consideration by the Company,
the number of shares of Common Stock covered by each outstanding option and the
price per share thereof shall be equitably adjusted by the Board of Directors to
reflect such change. Additional shares which may be credited pursuant to such
adjustment shall be subject to the same restrictions as are applicable to the
shares with respect to which the adjustment relates.
In the event of the sale by the Company of substantially all of its
assets and the consequent discontinuance of its business, or in the event of a
merger, exchange, consolidation or liquidation of the Company, the Board of
Directors shall, in its sole discretion, in connection with the Board's adoption
of the plan for sale, merger, exchange, consolidation or liquidation, provide
for one or more of the following: (i) the acceleration of the exercisability of
any or all outstanding options; (ii) the complete termination of this Plan and
cancellation of outstanding options not exercised prior to a date specified by
the Board (which date shall give Optionees a reasonable period of time in which
to exercise the options prior to the effectiveness of such sale, merger,
exchange, consolidation or liquidation); and (iii) the continuance of the Plan
with respect to the exercise of options which were outstanding as of the date of
adoption by the Board of such plan for sale, merger, exchange, consolidation or
liquidation and provide to Optionees holding such options the right to exercise
their respective options as to an equivalent number of shares of stock of the
corporation succeeding the Company by reason of such sale, merger, exchange,
consolidation or liquidation. The grant of an option pursuant to the Plan shall
not limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or
<PAGE>
changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 13.
INVESTMENT PURPOSE
No shares of Common Stock shall be issued pursuant to the Plan unless
and until there has been compliance, in the opinion of the Company's counsel,
with all applicable legal requirements, including without limitation, those
relating to securities laws and stock exchange listing requirements. As a
condition to the issuance of Common Stock to an Optionee, the Board, or the
Committee if so empowered by the Board, may require the Optionee to (a)
represent that the shares of Common Stock are being acquired for investment and
not resale and to make such other representations as the Board, or the Committee
if so empowered by the Board, shall deem necessary or appropriate to qualify the
issuance of the shares as exempt from the Securities Act of 1933 and any other
applicable securities laws, and (b) represent that the Optionee shall not
dispose of the shares of Common Stock in violation of the Securities Act of 1933
or any other applicable securities laws. The Company reserves the right to place
a legend on any stock certificate issued upon exercise of an option granted
pursuant to the Plan to assure compliance with this Section 13.
SECTION 14.
RIGHTS AS A SHAREHOLDER
An Optionee (or the Optionee's successor or successors) shall have no
rights as a shareholder with respect to any shares covered by an option until
the date of the issuance of a stock certificate evidencing such shares (except
as otherwise provided in Section 12 above). No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is actually issued (except as otherwise provided
in Section 12).
SECTION 15.
AMENDMENT OF THE PLAN
The Board of Directors of the Company may from time to time, insofar as
permitted by law, suspend or discontinue the Plan or revise or amend it in any
respect; provided, however, that no such revision or amendment shall impair the
terms and conditions of any option which is outstanding on the date of such
revision or amendment to the material detriment of the Optionee without the
consent of the Optionee. Notwithstanding the foregoing, no such revision or
amendment shall, (i) materially increase the number of shares subject to the
Plan except as provided in Section 12 hereof, (ii) change the designation of the
class of employees eligible to receive options, (iii) decrease the price at
which options may be granted, or (iv) materially increase the benefits accruing
to Optionees under the Plan, unless such revision or amendment is approved by
the shareholders of the Company. Furthermore, the Plan may not, without the
approval of the shareholders, be amended in any manner that will cause incentive
stock options
<PAGE>
to fail to meet the requirements of "Incentive Stock Options" as defined in
Section 422A of the Internal Revenue Code.
SECTION 16.
NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the Optionee
to exercise such option. Further, the granting of an option hereunder shall not
impose upon the Company or any Subsidiary any obligation to retain the Optionee
in its employ or as a director for any period.
<PAGE>
AMENDMENT NO. 1
TO THE
GROW BIZ INTERNATIONAL, INC.
1992 STOCK OPTION PLAN
The following resolution was adopted by the Board of Directors of Grow Biz
International, Inc. effective February 25, 1994:
Increase in Number of Shares Reserved Under 1992 Stock Option Plan
WHEREAS, the directors believe that it is in the best interests of the
Corporation to increase the number of shares reserved for issuance under the
1992 Stock Option Plan ("1992 Plan:)
RESOLVED, that the number of shares reserved for issuance under the
1992 Plan shall be increased from 500,000 to 800,000 shares of the
Corporation's Common Stock, such increase in the number of shares
reserved for issuance shall be submitted for approval by the
shareholders at the next meeting of the shareholders of the
Corporation.
RESOLVED FURTHER, that the officers of the Corporation be, and they
each hereby are, authorized and directed to take or cause the
Corporation's transfer agent to take such action as they may deem
necessary or advisable to accomplish the foregoing, and, subject to the
approval of the shareholders, all such actions as heretofore may have
been taken by the officers and directors for such purposes are hereby
ratified and confirmed.
<PAGE>
AMENDMENT NO. 2
TO THE
GROW BIZ INTERNATIONAL, INC.
1992 STOCK OPTION PLAN
The following resolution was adopted by the Board of Directors of Grow Biz
International, Inc. effective March 14, 1996.
Increase in Number of Shares Reserved Under 1992 Stock Option Plan
WHEREAS, the directors believe that it is in the best interests of the
Corporation to increase the number of shares reserved for issuance under the
1992 Stock Option Plan ("1992 Plan");
RESOLVED, that the number of shares reserved for issuance under the
1992 Plan shall be increased from 800,000 to 1,100,000 shares of the
Corporation's Common Stock, such increase in the number of shares
reserved for issuance shall be submitted for approval by the
shareholders at the next meeting of the shareholders of the
Corporation.
RESOLVED FURTHER, that the officers of the Corporation be, and they
each hereby are, authorized and directed to take or cause the
Corporation's transfer agent to take such action as they may deem
necessary or advisable to accomplish the foregoing, and, subject to the
approval of the shareholders, all such actions as heretofore may have
been taken by the officers and directors for such purposes are hereby
ratified and confirmed.
<PAGE>
AMENDMENT NO. 3
TO THE
GROW BIZ INTERNATIONAL, INC.
1992 STOCK OPTION PLAN
The following resolution was adopted by the Board of Directors of Grow Biz
International, Inc. effective February 18, 1998.
Increase in Number of Shares Reserved Under 1992 Stock Option Plan
RESOLVED, that the number of shares reserved for issuance under the
1992 Stock Option Plan ("1992 Plan") shall be increased from 1,100,000
to 1,400,000 shares of the Corporation's Common Stock, such increase in
the number of shares reserved for issuance shall be submitted for
approval by the shareholders at the next meeting of the shareholders of
the Corporation.
RESOLVED FURTHER, that the officers of the Corporation be, and they
each hereby are, authorized and directed to take or cause the
Corporation's transfer agent to take such action as they may deem
necessary or advisable to accomplish the foregoing, and, subject to the
approval of the shareholders, all such actions as heretofore may have
been taken by the officers and directors for such purposes are hereby
ratified and confirmed.
