<PAGE>
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
[_] Confidential, for use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
IJNT.NET, 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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------------
<PAGE>
IJNT.NET, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF IJNT.NET, INC.:
The Annual Meeting of Stockholders of IJNT.net, Inc. (the "Company") will
be held at the Country Inn and Suites located at 325 Bristol Street, Costa Mesa,
California, 92626, on July 25, 2000 at 10:00 a.m. for the purpose of considering
and acting upon the following proposals:
(1) To elect eight (8) members of the Board of Directors and, subject
to adoption of Proposal No. 2, to divide the Board of Directors into three
classes;
(2) To approve the Amended and Restated Certificate of Incorporation
of the Company and the Amended and Restated By-laws of the Company;
(3) To approve the Company's 2000 Equity Incentive Plan and the
Company's 2000 Management Equity Incentive Plan;
(4) To ratify the designation of BDO Seidman, LLP as the Company's
independent accountants for the period ending March 31, 2000; and
(5) To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed the close of business on June 13, 2000 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting and at any postponements or adjournments thereof. A
list of stockholders entitled to vote will be available at 2030 So. Main, Suite
550, Irvine, California 92612 for ten days prior to the Annual Meeting.
The Company's March 31, 2000 Annual Report on Form 10-K will be sent to all
stockholders separately herefrom at least ten (10) days prior to July 25, 2000.
By Order of the Board of Directors
Jeffrey R. Matsen
Secretary
Irvine, California
July 3, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED ENVELOPE.
<PAGE>
IJNT.NET, INC.
2030 Main, Suite 550
Irvine, CA 92614
(949) 260-8100
____________________
PROXY STATEMENT
____________________
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of IJNT.net, Inc. (the "Company") of
proxies for use at the Annual Meeting of Stockholders of the Company to be held
on July 25, 2000 at the Country Inn and Suites located at 325 Bristol Street,
Costa Mesa, California, 92626. This proxy statement and the accompanying form
of proxy are being mailed to stockholders on or about July 5, 2000.
VOTING RIGHTS
Record Date; Outstanding Shares. Stockholders of record of the Company as
of the close of business on June 13, 2000 have the right to receive notice of
and to vote at the Annual Meeting. On June 13, 2000, the Company had issued and
outstanding 20,845,123 shares of Common Stock. Each share of Common Stock is
entitled to one vote for as many separate nominees as there are directors to be
elected and for or against all other matters presented.
Quorum; Vote Required. For action to be taken at the Annual Meeting, the
majority of the shares entitled to vote must be represented at the meeting in
person or by proxy. Director nominees receiving the highest number of
affirmative votes up to the number of directors to be elected will be elected as
directors of the Company for the succeeding year. Votes withheld with respect
to director nominees have no legal effect.
The affirmative vote of a majority of the shares voting and a majority of
the required quorum is the minimum approval necessary and is required to ratify
the Amendment to the Certificate of Incorporation and to approve the Amended and
Restated Certificate of Incorporation and the Amended and Restated By-laws of
the Company, the Company's 1999 Equity Incentive Plan and the Company's 2000
Stock Bonus Plan, and to ratify the appointment of BDO Seidman, LLP as the
Company's independent accountants. Because abstentions with respect to any
matter are treated as shares present or represented and entitled to vote for the
purposes of determining whether that matter has been approved by the
stockholders, abstentions have the same effect as negative votes. If the number
of abstentions is such that the affirmative votes do not constitute the
requisite vote, the proposal will be defeated. Broker non-votes and shares as
to which proxy authority has been withheld with respect to any matter are not
deemed to be present or represented for purposes of determining whether
stockholder approval of that matter has been obtained.
PROXIES
Solicitation of Proxies; Expenses. Proxies for use at the Annual Meeting
are being solicited by the Board of Directors of the Company from its
stockholders. The Company will bear the cost of the solicitation of proxies
from its stockholders in the enclosed form. The directors, officers and
employees of the Company may solicit proxies by mail, telephone, letter,
facsimile, electronically or in person. Following the original mailing of the
proxies and other soliciting materials, the Company will request that brokers,
custodians, nominees and other record holders forward copies of the proxy and
other soliciting materials to persons for whom they hold shares of Common Stock
and request authority for the exercise of proxies. In such cases, the Company
will reimburse such record holders for their reasonable expenses.
-1-
<PAGE>
Voting of Proxies; Revocation of Proxies. Shares represented by properly
executed proxies received by the Company will be voted at the Annual Meeting in
accordance with the instructions thereon. It is intended that shares represented
by proxies received by the Company with no instructions will be voted in favor
of all proposals set forth in the Notice of Meeting and for the nominees for
director as described below.
Any person giving a proxy in the form accompanying this Proxy Statement has
the power to revoke it at any time before its exercise by (i) filing with the
Secretary of the Company a signed written statement revoking his or her proxy or
(ii) submitting an executed proxy bearing a date later than that of the proxy
being revoked. A proxy may also be revoked by attending the Annual Meeting and
voting in person at the Annual Meeting. Attendance at the Annual Meeting will
not by itself constitute the revocation of a proxy.
-2-
<PAGE>
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
(Item No. 1 on the Proxy Card)
At the Annual Meeting, eight (8) directors will be elected, leaving one
vacancy. All eight (8) of the nominees are presently directors of the Company.
The Company's Board of Directors is currently comprised of eight members
and one vacancy. On May 5, 2000, Robert Santore, an executive officer of Man
Rabbit House Multimedia, Inc., a subsidiary of the Company, resigned from the
Board of Directors and on May 19, 2000, Jeffrey R. Matsen, Vice President and
General Counsel of the Company, resigned, and the Board appointed Richard R.
Nelson, Chief Financial Officer to the Board. Thereafter on June 6, 2000, the
Board agreed to increase the number of directors from seven (7) to nine (9) and
Terry D. Kramer and Michael A. Sternberg were elected as directors of the
Company. Subsequently, on June 9, 2000, Stephen E. Pazian was elected as a
director. On June 28, 2000, Richard R. Nelson resigned as a director leaving one
vacancy on the Board. The Board of Directors intends to appoint an independent
director to fill the remaining vacancy as soon as practicable. Such director
will also be placed in Class I, whose initial term will expire in 2001.
The Company's Board of Directors is not currently classified; all directors
are elected annually for a term of one year. However, the Company's Amended and
Restated Certificate of Incorporation and Amended and Restated By-Laws submitted
for stockholder approval in Proposal No. 2 of this Proxy Statement will, if
adopted, divide the Board of Directors into three classes. Except for the
initial term, which will vary by class, directors of will be re-elected for a
term of three years. One class of directors will be submitted for election by
the stockholders at each annual meeting.
The election of directors will be determined by the eight nominees
receiving the greatest number of votes from shares eligible to vote. Unless a
stockholder signing a proxy withholds authority to vote for one or more of the
Board's nominees in the manner described in the proxy, each proxy received will
be voted in favor of the Board's nominees. Although it is not contemplated that
any nominee will decline or be unable to serve as a director, in the event any
director declines or is unable to serve as a director, the proxies will be votes
by the proxy holders as directed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION
OF THE EIGHT NOMINEES AS DIRECTORS OF THE COMPANY.
-3-
<PAGE>
Information Regarding the Nominees for Director
The following table lists the nominees for the Board of Directors, their
ages, their proposed class, if Proposal No. 2 is adopted, and their initial term
of office. Biographical information regarding each nominee is provided below.
<TABLE>
<CAPTION>
Class of Committee
Name Age Position Director Membership
---- --- -------- -------- ----------
<S> <C> <C> <C> <C>
Jon H. Marple 60 Chairman of the Board III Nominations
Mary E. Blake 46 Vice Chairman II Nominations
Michael A. Sternberg 55 Chief Executive Officer and II Compensation
Director
Richard W. Torney 60 Director III Audit,
Compensation
and Nominations
Richard F. Charles 59 Director I Audit and
Compensation
H. Dean Cubley 58 Director III Audit
Terry D. Kramer 40 Director II
Stephen E. Pazian 50 Director I
</TABLE>
Jon H. Marple has served as Chairman of the Board since January 1997. From
January 1997 to May 5, 2000, Mr. Marple served as the Chief Executive Officer,
and from January 1999 to October 1999, Mr. Marple also served as the Company's
President. From 1991 to 1997, Mr. Marple was the Chief Executive Officer of
Micro-Lite Television, Inc. (formerly Marrco Communications, Inc.), which
acquired and resold spectrum licenses allocated by the Federal Communications
Commission. Mr. Marple holds a B.A. degree from Brigham Young University and a
J.D. degree from the University of Washington College of Law.
Mary E. Blake served as the Company's President from October 1999 to May 5,
2000 and as Vice President from January 1997 to October 1999. Ms. Blake has
served as a director of the Company or its predecessor since January 1997. From
1994 to 1997, Ms. Blake served as the Vice President and Secretary of Micro-Lite
Television, Inc. (formerly Marrco Communications, Inc.). Ms. Blake attended
Texas A&M University in College Station, Texas and majored in Economics with
minors in Marketing and Management.
Michael A. Sternberg was elected a director of the Corporation on June 9,
2000 and began his duties as Chief Executive Officer of the Corporation on June
19, 2000. From July 1996 to March 2000, Mr. Sternberg served as President and
Chief Executive Officer of KMC Telecomm Holdings, Inc. of Princeton, New Jersey.
KMC Telecomm is a competitive local exchange carrier (CLEC) providing
alternative customized telecommunication services in the United States. From
1993 to 1996 Mr. Sternberg was the Chief Executive Officer of Rimsat and
negotiated a purchase of four Russian satellites with the Russian Space Agency,
launched two satellites using Tongan slots over the Pacific Ocean and sold all
transponders before the satellite was launched. From 1990 to 1993, Mr.
Sternberg worked as a consultant to small and growing telephone companies and
manufacturers. From 1987 to 1990, Mr. Sternberg was the Executive Vice
President of Sales and Marketing for Metropolitan Fiber Systems. This Company
was eventually sold to WorldCom. Mr. Sternberg served as a Captain in the U.S.
Army Special Forces from 1965 to 1969.
-4-
<PAGE>
Richard W. Torney has served as a director of the Company since September
1997. From 1991 to the present, Mr. Torney has been the President and CEO of
Imaging System, Inc., an international sales and marketing organization. During
the concurrent period from 1994 to 1996, Mr. Torney served as the Vice President
of Sales and Marketing and Chief Financial Officer at International Separation
Technology, Inc., a manufacturer of oil and water separation equipment, where he
presently serves as a director. From 1988 to 1991, Mr. Torney served as the CEO
of VistaGraphics, a producer of highly stylized, large format graphic images
with a computerized air brush process. Mr. Torney holds a B.A. degree in
Accounting from Brigham Young University.
Richard F. Charles has been a director of the Company since December 1999.
From 1985 to 1992, while serving as Dean and Vice President of Foothill
Community College in San Jose, California, Dr. Charles managed a budget in
excess of $15.0 million and oversaw 700 full time and part time staff members.
Dr. Charles also has served as a consultant for private and public corporations
in the area of management and leadership. From 1996 to 1999, Dr. Charles taught
at Hood River Valley High School. From 1994 to 1996, Dr. Charles taught at
Republic High School. Dr. Charles obtained his B.A. degree in Spanish and
History from Brigham Young University, his M.A. degree in Spanish from the
University of Washington and his E.D.D. degree in Organization and Leadership at
the University of San Francisco. Dr. Charles also has completed post doctoral
research at the University of Madrid and the University of Salamanca.
H. Dean Cubley has been a director of the Company since March 2000. In
addition, Dr. Cubley currently is, and has been since March 1996, the Chairman
of the Board and Chief Executive Officer of Eagle Wireless International (AMEX:
EAG). Dr. Cubley has served in various electrical engineering capacities with
NASA from 1965 until 1984. Since that time, Dr. Cubley has been actively
involved in the establishment and development of several private companies. Dr.
Cubley is one of the world's leading authorities in mobile radio, radio paging
and personal communications systems. Dr. Cubley holds a B.S. degree in
Electrical Engineering from the University of Texas, a M.S. degree from the
University of Texas and a Ph.D. in Electrical Engineering from the University of
Houston. He has authored a myriad of technical articles and reports. He also
holds several patents and is the inventor of other patents for which patent
applications are pending.
Terry D. Kramer was elected as a director on June 6, 2000. Mr. Kramer
currently serves as the Vodathone AirTouch Vice President of Corporate
Development for the Americas and Asia with responsibility for all merger and
acquisition activity in those regions. He is the immediate past President of
AirTouch Paging where he was responsible for all network operations, sales,
marketing call center and administrative activities. From December 1998 to June
1999, Mr. Kramer served as Vice President of Human Resources and Corporate
Services for AirTouch Communications. From March 1998 to December 1998, he was
the Vice President Business Development for AirTouch International. He also
served as Vice President and General Manager for Southwest Markets of AirTouch
Cellular from June 1996 to March 1998 and has held various other key positions
at the Vice President and Executive Director levels in the international
cellular units of AirTouch Communications for over a decade. Before PacTel
Corporation became AirTouch Communications, Mr. Kramer served as PacTel's Manger
of Corporate Development. Previous to joining PacTel, Mr. Kramer was an
Associate in Booz, Allen & Hamilton's consulting practices and a Product Manager
and Marketing Research Analyst in Harris Corporation's microwave equipment unit.
Mr. Kramer is an honors graduate of UCLA in economics and holds an MBA from
Harvard Business School.
Stephen E. Pazian became a director of the Company on June 9, 2000. Mr.
Pazian currently is the Chairman and CEO of SoCal Ventures which assists start-
up companies in executing their business plans focusing on e-commerce
technology. From 1997 to 1999, Mr. Pazian was the President and CEO of Edison
Enterprises, which involved three start-up businesses he helped to grow to $200
million annual revenue and more than 4,000 employees. Previous to joining
Edison Enterprises, Mr. Pazian was President of Ameritech's Security Monitoring
from 1996 to 1997. Prior to that he was President and CEO of MobileComm, a
division of Bellsouth Corporation from 1988 to 1996. He also served as
Executive Vice President of Bell Atlantic Mobile from 1985 to 1988 and was
employed for over 11 years with Xerox Corporation finishing as a District Sales
Manager. Mr. Pazian received his BS in Business Administration from Rochester
Institute of Technology and his MBA from the University of Georgia.
-5-
<PAGE>
Directors' Terms
Members of the Board of Directors currently hold office and serve until the
next annual meeting of stockholders, or until their respective successors have
been elected. The Board of Directors currently is comprised of eight directors
and one vacancy. Subject to the approval of Proposal No. 2, the Board of
Directors will be divided into three classes designated as Class I, Class II and
Class III, with each class to be as nearly equal in number of directors as
possible. Messrs. Charles and Pazian will be Class I directors and Ms. Blake,
Mr. Sternberg and Mr. Kramer will be Class II directors. Mr. Marple, Mr. Torney
and Dr. Cubley will be Class III directors. Class I, Class II and Class III
directors will stand for reelection at the annual meetings of stockholders held
in 2001, 2002 and 2003, respectively. Directors may be removed, with or without
cause, by the affirmative vote of the holders of a majority of the shares
entitled to vote at an election of directors.
Committees of the Board of Directors
The Board of Directors has created three committees: the Audit Committee,
the Compensation Committee and the Nominations Committee.
Audit Committee. The Audit Committee of the Board of Directors was
established in March 2000 and reviews, acts on and reports to the Board of
Directors with respect to various auditing and accounting matters, including the
recommendation of independent auditors, the scope of the annual audits, fees to
be paid to and the performance of the independent auditors and the Company's
accounting practices. The members of the Audit Committee are Messrs. Cubley,
Charles and Torney. The Audit Committee Charter is attached as Appendix A.
Compensation Committee. The Compensation Committee of the Board of
Directors was established in December 1999 and determines the salaries, benefits
and stock option grants for the Company's employees, consultants and directors.
In addition, the members of the Compensation Committee oversee the
administration of the Company's employee stock option plans. The members of the
Compensation Committee are Messrs. Torney, Charles and Sternberg.
Nominations Committee. The Nominations Committee of the Board of
Directors, which presently consists of Messrs. Marple and Torney and Ms. Blake,
met one time during the last fiscal year. The Nominations Committee recommends
to the Board of Directors persons for nomination to the Board. The Nominations
Committee will consider recommendations from stockholders which should be
addressed to the attention of the Secretary, IJNT.net, Inc., 2030 So. Main,
Suite 550, Irvine, California 92614.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
The compensation of the Company's executive officers is determined by the
Compensation Committee of the Board of Directors (the "Compensation Committee")
on an annual basis. The Chief Executive Officer's recommendations of
compensation to be paid to other executive officers of the Company are
considered by the Compensation Committee in its decision-making process. The
Compensation Committee is currently composed of two non-employee directors.
The Compensation Committee's policy on executive compensation is to attract
and retain highly qualified personnel while tying compensation to performance.
Consequently, the Compensation Committee seeks to establish compensation that
will reward individuals for Company performance as well as individual
performance and motivate and reward executives for achievement of strategic
business objectives.
The Compensation Committee believes that the compensation of the Executive
Officers including that of the Chief Executive Officer (collectively the
"Executive Officers") should be influenced by the Company's performance.
However, with a start up company which has not realized its revenue and profit
potential, performance is measured by more intangible factors relating to the
growth and development of the Company. The Compensation Committee establishes
the salaries and bonuses of all of the Executive Officers by considering:
(1) The Company's financial performance for the past year;
-6-
<PAGE>
(2) The Company's growth and development for the past year;
(3) The achievement of certain objectives related to the particular
Executive Officer's area of responsibility; and
(4) The salaries and bonuses of Executive Officers in similar positions of
comparably sized companies.
The Compensation Committee believes that the Company's Executive Officers'
salaries and bonuses in the fiscal year ending March 31, 2000 were comparable in
the industry for similarly sized businesses.
In addition to salary and bonus, the Compensation Committee from time to
time recommends grants of options to Executive Officers and other employees.
The Compensation Committee thus views option grants as an important component of
its long term performance based compensation philosophy. Since the value of an
option bears a direct relationship to the Company's stock price, the
Compensation Committee believes that options motivate Executive Officers and
other employees to manage the Company and perform in a manner which will also
benefit shareholders. As such, options are sometimes granted at a discount from
the current market price. One of the principal factors considered in granting
options to an Executive Officer is the Executive Officer's ability to influence
the Company's long term growth and profitability.
AUDIT COMMITTEE REPORT
The following information shall not be deemed to be "soliciting
information" or to be "filed" with the Securities and Exchange Commission. Such
information shall not be deemed to be incorporated by reference into any
subsequent filing under the Securities Act of 1933 or the Securities Exchange
Act of 1934.
The Audit Committee receives draft audited financial statements prepared by
the independent auditors and discusses such draft financials with management.
The Audit Committee includes in its review and discussion the scope of the audit
performed by the independent auditors, the adequacy of the internal audit
procedures and controls, and the independent auditors' opinion as to the
adequacy of the financial disclosures contained therein. The Audit Committee
has received from the independent auditors the written disclosures and letter
required by the Independent Standards Board Standard No. 1 and has discussed the
independent auditors' independence. Based on its review of the financial
statements and the discussion with the independent auditors, the Audit Committee
recommends to the Board of Directors that the financial statements be included
in the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
2000 to be filed with the Securities and Exchange Commission.
Richard W. Torney
Richard F. Charles
H. Dean Cubley
Board of Directors Meetings
The total number of regular and special meetings of the Board of Directors
held in the last fiscal year was one. All Directors but Mr. Torney attended the
Board meeting, and the meetings of the committees of the Board on which each
director served were unanimously attended. The number of Resolutions passed by
Unanimous Written Consent of the Directors totaled thirty-six.
-7-
<PAGE>
Directors' Compensation
Directors who are also employees of the Company receive no extra
compensation for their service on the Board. Directors who are not employees of
the Company receive compensation for serving on the Board and the Company
reimburses non-employee directors for travel and related expenses incurred in
attending meetings of the Board and its Committees. Richard W. Torney and
Richard F. Charles received an annual cash fee of $5,000 for serving on the
Board. H. Dean Cubley received a cash fee of $2,500 per meeting. In March
2000, Richard F. Charles and H. Dean Cubley each received 2,500 shares of the
Company's common stock valued at $25,155 and $27,030, respectively, as
consideration for accepting the appointment of director.
Effective for the fiscal year beginning April 1, 2000, non-employee
directors receive an annual fee in the form of shares of the Company's S-8 Stock
valued at $60,000 as of the 31st of May each year. Accordingly, on May 31, 2000
the Company's non-employee directors, Messrs. Torney, Charles, Cubley, Kramer
and Pazian, received $60,000 of the Company's S-8 Stock valued at the fair
market price of $2.88 a share, for a total of 20,833 shares each.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between the Company's Board of
Directors or Compensation Committee and the Board of Directors or Compensation
Committee of any other Company. Nor has any such interlocking relationship
existed in the past.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules of the Securities and Exchange Commission (the
"Commission") thereunder require the Company's executive officers, directors and
greater than 10% stockholders to file reports of ownership and changes in
ownership of the Common Stock with the Commission. Based upon a review of such
reports, the Company has determined that the following persons have filed late
reports:
Mary E. Blake has been late filing Form 4 on thirteen different occasions
and Form 5 on one occasion. The number of months of late filing for Form 4 are
16, 14, 12, 11, 10, 9, 8, 7, 6, 5, 4, 3, and 1, respectively, and the number of
transactions for Form 4 are 3, 23, 1, 2, 26, 6, 5, 10, 6, 5, 19, 1 and 1,
respectively. With respect to the late filing of Form 5 for Ms. Blake, the
number of months late filing is one and the number of transactions is one. Jon
R. Marple has been late filing Form 5 by one month for one transaction.
Jeffrey R. Matsen has been late filing Form 3 for 17 months with no
transactions involved. Mr. Matsen has been late filing Form 4 on six occasions
for 11,10, 8, 7, 6 and 4 months, respectively, and for 1, 1, 1, 1, 1 and 2
transactions, respectively. Mr. Matsen has been late filing Form 5 for one
month involving one transaction.
Robert Santore has been late filing Form 3 for 26 months with respect to
one transaction. Mr. Santore was late filing Form 4 on seven different
occasions for 16, 15, 14, 12, 10, 7 and 6 months, respectively, involving 1, 1,
3, 8, 3, 2, and 2 transactions, respectively. He has been late filing Form 5
for one month involving one transaction.
Richard F. Charles has been late filing Form 3 for 6 months for no
transactions, Form 4 for one month for one transaction, and Form 5 for one
transaction. Richard Torney has been late filing Form 3 for 30 months involving
no transactions. He has been late filing Form 4 on two different occasions for
7 and 2 months, respectively and 5 and 7 transactions, respectively. He has
been late filing Form 5 on one occasion for one month involving one transaction.
H. Dean Cubley has been late filing Form 3 for one month involving no
transactions. Jerral R. Pulley has been late filing Form 3 for 13 months for no
transactions and Form 5 for one month for one transaction. Richard R. Nelson
has been late filing Form 3 for 3 months for no transactions Form 4 for three
months for one transaction and Form 5 for one month for one transaction.
The following gains by certain Officers and Directors for Short Sales under
Rule 16b have been paid back to the Company by the Officers and Directors
involved:
-8-
<PAGE>
Mary E. Blake $ 8,710.37
Jeffrey R. Matsen $ 5,840.50
Robert Santore $14,471.86
The Company has determined that its officers and directors have
substantially failed to comply with the reporting requirements of Forms 3, 4 and
5 in the past. As a result, the Company has implemented with its outside legal
counsel a program to assist its officers and directors in completing and filing
the monthly and annual reports on Forms 4 and 5. All Forms have now been filed.
Certain Legal Proceedings
On December 5, 1994, Jon H. Marple and Mary E. Blake, officers and
directors of the Company, voluntarily consented to the entry of a Judgment and
Order of Permanent Injunction and Ancillary Relief on by the Superior Court of
the State of California (the "California Consent"), in connection with legal
proceedings initiated by the California Department of Corporations. The
California Consent relates to the offer and sale of securities by Micro-Lite
Television, Inc., a Nevada corporation and formerly known as Marrco
Communications, Inc. ("MLTV"), and several related partnerships and
corporations, all of which were owned and controlled by Mr. Marple and Ms.
Blake.
The California Consent resulted from an investigation by the California
Department of Corporations commenced in June 1994. On December 4, 1994, the
California Department of Corporations filed a complaint against MLTV, Mr. Marple
and Ms. Blake (collectively the "defendants") alleging violations of state
securities laws and simultaneously entered into the California Consent.
Pursuant to the California Consent, the allegations against each of the
defendants were dismissed and settled. Neither Mr. Marple nor Ms. Blake, nor
any affiliated entity, admitted or denied any of the allegations or assertions
in the Consent Decree. The California Department of Corporations did not impose
any fines, penalties or sanctions against any of the defendants.
The California Consent provided that the Parties would not offer or sell
securities in violation of the registration requirements of the California
Corporations Code and would not offer or sell any security by means of any
untrue statement or omission of a material fact. The Consent Decree also
required that the defendants either sell the assets of one affiliated entity
with the consent of the limited partners or offer to repurchase the limited
partnership interests. Mr. Marple and Ms. Blake believe that they have complied
in all material respects with the California Consent.
Mr. Marple also voluntarily entered into similar consent decrees in the
State of Wisconsin on August 10, 1993 and the State of Maine on March 15, 1994
in connection with the same or related matters involving MLTV and several
related entities.
Family Relationships
Mr. Santore, a director until May 2000 and an executive officer of Man
Rabbit House, Multimedia, Inc., a subsidiary of the Company, is the nephew of
Mary E. Blake, a director. In addition, Mr. Marple and Ms. Blake, both
Directors of the Company, are spouses. No other family relationship exists
among the directors and executive officers. See "Related Party Transactions."
-9-
<PAGE>
Executive Officers and Key Employees
Name Age Position
---- --- --------
Michael A. Sternberg 55 Chief Executive Officer and
Director
Nancy Hobbs 54 President and Chief Operating
Officer
Jeffrey R. Matsen 60 Executive Vice President and
General Counsel
Kim Marcus 40 Interim Chief Financial Officer
Steve M. Pierson 53 Chief Technical Officer
Jerral R. Pulley 66 Vice President Marketing
Michael E. Phillips 44 Vice President of Network Operations
Louis M. DiGregorio 43 Vice President of Network Architecture
Nancy J. Hobbs joins the Company as President and Chief Operating Officer
effective July 2, 2000. From February 1997 to May 2000, Ms. Hobbs served as the
Area President/General Manager for Verizon Wireless Southwest Area. Previously,
from April 1994 to February 1997, Ms. Hobbs served as Vice President/General
Manager for Verizon Wireless (AirTouch Cellular) San Diego. Ms. Hobbs has over
30 years experience in the telecommunications industry and has served in a range
of other positions and special assignments for Verizon Wireless and Pacific
Bell, spanning a variety of functions and responsibilities including general
manager, marketing, business and consumer sales, and network operations. Ms.
Hobbs graduated from the University of San Francisco with a BA in English and
completed a 1992 Senior Management Program at Massachusetts Institute of
Technology. She is on the Board of Directors of Wedbush Morgan Securities and
Cresenda Wireless.
Jeffrey R. Matsen has served as the Company's Executive Vice President and
General Counsel since October 1, 1999. Mr. Matsen also served as a director
from December 1998 until May 5, 2000. From 1971 to 1999, Mr. Matsen practiced
corporate and business law with various law firms, most recently with the Law
Offices of Jeffrey R. Matsen & Associates. Mr. Matsen holds a B.A. degree
(magna cum laude) from Brigham Young University and a J.D. degree (Order of the
Coif) from UCLA School of Law. He served as a Captain in the U.S. Marines Corps
from 1968 to 1971.
Kim Marcus has served as the Interim Chief Financial Officer of the Company
since June 28, 2000. Previously she had served as the Company's Director of
Finance/Controller since January 1, 2000. From 1998 through January 2000 Ms.
Marcus served as the Controller for the LA Cellular Telephone Company (which
became AT&T Wireless Services) where she was responsible for the entire
accounting, financial reporting and tax functions of this billion dollar entity.
From 1987 to 1998 Ms. Marcus served in various financial capacities, including
Director of Accounting with Apria Healthcare (formerly known as Homedco, Inc.)
where she was responsible for all facets of the accounting and budgeting process
for the largest home healthcare provider in the U.S. Ms. Marcus received her
bachelor's degree in accounting from California Polytechnic University, Pomona
and has attended the masters in tax program at Golden Gate University.
-10-
<PAGE>
Steve M. Pierson joins the Company as Chief Technical Officer effective
July 1, 2000. Mr. Pierson has been employed with Verizon Wireless from 1992
until June 2000. He has served as Vice President of Engineering/Operations for
the Sierra Pacific Region and as Vice President, Chief Technical Officer and
Executive Director for several AirTouch posts in Europe and in the United
States. From 1965 to 1992, he served in several positions for Pacific Bell as a
General Manager, Director and District Manager where he was heavily involved in
network and engineering and operation activities in the installation of
telecommunication services and maintenance of those services. Mr. Pierson
studied Business Administration at the University of California Berkeley and at
Penn State University. He also completed Advanced Engineering and Economic
studies at Stanford University and Information Technologies and Software
Development studies at the Massachusetts Institute of Technology.
Jerral R. Pulley has served as a director and Vice President of Marketing
for the Company since May 1999. Mr. Pulley brings to the Company his experience
in marketing at companies such as Procter & Gamble, PepsiCo, Hallmark and
Squibb. During the past five years, Mr. Pulley served in the following
capacities. From 1997 to 1999, Mr. Pulley served as a partner with Client
Synergy Group. From 1995 to 1997, Mr. Pulley served as a Vice President and
General Manager with SC Publishing. He also serves as a director of Sundog
Technologies, Inc. and First Scientific, Inc. Mr. Pulley received a B.S. degree
from the University of Utah and earned his M.B.A. from the Anderson School of
Business at the University of California at Los Angeles.
Michael E. Phillips has served as the Vice President of Network Operations
of the Company since August 1999. Mr. Phillips specializes in interconnection
engineering for wireless and wireline networks. He has experience in deploying
worldwide systems and managing and coordinating all aspects of
telecommunications network development, including systems design and
engineering. From 1997 to 1999, Mr. Phillips served as Chief Technical
Consultant at Millicom International. While at Millicom International, Mr.
Phillips served as a Consultant for the East African project in Tanzania, where
he was responsible for all RF design, Microwave Backbone Design, Site
Acquisition, Network Construction, Equipment Installation, Network Operation and
all other engineering applications relating to the project. From 1996 to 1997,
Mr. Phillips served as the Managing Director of Comstar Cellular, which operates
the first GSM cellular network in West Africa and in the Ivory Coast. From 1994
to 1996, Mr. Phillips served as the Director of Project Planning at LLC, where
he was responsible for PCS business development and network design for all
phases of interconnect deployment. Mr. Phillips received a B.S. degree in
Telecommunications Engineering at the University of California at Los Angeles
and a Certificate in Telecommunications Science from the United States Air
Force.
Louis M. DiGregorio has served as the Vice President of Network
Architecture for the Company since August 1999. From 1997 to 1999, Mr.
DiGregorio served as the Network Engineer at Teligent, a CLEC providing local
dial-tone over a microwave radio/ATM network utilizing cutting-edge
telecommunications technology including wireless access nodes, Northern
Telecom's Magellan Passport ATM switch and DMS-250 to transport and process
voice and data over their network. During his tenure at Teligent, Mr.
DiGregorio served as the project manager of telecommunications projects ranging
from network engineering to design of voice and data networks. From 1996 to
1997, Mr. DiGregorio served as the PCS Interconnect Engineer at Sprint, where,
among other things, he provided project management for implementation of
Transmission Networks and Network and Emergency Disaster Planning. From 1995 to
1996, Mr. DiGregorio served as a Network Engineer at Carolina Power & Light,
where he provided project management of telecommunications projects ranging from
network engineering of fiber and microwave networks to the design of the Battery
Power Plant. Mr. DiGregorio received an A.A. degree from the Radio Electronic
Technical Schools.
Employment, Severance and Other Agreements
All of the Executive Officers are appointed annually and serve at the
discretion of the Board of Directors. Except as set forth below, the Company
does not have employment or severance agreements that provide for a fixed term
with any of the Executive Officers.
The Company has recently engaged the services of Mr. Sternberg as Chief
Executive Officer and a Director effective June 19, 2000, under the terms of an
Employment Contract (the "Contract"). The Contract provides for a two year term
commencing June 19, 2000 and for a base salary of $350,000 per year. In
addition, Mr. Sternberg is to receive a $1,000,000 sign on bonus on or about
July 19, 2000, and is entitled to a discretionary cash bonus in the
-11-
<PAGE>
amount of $400,000 due and payable within thirty days after the end of the
Company's fiscal year, commencing with the fiscal year ending March 31, 2001.
The discretionary cash bonus is only due and payable, if at all, provided that
the Compensation Committee or the Board of Directors has determined and formally
declared the amount of same. In making such determination, if at all, the
Compensation Committee or the Board of Directors and Executives shall mutually
agree on Company objectives for each fiscal year and the Board of Directors
shall make its determination based on the Company's accomplishment of such
objectives and Mr. Sternberg's contribution thereto. Additionally, under the
Contract, the Company granted to Mr. Sternberg an option grant to purchase up to
1,000,000 shares of the Company's common stock at $5.28, the fair market value
of the common stock on June 19, 2000, the grant date. The stock options vest
100,000 shares as of June 19, 2000 and 150,000 shares at the end of each
consecutive six month period of continuous employment until all 1,000,000 stock
options are vested.
Nancy J. Hobbs became employed as the President and Chief Operations
Officer of the Company for a two year term commencing July 2, 2000 pursuant to
an agreement dated May 31, 2000. The agreement provides for a base salary of
$300,000 per year and a discretionary bonus of up to $300,000 per year.
Additionally, under the agreement, the Company granted to Ms. Hobbs an option
grant to purchase up to 250,000 shares of the Company's common stock at $2.88,
the fair market value of the common stock on May 31, 2000, the grant date. Her
vesting schedule is 50,000 to vest immediately and carry a one year restriction
and 100,000 shares vest May 31, 2001 and the additional 100,000 shares will vest
on May 31, 2002.
The Company formally engaged the services of Mr. Matsen as its Executive
Vice President and General Counsel under the terms of an engagement letter
executed on August 18, 1999. The engagement letter provides for a three-year
term commencing on October 1, 1999 and terminating on September 30, 2002. As
compensation for services rendered to the Company, the Company agreed to pay Mr.
Matsen an annual salary of $150,000. As further compensation and as
consideration for his engagement, the Company issued to Mr. Matsen 50,000 shares
of the Company's common stock as a signing bonus. The issuance of the 50,000
shares to Mr. Matsen was registered, and the shares were valued at $142,150,
based on the market price of the Company's common stock on the issuance date.
Additionally, Mr. Matsen was granted 200,000 options to purchase the Company's
common stock. The first 40% have a strike price of $3.00 per share and vest
March 30, 2000 and the balance have a strike price of $10.28 per share vesting
50% on March 30, 2001 and 50% on March 31, 2002. In order to wind down his
outside law practice, Mr. Matsen is entitled to allocate up to 25.0% of his
regular working hours to matters involving his private law practice for Jeffrey
R. Matsen & Associates of Newport Beach, California. Mr. Matsen is responsible
for 25.0% of the annual salaries of two of his assistants, including staff
attorney Julie Wahlstedt and a secretary, both of whom the Company hired to
support Mr. Matsen in the Company's legal department as part of this
arrangement. On May 30, 2000, Mr. Matsen and the Company executed an Employee
Retention Agreement whereby the Company granted to Mr. Matsen an additional
option grant to purchase up to 25,000 shares of common stock at a purchase price
of $3.91 per share, the fair market value on that date, to become fully vested
on January 15, 2001. In addition, the Company agreed to pay Mr. Matsen a cash
bonus in the amount of $25,000 on January 25, 2001. If Mr. Matsen's employment
with the Company is terminated for any reason prior to January 15, 2001, the
entire bonus and option grant are to be forfeited.
Pursuant to terms of an agreement dated November 22, 1999, Kim Marcus was
hired as the Company's Director of Finance/Controller. She was appointed Interim
Chief Financial Officer on June 28, 2000. Her base salary is $116,004. In
addition she is entitled to an annual bonus on December 31st of each year equal
to 25% of her base salary depending on performance. Ms. Marcus was granted
40,000 options to purchase the Company's common stock on March 30, 2000. The
first 40% of the options have a strike price $8.398 per share and vested on
March 30, 2000. The remaining 60% have a strike price of $10.812 per share
vesting 25% on March 30, 2001, 25% on March 30, 2002, 25% on March 30, 2003 and
25% on March 30, 2004. On May 30, 2000, Ms. Marcus and the Company executed an
Employee Retention Agreement whereby the Company agreed to pay Ms. Marcus a cash
bonus in the amount of $23,200 on January 25, 2001. If Ms. Marcus' employment
with the Company is terminated for any reason prior to January 15, 2001, the
entire bonus is to be forfeited.
Steve M. Pierson became employed as the Chief Technical Officer of the
Company effective July 1, 2000 pursuant to an Agreement dated May 31, 2000. The
agreement provides for a base salary of $300,000 per year and a discretionary
bonus of up to $300,000 per year. Additionally, under the agreement, the
Company granted to Mr. Pierson an option grant to purchase up to 175,000 shares
of the Company's common stock at $2.88, the fair market value of the common
stock on May 31, 2000, the grant date. The options vest as follows: 37,500
options will vest
-12-
<PAGE>
immediately and carry a one year restriction, 68,750 options will vest on May
31, 2001 and the remaining 68,750 options will vest on May 31, 2002.
Jerral R. Pulley executed an Employment Agreement dated May 4, 2000,
wherein Mr. Pulley became employed by the Company as Vice President Marketing
effective May 1, 2000 with an annual base salary of $125,000. On March 30,
2000, Mr. Pulley was granted stock options in the amount of 125,000 shares. The
first 40% have a strike price of $3.00 per share and vest March 30, 2000 and the
balance have a strike price of $10.28 per share vesting 50% on March 30, 2001
and 50% on March 31, 2002. In addition, 100% of vesting will occur in the event
of a change of ownership, control or a sell of the majority assets or
termination of his services. Should the Company terminate his services for
other than cause, he is to receive salary continuation for six months plus
Company paid benefits over that period. On May 30, 2000, Mr. Pulley and the
Company executed an Employee Retention Agreement whereby the Company agreed to
grant Mr. Pulley an additional 25,000 options to purchase the Company's common
stock at a purchase price of $3.91, the fair market value on such date, to
become fully vested on January 15, 2001. In addition, the Company agreed to pay
Mr. Pulley a cash bonus in the amount of $25,000 on January 25, 2001. If Mr.
Pulley's employment with the Company is terminated for any reason prior to
January 15, 2001, the entire bonus and option grant are to be forfeited.
Additionally, the Company's principal operating subsidiary, Urjet Backbone
Network, Inc., a Delaware corporation ("Urjet Backbone Network"), has in place
employment agreements with the following key employees. The Company is a party
to an employment agreement with Louis DiGregorio, the Vice President of Network
Architecture of Urjet Backbone Network. Mr. DiGregorio's employment agreement
provides for a fixed one-year term commencing on August 13, 1999, which will be
extended automatically for additional one-year terms unless terminated by signed
written notice of either party at least 30 days before the expiration of the
term. Under the terms of the employment agreement, the Company pays to Mr.
DiGregorio a base annual salary of $99,500, which the Company expects will
increase by 15.0% at the commencement of a secondary public offering the
Company's common stock to the public. Mr. DiGregorio is entitled to a
performance bonus based on a percentage reduction in the time for completion the
Company's network installation. Under the terms of the employment agreement,
the Company issued to Mr. DiGregorio 2,370 shares of the Company's common stock
in September 1999, valued at $6,814. On March 30, 2000 the Company also granted
to Mr. DiGregorio an option to purchase 16,000 shares of the Company's common
stock at a price of $3.00 which are exercisable immediately, and an additional
grant of 24,000 options at a price of $10.81 which vest 25% per year over four
years. UrJet Backbone Network at its sole discretion is entitled to terminate
Mr. DiGregorio's employment for cause, including (without limitation) its
determination that Mr. DiGregorio's performance is unsatisfactory in relation to
the deployment of the network infrastructure. Upon termination of his
employment, Mr. DiGregorio will be entitled to base salary, stock option and
other compensation provided under the agreement that Mr. DiGregorio earns
through the date of termination.
On September 26, 1999, Urjet Backbone Network hired Michael Phillips as
Vice President of Network Operations for a one-year initial term, under the
terms of an employment agreement similar to the Company's agreement with Mr.
DiGregorio. The employment agreement with Mr. Phillips similarly provides that
the initial term shall be extended for additional one-year terms unless
terminated by signed written notice of either party at least 30 days before the
expiration of the term. Mr. Phillips is entitled to a base annual salary of
$99,500, which the Company expects will increase by 20.0% at the commencement of
a secondary public offering of the Company's common stock. Mr. Phillips is
entitled to a performance bonus similar to the above-described bonus for Mr.
DiGregorio. Under the employment agreement, the Company issued to Mr. Phillips
2,807 shares of the Company's common stock in September of 1999, valued at
$8,070. On March 30, 2000 the Company also granted to Mr. DiGregorio an option
to purchase 16,000 shares of the Company's common stock at a price of $3.00
which are exercisable immediately, and an additional grant of 24,000 options at
a price of $10.81 which vest 25% per year over four years. The employment
agreement with Mr. Phillips is terminable for cause under conditions similar to
those described above for Mr. DiGregorio. Upon termination of his employment,
Mr. Phillips will be entitled to base salary, stock option and other
compensation provided under the agreement that Mr. Phillips earns through the
date of termination.
-13-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to (i) the individual who was serving as the Company's Chief Executive
Officer at the end of the last completed fiscal year ended March 31, 2000, (ii)
four other highly compensated executive officers whose annual salary and bonus
exceeded $100,000 for the last completed fiscal year and (iii) the next two most
highest paid employees whose annual salary and bonuses exceeded $100,000 for the
last completed fiscal year (collectively, the "Named Executive Officers"), for
services rendered to the Company in all capacities during the last completed
fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation/(1)/ Compensation
----------------------------------------------------------
Fiscal Other Annual All Other
Name and Principal Position Year Salary($)/(2)/ Bonus($) Compensation($) Options(#) Compensation($)
--------------------------------------- ---- -------------- ------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jon H. Marple/(3)/..................... 2000 175,000 -0- -0- 350,000 -0-
Chairman 1999 180,126 -0- -0- -0- -0-
1998 142,292 -0- -0- -0- -0-
Mary E. Blake/(4)/..................... 2000 175,000 -0- -0- 350,000 21,902/(4)/
Vice Chairman 1999 159,027 -0- -0- -0- -0-
1998 108,775 -0- -0- -0- -0-
Jeffrey R. Matsen/(5)/................. 2000 154,560 -0- 142,150 200,000 -0-
Executive Vice President, 1999 -0- -0- -0- -0- -0-
Secretary and General Counsel 1998 -0- -0- -0- -0- -0-
Richard R. Nelson/(6)/................. 2000 120,000 -0- 108,120 100,000 -0-
Chief Financial Officer and 1999 -0- -0- -0- -0- -0-
Director 1998 -0- -0- -0- -0- -0-
Jerral R. Pulley/(7)/.................. 2000 125,000 -0- 216,240 125,000 -0-
Vice President of Marketing 1999 -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0-
Michael A. Sternberg/(8)/
Chief Executive Officer and
Director
Nancy J. Hobbs(9)
President and Chief Operating
Officer
Steven M. Pierson(10)
Chief Technical Officer
</TABLE>
________________
/(1)/ Excludes compensation in the form of perquisites and other personal
benefits that constitutes the base of $50,000 or 10.0% of the total
annual salary and bonus of each of the Named Executive Officers.
/(2)/ Represents annualized rates for the year ended March 31, 2000, and
amounts actually paid for prior years.
/(3)/ Mr. Marple resigned as Chief Executive Officer of the Company on May 6,
2000.
/(4)/ Amount paid to Ms. Blake as consideration for company use of certain
premises owned by Ms. Blake. Ms. Blake resigned as President and
Secretary of the Company on May 6, 2000.
/(5)/ Mr. Jeffrey Matsen became an Executive Officer on October 1, 1999. Mr.
Jeffrey Matsen received a total of $75,000 in salary compensation for the
fiscal year ended March 31, 2000. He was a director of the Company from
December 18, 1998 to May 19, 2000. In addition, see "Related Party
Transactions." He received 50,000 shares of S-8 stock valued at $142,150
as a signing bonus in October 1999.
/(6)/ Mr. Nelson became an Executive Officer on February 16, 2000. Mr. Nelson
received a total of $15,000 in salary compensation for the fiscal year
ended March 31, 2000. He received 10,000 shares of S-8 stock valued at
$108,120 as a signing bonus in April 2000.
/(7)/ Mr. Pulley became an Executive Officer on May 5, 2000. He received 20,000
shares of S-8 stock valued at $216,240 in April 2000.
/(8)/ Mr. Sternberg became a Director and the Chief Executive Officer of the
Company on June 19, 2000, pursuant to an Employment Agreement of the same
date.
/(9)/ Ms. Hobbs became the President and Chief Operating Officer of the Company
effective July 1, 2000, pursuant to an Employment Agreement dated May 31,
2000.
/(10)/ Mr. Pierson became the Chief Technical Officer of the Company effective
July 1, 2000, pursuant to an Employment Agreement dated May 31, 2000.
-14-
<PAGE>
Option Grants In Last Year
The following table sets forth certain information regarding options
granted during the fiscal year ended March 31, 2000 to the Named Executive
Officers and directors.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of Potential Realizable Value
Securities Percent of Total at Assumed Annual Rates of
Underlying Options Granted Exercise or Stock Price Appreciation for
Options to Employees in Base Price Expiration Option Term($)
----------------------------
Name Granted(#) Fiscal Year ($/Share) Date 5% 10%
---------------------------------- ---------- ---------------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Jon H. Marple..................... 140,000 5.1% 3.00 3/1/2010 686,000 1,092,000
Chairman of the Board 210,000 7.6% 10.812 3,696,000 5,880,000
Mary E. Blake..................... 140,000 5.1% 3.00 3/1/2010 686,000 1,092,000
Vice Chairman 210,000 7.6% 10.812 3,696,000 5,880,000
Jeffrey R. Matsen................. 80,000 2.9% 3.00 3/1/2010 392,000 624,000
Executive Vice President, 120,000 4.4% 10.812 2,112,000 3,360,000
Secretary and General
Counsel
Richard R. Nelson................. 40,000 1.5% 3.00 3/1/2010 196,000 312,000
Chief Financial Officer and 60,000 2.2% 10.812 1,056,000 1,680,000
Director
Jerral R. Pulley.................. 50,000 1.8% 3.00 3/1/2010 245,000 390,000
Vice President of Marketing 75,000 2.7% 10.812 1,320,000 2,100,000
Other employees................... 1,715,500 60.4% ___ ___ ___
</TABLE>
-15-
<PAGE>
Option Exercises and Holdings
The following table shows the number of shares of the Company's common
stock underlying outstanding stock options held by each of the Named Executive
Officers at March 31, 2000. None of the Company's Named Executive Officers
exercised any stock option in the fiscal year ended March 31, 2000.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values(1)
<TABLE>
<CAPTION>
Total Number of Value of Unexercised In-the-
Unexercised Options Money Options held at Fiscal
Shares Held at Fiscal Year End Year End/(1)/
---------------------------------------------------------
Acquired on Value Unexercis- Unexercis-
Name Exercise Realized Exercisable able Exercisable able
---------------------------------- ----------- --------- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jon H. Marple..................... -- -- 140,000 210,000 $319,340 $ --
Chairman
Mary E. Blake..................... -- -- 140,000 210,000 $319,340 $ --
Vice Chairman
Jeffrey R. Matsen................. -- -- 80,000 120,000 $182,480 $ --
Executive Vice President,
Secretary and General Counsel
Richard R. Nelson................. -- -- 40,000 60,000 $ 91,240 $ --
Chief Financial Officer
Jerral R. Pulley.................. -- -- 50,000 75,000 $114,050 $ --
Vice President of Marketing
</TABLE>
________________
(1) Based on a per share price of $5.28, the closing price of the Company's
common stock on June 19, 2000.
Transactions with Officers, Directors and Employees
Transactions with Jeffrey Matsen
Mr. Jeffrey R. Matsen is the Executive Vice President, Secretary and
General Counsel of the Company. During the year ended March 31, 1999, Mr.
Matsen and his law firm Jeffrey R. Matsen & Associates of Newport Beach,
California, provided various legal services to the Company and Mr. Matsen was
compensated for such services by the payment from the Company to Mr. Matsen of
$57,395. In addition, on August 5, 1999, Mr. Matsen received 5,000 shares of
the Company's common stock in exchange for legal services rendered at a value of
$4.218 per share or $21,090.00 total. See "Management -- Employment, Severance
and Other Agreements."
Relationship with Robert Santore
In July 1998, the Company issued to Robert Santore 10,000 shares of the
Company's common stock as consideration for certain Web development services
rendered to the Company. The shares were valued at $98,000 based on the market
price of the common stock on the date of issuance. In August 1998, the Company
issued to Mr. Santore 25,000 additional shares of common stock in exchange for
the entire capital stock of Man Rabbit House Multimedia, Inc. These shares were
valued at $100,000 based on the market price of the Company's common stock on
the date of closing of the above-described acquisition.
During the previous two fiscal years, the Company also made certain
payments to Parrot Design as consideration for graphic design and related
services rendered to the Company. Parrot Design is a graphic design firm owned
and managed by Stephanie Santore, who is the wife of Mr. Robert Santore. For
the years ended March 31, 2000 and 1999, the Company paid to Parrot Design a
total of $96,132 and $63,472, respectively. The Company
-16-
<PAGE>
has paid to Parrot Design an additional $42,932 for services rendered during the
current fiscal year through the date of this Memorandum.
Transactions with Other Related Parties
During the past three years, the Company was a party to several
transactions (as described below) involving Mr. Jon R. ("J.R.") Marple and
JustWebit.com, Inc., a Nevada corporation, managed by J.R. Marple. J.R. Marple
is the son of Jon H. Marple, the Company's Chairman.
In April and August of 1998, the Company issued to J.R. Marple 12,903 and
25,000 shares of common stock, respectively, as consideration for certain
accounting services rendered by J.R. Marple to the Company. In April 1999, the
Company issued to JustWebit 50,000 shares of common stock as consideration for
certain channel rights and licenses to provide wireless services in designated
locations. The shares issued to JustWebit were valued at $102,000 based on the
per share market price of the common stock on the date of the closing of the
related transactions.
The Company was also a party to a consulting services agreement with
JustWebit, under which the Company agreed to issue to JustWebit 25,000 shares of
common stock as consideration for services relating to the development of e-
commerce sites and the functionality of certain back-office support systems.
The shares were valued at $247,000 based on the per share market price of the
Company's common stock in December 1999, the date of issuance.
Employee Benefit Plans
Effective on February 29, 2000, the Company's Board of Directors adopted
the 2000 Management Equity Incentive Plan and the 2000 Equity Incentive Plan
(collectively, the "Equity Incentive Plans"), subject to the approval of the
Company's shareholders. The principal terms and provisions of the Equity
Incentive Plans are summarized under Proposal No. 3.
-17-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the beneficial ownership
of the capital stock of the Company as of June 19, 2000, by: (i) each person
known to the Company to beneficially own more than five percent (5%) of the
capital stock of the Company; (ii) each of the Company's directors; (iii) each
of the Company's Named Executive Officers; and (iv) all executive officers and
directors as a group.
<TABLE>
<CAPTION>
No. of Shares Approximate
Name (1) Owned Percentage Owned
<S> <C> <C>
Mary E. Blake (2)................................. 7,595,538 36.2%
Jon H. Marple (3)................................. 140,000 *
Michael A. Sternberg (3).......................... 100,000 *
Nancy Hobbs (3)................................... 50,000 *
Jeffrey R. Matsen (4)............................. 122,805 *
Richard R. Nelson (5)............................. 50,000 *
Steve Pierson (3)................................. 37,500 *
Jerral R. Pulley (6).............................. 70,000 *
Richard F. Charles (7)............................ 23,333 *
H. Dean Cubley (7)................................ 23,333 *
Terry D. Kramer (7)............................... 20,833 *
Stephen E. Pazian (7)............................. 20,833 *
Richard W. Torney (7)(8).......................... 61,833 *
All Executive Officers and Directors as a group... 8,316,008 38.5%
</TABLE>
________________
* Less than one percent (1%)
(1) This table is based upon information supplied by officers, directors, and
principal stockholders and Schedules 13D and 13G, if any, filed with the
Commission with regard to the Company's common stock. Unless otherwise
indicated in the footnotes of this table and subject to community property
and marital property laws where applicable, each of the stockholders named
in this table has sole voting and investment power with respect to the
shares indicated as beneficially owned. Applicable percentages are based on
20,845,123 shares outstanding on June 19, 2000. The information contained
in this table reflects "beneficial ownership" as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Shares not outstanding that are subject to vested options,
or options that vest and become exercisable by the holder thereof within
sixty (60) days of June 19, 2000 are deemed outstanding for the purposes of
calculating the number and percentage owned by such shareholder, but are
not deemed outstanding for the purposes of calculating the percentage owned
by each other shareholder listed. Unless otherwise noted, all shares listed
as beneficially owned by a shareholder are actually outstanding.
(2) Includes 140,000 shares that are issuable upon exercise of vested stock
options.
(3) All shares are issuable upon exercise of vested stock options.
(4) Includes 1,000 shares owned by Mr. Matsen's minor son, Brett Richard Matsen
and 80,000 shares that are issuable upon exercise of vested stock options .
(5) Includes 40,000 shares that are issuable upon exercise of vested stock
options.
(6) Includes 50,000 shares that are issuable upon exercise of vested stock
options.
(7) Includes 20,833 shares granted on May 31, 2000 in connection with the non-
employee Directors' Compensation Plan.
(8) Includes 1,000 shares owned by Mr. Torney's wife, Lorie, and 31,000 shares
owned by Image Systems Dividend Benefit Pension Trust of which Mr. Torney
is the principal participant and Trustee.
-18-
<PAGE>
PERFORMANCE GRAPH
The following graph illustrates a comparison of the cumulative total
stockholder return (change in stock price plus reinvested dividends) of the
Company's Common Stock with the CRSP Total Return Index for The Nasdaq Stock
Market *U.S. and Foreign) (the "Nasdaq Composite Index") and the CRSP Total
Return Index for Nasdaq Telecommunications Stocks ("the Nasdaq
Telecommunications Index"). The comparisons in the graph are required by the
Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
12/31/97 06/30/98 12/31/98 06/30/99 12/31/99
IJNT.net 100.00 162.50 64.71 75.00 244.12
Nasdaq Composite 100.00 111.67 130.95 160.67 243.04
Nasdaq Telecommunications 100.00 134.61 165.56 220.81 293.46
Assumes a $100 investment on December 31, 1997 in each of the Company's
Common Stock, the securities comprising the Nasdaq Composite Index and the
securities comprising the Nasdaq Telecommunications Index.
The Nasdaq Telecommunications Index includes all companies listed on The
Nasdaq Stock Market within SIC Code 48.
-19-
<PAGE>
PROPOSAL NUMBER 2
AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BYLAWS
(Item No. 2 on the Proxy Card)
General
Our Board of Directors have approved proposals to amend our certificate of
incorporation, also called our charter, to include provisions available to
public companies under Delaware law that deter hostile take-over attempts, as
more particularly described below. Our Board of Directors has also approved
amendments to our bylaws consistent with the proposed amendments to our charter,
which are to become effective simultaneously with the effectiveness of the
proposed amendments to our charter. If the proposed amendments to our charter
and bylaws are approved by our stockholders, the charter and bylaws, as so
amended, will become the governing instruments of our company and will differ in
several respects from our existing charter and bylaws. Some of the changes will
be procedural in nature but others will result in material changes in
stockholders' rights and corporate procedures from those currently provided.
Our Board of Directors recommends that you carefully review the proposed
amendments to determine the nature and desirability of the proposed changes.
Upon your review, our Board of Directors recommends that you approve and adopt
the amended charter of IJNT.net attached as Appendix B to this proxy statement
and the amended bylaws of IJNT.net, Inc. attached as Appendix C to this proxy
statement.
The first significant amendment to our Certificate of Incorporation
involves the change of our name to Universal Broadband Networks, Inc. This name
change is in keeping with the Company's integrated broadband communications
vision and is much more descriptive of what the Company really does. The Board
of Directors believes that the name change will make the Company more easily
identifiable with the products and services it sells and delivers and the
abbreviated version, UBNetworks, will facilitate customer and investor
identification.
In considering the remaining proposals, you should be aware that the
overall effect of many of the proposed provisions is to make it more difficult
for holders of a majority of the outstanding shares of our common stock to
change the composition of our Board of Directors and to remove existing
management in circumstances where a majority of the stockholders may be
dissatisfied with the performance of the incumbent directors or otherwise desire
to make changes. These provisions, if included in our charter and bylaws, could
hinder or possibly prevent the use of a proxy contest as a means of removing or
replacing existing directors or could make it more difficult to make a change in
control of our company which is opposed by our Board of Directors. This
strengthened tenure and authority of the Board of Directors could enable it to
resist change and otherwise thwart the desires of a majority of the
stockholders. Because these provisions may have the effect of continuing the
tenure of the current directors, our Board of Directors has recognized that the
individual directors have a personal interest in these provisions that may
differ from those of our stockholders. However, our Board of Directors believes
that the primary purpose of these provisions is to ensure that it will have
sufficient time to consider fully any proposed takeover attempt in light of the
short-term and long-term benefits and other opportunities available to our
company and, to the extent our Board of Directors determines to proceed with any
takeover, to effectively negotiate terms that would maximize the benefits to our
company and to our stockholders.
A hostile takeover attempt may have a positive or negative effect on a
corporation and its stockholders, depending on the circumstances surrounding a
particular takeover attempt. Takeover attempts that have not been negotiated or
approved by the Board of Directors of a corporation can seriously disrupt the
business and management of a corporation and generally present to the
stockholders the risk of terms which may be less than favorable to all of the
stockholders than would be available in a board-approved transaction. Board
approved transactions may be carefully planned and undertaken at an opportune
time in order to obtain maximum value for the corporation and all of its
stockholders with due consideration to matters such as the recognition or
postponement of gain or loss for tax purposes, the management and business of
the acquiring corporation and the maximum strategic deployment of corporate
assets. In addition, in the case of a proposal which is presented to a Board of
Directors, there is a greater opportunity for the Board of Directors to analyze
the proposal thoroughly, to develop and evaluate alternatives, to negotiate for
improved terms and to present its recommendations to stockholders in the most
effective manner.
-20-
<PAGE>
Our Board of Directors recognizes that hostile takeover attempts do not
always have the unfavorable consequences or effects described above and may
frequently be beneficial to stockholders, providing all stockholders with
considerable value for their shares. Our Board of Directors believes, however,
that the potential disadvantages of unapproved takeover attempts are
sufficiently great such that prudent steps to reduce the likelihood of such
takeover attempts are in the best interests of our company and our stockholders.
You should recognize, therefore, that one of the effects of the proposed
amendments may be to discourage a future attempt to acquire control of our
company which is not presented to and approved by our Board of Directors, but
which a substantial number, and perhaps even a majority, of our stockholders
might believe to be in their best interests or in which stockholders might
receive a substantial premium for their shares over the current market price.
As a result, stockholders who might desire to participate in such a transaction
may not have an opportunity to do so. In addition, by increasing the
probability that any person or group seeking control of our company would be
forced to negotiate directly with our Board of Directors, the proposed takeover
defenses could discourage takeover bids by means of a hostile tender offer,
proxy contest or otherwise without the approval of our Board of Directors.
Thus, the principal disadvantages to our stockholders which result from
discouraging such hostile takeover bids would be to:
. reduce the likelihood that any acquiror would make a hostile tender
offer for the outstanding shares of stock of our company at a premium
over the market price; and
. increase the difficulty of removing our existing Board of Directors
and management even if in a particular case removal would be
beneficial to stockholders generally.
You should note, however, that our Board of Directors has a fiduciary duty
to our stockholders to negotiate in the best interests of our stockholders and
not for its own interests. Further, while the proposed takeover defenses may
discourage hostile takeover attempts, these provisions would not prevent a
hostile acquisition of our company.
Our Board of Directors has considered the potential disadvantages of the
proposed amendments and believes that they are outweighed by the potential
benefits. In particular, our Board of Directors believes that the benefits
associated with enabling our Board of Directors to fully consider and negotiate
proposed takeover attempts make these proposals beneficial to our company and to
our stockholders.
The proposals to include these anti-takeover provisions in our charter and
bylaws do not reflect knowledge on the part of our Board of Directors or
management of any proposed takeover or other attempt to acquire control of our
company. Our Board of Directors may in the future propose or adopt other
measures designed to discourage takeovers apart from those proposed in this
Proxy Statement, if warranted, from time to time in the judgment of our Board of
Directors, although there is no intention to do so at the present time.
The anti-takeover proposals are summarized below. The following summary
does not purport to be an exhaustive discussion. It is qualified in its
entirety by reference to the Delaware General Corporation Law, our charter and
bylaws, as presently in effect, and our charter and bylaws as proposed to be
amended.
-21-
<PAGE>
Summary of Anti-Takeover Proposals
Amendments to Charter
<TABLE>
<CAPTION>
Issue Present Charter Provision Proposed Amended Charter Provision
----- ------------------------- ----------------------------------
<S> <C> <C>
Stockholder action by written Stockholders may take action Stockholder action may be taken
consent by written consent or at a only at a duly called annual or
meeting special meeting of stockholders
and may not be taken by written
consent.
Supermajority required for some Amendments to the charter The approval of the holders of at
amendments require the approval of least 66 2/3% of the outstanding
holders of at least 50% of the voting stock is required to amend
outstanding voting stock. the provisions in the charter
that (1) prohibit stockholders
from acting other than at an
annual or special meeting or (2)
provide for amendments to the
charter.
Board Determination of Rights No current provision. Adds a provision granting the
and Preferences of Preferred Board of Directors the power,
Stock subject to the limitations
prescribed by law, to provide for
the issuance of our authorized
shares of preferred stock in
series and, by filing a
certificate pursuant to the
applicable law of the State of
Delaware, to establish from time
to time the number of shares to
be included in each such series
and the qualifications,
limitations or restrictions
thereof.
Indemnification of directors, Provides that our directors Further provides that, to the
officers and other agents will not be personally liable fullest extent permitted by
for monetary damages to us or Section 145 of the Delaware
our stockholders for breach of General Corporation Law we will
any fiduciary duty as a indemnify any and all persons who
director, except for liability we have the power to indemnify
(1) for any breach of the from and against any expenses,
director's duty of loyalty to liabilities or other matters
us or our stockholders; (2) referred to in or covered by
for acts or omissions not in Section 145.
good faith or which involve
intentional misconduct or a
knowing violation of law; (3)
under Section 174 of the
Delaware General Corporation
Law or (4) for any transaction
from which the director
derives an improper personal
benefit.
</TABLE>
-22-
<PAGE>
Amendments to Bylaws
<TABLE>
<CAPTION>
Issue Present Bylaw Provision Bylaw Provision as Proposed to be
----- ----------------------- ----------------------------------
Amended
-------
<S> <C> <C>
Stockholder action by written Stockholders may take action Consistent with the proposed
consent by written consent or at a amendment to our charter,
meeting. stockholder action may be taken
only at a duly called annual or
special meeting of stockholders
and may not be taken by written
consent.
Authority to call and adjourn Meetings of stockholders may Meetings of stockholders may be
meetings of stockholders be called by the Board of called only by the chairman of
Directors or by holders of at the board or a majority of the
least 20% of our outstanding Board of Directors
common stock.
Provides that a meeting of the
Provides that a meeting of the stockholders may be adjourned at
stockholders may be adjourned any time by the chairman of the
only upon the affirmative vote meeting and by the holders of a
of the shares represented at majority of the voting power of
such meeting, whether or not a the shares represented at such
quorum is present. meeting, whether or not a quorum
is present...
Supermajority for amendment; Amendments to the bylaws may No amendment to the bylaws may be
removal of directors currently be approved by the adopted without the approval of a
holders of a majority of our majority of the authorized
common stock and amendments directors or the approval of the
that so provide may not be holders of at least 75% of the
amended by our Board of voting power of our outstanding
Directors. The Board of stock. The Board of Directors
Directors may otherwise amend will have the ability to amend or
the bylaws, except that the repeal any bylaw.
board does not have the power
to change the quorum for
meetings of stockholders or of
the Board of Directors, or to
change any provisions of the
bylaws with respect to the
removal of directors or the
filling of vacancies in the
board resulting from removal
by the stockholders.
Directors may be removed with Subject to the rights, if any, of
or without cause by a majority holders of preferred stock,
vote of the stockholders. directors may be removed, with or
without cause by the holders of
75% of the shares then entitled
to vote at an election of
directors, except that (1) if we
institute a classified board,
stockholders may remove a
director only for cause and (2) if
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
Issue Present Bylaw Provision Bylaw Provision as Proposed to be
----- ----------------------- ----------------------------------
Amended
-------
<S> <C> <C>
we have instituted cumulative voting
for the election of directors, if
less than the entire board is removed,
no director may be removed without
cause if the votes cast against removal
of the director would be sufficient to
elect that person.
Advance notice requirement for No current provision Adds provisions for director
stockholders' proposals pertaining to nominations to nominations and for the
the Board of Directors or submission of new business,
submission of business to be including: (1) only such business
considered by stockholders at or nominations as are properly
any meeting. brought before a meeting of the
stockholders may be considered at
such meeting; (2) timely notice
must be given prior to any such
meeting; (3) a nomination for a
director must set forth the
person proposed for election; (4)
the submission of new business
must set forth a brief
description of such business; and
(5) the chairman of the meeting
may determine whether a
nomination or submission of new
business was made in accordance
with these procedures.
Election of directors and The approval of a majority of Except with respect to the rights
stockholder approval of the shares represented and of the holders of any other
corporate action entitled to vote constitutes series or class of stock to elect
action by the stockholders, directors, a plurality of the
unless the vote of a greater votes cast at a meeting of the
number is required by the stockholders shall elect
Delaware General Corporation directors. All other matters
Law or the charter. submitted are to be decided by
the approval of a majority of the
shares represented and entitled
to vote at a meeting of
stockholders, except as otherwise
required by the Delaware General
Corporation Law, the charter or
specific provisions of the bylaws.
Filling of vacancies on Board Vacancies on the Board of A vacancy on the Board of
of Directors Directors may be filled by the Directors may be filled only by
stockholders. the members of the board then
remaining. If, at the time of
filling any vacancy or any newly
created directorship, the
directors then in office shall
constitute less than a majority
of the whole
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
Issue Present Bylaw Provision Bylaw Provision as Proposed to be
----- ----------------------- ----------------------------------
Amended
-------
<S> <C> <C>
Board of Directors (as constituted
immediately prior to any such
increase), the Court of Chancery may,
upon application of any stockholder or
stockholders holding at least ten
percent of the total number of
the shares at the time
outstanding having the right to
vote for such directors,
summarily order an election to be
held to fill any such vacancies
or newly created directorships,
or to replace the directors
chosen by the directors then in
office.
Changes in conduct of board and Special meetings of the Board Special meetings of the Board of
exercise of power of Directors may be called at Directors may be called by the
any time by the chairman of chairman of the board and shall
the board, the president, any be called upon the written
vice-president, the secretary request of two directors, unless
or by any director. the board consists of one
director.
Special meetings are to be Special meetings may be held upon
held upon at least four days three days notice.
notice.
Requires that the Board of Removes this requirement.
Directors meet immediately
following each annual meeting
of the stockholders.
Requires that if a meeting of Removes this requirement.
the Board of Directors is
adjourned for more than 24
hours, notice of the
adjournment be given prior to
the time of the adjourned
meeting to the directors who
were not present at the time
of the adjournment.
Provides that the Board of Provides that committees
Directors may designate an appointed by the Board of
executive and other Directors may consist of one,
committees, each consisting of rather than two, directors and
at least two directors to provides that the Board of
serve at the pleasure of the Directors may designate one or
board. Any such committee may more directors as alternate
have all of the powers of the members of any committee. Limits
Board of Directors, except as the power of committees such that
limited by the Delaware they may not adopt amendments to
General Corporation Law. the certificate of incorporation,
adopt any agreement and plan of
merger or
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
Issue Present Bylaw Provision Bylaw Provision as Proposed to be
----- ----------------------- ----------------------------------
Amended
-------
<S> <C> <C>
consolidation, recommend to the
stockholders the sale, lease or
exchange of all or substantially
all of our assets, recommend our
dissolution or a revocation of our
dissolution or amend our bylaws.
Fixing of record date Provides that for purposes of Provides that our Board of
determining the stockholders Directors must, not less than 10
entitled to receive payment of nor more than 60 days prior to a
a dividend or other stockholders meeting nor more
distribution, or entitled to than 60 days prior to any other
exercise any rights in respect action, fix a record date so that
of any change or conversion or we may determine who is entitled
exchange of stock, our Board to notice of or to vote at such
of Directors may fix a record meeting of stockholders, or who
date, which shall not be more is entitled to payment of any
than 60 days before any such dividend or other distribution,
action. or entitled to exercise any
rights in respect of any change
or conversion or exchange of
stock.
Inspection of corporate records Provides that stockholders and Deletes the reference to holders
holders of voting trust of voting trust certificates.
certificates may, at any
reasonable time, inspect the
accounting books, the minutes
of the Board of Directors,
committees of the Board of
Directors and similar records
of our subsidiaries for a
purpose reasonably related to
their interests as a
stockholder or holder of
voting trust certificates.
A stockholder or stockholders The secretary is required to
holding at least 5% in the prepare, at least ten days before
aggregate of our outstanding every meeting of stockholders, a
voting shares or who hold at complete list of the stockholders
least 1% of such voting shares entitled to vote at the meeting,
and have filed a Schedule 14A arranged in alphabetical order,
with the United States and showing the address of each
Securities and Exchange stockholder and the number of
Commission relating to the shares registered in the name of
election of directors have the each stockholder. Such list will
right to inspect and copy the be open to the examination of any
record of stockholders' names stockholder, for any purpose
and addresses and germane to the meeting, during
shareholdings during usual ordinary business hours, for a
business hours upon five period of at least ten days prior
business days' prior written to the meeting.
demand and to obtain from our
the transfer
</TABLE>
-26-
<PAGE>
<TABLE>
<CAPTION>
Issue Present Bylaw Provision Bylaw Provision as Proposed to be
----- ----------------------- ----------------------------------
Amended
-------
<S> <C> <C>
agent, upon written demand and
upon the tender of its usual
charges, a list of the
stockholders' names and
addresses, who are
entitled to vote for the
election of directors, and
their shareholdings, and of
the most recent record date
for which it has been compiled
or as of a date specified by
the stockholder subsequent to
the date of demand. The list
shall be made available on or
before the later of five (5)
business days after the demand
is received or the date
specified therein as the date
as of which the list is to be
compiled.
Provides that the directors Provides that members of the
have the right to inspect and Board of Directors shall have the
copy all books, records and right at any reasonable time to
documents of every kind and to examine our stock ledger, a list
inspect the physical of stockholders and our other
properties of IJNT.net. books and records for a purpose
reasonably related to that
director's position as a director.
Notices provisions No current provision. Clarifies that we may treat the
holder of record of any share or
shares of our stock as the holder
in fact if such shares.
No current provision. Provides that when any notice is
to be given to a stockholder or
director under the provisions of
the bylaws, personal notice is
not required and such notice may
be given in writing, by mail,
delivered to the address of the
recipient appearing on our
records.
</TABLE>
The following is a more complete description of some of the more material
proposed amendments to our charter and our bylaw and the effect that such
amendments will have on your rights as a stockholder of IJNT.net:
Amendments to our Certificate of Incorporation
Removal of Action by Written Consent. Under the applicable provisions of
our current certificate of incorporation and bylaws, stockholders may take any
action which may be taken at a meeting of stockholders without a meeting,
without prior notice and without a vote, if:
-27-
<PAGE>
. the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take the
action at a meeting at which all shares entitled to vote thereon were
present and voted, sign consents in writing, setting forth the action;
and
. deliver the consents to the corporation.
The proposed amendments to the certificate of incorporation and bylaws
remove the ability of stockholders to take action by written consent without a
meeting and require the approval of at least 66 2/3% of the outstanding voting
power of our stock to amend this new provision. These amendments may have the
effect of delaying consideration of a stockholder proposal until the next annual
meeting, and will prevent the holders of a majority of the voting power of our
stock from unilaterally using the written consent procedure to take stockholder
action. Additionally, it will require a supermajority of the outstanding voting
power of our stock to repeal this provision.
Designation of Series of Preferred Stock by Board of Directors. Section
151 of the Delaware General Corporation Law provides that a corporation may
issue classes or series of stock having such voting powers, designations,
preferences and special rights as stated in its certificate of incorporation or
in resolutions providing for the issue of such stock adopted by its Board of
Directors pursuant to authority expressly vested in it by the provisions of its
certificate of incorporation. The proposed amendment to our certificate of
incorporation grants our Board of Directors the power, subject to the
limitations prescribed by law, to provide for the issuance of our authorized
shares of preferred stock in series and to establish the number of shares to be
included in each such series and the qualifications, limitations or restrictions
of such series. This power, which had previously been granted to our Board of
Directors, was inadvertently removed from the certificate of incorporation at
the time our certificate of incorporation was amended in November, 1999 to
increase the authorized number of shares of our capital stock.
Indemnification of Our Agents. The proposed amendment to the charter
provides that, to the fullest extent permitted by Section 145 of the Delaware
General Corporation Law we will indemnify any and all persons who we have the
power to indemnify under Section 145 from and against any and all of the
expenses, liabilities or other matters referred to in or covered by Section 145,
and such indemnification shall not be deemed exclusive of any other rights to
which those indemnified may be entitled under any bylaw or otherwise, both as to
action in his or her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any person made a party or threatened to be made a
party to any type of proceeding (other than an action by or in the right of the
corporation) because he or she is or was an officer, director, employee or agent
of the corporation or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or entity, against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with such proceeding: (1) if he or she acted
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, or (2) in the case of a
criminal proceeding, he or she had no reasonable cause to believe that his or
her conduct was unlawful.
Section 145 of the Delaware General Corporation Law further provides that a
corporation may indemnify any person made a party or threatened to be made a
party to any threatened, pending or completed action or suit brought by or in
the right of the corporation because he or she was an officer, director,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
other entity, against expenses actually and reasonably incurred in connection
with such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
corporation, except that there may be no such indemnification if the person is
found liable to the corporation unless, in such a case, the court determines the
person is fairly and reasonably entitled to such indemnification.
Section 145 of the Delaware General Corporation Law also provides that a
corporation must indemnify a director, officer, employee or agent who
successfully defends himself in a proceeding to which he or she was a party
because he or she was a director, officer, employee or agent of the corporation
against expenses actually and
-28-
<PAGE>
reasonably incurred by him or her. Expenses incurred by an officer or director
(or other employees or agents as deemed appropriate by the Board of Directors)
in defending a civil or criminal proceeding may be paid by the corporation in
advance of the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Under Delaware law, termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that such person is prohibited from
being indemnified.
Amendments to Bylaws
Our bylaws currently provide that the Board of Directors may generally
amend the bylaws, except that the board does not have the power to change the
quorum for meetings of stockholders or of the Board of Directors, or to change
any provisions of the bylaws with respect to the removal of directors or the
filling of vacancies in the board resulting from the removal by the stockholders
or to amend or repeal a bylaw which the stockholders provided, when passing such
bylaw, was not subject to amendment or repeal by the Board of Directors. As a
result, several of the proposed amendments to the bylaws have already been
approved by our Board of Directors and do not require your approval. In the
discussion of the material amendments to the bylaws that follows, we have
indicated those amendments which are subject to stockholder approval. It is
only for those indicated amendments that we are seeking your approval in this
proposal.
Removal of Directors. The proposed amendments to our bylaws provide that,
subject to the rights, if any, of holders of preferred stock, directors may be
removed, with or without cause only by the holders of 75% of the shares then
entitled to vote at an election of directors, except that (1) if we institute a
classified board, stockholders may remove a director only for cause and (2) if
we have instituted cumulative voting for the election of directors, if less than
the entire board is removed, no director may be removed without cause if the
votes cast against removal of the director would be sufficient to elect that
person. As a result, it will be more difficult for a stockholder to remove a
member of the board and create a vacancy that may be filled with its own
nomination. This proposed amendment to the bylaws requires consent of our
stockholders before it may become effective.
Filling of Vacancies on the Board of Directors. Upon amendment, our bylaws
will provide that, subject to the rights of the holders of any series of
preferred stock and unless the board otherwise determines, newly created
directorships resulting from any increase in the number of directors and any
vacancies on the board resulting from death, resignation, disqualification,
removal or other cause will be filled by the affirmative vote of a majority of
the remaining directors then in office, even though less than a quorum of the
board, and not by the stockholders. Any director elected in accordance with the
preceding sentence will hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been duly elected and
qualified. No decrease in the number of directors constituting the board will
shorten the term of any incumbent director.
Consistent with the Delaware General Corporation Law, the amended bylaws
will provide that if, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole Board of Directors (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any stockholder or
stockholders holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors, summarily
order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in
office.
These amendments may deter a stockholder from removing incumbent directors
and simultaneously gaining control of our Board of Directors by filling the
vacancies created by that removal with its own nominees. This proposed
amendment to the bylaws requires consent of our stockholders before it may
become effective.
Requirement of Supermajority for Stockholder Amendments to Bylaws. This
amendment requires the affirmative vote of at least 75% of the voting power of
our stock issued and outstanding for an amendment of the bylaws to be effected
by our stockholders. The Delaware General Corporation Law reserves the power to
amend or repeal a corporation's bylaws exclusively to its stockholders unless
the certificate of incorporation also confers such power upon the directors. If
the certificate of incorporation confers such power upon the directors, as does
ours, the
-29-
<PAGE>
stockholders nevertheless retain the power to adopt, amend, or repeal the
company's bylaws. This amendment, however, would make it easier for the holders
of a minority of our common stock to impede changes to the bylaws to which they
are opposed, and may also preclude a potential hostile acquirer from amending
the bylaws in a manner that would make a takeover of IJNT.net easier. This
proposed amendment to the bylaws requires consent of our stockholders before it
may become effective.
Limitation on Stockholder Action. As do the proposed amendments to the
charter, the proposed amendments to the bylaws provide that stockholders may not
take action by written consent and may only act at a special or annual meeting
of stockholders. The amended and restated bylaws also provide that a meeting of
stockholders may be called only by the chairman of the board or a majority of
the Board of Directors, and may not be called by stockholders. As a result, it
may be difficult for stockholders to present proposed business to the
stockholders for their consideration, and stockholder proposals may be delayed
until the next annual meeting.
These provisions would also prevent the holders of a majority of the voting
power of our outstanding stock from unilaterally using the written consent
procedure to take stockholder action. Furthermore, a stockholder could not
force stockholder consideration of a proposal over the opposition of the our
board by calling a special meeting of stockholders prior to the time the board
believes such consideration to be appropriate.
Procedures for Stockholder Nominations and Proposals. The bylaws as
amended establish an advance notice procedure for stockholders to nominate
candidates for election as directors or to bring other business before meetings
of stockholders (the "Stockholder Notice Procedure"). Only those stockholder
nominees who are nominated in accordance with the Stockholder Notice Procedure
will be eligible for election as directors of our company. Under the
Stockholder Notice Procedure, we must receive notice of stockholder nominations
to be made at an annual meeting (or of any other business to be brought before
such meeting) not less than 90 days nor more than 120 days prior to the first
anniversary of the previous year's annual meeting (or, if the date of the annual
meeting is more than 30 days before or more than 70 days after such anniversary
date, not earlier than the 120th day prior to such meeting and not later than
the later of (1) the 90th day prior to such meeting or (2) the 10th day after
public announcement of the date of such meeting is first made). Notwithstanding
the foregoing, in the event that the number of directors to be elected is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased board at least 80 days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice will be timely, but only with respect to nominees for any new positions
created by such increase, if we received it not later than the 10th day after we
make such public announcement. Our bylaws provide that only such business may
be conducted at a special meeting as is specified in the notice of meeting.
Nominations for election to the Board of Directors may be made at a special
meeting at which directors are to be elected by or at the board's direction or,
provided that the board has determined that directors will be elected at such
meeting, by a stockholder who has given timely notice of nomination. Under the
Stockholder Notice Procedure, we must receive such notice not earlier than the
120th day before such meeting and not later than the later of (1) the 90th day
prior to such meeting or (2) the 10th day after we first make public
announcement of the date of such meeting. Stockholders will not be able to
bring other business before special meetings of stockholders.
The Stockholder Notice Procedure provides that at an annual meeting only
such business may be conducted as has been brought before the meeting by or at
the direction of the board or by a stockholder who has given timely written
notice (as set forth above with respect to stockholder's nominations for
election of directors at annual meetings) to us of such stockholder's intention
to bring such business before such meeting. Under the Stockholder Notice
Procedure, a stockholder's notice to us proposing to nominate an individual for
election as a director must contain certain information, including the identity
and address of the nominating stockholder, the class and number of shares of
stock owned by such stockholder, and all information regarding the proposed
nominee that would be required to be included in a proxy statement soliciting
proxies for the proposed nominee. Under the Stockholder Notice Procedure, a
stockholder's notice relating to the conduct of business other than the
nomination of directors must contain information about such business and about
the proposing stockholder, including a brief description of the business the
stockholder proposes to bring before the meeting, the reasons for conducting
such business at such meeting, the name and address of such stockholder, the
class and number of shares of stock owned beneficially and of record by such
stockholder, and any material interest of such stockholder in the business so
proposed. If the chairman of the meeting determines that an individual was not
nominated, or other business was not brought before
-30-
<PAGE>
the meeting, in accordance with the Stockholder Notice Procedure, such
individual will not be eligible for election as a director, or such business
will not be conducted at such meeting, as the case may be.
By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure affords us the opportunity to consider the qualifications of
the proposed nominees and, to the extent deemed necessary or desirable by the
board, to inform stockholders about such qualifications. By requiring advance
notice of other proposed business, the Stockholder Notice Procedure provides a
more orderly procedure for conducting annual meetings of stockholders and, to
the extent deemed necessary or desirable by the board, provides us with an
opportunity to inform stockholders, prior to such meetings, of any business
proposed to be conducted at such meetings, together with the board's position
regarding action to be taken with respect to such business, so that stockholders
can better decide whether to attend such a meeting or to grant a proxy regarding
the disposition of any such business.
Although our bylaws do not give the board any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, they may have the effect of precluding a contest for the election of
directors or the consideration of stockholder proposals if the proper procedures
are not followed, and of discouraging or deterring a third party from conducting
a solicitation of proxies to elect its own slate of directors or to approve its
own proposal, without regard to whether consideration of such nominees or
proposals might be harmful or beneficial to IJNT.net and its stockholders.
Election of Directors by Plurality. Under the amended bylaws, a plurality
of the votes present in person or represented by proxy at an annual or special
meeting of stockholders will be is required to elect the nominees for director
at such meeting. "Plurality" means that the individuals who receive the largest
number of votes cast are elected as directors up to the maximum number of
directors to be chosen at the meeting. For example, if there are eight nominees
to be considered at a meeting at which six directors are to be elected, the six
directors receiving the highest number of votes will be elected. Consequently,
any shares not voted (whether by abstention, broker non-vote or otherwise) will
have no impact on the election of the director, except to the extent that the
failure to vote for an individual results in another individual receiving a
larger number of votes. Also, it is possible that a director could be elected
to office upon the approval of less than the holders of a majority of the voting
power of our outstanding stock.
Currently, directors are elected upon the approval of the holders of a
majority of the voting power of our outstanding stock represented in person or
by proxy at the meeting. As a result, a nominee must receive the affirmative
vote of greater than 50% of the shares represented at such meeting to be
elected. Any shares represented at the meeting that are not voted (whether by
abstention, broker non-vote or otherwise) will consequently have the effect of a
vote against such nominee.
Special Stockholders' Meetings. Our bylaws provide that, subject to the
rights of holders of any series of preferred stock to elect additional
directors, a special meeting of stockholders may be called only by the chairman
of the board or upon the written request of a majority of the entire board.
Stockholders are not permitted to call, or to require that the board call, a
special meeting of stockholders.
Stockholder Approval Required
Each of the proposed amendments to our charter and those amendments to our
bylaws that require stockholder approval described in this Proposal 3 are
conditioned upon stockholder approval of the other proposed amendments to our
charter and amendments to our bylaws that require stockholder approval. None of
the amendments to our charter or amendments to our bylaws that require
stockholder approval that are proposed will be adopted unless all are approved
by our stockholders.
The affirmative vote of a majority of the outstanding shares of our common
stock is required for approval of the proposed amendments to our charter and
amendments to our bylaws that require stockholder approval. Abstentions and
broker non-votes will be counted towards the tabulation of votes cast on each
proposal and will have the same effect as negative votes. If all of the
proposed amendments to our charter and bylaws are approved at the annual
meeting, we intend to file an amendment to our certificate of incorporation
shortly after the meeting. The amendment to the certificate of incorporation
will be effective immediately upon its acceptance for filing by the
-31-
<PAGE>
Secretary of State of the State of Delaware. The amendments to the bylaws that
require stockholder approval will be effective upon approval by the
stockholders. The amendments to our bylaws that do not require stockholder
approval were approved by our Board of Directors at a meeting on May 6, 2000
and, accordingly, are already effective. A description of these bylaw amendments
is included in this Proxy Statement for informational purposes only.
OUR BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF PROPOSAL 2 IS IN THE BEST
INTERESTS OF OUR COMPANY AND OUR STOCKHOLDERS. OUR BOARD OF DIRECTORS,
THEREFORE, RECOMMENDS THAT YOU VOTE "FOR" SUCH PROPOSAL; AND IT IS INTENDED THAT
PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
PROPOSAL NUMBER 3
EMPLOYEE BENEFIT PLANS
(Item No. 3 on the Proxy Card)
The Board of Directors of the Company have approved the 2000 Management
Equity Incentive Plan and the 2000 Equity Incentive Plan. The principal terms
and provisions of both Plans are summarized below. The summary, however, is not
a complete description of all the terms of the 2000 Management Equity Incentive
Plan or the 2000 Equity Incentive Plan. Copies of each plan are attached as
Appendices D and E.
Purpose
The 2000 Management Equity Incentive Plan and the 2000 Equity Incentive
Plan are designed to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
Employees, Directors and Consultants and to promote the success of the Company's
business. Options granted under each Plan may be Incentive Stock Options or
Non-Qualified Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under each Plan.
Stock Subject to Each Plan
Subject to the provisions of Section 13 of each Plan, the shares of stock
subject to Options or Stock Purchase Rights shall be Common Stock, initially
shares of the Company's Common Stock, par value $.001 per share. Subject to the
provisions of Section 13 of the 2000 Management Equity Incentive Plan, the
maximum aggregate number of Shares which may be issued upon exercise of such
Options or Stock Purchase Rights is 2,382,500 Shares. Subject to the provisions
of Section 13 of the 2000 Equity Incentive Plan, the maximum aggregate number of
Shares which may be issued upon exercise of such Options or Stock Purchase
Rights is 3,000,000 Shares. Shares issued upon exercise of Options or Stock
Purchase Rights may be authorized but unissued, or reacquired Common Stock. If
an Option or Stock Purchase Right expires or becomes unexercisable without
having been exercised in full, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under each Plan (unless either
Plan has terminated). Shares which are delivered by the Holder or withheld by
the Company upon the exercise of an Option or Stock Purchase Right under either
Plan, in payment of the exercise price thereof or tax withholding thereon, may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 3 of each Plan. If Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under either Plan. Notwithstanding the provisions of Section 3 of
each Plan, no Shares may again be optioned, granted or awarded if such action
would cause an Incentive Stock Option to fail to qualify as an Incentive Stock
Option under Code Section 422.
Administration of Each Plan
Unless and until the Board delegates administration to a Committee, each
Plan shall be administered by the Board. Subject to the provisions of either
Plan and the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, the Administrator shall
have the authority in its discretion: (i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock Purchase Rights
may from time to time be granted hereunder; (iii) to determine the number of
Shares to be covered by each
-32-
<PAGE>
such award granted hereunder; (iv) to approve forms of agreement for use under
either Plan; (v) to determine the terms and conditions of any Option or Stock
Purchase Right granted hereunder (such terms and conditions include, but are not
limited to, the exercise price, the time or times when Options or Stock Purchase
Rights may vest or be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or the
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine); (vi) to determine
whether to offer to buyout a previously granted Option as provided in either
Plans subsection 10(i) and to determine the terms and conditions of such offer
and buyout (including whether payment is to be made in cash or Shares); (vii) to
prescribe, amend and rescind rules and regulations relating to either Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws; (viii)
to allow Holders to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Option or
Stock Purchase Right that number of Shares having a Fair Market Value equal to
the minimum amount required to be withheld based on the statutory withholding
rates for federal and state tax purposes that apply to supplemental taxable
income. The Fair Market Value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined. All
elections by Holders to have Shares withheld for this purpose shall be made in
such form and under such conditions as the Administrator may deem necessary or
advisable; (ix) to amend either Plan or any Option or Stock Purchase Right
granted under either Plan as provided in Section 15 of either Plan; (x) and to
construe and interpret the terms of each Plan and awards granted pursuant to
each Plan and to exercise such powers and perform such acts as the Administrator
deems necessary or desirable to promote the best interests of the Company which
are not in conflict with the provisions of either Plan.
Eligibility
Non-Qualified Stock Options and Stock Purchase Rights may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option or
Stock Purchase Right may be granted additional Options or Stock Purchase Rights.
Limitations
Each Option shall be designated by the Administrator in the Option
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Shares subject to a Holder's Incentive Stock Options and
other incentive stock options granted by the Company, any Parent or Subsidiary,
which become exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options or other options shall be treated as Non-Qualified Stock Options.
Neither Plan, any Option nor any Stock Purchase Right shall confer upon a Holder
any right with respect to continuing the Holder's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Holder's right or the Company's right to terminate such employment or consulting
relationship at any time, with or without cause. No Service Provider shall be
granted, in any calendar year, Options or Stock Purchase Rights to purchase more
than 2,000,000 Shares under the 2000 Management Equity Incentive Plan or
1,000,000 under the 2000 Equity Incentive Plan; provided, however, that the
foregoing limitation shall not apply before the Public Trading Date and,
following the Public Trading Date, the foregoing limitation shall not apply
until the earliest of: (i) the first material modification of the each Plan
(including any increase in the number of shares reserved for issuance under
either Plan in accordance with Section 3); (ii) the issuance of all of the
shares of Common Stock reserved for issuance under each Plan; (iii) the
expiration of either Plan; (iv) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. For purposes of Section 6(c)
of each Plan, if an Option is canceled in the same calendar year it was granted
(other than in connection with a transaction described in Section 13 of either
plan), the canceled Option will be counted against the limit set forth in
Section 6(c) of each Plan. For this purpose, if the exercise price of an Option
is reduced, the transaction shall be treated as a cancellation of the Option and
the grant of a new Option.
-33-
<PAGE>
Term of Plans
Each Plan shall become effective upon its initial adoption by the Board and
shall continue in effect until it is terminated under Section 15 of each Plan.
No Options or Stock Purchase Rights may be issued under each Plan after the
tenth (10th) anniversary of the earlier of (i) the date upon which each Plan is
adopted by the Board or (ii) the date each Plan is approved by the stockholders.
Term of Options
The term of each Option shall be stated in the Option Agreement; provided,
however, that the term shall be no more than ten (10) years from the date of
grant thereof. In the case of an Incentive Stock Option granted to a Holder
who, at the time the Option is granted, owns (or is treated as owning under Code
Section 424) stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Option Agreement.
Option Exercise Price; Payment of Exercise Price
Option Exercise Price. The per share exercise price for the Shares to be
issued upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following: (i) In the case of an
Incentive Stock Option (A) granted to an Employee who, at the time of grant of
such Option, owns (or is treated as owning under Code Section 424) stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of grant. (B) granted to any other Employee, the per
Share exercise price shall be no less than one hundred percent (100%) of the
Fair Market Value per Share on the date of grant. (ii) Under the 2000
Management Equity Incentive Plan in the case of a Non-Qualified Stock Option,
the exercise price shall be set by the Administrator; provided, however, such
price shall be no less than the par value of a share of Common Stock, unless
otherwise permitted by applicable state law. Under the 2000 Equity Incentive
Plan, in the case of a Non-Qualified Stock Option (A) granted to a Service
Provider who, at the time of grant of such Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the exercise price shall be no less than
one hundred ten percent (110%) of the Fair Market Value per Share on the date of
the grant. (B) granted to any other Service Provider, the per Share exercise
price shall be no less than eighty-five percent (85%) of the Fair Market Value
per Share on the date of grant. (iii) Notwithstanding the foregoing, Options
may be granted with a per Share exercise price other than as required above
pursuant to a merger or other corporate transaction.
Payment of Exercise Price. The consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be
determined by the Administrator (and, in the case of an Incentive Stock Option,
shall be determined at the time of grant). Such consideration may consist of
(1) cash, (2) check, (3) with the consent of the Administrator, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Administrator, (4) with the consent of the
Administrator, other Shares which (x) in the case of Shares acquired from the
Company, have been owned by the Holder for more than six (6) months on the date
of surrender, and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) with the consent of the Administrator, surrendered Shares then
issuable upon exercise of the Option having a Fair Market Value on the date of
exercise equal to the aggregate exercise price of the Option or exercised
portion thereof, (6) property of any kind which constitutes good and valuable
consideration, (7) with the consent of the Administrator, delivery of a notice
that the Holder has placed a market sell order with a broker with respect to
Shares then issuable upon exercise of the Options and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price, provided, that payment of
such proceeds is then made to the Company upon settlement of such sale, or (8)
with the consent of the Administrator, any combination of the foregoing methods
of payment.
-34-
<PAGE>
Stock Purchase Rights
Rights to Purchase. Stock Purchase Rights may be issued either alone, in
addition to, or in tandem with Options granted under each Plan and/or cash
awards made outside of each Plan. After the Administrator determines that it
will offer Stock Purchase Rights under each Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
Repurchase Right. Unless the Administrator determines otherwise, the
Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 20 of each Plan, the purchase price for Shares repurchased by
the Company pursuant to such repurchase right and the rate at with such
repurchase right shall lapse shall be determined by the Administrator in its
sole discretion, and shall be set forth in the Restricted Stock purchase
agreement.
Time of Granting Options and Stock Purchase Rights
The date of grant of an Option or Stock Purchase Right shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option or Stock Purchase Right, or such other date as is
determined by the Administrator. Notice of the determination shall be given to
each Employee or Consultant to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.
Amendment and Termination of Each Plan
The Board may at any time wholly or partially amend, alter, suspend or
terminate either Plan. However, without approval of the Company's stockholders
given within twelve (12) months before or after the action by the Board, no
action of the Board may, except as provided in Section 13 of each Plan, increase
the limits imposed in Section 3 of each Plan on the maximum number of Shares
which may be issued under each Plan or extend the term of each Plan under
Section 7 of each Plan.
OUR BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF PROPOSAL NUMBER 3 IS IN
THE BEST INTEREST OF OUR COMPANY AND OUR STOCKHOLDERS. OUR BOARD OF DIRECTORS,
THEREFORE, RECOMMENDS THAT YOU VOTE "FOR" SUCH PROPOSAL AND IT IS INTENDED THAT
PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED.
PROPOSAL NUMBER 4
RATIFICATION OF DESIGNATION OF INDEPENDENT ACCOUNTANTS
(Item No. 4 on the Proxy Card)
The Board of Directors has approved the retention of BDO Seidman, LLP as
independent accountants for the Company until revoked by further action. BDO
Seidman, LLP has been the Company's independent accountants since April 3, 2000.
The Company previously engaged Smith & Co. as its independent accountants.
The stockholders are being asked to ratify the designation of BDO Seidman,
LLP as independent accountants for the Company for the fiscal year ending March
31, 2000. A representative of BDO Seidman, LLP is expected to be present at the
Annual Meeting to make a statement if he or she desires to do so, and such
representative is expected to be available to respond to appropriate questions.
Should the stockholders fail to ratify the designation of BDO Seidman, LLP
as independent accountants, retention of the firm for the fiscal year ending
March 31, 2000 will be reconsidered by the Board of Directors.
-35-
<PAGE>
Required Approval
The affirmative vote of the holders of a majority of shares of capital
stock represented and voting at a duly held meeting at which a quorum is present
is required to approve the designation of BDO Seidman, LLP as independent
accountants for the Company for the fiscal year ending March 31, 2000. Unless
marked to the contrary, proxies received will be voted "FOR" ratification of the
designation of BDO Seidman, LLP. as independent accountants for the Company's
fiscal year ending March 31,2000.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
Proposals Intended to be Presented at Next Annual Meeting. Proposals of
security holders intended to be presented at the Company's 2001 Annual Meeting
of Stockholders must be received by the Company for inclusion in the Company's
proxy statement and form of proxy at least 90 days but not more than 120 days
prior to August 25, 2001. Next year's Annual Meeting of stockholders will be
held on or about August 25, 2001.
Other Matters. Management knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the meeting, it
is the intention of the persons named in the accompanying form of proxy to vote
the shares represented thereby on such matters in accordance with their best
judgment.
Proxy Solicitation. The expense of solicitation of proxies will be borne
by the Company. In addition to solicitation of proxies by mail, certain
officers, directors and Company employees who will receive no additional
compensation for their services may solicit proxies by telephone, telegraph or
personal interview. The Company is required to request brokers and nominees who
hold stock in their name to furnish this proxy material to beneficial owners of
the stock and will reimburse such brokers and nominees for their reasonable out-
of-pocket expenses in so doing.
Annual Report. The Company will provide a copy of its Annual Report on
Form 10-K for the fiscal year ended March 31, 2000, without charge, to any
stockholder who makes a written request to Jeffrey R. Matsen, Executive Vice
President, IJNT.net, Inc., 2030 So. Main, Suite 520, Irvine, California 92612.
By Order of the Board of Directors
Jeffrey R. Matsen
Secretary
Irvine, CA
July 3, 2000
-36-
<PAGE>
INDEX TO APPENDICES
<TABLE>
<CAPTION>
Appendix
--------
<S> <C>
Audit Committee Charter............................................... A
Amended and Restated Certificate of Incorporation..................... B
Amended and Restated Bylaws........................................... C
2000 Management Equity Incentive Plan................................. D
2000 Equity Incentive Plan............................................ E
</TABLE>
<PAGE>
APPENDIX "A"
AUDIT COMMITTEE CHARTER
<PAGE>
IJNT.NET, INC.
AUDIT COMMITTEE CHARTER
ARTICLE I
---------
PURPOSE
-------
The purpose of the Audit Committee (the "Committee") of the Board of
Directors of IJNT.net, Inc., a Delaware corporation (the "Corporation"), is to
provide assistance to the Board of Directors in fulfilling their responsibility
to the stockholders, potential stockholders and investment community relating to
corporate accounting, reporting practices of the Corporation, and the quality
and integrity of financial reports of the Corporation. In so doing, it is the
objective of the Committee to establish and maintain free and open communication
between the directors, the independent auditors, the internal auditors and the
financial management of the Corporation.
ARTICLE II
----------
COMMITTEE MEMBERSHIP
--------------------
2.1 Number of Committee Members.
---------------------------
The authorized number of members of the Committee shall be three (3) and
all members of the Committee shall be composed of directors independent of the
Corporation and otherwise duly qualified under the relevant sections of the
Nasdaq National Market Rules, attached hereto and incorporated by reference as
Schedule 1. The Board of Directors may designate one or more Directors as
----------
alternate Committee members, who may replace any absent member at any meeting of
the Committee.
2.2 Appointment and Term of Office of Committee Members.
---------------------------------------------------
Committee members shall be appointed by the Board of Directors to hold
office until replaced by a resolution of the Board. Each Committee member,
including a member elected to fill a vacancy, shall hold office until the
expiration of the term for which elected and until a successor has been elected
and qualified, except in the case of the death, resignation, or removal of such
a member.
2.3 Removal.
-------
The entire Committee or any individual Committee member may be removed from
office without cause by the affirmative vote of a majority of the Board of
Directors of the Corporation.
-1-
<PAGE>
2.4 Resignation and Vacancies.
-------------------------
Any Committee member may resign effective upon giving oral or written
notice to the Chairman of the Board, the Secretary or the Board of Directors,
unless the notice specifies a later time for the effectiveness of such
resignation. If the resignation of a Committee member is effective at a future
time, the Board of Directors may elect a successor to take office when the
resignation becomes effective.
Vacancies on the Committee may be filled by the Board of Directors. Each
Committee member so elected shall hold office until a successor has been elected
and qualified by the Board of Directors, or until his or her death, resignation
or removal.
A vacancy or vacancies in the Committee shall be deemed to exist (i) in the
event of the death, resignation or removal of any Committee member, (ii) if the
Board of Directors by resolution declares vacant the office of a Committee
member who has been declared of unsound mind by an order of court or convicted
of a felony or (iii) if the authorized number of Committee members is increased.
ARTICLE III
-----------
COMMITTEE PROCESS
-----------------
3.1 Place of Meetings; Meetings by Telephone.
----------------------------------------
Regular meetings of the Committee may be held at any place within or
outside the State of Delaware that has been designated from time to time by the
Chairman of the Committee. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the Corporation.
Special meetings of the Committee may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the Corporation.
Members of the Committee may participate in a meeting through the use of
conference telephone or similar communications equipment, so long as all
Committee members participating in such meeting can hear one another.
Participation in a meeting pursuant to this paragraph constitutes presence in
person at such meeting.
3.2 Regular Meetings.
----------------
Regular meetings of the Committee may be held without notice if the time
and place of such meetings are fixed by resolution of the Board of Directors or
by resolution of the Committee.
3.3 Special Meetings; Notice.
------------------------
Subject to the provisions of the following paragraph, special meetings of
the Committee for any purpose or purposes may be called at any time by the
Chairman of the Committee, by the Board of Directors or by two (2) Committee
members.
-2-
<PAGE>
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telegram, charges prepaid, or by facsimile or electronic mail, addressed to
each Committee member at that member's address as it is shown on the records of
the Corporation. If the notice is mailed, it shall be deposited in the United
States mail at least four (4) days before the time of the holding of the
meeting. If the notice is delivered personally or by telephone or by facsimile,
telegram or electronic mail, it shall be delivered personally or by telephone or
by facsimile or to the telegraph company at least forty-eight (48) hours before
the time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the Committee member or to a person at
the office of the member who the person giving the notice has reason to believe
will promptly communicate it to the member. The notice need not specify the
purpose of the meeting.
3.4 Quorum.
------
A majority of the authorized number of Committee members shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.6 of this Charter. Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is present is the act
of the Committee, subject to certain provisions of the Delaware General
Corporation Law, the Certificate of Incorporation and other applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of Committee members, if any action
taken is approved by at least a majority of the required quorum for such
meeting.
3.5 Waiver of Notice.
----------------
Notice of a meeting need not be given to any Committee member who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, the lack of notice to
such member. All such waivers, consents, and approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. A waiver of
notice need not specify the purpose of any regular or special meeting of the
Committee.
3.6 Adjournment.
-----------
A majority of the Committee members present, whether or not a quorum is
present, may adjourn any meeting to another time and place.
3.7 Notice of Adjournment.
---------------------
If the meeting is adjourned for more than twenty-four (24) hours, notice of
any adjournment to another time and place shall be given prior to the time of
the adjourned meeting to the Committee members who were not present at the time
of the adjournment.
3.8 Committee Action by Written Consent Without A Meeting.
-----------------------------------------------------
Any action required or permitted to be taken by the Committee may be taken
without a meeting, if all Committee members individually or collectively consent
in writing to such action.
-3-
<PAGE>
Such written consent or consents shall be filed with the minutes of the
proceedings of the Committee. Such action by written consent shall have the same
force and effect as a unanimous vote of the Committee.
ARTICLE IV
----------
COMMITTEE STRUCTURE
-------------------
4.1 Chairman of the Committee.
-------------------------
The Chairman of the Committee, if such an officer be elected, shall, if
present, preside at meetings of the Committee and exercise and perform such
other powers and duties as may from time to time be assigned by the Board of
Director or as may be prescribed by this Charter. The Chairman of the Committee
shall be elected by resolution of the Board of Directors. In the absence or
disability of the Chairman of the Committee, the Board of Directors shall
appoint an alternative Chairman to preside at the Committee meetings.
4.2 Secretary.
---------
The Secretary shall keep or cause to be kept, at the principal executive
office of the Corporation or such other place as the Board of Directors may
direct, a book of minutes of all meetings and actions of the Committee. The
minutes shall show the time and place of each meeting, whether regular or
special (and, if special, how authorized and the notice given), the names of
those present and the proceedings thereof.
The Secretary shall give, or cause to be given, notice of all meetings of
the Committee required to be given by law, this Charter or by the Corporation's
Bylaws.
ARTICLE V
---------
RECORDS AND REPORTS
-------------------
5.1 Maintenance and Inspection of Charter.
-------------------------------------
The Corporation shall keep at its principal executive office the original
or a copy of this Charter as amended to date, which shall be open to inspection
by the stockholders at all reasonable times during office hours.
5.2 Minutes and Reports.
-------------------
The Committee shall keep regular minutes of its proceedings, which shall be
filed with the Secretary of the Corporation. All action by the Committee shall
be reported to the Board of Directors at the next meeting thereof, and, insofar
as rights of third parties shall not be affected thereby, shall be subject to
revision and alteration by the Board of Directors.
-4-
<PAGE>
5.3 Maintenance and Inspection of Minutes.
-------------------------------------
The records and the minutes of proceedings of the Committee shall be kept
at such place or places as are designated by the Board of Directors or, in
absence of such designation, at the principal executive office of the
Corporation. The minutes shall be kept in written form, and the accounting
books and records shall be kept either in written form or in any other form
capable of being converted into written form.
ARTICLE VI
RESPONSIBILITIES
----------------
In carrying out its responsibilities, the Committee believes its policies
and procedures should remain flexible, in order best to react to changing
conditions and to ensure to the directors and stockholders that the corporate
accounting and reporting practices of the Corporation are in accordance with all
requirements and are of the highest quality. The Audit Committee shall:
6.1 Documents/Reports Review
------------------------
(a) Review the annual audited financial statements with management
and the independent auditors, including major issues regarding accounting and
auditing principles and practices as well as the adequacy of internal controls
that could significantly affect the Company's financial statements, and
recommend that the audited financial statements be included in the Company's
Annual Report on Form 10-K.
(b) Review with management and the independent auditors the Company's
quarterly financial statements.
(c) Review with management and the independent auditors the
significant financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements and discuss any other matters
communicated to the Committee by the independent auditors.
(d) Prepare the report of the Audit Committee required by the rules
of the Securities and Exchange Commission to be included in the Company's annual
proxy statement.
6.2 Accounting and Financial Controls Framework
-------------------------------------------
(a) Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditors or management.
(b) Review with the independent auditors any management letter
provided by the independent auditors and the Company's responses to that letter.
-5-
<PAGE>
6.3 Independent Auditors
--------------------
(a) Recommend to the Board the appointment of the independent
auditors, which firm is ultimately accountable to the Audit Committee and the
Board.
(b) Approve the fees to be paid to the independent auditors.
(c) Receive disclosures from the independent auditors regarding the
auditors' independence required by Independence Standards Board Standard No. 1,
discuss such reports with the independent auditors, and, if so determined by the
Audit Committee, recommend that the Board take appropriate action to satisfy
itself of the independence of the auditors.
(d) Evaluate together with the Board the performance of the
independent auditors and, if so determined by the Audit Committee, recommend
that the Board replace the independent auditors.
(e) Meet with the independent auditors prior to the audit to review
the planning and staffing of the audit.
(f) Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit.
6.4 General Authority and Responsibilities
--------------------------------------
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee
may request any officer or employee of the Company or the Company's outside
counsel or independent auditors to attend a meeting of the Committee or to meet
with any members of, or consultants to, the Committee.
While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditors. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent
auditors or to assure compliance with laws and regulations.
The Audit Committee shall review and reassess the adequacy of this
Charter annually and recommend any proposed changes to the Board.
6.5 Duties As Needed.
----------------
(a) Review reports received from regulators and other legal and
regulatory matters that may have a material effect on the financial statements
or related Corporation compliance policies.
(b) Investigate any matter brought to its attention within the scope
of its duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
-6-
<PAGE>
ARTICLE VII
INDEMNIFICATION
---------------
Every person who was or is a party to, or is threatened to be made a party
to, or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a Committee member of the
Corporation shall be indemnified and held harmless to the fullest extent legally
permissible under the laws of the State of Delaware from time to time against
all expenses, liability and loss, including attorneys' fees, judgments, fines
and amounts paid or to be paid in settlement, reasonably incurred or suffered by
him in connection therewith. Such right of indemnification shall be a contract
right which may be enforced in any manner desired by such person.
This indemnification is intended to provide at all times the fullest
indemnification permitted by the laws of the State of Delaware and the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a Committee member of the corporation against any liability asserted
against such person and incurred in any such capacity or arising out of such
status, whether or not the corporation would have the power to indemnify such
person.
ARTICLE VIII
AMENDMENTS
----------
8.1 Amendment by Board of Directors.
-------------------------------
This Charter and any provision contained herein may be amended or repealed
by the Board of Directors.
8.2 Record of Amendments.
--------------------
Whenever an amendment or a new Charter is adopted, it shall be copied in
the book of minutes with the original Charter. If any provision of this Charter
is repealed, the fact of repeal, with the date of the meeting at which the
repeal was enacted or written consent was filed, shall be stated in said book.
-7-
<PAGE>
SCHEDULE 1
----------
NASDAQ Stock Market 4460 Non-Quantitative Designation Criteria for Issuers
Excepting Limited Partnerships--(d) Audit Committee:
(2)(A) Each issue must have, and certify that it has and will continue to
have, an audit committee of at least three members, comprised solely of
independent directors, each of whim is able to read and understand fundamental
financial statements, including a company's balance sheet, income statement, and
cash flow statement or will become able to do so within a reasonable period of
time after his or her appointment to the audit committee. Additionally, each
issuer must certify that it has, and will continue to have, at least one member
of the audit committee that has past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibility.
(2)(B) Notwithstanding paragraph (i), one director whose is not independent
as defined in Rule 4200, and is not a current employee or an immediate family
member of such employee, may be appointed to the audit committee, if the
membership on the committee by the individual is required by the best interests
of the corporation and its shareholders, and the board discloses, in the next
annual proxy statement subsequent to such determination, the nature of the
relationship and the reason for that determination.
NASDAQ Stock Market -4200. Definition (a) For the purposes of the Rule 4000
Series, unless the context requires otherwise--
14) "Independent director" means a person other than an officer or employee
of the company or its subsidiaries or any other individual having a relationship
which, in the opinion of the company's board of directors, would interfere with
the exercise of independent judgement in carrying out the responsibilities of a
director. The following persons shall not be considered independent:
(A) a director who is employed by the corporation or any of its
affiliates for the current year or any of the past three years;
(B) a director who accepts any compensation from the corporation or
any of its affiliates in excess of $60,000 during the previous fiscal year,
other than compensation for board service, benefits under a tax-qualified
retirement plan, or non-discretionary compensation;
(C) a director who is a member of the immediate family of an
individual who is, or has been in any of the past three years, employed by the
corporation or any of its affiliates as an executive officer. Immediate family
includes a person's spouse, parents, children, siblings, mother-in-law, father-
in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, and anyone
who resides in such person's home;
SCHEDULE 1
-1-
<PAGE>
(D) a director who is a partner in, or a controlling shareholder or
an executive officer of, any for-profit business organization to which the
corporation made, or from which the corporation received, payments (other than
those arising solely from investments in the corporation's securities) that
exceed 5% of the corporation's or business organization's consolidated gross
revenues for that year, or $200,000, whichever is more, in any of the past three
years; or
(E) a director who is employed as an executive of another entity
where any of the company's executives serve on that entity's compensation
committee.
SCHEDULE 1
-2-
<PAGE>
SECRETARY'S CERTIFICATE OF ADOPTION OF THE CHARTER
OF THE
IJNT.NET, INC.
AUDIT COMMITTEE
I, the undersigned, do hereby certify:
That I am the duly elected and acting Secretary of IJNT.net, INC., a Delaware
corporation.
That the foregoing Charter constituting the Charter of IJNT.net, Inc.'s Audit
Committee was adopted by the Directors of IJNT.net, Inc. on May 6, 2000.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 6/th/ day of May,
2000.
/s/ Jeffrey R. Matsen
----------------------------
JEFFREY R. MATSEN, Secretary
-1-
<PAGE>
APPENDIX "B"
AMENDED AND RESTATED CERTIFICATE
OF INCORPORATION
<PAGE>
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IJNT.NET, INC.,
a Delaware corporation
IJNT.NET, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (hereinafter
referred to as the "corporation"), hereby certifies as follows:
1. The name of the corporation is IJNT.net, Inc. and the original
Certificate of Incorporation of the corporation was filed with the Secretary of
State of the State of Delaware on June 11, 1992 under the name Picometrix, Inc.,
amended on December 8, 1995, further amended on August 8, 1997, further amended
on August 12, 1998, further amended on September 26, 1998, further amended on
March 8, 1999 and further amended on November 16, 1999.
2. Pursuant to Sections 242 and 245 of the General Corporation Law
of the State of Delaware, and having been adopted in accordance therewith, this
Amended and Restated Certificate of Incorporation restates and further
integrates and amends the provisions of the Certificate of Incorporation of the
corporation.
3. The text of the Certificate of Incorporation, as it may have
heretofore been amended or supplemented, is hereby restated and further amended
to read in its entirety as follows:
FIRST: The name of this corporation is:
-----
Universal Broadband Networks, Inc.
SECOND: The name and address, including street, number, city and
------
county, of the registered agent of the corporation in the State of Delaware are:
THE CORPORATION TRUST COMPANY
Corporation Trust Center
1209 Orange Street
Wilmington, New Castle County, Delaware 19801
THIRD: The purpose of the corporation is to engage in any lawful
-----
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes which the
------
corporation is authorized to have outstanding is Fifty-Five Million (55,000,000)
shares of which stock Fifty Million (50,000,000) shares in the par value of
$.001 each, amounting in the aggregate to Fifty Thousand Dollars ($50,000.00)
shall be common stock, and of which Five Million (5,000,000)
<PAGE>
shares in the par value of $.001 each, amounting in the aggregate to Five
Thousand Dollars ($5,000.00) shall be preferred stock.
FIFTH: Holders of the corporation's common stock shall have the
-----
following rights and preferences:
1. Dividend Rights of Common. Subject to the prior rights of
-------------------------
holders of all classes of stock at the time outstanding having prior rights as
to dividends, the holders of the common stock shall be entitled to receive, when
and as declared by the board of directors, out of any assets of the corporation
legally available therefor, such dividends as may be declared from time to time
by the board of directors.
2. Voting Rights. The holder of each share of common stock shall
-------------
have the right to one vote, and shall be entitled to notice of any
stockholder's meeting in accordance with the bylaws of the corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
3. Redemption. The common stock is not redeemable.
----------
SIXTH: The Board of Directors shall be and is divided into three
-----
classes, Class I, Class II and Class III. The number of directors in each class
shall be the whole number contained in the quotient arrived at by dividing the
number of directors by three, and if a fraction is also contained in such
quotient then if such fraction is one-third the extra director shall be a member
of Class III and if the fraction is two-thirds one of the extra directors shall
be a member of Class III and the other shall be a member of Class II. Each
director shall serve for a term ending on the date of the third annual meeting
following the annual meeting at which such director was elected; provided,
--------
however, that the initial directors of the Corporation shall each be assigned to
-------
a class at the time of their election, and the directors assigned to Class I
shall serve for a term ending on the date of the first annual meeting next
following July 25, 2000, the directors assigned to Class II shall serve for a
term ending on the date of the second annual meeting next following July 25,
2000, and the directors assigned to Class III shall serve for a term ending on
the date of the third annual meeting next following July 25, 2000.
In the event of any increase or decrease in the number of directors,
(a) each director then serving as such shall nevertheless continue as a director
of the class of which he is a member until the expiration of his current term,
or his prior death, retirement, resignation or removal, and (b) the newly
created or eliminated directorships resulting from such increase or decrease
shall be apportioned by the board of directors to such class or classes as
shall, so far as possible, bring the number of directors in the respective
classes into conformity with the formula in this Article, as applied to the new
number of directors.
Notwithstanding any of the foregoing provisions of this Article, each
director shall serve until his successor is elected and qualified or until his
death, retirement, resignation or removal. Should a vacancy occur or be
created, the remaining directors (even though less than a quorum) may fill the
vacancy for the full term of the class in which the vacancy occurs or is
created.
2
<PAGE>
SEVENTH: No action shall be taken by the stockholders except at an
-------
annual or special meeting of stockholders. The stockholders may not take action
by written consent.
EIGHTH: Election of directors at an annual or special meeting of
------
stockholders need not be by written ballot unless the bylaws of the corporation
shall otherwise provide. The number of directors of the corporation which shall
constitute the whole board of directors shall be such as from time to time shall
be fixed by or in the manner provided in the bylaws.
NINTH: In furtherance and not in limitation of the powers
-----
conferred by statute, the board of directors is expressly authorized to make,
repeal, alter, amend and rescind the bylaws of the corporation.
TENTH: The corporation shall, to the fullest extent permitted by
-----
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such person.
ELEVENTH: A director or officer of the corporation shall not be
--------
disqualified by his or her office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent or otherwise. No
transaction, contract or act of the corporation shall be void or voidable or in
any way affected or invalidated by reason of the fact that any director or
officer of the corporation is a member of any firm, a stockholder, director or
officer of any corporation or trustee or beneficiary of any trust that is in any
way interested in such transaction, contract or act. No director or officer
shall be accountable or responsible to the corporation for or in respect of any
transaction, contract or act of the corporation or for any gain or profit
directly or indirectly realized by him or her by reason of the fact that he or
she or any firm in which he or she is a member or any corporation of which he or
she is a stockholder, director, or officer, or any trust of which he or she is a
trustee, or beneficiary, is interested in such transaction, contract or act;
provided the fact that such director or officer or such firm, corporation,
trustee or beneficiary of such trust, is so interested shall have been disclosed
or shall have been known to the members of the board of directors as shall be
present at any meeting at which action upon such contract, transaction or act
shall have been taken. Any director may be counted in determining the existence
of a quorum at any meeting of the board of directors which shall authorize or
take action in respect to any such contract, transaction or act, and may vote
thereat to authorize, ratify or approve any such contract, transaction or act,
and any officer of the corporation may take any action within the scope of his
or her authority, respecting such contract, transaction or act with like force
and effect as if he or she or any firm of which he or she is a member, or any
corporation of which he or she is a stockholder, director or officer, or any
trust of which he or she is a trustee or beneficiary, were not interested in
such transaction,
3
<PAGE>
contract or act. Without limiting or qualifying the foregoing, if in any
judicial or other inquiry, suit, cause or proceeding, the question of whether a
director or officer of the corporation has acted in good faith is material, and
notwithstanding any statute or rule of law or equity to the contrary (if any
there by) his or her good faith shall be presumed in the absence of proof to the
contrary by clear and convincing evidence.
TWELFTH: Whenever a compromise or arrangement is proposed between
-------
the corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or the stockholders or class of stockholders of the corporation, as the case
may be, agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
THIRTEENTH: The corporation reserves the right to amend and repeal
----------
any provision contained in this certificate of incorporation in the manner
prescribed by the laws of the State of Delaware. All rights herein conferred are
granted subject to this reservation. Notwithstanding the foregoing, no
amendment, alteration, change or repeal may be made to Article Sixth or Seventh
or this Article Thirteenth without the affirmative vote of the holders of at
least sixty-six and two-thirds percent of the outstanding voting stock of the
corporation voting together as a single class.
The foregoing Amended and Restated Certificate of Incorporation has
been approved by the Board of Directors by written consent in accordance with
Section 141(f) of the General Corporation Law of the State of Delaware.
The foregoing Amended and Restated Certificate of Incorporation has
been approved by the stockholders of the corporation at the annual meeting of
stockholders held on July 25, 2000.
4
<PAGE>
The foregoing Amended and Restated Certificate of Incorporation has
been duly adopted in accordance with the applicable provisions of Sections 242
and 245 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by Jeffrey R. Matsen, its Executive Vice President, this 20/th/ day of
June, 2000.
---------------------------------------------
JEFFREY R. MATSEN, Executive Vice President
5
<PAGE>
APPENDIX "C"
AMENDED AND RESTATED BYLAWS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
ARTICLE I. OFFICES AND RECORDS........................................................................... 1
Section 1.1 Principal Executive Office.................................................... 1
Section 1.2 Other Offices................................................................. 1
Section 1.3 Books and Records............................................................. 1
ARTICLE II. MEETINGS OF STOCKHOLDERS..................................................................... 1
Section 2.1 Place of Meetings............................................................. 1
Section 2.2 Annual Meetings............................................................... 1
Section 2.3 Special Meetings.............................................................. 1
Section 2.4 Notice of Annual or Special Meeting........................................... 2
Section 2.5 Maintenance and Inspection of Stockholder List................................ 2
Section 2.6 Quorum........................................................................ 2
Section 2.7 Adjourned Meeting and Notice Thereof.......................................... 3
Section 2.8 Voting........................................................................ 3
Section 2.9 Validation of Defectively Called or Noticed Meeting........................... 3
Section 2.10 No Written Consent of Stockholders in Lieu of Meeting......................... 4
Section 2.11 Proxies....................................................................... 4
Section 2.12 Inspectors of Election........................................................ 5
Section 2.13 Record Date for Stockholder Notice, Voting and Giving Consents................ 5
Section 2.14 Notice of Stockholder Business and Nominations................................ 6
ARTICLE III. DIRECTORS................................................................................... 8
Section 3.1 Powers........................................................................ 8
Section 3.2 Number and Qualification of Directors......................................... 9
Section 3.3 Election and Term of Office................................................... 9
Section 3.4 Eligibility................................................................... 9
Section 3.5 Removal....................................................................... 9
Section 3.6 Vacancies..................................................................... 10
Section 3.7 Place of Meeting.............................................................. 10
Section 3.8 Regular Meetings.............................................................. 10
Section 3.9 Special Meetings.............................................................. 11
Section 3.10 Action at a Meeting: Quorum and Resulted Vote................................. 11
Section 3.11 Validation of Defectively Called or Noticed Meetings.......................... 11
Section 3.12 Adjournment................................................................... 12
Section 3.13 Participation in Meetings by Conference Telephone............................. 12
Section 3.14 Action Without Meeting........................................................ 12
Section 3.15 Fees and Compensation......................................................... 12
Section 3.16 Committees.................................................................... 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 3.17 Minutes of Committee Meetings................................................. 13
ARTICLE IV. OFFICERS..................................................................................... 13
Section 4.1 Officers...................................................................... 13
Section 4.2 Election...................................................................... 13
Section 4.3 Subordinate Officer........................................................... 13
Section 4.4 Removal and Resignation....................................................... 14
Section 4.5 Vacancies..................................................................... 14
Section 4.6 Chairman of the Board......................................................... 14
Section 4.7 Chief Executive Officer....................................................... 14
Section 4.8 President..................................................................... 14
Section 4.9 Vice Presidents............................................................... 15
Section 4.10 Secretary..................................................................... 15
Section 4.11 Chief Financial Officer....................................................... 15
Section 4.12 Assistant Secretaries and Assistant Treasurers................................ 16
ARTICLE V. INDEMNIFICATION OF OFFICERS, EMPLOYEES AND OTHER AGENTS....................................... 16
Section 5.1 Definitions................................................................... 16
Section 5.2 Actions by Third Parties...................................................... 17
Section 5.3 Actions by or in the Right of the Corporation................................. 17
Section 5.4 Action Commenced by Agent..................................................... 17
Section 5.5 Advance of Expenses........................................................... 17
Section 5.6 Contractual Nature............................................................ 18
Section 5.7 Insurance..................................................................... 18
Section 5.8 ERISA......................................................................... 18
Section 5.9 Other Indemnities............................................................. 18
ARTICLE VI. GENERAL CORPORATE MATTERS.................................................................... 19
Section 6.1 Record Date for Purposes Other Than Notice and Voting......................... 19
Section 6.2 Inspection of Corporate Records............................................... 19
Section 6.3 Inspection of Bylaws.......................................................... 19
Section 6.4 Checks, Drafts, Etc........................................................... 19
Section 6.5 Certificate for Shares........................................................ 20
Section 6.6 Representation of Shares of Other Corporations................................ 20
Section 6.7 Construction and Definitions.................................................. 20
Section 6.8 Registered Stockholders....................................................... 21
Section 6.9 Dividends..................................................................... 21
Section 6.10 Payment of Dividends.......................................................... 21
Section 6.11 Fiscal Year................................................................... 21
Section 6.12 Corporate Seal................................................................ 21
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 6.13 Manner of Giving Notice....................................................... 21
Section 6.14 Waiver of Notice.............................................................. 22
ARTICLE VII. AMENDMENTS TO BYLAWS........................................................................ 22
Section 7.1 Amendment by Director or Stockholders......................................... 22
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED
BYLAWS OF
UNIVERSAL BROADBAND NETWORKS, INC.
a Delaware corporation
ARTICLE I.
OFFICES AND RECORDS
Section 1.1 Principal Executive Office.
--------------------------
The principal executive office of the corporation shall be located as
directed by the board of directors, and the name and address of its registered
agent is The Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801.
Section 1.2 Other Offices.
-------------
Other business offices may at any time be established by the board of
directors, both within and without the State of Delaware, at any place or places
as the business of the corporation require.
Section 1.3 Books and Records.
-----------------
The books and records of the corporation may be kept at the corporation's
headquarters in Newport Beach, California or at such other locations outside the
State of Delaware as may from time to time be designated by the board of
directors.
ARTICLE II.
MEETINGS OF STOCKHOLDERS
Section 2.1 Place of Meetings.
-----------------
All meetings of stockholders shall be held at the principal executive
office of the corporation, or at any other place within or without the State of
Delaware which may be designated by the board of directors. If no designation is
made by the board of directors, the place of the meeting shall be the principal
office of the corporation.
Section 2.2 Annual Meetings.
---------------
The annual meetings of stockholders shall be held each year on a date and
time designated by the board of directors. At each such meeting (i) directors
shall be elected only from the persons who are nominated in accordance with the
procedure set forth in Section 2.14 below, (ii) reports of the affairs of the
corporation shall be considered, and (iii) any proper business may be transacted
only if submitted in accordance with the procedures set forth in Section 2.14
below.
Section 2.3 Special Meetings.
----------------
1
<PAGE>
Subject to the rights of the holders of any series of preferred stock,
par value $.001 per share, of the corporation or any other series or class of
stock as set forth in the certificate of incorporation to elect additional
directors under specified circumstances, special meetings of the stockholders
may be called only by the chairman of the board and shall be called by the
chairman of the board or the secretary of the corporation at the request in
writing of a majority of the board of directors.
Section 2.4 Notice of Annual or Special Meeting.
-----------------------------------
(a) Whenever stockholders are required or permitted to take action at a
meeting, written notice, stating the place, day and hour of the meeting, and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder of record entitled to vote at such
meeting, unless otherwise required or permitted by law. Such written notice
shall be given either personally or by mail or other means of written
communication. If mailed, such notice shall be deposited in the United States
mail, charges prepaid, addressed to such stockholder at his address appearing on
the stock transfer books of the corporation.
(b) Any notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any such notice in accordance with the
foregoing provisions, executed by the secretary, assistant secretary or any
transfer agent of the corporation, shall be prima facie evidence of the giving
of the notice.
Section 2.5 Maintenance and Inspection of Stockholder List.
----------------------------------------------
The secretary of the corporation shall prepare and make, at least ten
days before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 2.6 Quorum.
------
Except as otherwise required by law or by the certificate of incorporation,
the presence in person or by proxy of the holders of a majority of the voting
power of the shares entitled to vote at any meeting shall constitute a quorum
for the transaction of business at any meeting of stockholders, except that,
where a separate vote by a class or classes or series is required, the presence
in person or by proxy of the holders of a majority of the voting power of the
shares of such class or classes or series shall constitute a quorum for the
transaction of such business. The stockholders present at a duly called or held
meeting at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to
2
<PAGE>
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
Section 2.7 Adjourned Meeting and Notice Thereof.
------------------------------------
(a) Any stockholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time without notice other than
announcement at the meeting by the chairman of the meeting or by the vote of the
holders of a majority of the voting power of the shares represented in person by
proxy at such meeting, but in the absence of a quorum at the commencement of the
meeting, no other business may be transacted at such meeting.
(b) At any adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If any stockholders' meeting, either annual
or special, is adjourned for thirty days or more, or if after adjournment a new
record date is fixed for the adjourned meeting, notice of the adjourned meeting
shall be given as in the case of an original meeting. Except as provided above,
it shall not be necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat, other than by
announcement of the time and place thereof at the meeting at which such
adjournment is taken.
Section 2.8 Voting.
------
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the Delaware General Corporation Law (relating to
voting of shares held by a fiduciary, in the name of a corporation, or in joint
ownership). Election of directors at all meetings of the stockholders at which
directors are to be elected shall be by written ballot, and, except as otherwise
set forth in the certificates of incorporation with respect to the right of the
holders of any series of preferred stock or any other series or class of stock
to elect additional directors under specified circumstances, a plurality of the
votes cast thereat shall elect directors. All matters other than the election of
directors submitted to the stockholders at any meeting shall be decided, except
as otherwise provided by law, the certificate of incorporation, these Bylaws or
the rules and regulations of any stock exchange applicable to the corporation,
by the affirmative vote of the majority of the voting power of the shares
represented at the meeting and entitled to vote on such matter, except that
where a separate vote by a class or classes or series is required, the
affirmative vote of the majority of the voting power of the shares of such class
or classes or series represented at the meeting and entitled to vote shall be
the act of such class or classes or series.
Section 2.9 Validation of Defectively Called or Noticed Meeting.
---------------------------------------------------
The transactions of any meeting of stockholders, either annual or special,
however called and noticed, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present either in person or
by proxy, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, or who, though present,
has, at the beginning of the meeting, properly objected to the transaction of
any business because the meeting was not lawfully called or convened, or to
particular matters of business legally required to be included in the notice,
but not so included, signs a written waiver of notice,
3
<PAGE>
or a consent to the holding of such meeting, or an approval of the minutes
thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting. Neither the
business to be transacted at nor the purpose of any regular or special meeting
of stockholders need be specified in any written waiver of notice or consent.
Section 2.10 No Written Consent of Stockholders in Lieu of Meeting.
-----------------------------------------------------
No action shall be taken by the stockholders except at an annual or special
meeting of stockholders. The stockholders may not take action by written
consent.
Section 2.11 Proxies.
-------
(a) Every person entitled to vote or execute consents shall have the right
to do so either in person or by one or more agents authorized by a written proxy
executed by such person or his duly authorized agent and filed with the
secretary of the corporation. Subject to the Delaware General Corporation Law in
the case of any proxy which states that it is irrevocable, any proxy duly
executed shall continue in full force and effect until (i) an instrument
revoking it or a duly executed proxy bearing a later date is filed with the
secretary of the corporation prior to the vote pursuant thereto, (ii) the person
executing the proxy attends the meeting and votes in person, or (iii) written
notice of the death or incapacity of the maker of such proxy is received by the
corporation before the vote pursuant thereto is counted; provided that no such
proxy shall be valid after the expiration of three years from the date of its
execution, unless otherwise provided for in the proxy. The dates contained on
the forms of proxy shall presumptively determine the order of execution of the
proxies, regardless of the postmark dates on the envelopes in which they are
mailed.
(b) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy, the following shall
constitute a valid means by which a stockholder may grant such authority:
(i) A stockholder may execute a writing authorizing another person
or persons to act for such stockholder as proxy. Execution may be accomplished
by the stockholder or such stockholder's authorized officer, director, employee
or agent signing such writing or causing such stockholder's signature to be
affixed to such writing by any reasonable means including, but not limited to,
by facsimile signature.
(ii) A stockholder may authorize another person or persons to act
for such stockholder as proxy by transmitting or authorizing the transmission of
a telegram, cablegram, or other means of electronic transmission to the person
who will be the holder of the proxy or to a proxy solicitation firm, proxy
support service organization or like agent duly authorized by the person who
will be the holder of the proxy to receive such transmission, provided that any
such telegram, cablegram or other means of electronic transmission must either
set forth or be submitted with information from which it can be determined that
the telegram, cablegram or other electronic transmission was authorized by the
stockholder. If it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making that determination shall specify the
information upon which they relied.
4
<PAGE>
(iii) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission described in subparagraphs (i) or
(ii) above may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
Section 2.12 Inspectors of Election.
----------------------
(a) In advance of any meeting of stockholders, the board of directors may
appoint any person or persons other than nominees for office as inspectors of
election to act at such meeting or any adjournment thereof or in connection with
such written consent. If inspectors of election be not so appointed in advance
of any meeting, the chairman of any such meeting may, and on the request of any
stockholder or his proxy shall, make such appointment at the meeting. The number
of inspectors shall be either one or three. If appointed at a meeting on the
request of one or more stockholders or proxies, the majority of shares
represented in person or by proxy shall determine whether one or three
inspectors are to be appointed. In case any person appointed as inspector fails
to appear or fails or refuses to act, the vacancy may, and on the request of any
stockholder or a stockholder's proxy shall, be filled by appointment by the
board of directors in advance of the meeting, or at the meeting by the chairman
of the meeting.
(b) The duties of such inspectors shall be as prescribed by the Delaware
General Corporation Law and shall include: (i) determining the number of shares
outstanding and the voting power of each; (ii) the shares represented at the
meeting; (iii) the existence of a quorum; (iv) the authenticity, validity and
effect of proxies; (v) receiving votes, ballots or consents; (vi) hearing and
determining all challenges and questions in any way arising in connection with
the right to vote; (vii) counting and tabulating all votes or consents; (viii)
determining when the polls shall close; (ix) determining the result and (x) such
acts as may be proper to conduct the election or vote with fairness to all
stockholders.
(c) The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.
Section 2.13 Record Date for Stockholder Notice, Voting and Giving
-----------------------------------------------------
Consents.
--------
(a) For purposes of determining the stockholders entitled to notice of any
meeting or to vote at such meeting, the board of directors may fix, in advance,
a record date, which shall not be more than sixty days nor more than sixty days
before any such action without a meeting, and in this event only stockholders of
record on the date so fixed are entitled to notice of and to vote at such
meeting, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Delaware
General Corporation Law.
(b) If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or if
5
<PAGE>
notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held.
Section 2.14 Notice of Stockholder Business and Nominations.
----------------------------------------------
(a) Annual Meetings of Stockholders.
-------------------------------
(i) Nominations of persons for election to the board of directors
of the corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders only (a) pursuant
to the corporation's notice of meeting delivered pursuant to Section 2.7 of
these Bylaws, (b) by or at the direction of the chairman of the board or the
board of directors or (c) by any stockholder of the corporation who is entitled
to vote at the meeting, who complied with the notice procedures set forth in
Section 2.14(a)(ii) and (iii) and who was a stockholder of record at the time
the notice provided for in this Section 2.14 is delivered to the secretary of
the corporation.
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of Section
2.14(a)(i), the stockholder must have given timely notice thereof in writing to
the secretary of the corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice shall
be delivered to the secretary of the corporation at the principal executive
offices of the corporation not later than the close of business on the ninetieth
day nor earlier than the close of business on the one hundred twentieth day
prior to the first anniversary of the preceding year's annual meeting, provided,
however, that in the event that the date of the annual meeting is advanced by
more than thirty days, or delayed by more than seventy days, from such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the one hundred twentieth day prior to
such annual meeting and not later than the close of business on the later of (x)
the ninetieth day prior to such annual meeting or (y) the tenth day following
the day on which public announcement of the date of such meeting is first made
by the corporation. In no event shall the public announcement of an adjournment
or postponement of an annual meeting commence a new time period for the giving
of a stockholder's notice as described above. Such stockholder's notice shall
set forth: (a) as to each person whom the stockholder proposes to nominate for
election or reelection as a director all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and Rule 14a-11 thereunder, including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and the
beneficial owner, if any, on whose behalf the proposal is made and in the event
that such business includes a proposal to amend the Bylaws of the corporation,
the language of the proposed amendment; and (c) as to the stockholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such stockholder, as they appear on
the corporation's books, and of such beneficial owner, (ii) the class and number
of shares of the corporation which are owned beneficially and of record by such
stockholder and such beneficial
6
<PAGE>
owner, (iii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose such business or nomination,
(iv) a description of all arrangements or understandings between the stockholder
and each nominee and any other person or persons pursuant to which the
nomination or nominations are to be made by the stockholder, and (v) a
representation whether the stockholder or the beneficial owner, if any, intends
or is part of a group which intends to (a) deliver a proxy statement and form of
proxy to holders of at least the percentage of the corporation's outstanding
stock having the voting power required to approve or adopt the proposal or elect
the nominee and/or (b) otherwise solicit proxies from stockholders in support of
such proposal or nomination. The corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the corporation
to determine the eligibility of such proposed nominee to serve as a director of
the corporation or for use in the preparation of materials used for the
solicitation of proxies for the election of directors.
(iii) Notwithstanding anything in the second sentence of Section
2.14(a)(ii) to the contrary, in the event that the number of directors to be
elected to the board of directors of the corporation is increased and there is
no public announcement naming all of the nominees for director or specifying the
size of the increased board of directors made by the corporation at least eighty
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by this Bylaw shall also be considered timely, but
only with respect to nominees for any new positions created by such increase, if
it shall be delivered to the secretary of the corporation at the principal
executive offices of the corporation not later than the close of business on the
tenth day following the day on which such public announcement is first made by
the corporation.
(b) Special Meetings of Stockholders. Only such business shall be
--------------------------------
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the corporation's notice of meeting pursuant to Section
2.7 of these Bylaws. Nominations of persons for election to the board of
directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the corporation's notice of meeting (a) by or at
the direction of the board of directors or (b) provided that the board of
directors has determined that directors shall be elected at such meeting, by any
stockholder of the corporation who is entitled to vote at the meeting, who
complies with the notice procedures set forth in this Section 2.14 and who is a
stockholder of record at the time the notice provided for in this Section 2.14
is delivered to the secretary of the corporation. In the event the corporation
calls a special meeting of stockholders for the purpose of electing one or more
directors to the board of directors, any such stockholder may nominate a person
or persons (as the case may be), for election to such position(s) as are
specified in the corporation's notice of meeting, if the stockholder's notice as
required by Section 2.14(a)(ii) shall be delivered to the secretary of the
corporation at the principal executive offices of the corporation not earlier
than the close of business on the one hundred twentieth day prior to such
special meeting and not later than the close of business on the later of (x) the
ninetieth day prior to such special meeting or (y) the tenth day following the
day on which public announcement is first made of the date of the special
meeting and of the nominees proposed by the board of directors to be elected at
such meeting. In no event shall the public announcement of an adjournment of a
special meeting commence a new time period for the giving of a stockholder's
notice as described above.
7
<PAGE>
(c) General.
-------
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.14 shall be eligible to be elected at an
annual or special meeting of stockholders of the corporation to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 2.14. Except as otherwise provided by law, the
certificate of incorporation or these Bylaws, the chairman of the meeting shall
have the power and duty to (A) determine whether a nomination or any business
proposed to be brought before the meeting was made in accordance with the
procedures set forth in this Section 2.14 and (B) if any proposed nomination or
business is not in compliance with this Section 2.14, to declare that such
defective proposal or nomination shall be disregarded or that such proposed
business shall not be transacted.
(ii) For purposes of this Section 2.14, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 2.14,
a stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 2.14. Nothing in this Section 2.14 shall be deemed to
affect (A) any rights of stockholders to request inclusion of proposals in the
corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act (B)
any rights of the holders of preferred stock to elect directors under specified
circumstances.
ARTICLE III.
DIRECTORS
Section 3.1 Powers.
------
Subject to the provisions of the Delaware General Corporation Law, and
to any limitations in the certificate of incorporation and these bylaws relating
to action required to be approved by the stockholders or approved by the
outstanding shares, all corporate powers shall be exercised by or under the
authority of, and the business and affairs of the corporation shall be managed
by, the board of directors. Without prejudice to such general powers, but
subject to the same limitations, it is hereby expressly declared that the board
of directors shall have the following powers, to wit:
(a) to select and remove all the officers, agents and employees of the
corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the certificate of incorporation or with these
Bylaws, fix their compensation and require from them security for faithful
service;
(b) to conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, or with the certificate of incorporation or with these Bylaws, as they
may deem best;
8
<PAGE>
(c) to change the principal executive office and principal office for the
transaction of the corporation from one location to another; to fix and locate
from time to time one or more subsidiary offices of the corporation within or
without the State of Delaware; to designate any place within or without the
State of Delaware for the holding of any stockholders' meeting or meetings; and
to adopt, make and use a corporate seal, and to prescribe the forms of
certificates of stock, and to alter the form of such seal and of such
certificates from time to time, as in their judgment they may deem best,
provided such seal and such certificates shall at all times comply with the
provisions of law;
(d) to authorize the issuance of shares of stock of the corporation from
time to time, upon such terms as may be lawful; and
(e) to borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and securities therefor.
SECTION 3.2 Number and Qualification of Directors. The authorized number
-------------------------------------
of directors which shall constitute the board of directors shall not be less
than one nor more than ___. The exact number shall be determined from time to
time by resolution of the board of directors. Until otherwise determined by such
resolution, the board of directors shall consist of ___ persons.
SECTION 3.3 Election and Term of Office. The directors shall be elected
---------------------------
at each annual meeting of stockholders but, if any such annual meeting is not
held or the directors are not elected thereat, the directors may be elected at
any special meeting of stockholders held for that purpose. All directors shall
hold office until their respective successors are elected and qualified or until
such person's death, retirement, resignation or removal.
SECTION 3.4 Eligibility. Subject to the rights, if any, of the holders
-----------
of preferred stock then outstanding, if any, only persons who are nominated in
accordance with the procedures set forth in Section 2.14 shall be eligible for
election as directors. The directors need not be stockholders of the
corporation.
SECTION 3.5 Removal. Subject to the rights, if any, of the holders of
-------
shares of preferred stock then outstanding, if any, any director or the entire
board of directors may be removed, with or without cause, by the holders of 75%
of the voting power of the shares then entitled to vote at an election of
directors except that (i) unless the certificate of incorporation provides
otherwise, if the corporation shall have a classified board of directors,
stockholders may effect such removal only for cause, and (ii) so long as the
corporation shall have cumulative voting in respect of the election of
directors, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against the removal of the director
would be sufficient to elect that person if then cumulatively voted at an
9
<PAGE>
election of the entire board of directors or, if the corporation shall have
classes of directors, at an election of the class of directors of which that
person is a part.
SECTION 3.6 Vacancies.
---------
(a) A vacancy in the board of directors shall be deemed to exist in case
of the death, resignation or removal of any director, or if the board of
directors by resolution declares vacant the office of a director who has been
declared of unsound mind by order of a court or convicted of a felony, or if the
authorized number of directors be increased, or if the stockholders fail, at any
annual or special meeting of stockholders at which any director or directors are
elected, to elect the full authorized number of directors to be voted for at
that meeting.
(b) Vacancies on the board of directors by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, and newly
created directorships resulting from any increase in the authorized number of
directors may be filled only by a majority of the directors then in office,
although less than a quorum, or by a sole remaining director. The directors so
chosen shall hold office until the next annual election of directors and until
their successors are duly elected and qualified, unless sooner displaced. If
there are no directors in office, then an election of directors may be held in
the manner provided by statute. If, at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board of directors (as constituted immediately
prior to any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent of the total number of
the shares at the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies or newly
created directorships, or to replace the directors chosen by the directors then
in office.
(c) Any director may resign effective upon giving written notice to the
chairman of the board, the chief executive officer, the president, the secretary
or the board of directors of the corporation, unless the notice specifies a
later time for the effectiveness of such resignation. If the board of directors
accepts the resignation of a director tendered to take effect at a future time,
the board of directors shall have power to elect a successor or take office when
the resignation is to become effective. The director so elected shall hold
office until the next annual election of directors and until their successor is
duly elected and qualified, unless sooner displaced.
(d) No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
SECTION 3.7 Place of Meeting. Regular meetings of the board of directors
----------------
shall be held at any place within or without the State of Delaware which has
been designated from time to time by resolution of the board of directors or by
written consent of all members of the board of directors. In the absence of such
designation, regular meetings shall be held at the principal executive office of
the corporation. Special meetings of the board may be held either at a place so
designated or at the principal executive office of the corporation.
SECTION 3.8 Regular Meetings.
----------------
10
<PAGE>
Regular meetings of the board of directors shall be held without notice on the
date and at the time which the board of directors may from time to time
designate; provided, however, that should the day so designated fall upon a
Saturday, Sunday or legal holiday observed by the corporation at its principal
executive office, then said meeting shall be held at the same time on the next
day thereafter ensuing which is a full business day.
SECTION 3.9 Special Meetings.
----------------
(a) Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board. Special meetings of the
board of directors shall be called by the chairman of the board, the president,
any vice president or the secretary on the written request of two directors,
unless the board of directors consists of only one director; in which case
special meetings shall be called on the written request of the sole director.
(b) Special meetings of the board of directors shall be held upon three
days' written notice or forty-eight hours' notice given personally by telephone,
telegraph, telex or other similar means of communication. Any such notice shall
be addressed or delivered to each director at such director's address or, as
applicable, telephone number as it is shown upon the records of the corporation
or as may have been given to the corporation by the director for purposes of
notice or, if such address is not shown on such records or is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held.
(c) Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mail, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated to the recipient or to a person at the
office of the recipient who the person giving the notice has reason to believe
will promptly communicate it to the recipient.
(d) Any notice shall state the date, place and hour of the meeting. Notice
given to a director in accordance with this section shall constitute due, legal
and personal notice to such director.
SECTION 3.10 Action at a Meeting: Quorum and Resulted Vote. The presence
---------------------------------------------
of a majority of the authorized number of directors at a meeting of the board of
directors constitutes a quorum for the transaction of business, except as
hereinafter provided. If only one directors is authorized, such sole director
shall constitute a quorum. Every act or decision done or made by a majority of
the directors present at a meeting duly held at which a quorum is present shall
be regarded as the act of the board of directors, unless a greater number, or
the same number, after disqualifying one or more directors from voting, is
required by law, by the certificate of incorporation or by these Bylaws. A
meeting at which a quorum is initially present may continue to transact business
notwithstanding the withdrawal of directors, provided that any action taken is
approved by at least a majority of the required quorum for such meeting.
SECTION 3.11 Validation of Defectively Called or Noticed Meetings.
----------------------------------------------------
11
<PAGE>
The transactions of any meeting of the board of directors, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present and if, either before or
after the meeting, each of the directors not present or who, though present, has
prior to the meeting or at its commencement, protested the lack of proper notice
to him, signs a written waiver of notice or a consent to holding such meeting or
an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes or the
meeting.
SECTION 3.12 Adjournment. A majority of the directors present, whether or
-----------
not constituting a quorum, may adjourn any board of directors' meeting to
another time or place, without notice other than announcement at the meeting,
until a quorum shall be present.
SECTION 3.13 Participation in Meetings by Conference Telephone. Members
-------------------------------------------------
of the board of directors, or any committee designated by the board of directors
may participate in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can hear one another. Participating in a meeting as permitted in this Section
3.13 constitutes presence in person at such meeting.
SECTION 3.14 Action Without Meeting. Unless otherwise restricted by the
----------------------
certificate of incorporation, any action required or permitted to be taken by
the board of directors or any committee thereof may be taken without a meeting
if all members of the board or such committee, as the case may be, shall consent
in writing to such action. Such written consent or consents shall be filed with
the minutes of the proceedings of the board of directors and shall have the same
force and effect as a unanimous vote of the board of directors, or such
committee, as the case may be.
SECTION 3.15 Fees and Compensation. Unless otherwise restricted by the
---------------------
certificate of incorporation, the board of directors shall have the authority to
fix the compensation of directors. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and may be paid a
fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 3.16 Committees. The board of directors may, by resolution passed
----------
by the board of directors, designate one or more committees, each such committee
to consist of one or more of the directors of the corporation. The board of
directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or
12
<PAGE>
members thereof present at any meeting and not disqualified from voting, whether
or not constituting a quorum, may unanimously appoint another member of the
board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
Bylaws of the corporation; and, unless the resolution or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
SECTION 3.17 Minutes of Committee Meetings. Each committee shall keep
-----------------------------
regular minutes of its meetings and report the same to the board of directors
when required.
ARTICLE IV.
OFFICERS
SECTION 4.1 Officers. The officers of the corporation shall be chosen by
--------
the board of directors and shall include a chairman of the board, a chief
executive officer, a president, a secretary and a chief financial officer. The
corporation may also have, at the discretion of the board of directors, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 4.3 below. Any number of offices may be held by the same
person unless the certificate of incorporation shall provide otherwise. At the
time of the election of officers, the board of directors may by resolution
determine the order of their rank.
SECTION 4.2 Election. The officers of the corporation, except such
--------
officers as may be appointed in accordance with the provisions of Section 4.3
below, shall be chosen annually by, and shall serve at the pleasure of, the
board of directors, and each shall hold office until he or she shall resign or
shall be removed or otherwise disqualified to serve, or his or her successor
shall be elected and qualified.
SECTION 4.3 Subordinate Officer. The board of directors or the chief
-------------------
executive officer may appoint such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in these Bylaws or as the
board of directors or chief executive officer, as applicable, may from time to
time determine.
13
<PAGE>
SECTION 4.4 Removal and Resignation.
-----------------------
(a) Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting thereof, or, except in case
of an officer chosen by the board of directors, by any officer upon whom such
power or removal may be conferred by the board of directors.
(b) Any officer may resign at any time by giving written notice to the
board of directors, or to the president or to the secretary of the corporation.
Any resignation is without prejudice to the rights, if any, of the corporation
under any contract to which such officer is a party. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 4.5 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for regular election or appointment to such
office.
SECTION 4.6 Chairman of the Board. The chairman of the board shall, if
---------------------
present, preside at all meetings of the board of directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the board of directors or prescribed by these Bylaws. He shall be an ex-
officio member of all the standing committees, including the executive
committee, if any, and shall have the general power and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws. If there is no chief executive officer, the chairman of the board shall,
in addition, be the chief executive officer of the corporation and have the
powers and duties prescribed in Section 4.7 of these Bylaws.
SECTION 4.7 Chief Executive Officer. Subject to such supervisory powers,
-----------------------
if any, as may be given by the board of directors to the chairman of the board,
the chief executive officer shall be the chief executive officer of the
corporation and shall, subject to the control of the board of directors, have
general supervision, direction and control of the business and officers of the
corporation. He shall preside at all meetings of the stockholders and, if the
chairman of the board is not present, at all meetings of the board of directors.
SECTION 4.8 President. The president shall be the chief operating
---------
officer of the corporation, and in the event of absence or disability of the
chief executive officer, or if no chief executive officer has been appointed by
the board of directors, shall perform all the duties of the chief executive
officer, and when so acting shall have all the powers of, and be subject to all
the restrictions upon, the chief executive officer.
14
<PAGE>
SECTION 4.9 Vice Presidents. In the absence or disability of the
---------------
president, the vice presidents in order of their rank as fixed by the board of
directors or, if not ranked, a vice president designated by the board of
directors, if there be such an officer or officers, shall perform all the duties
of the president, and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents, if
there be such an officer or officers, shall have such other powers and perform
such other duties as from time to time may be prescribed for them respectively
by the board of directors or these Bylaws.
SECTION 4.10 Secretary.
---------
(a) The secretary shall record or cause to be recorded, and shall keep or
cause to be kept, at the principal executive office or such other place as the
board of directors may order, a book of minutes of all meetings and actions of
the stockholders, the board of directors and all committees thereof, with the
time and place of holding of meetings, whether regular or special, and, if
special, how authorized, the notice thereof given, the names of those present at
directors' meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
(b) The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors, and shall perform such other
duties as may be prescribed by the board of directors or these Bylaws. The
secretary shall keep in safe custody the seal of the corporation, and when
authorized by the board of directors, affix the same to any instrument requiring
it, and when so affixed it shall be attested by his signature or by the
signature of the chief executive officer, the president, any vice president,
assistant treasurer or assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his signature.
(c) The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent, or
registrar, if one be appointed, a share register, or a duplicate share register,
showing the names of the stockholders and their addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the same, and the number and date of cancellation of every certificate
surrendered for cancellation.
SECTION 4.11 Chief Financial Officer.
-----------------------
(a) The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and colored accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
(b) The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors, shall
render to the president and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation,
15
<PAGE>
and shall have such other powers and perform such other duties as may be
prescribed by the board of directors or these Bylaws.
(c) If required by the board of directors, the chief financial officer
shall give the corporation a bond, in such sum and with such surety or sureties
as shall be satisfactory to the board of directors, for the faithful performance
of the duties of the chief financial officer's office and for the restoration to
the corporation, in case of the chief financial officer's death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
SECTION 4.12 Assistant Secretaries and Assistant Treasurers. In the
----------------------------------------------
absence or disability of the secretary or the chief financial officer, their
duties shall be performed and their powers exercised, respectively, by any
assistant secretary or any assistant treasurer in the order determined by the
board of directors, or if there be no such determination, the assistant
secretary or assistant treasurer designated by the board of directors. The
assistant secretaries and the assistant treasurers shall have such other duties
and powers as may have been delegated to them, respectively, by the secretary or
the chief financial officer or by the board of directors.
ARTICLE V.
INDEMNIFICATION OF
OFFICERS, EMPLOYEES AND OTHER AGENTS
SECTION 5.1 Definitions. For the purpose of this Article V:
-----------
(a) "agent" means any person who is or was a director, officer, employee
or other agent of the corporation, or is or was serving at the written request
of the corporation as a director, officer, employee or agent of another foreign
or domestic corporation, partnership, joint venture, trust or other enterprise,
or was a director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
(b) "proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative.
(c) "expenses" includes, without limitation, attorneys' fees and any
expenses of establishing a right to indemnification under this Article V.
(d) "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
limited liability company, trust or other enterprise, shall
16
<PAGE>
stand in the same position under the provisions of this Article V with respect
to the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(e) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan.
(f) "serving at the written request of the corporation" shall include
service as an agent of the corporation which imposes duties on, or involves
services by, such agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this section.
Section 5.2 Actions by Third Parties.
------------------------
The corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any proceeding (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was
an agent of the corporation, against expenses, judgments, fines, settlements and
other amounts paid or to be paid in settlement actually and reasonably incurred
in connection with such proceeding to the fullest extent permitted by the laws
of the State of Delaware as they may exist from time to time.
Section 5.3 Actions by or in the Right of the Corporation.
---------------------------------------------
The corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of the corporation to procure a judgment in its favor by reason
of the fact that such person is or was an agent of the corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of such action to the fullest extent permitted by the laws
of the State of Delaware as they may exist from time to time.
Section 5.4 Action Commenced by Agent.
-------------------------
Notwithstanding the provisions of Section 5.2 or Section 5.3, except as
otherwise provided in paragraph (b) of Section 5.5, the corporation shall be
required to indemnify an agent in connection with a proceeding (or part thereof)
commenced by such agent only if the commencement of such proceeding (or part
thereof) by the agent was authorized by the board of directors of the
corporation.
Section 5.5 Advance of Expenses.
--------------------
(a) Expenses incurred in defending any proceeding shall be advanced by the
corporation prior to the final disposition of such proceeding upon receipt of a
request therefor and an undertaking by or on behalf of the agent to repay such
amount unless it shall be determined ultimately that the agent is not entitled
to be indemnified as authorized in this Article V.
17
<PAGE>
(b) If a claim for indemnification or advancement of expenses under this
Section 5.5 is not paid in full within thirty days after a written claim
therefor by the agent has been received by the corporation, the agent may file
suit to recover the unpaid amount of such claim and, if successful in whole or
in part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the corporation shall have the burden of proving that the agent
is not entitled to the requested indemnification or advancement of expenses
under applicable law.
Section 5.6 Contractual Nature.
------------------
The provision of this Article V shall not be deemed to be a contract right
and shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under the certificate of incorporation, these Bylaws, any
agreement, vote of stockholders or disinterested directors or otherwise both as
to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to an agent who has ceased being an
agent and shall inure to the benefit of the heirs, executors and administrators
of such person. Any repeal or modification of this Article V shall not affect
any rights or obligations then existing with respect to any state of facts then
or theretofore existing or any action, suit or proceeding theretofore existing
or any action, suit or proceeding theretofore or thereafter brought based in
whole or in part upon any such state of facts.
Section 5.7 Insurance.
---------
Upon and in the event of a determination by the board of directors to
purchase such insurance, the corporation shall purchase and maintain insurance
on behalf of any agent of the corporation against any liability asserted against
or incurred by the agent in such capacity or arising out of the agent's status
as such whether or not the corporation would have the power to indemnify the
agent against such liability under the provisions of this Article V. All amounts
received by an agent under any such policy of insurance shall be applied
against, but shall not limit, the amounts to which the agent is entitled
pursuant to the foregoing provisions of this Article V.
Section 5.8 ERISA.
-----
To assure indemnification under this provision of all such persons who are
or were "fiduciaries" of an employee benefit plan governed by the Employee
Retirement Income Security Act of 1974, as amended from time to time ("ERISA"),
the provisions of this Article V shall, except as limited by Section 410 of
ERISA, be interpreted as follows: an "other enterprise" shall be deemed to
include an employee benefit plan; the corporation shall be deemed to have
requested in writing a person to serve as an employee of an employee benefit
plan where the performance by such person of his duties to the corporation also
imposes duties on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on a person
with respect to an employee benefit plan in the performance of such person's
duties for a purpose reasonably believed by such person to be in compliance with
ERISA and the terms of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
Section 5.9 Other Indemnities.
-----------------
18
<PAGE>
This Article V shall not limit the right of the corporation, to the extent
and in the manner permitted by law, to indemnify and to advance expenses to
persons other than agents of the corporation when and as authorized by
appropriate corporate action.
ARTICLE VI.
GENERAL CORPORATE MATTERS
Section 6.1 Record Date for Purposes Other Than Notice and Voting.
------------------------------------------------------
(a) In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of the stockholders, or any adjournment
thereof, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix a record date which shall not be more
than sixty nor less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the board of directors may
fix a new record date for the adjourned meeting.
(b) If the board of directors does not so fix a record date, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth day before the date of that action, whichever is later.
Section 6.2 Inspection of Corporate Records.
--------------------------------
(a) The accounting books and records, the records of stockholders, and
minutes of proceedings of the stockholders and the board and committees of the
board of directors of the corporation and any subsidiary of the corporation
shall be open to inspection at any reasonable time during usual business hours,
upon the written demand on the corporation given under oath and stating the
purpose thereof, of any stockholder, for a purpose reasonably related to such
holder's interests as a stockholder. Such inspection by a stockholder or holder
of a voting trust certificate may be made in person or by an agent or attorney,
and the right of inspection includes the right to copy and make extracts.
(b) Every director shall have the absolute right at any reasonable time to
examine the corporation's stock ledger, a list of stockholders and its other
books and records for a purpose reasonably related to the director's position as
a director.
Section 6.3 Inspection of Bylaws.
--------------------
The corporation shall keep in its principal executive office in California,
or if its principal executive office is not in California, then at its principal
business office in California (or otherwise provide upon written request of any
stockholder) the original or a copy of these Bylaws as amended or otherwise
altered to date, certified by the secretary of the corporation, which shall be
open to inspection by the stockholders at all reasonable times during office
hours.
Section 6.4 Checks, Drafts, Etc.
-------------------
19
<PAGE>
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the board of directors.
Section 6.5 Certificate for Shares.
-----------------------
(a) Every holder of stock in the corporation shall be entitled to have a
certificate signed in the name of the corporation by the chairman of the board
or the president or a vice president and by the chief financial officer or an
assistant treasurer or the secretary or any assistant secretary, certifying the
number of shares and the class or series of shares represented by the
certificate owned by such stockholder. Any of the signatures on the certificate
may be facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such person were an officer, transfer agent or registrar at the date of
issue.
(b) Any such certificate shall also contain such legend or other statement
as may be required by applicable state securities laws, the federal securities
laws, and any agreement between the corporation and the stockholders thereof.
(c) Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or these Bylaws may
provide; provided, however, that on any certificate issued to represent any
partly paid shares, the total amount of the consideration to be paid therefor
and the amount paid thereon shall be stated.
(d) Except as provided in this Section 6.5, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
canceled at the same time. The board of directors may, however, in case any
certificate for shares is alleged to have been lost, stolen, or destroyed,
authorize the issuance of a new certificate in lieu thereof, and the corporation
may require that the corporation be given a bond or other adequate security
sufficient to indemnify it against any claim that may be made against it
(including expense or liability) on account of the alleged loss, theft, or
destruction of such certificate of the issuance of such new certificate.
Section 6.6 Representation of Shares of Other Corporations.
----------------------------------------------
The president or any other officer or officers authorized by the board of
directors or the president are each authorized to vote, represent and exercise
on behalf of the corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of the corporation. The
authority herein granted may be exercised either by any such officer in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officer.
Section 6.7 Construction and Definitions.
----------------------------
Unless the context otherwise requires, the general provisions, rules of
construction and definitions contained in the Delaware General Corporation Law
shall govern the construction of
20
<PAGE>
these bylaws. Without limiting the generality of the foregoing, the masculine
gender includes the feminine and neuter, the singular number includes the plural
and the plural number includes the singular, and the term "person" includes a
corporation as well as a natural person.
Section 6.8 Registered Stockholders.
-----------------------
The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and accordingly shall not
be bound to recognize any equitable or other claim or interest in such share on
the part of any other person, whether or not it shall have express or other
notice thereof, save as expressly provided by the laws of the State of Delaware.
Section 6.9 Dividends.
---------
Dividends upon the capital stock of the corporation, subject to the
provisions of the certificate of incorporation, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the certificate of incorporation.
Section 6.10 Payment of Dividends.
--------------------
Before payment of any dividend there may be set aside out of any funds of
the corporation available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the directors
shall think conducive to the interests of the corporation, and the directors may
abolish any such reserve.
Section 6.11 Fiscal Year.
-----------
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
Section 6.12 Corporate Seal.
--------------
The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 6.13 Manner of Giving Notice.
-----------------------
Whenever, under the provisions of the statutes or of the certificate of
incorporation or of these Bylaws, notice is required to be given to any director
or stockholder, it shall not be construed to mean personal notice, but such
notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by facsimile or telegram.
21
<PAGE>
Section 6.14 Waiver of Notice.
----------------
Whenever any notice is required to be given under the provisions of the
statutes or of the certificate of incorporation or of these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE VII.
AMENDMENTS TO BYLAWS
Section 7.1 Amendment by Director or Stockholders.
-------------------------------------
The board of directors is expressly empowered to adopt, amend or repeal the
bylaws of the corporation, without the approval of the stockholders. Any
adoption, amendment or repeal of the bylaws of the corporation by the board of
directors shall require the approval of a majority of the total number of
authorized directors (whether or not there exist any vacancies in previously
authorized directorships at the time any resolution providing for adoption,
amendment or repeal is presented to the board of directors). The holders of 75%
of the voting power of the stock issued and outstanding and entitled to vote
shall also have power to adopt, amend or repeal the bylaws of the corporation.
22
<PAGE>
APPENDIX "D"
2000 MANAGEMENT EQUITY INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Purposes of the Plan................................................... 1
2. Definitions............................................................ 1
3. Stock Subject to the Plan.............................................. 4
4. Administration of the Plan............................................. 4
5. Eligibility............................................................ 6
6. Limitations............................................................ 6
7. Term of Plan........................................................... 7
8. Term of Option......................................................... 7
9. Option Exercise Price and Consideration................................ 7
10. Exercise of Option..................................................... 8
11. Non-Transferability of Options and Stock Purchase Rights............... 11
12. Stock Purchase Rights.................................................. 11
13. Adjustments upon Changes in Capitalization, Merger or Asset Sale....... 12
14. Time of Granting Options and Stock Purchase Rights..................... 14
15. Amendment and Termination of the Plan.................................. 14
16. Stockholder Approval................................................... 15
17. Inability to Obtain Authority.......................................... 15
18. Reservation of Shares.................................................. 15
19. Information to Holders and Purchasers.................................. 15
20. Repurchase Provisions.................................................. 15
21. Investment Intent...................................................... 16
22. Governing Law.......................................................... 17
</TABLE>
i
<PAGE>
IJNT.NET, INC.
2000 MANAGEMENT EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of the IJNT.NET, Inc. 2000
--------------------
Management Equity Incentive Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business. Options granted under the Plan may be Incentive Stock
Options or Non-Qualified Stock Options, as determined by the Administrator at
the time of grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Acquisition" means (i) any consolidation or merger of the
-----------
Company with or into any other corporation or other entity or person in which
the stockholders of the Company prior to such consolidation or merger own less
than fifty percent (50%) of the Company's voting power immediately after such
consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (ii) a sale of all or
substantially all of the assets of the Company.
(b) "Administrator" means the Board or the Committee responsible for
-------------
conducting the general administration of the Plan, as applicable, in accordance
with Section 4 hereof.
(c) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(d) "Board" means the Board of Directors of the Company.
-----
(e) "Code" means the Internal Revenue Code of 1986, as amended.
----
(f) "Committee" means a committee appointed by the Board in
---------
accordance with Section 4 hereof.
(g) "Common Stock" means the Common Stock of the Company, par value
------------
$.001 per share.
(h) "Company" means IJNT.NET, Inc., a Delaware corporation.
-------
1
<PAGE>
(i) "Consultant" means any consultant or adviser if: (i) the
----------
consultant or adviser renders bona fide services to the Company or any Parent or
Subsidiary; (ii) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and (iii) the consultant or adviser is a natural person who has
contracted directly with the Company or any Parent or Subsidiary to render such
services.
(j) "Director" means a member of the Board.
--------
(k) "Employee" means any person, including an Officer or Director,
--------
who is an employee (as defined in accordance with Section 3401(c) of the Code)
of the Company or any Parent or Subsidiary of the Company. A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient, by itself, to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of a share
-----------------
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for a share of such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for a share of the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "Holder" means a person who has been granted or awarded an Option
------
or Stock Purchase Right or who holds Shares acquired pursuant to the exercise of
an Option or Stock Purchase Right.
(o) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code and
which is designated as an Incentive Stock Option by the Administrator.
2
<PAGE>
(p) "Independent Director" means a Director who is not an Employee
--------------------
of the Company.
(q) "Non-Qualified Stock Option" means an Option (or portion thereof)
--------------------------
that is not designated as an Incentive Stock Option by the Administrator, or
which is designated as an Incentive Stock Option by the Administrator but fails
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(r) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
------
(t) "Option Agreement" means a written agreement between the Company
----------------
and a Holder evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(u) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(v) "Plan" means the IJNT.NET, Inc. 2000 Management Equity
----
Incentive Plan.
(w) "Public Trading Date" means the first date upon which Common
-------------------
Stock of the Company is listed (or approved for listing) upon notice of issuance
on any securities exchange or designated (or approved for designation) upon
notice of issuance as a national market security on an interdealer quotation
system.
(x) "Restricted Stock" means Shares acquired pursuant to the exercise
----------------
of an unvested Option in accordance with Section 10(h) below or pursuant to a
Stock Purchase Right granted under Section 12 below.
(y) "Rule 16b-3" means that certain Rule 16b-3 under the Exchange
----------
Act, as such Rule may be amended from time to time.
(z) "Section 16(b)" means Section 16(b) of the Exchange Act.
-------------
(aa) "Securities Act" means the Securities Act of 1933, as amended.
--------------
(bb) "Service Provider" means an Employee, Director or Consultant.
----------------
(cc) "Share" means a share of Common Stock, as adjusted in accordance
-----
with Section 13 below.
(dd) "Stock Purchase Right" means a right to purchase Common Stock
--------------------
pursuant to Section 12 below.
3
<PAGE>
(ee) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
-------------------------
the Plan, the shares of stock subject to Options or Stock Purchase Rights shall
be Common Stock, initially shares of the Company's Common Stock, par value $.001
per share. Subject to the provisions of Section 13 of the Plan, the maximum
aggregate number of Shares which may be issued upon exercise of such Options or
Stock Purchase Rights is 2,382,500 Shares. Shares issued upon exercise of
Options or Stock Purchase Rights may be authorized but unissued, or reacquired
Common Stock. If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares
which were subject thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated). Shares which are delivered by the
Holder or withheld by the Company upon the exercise of an Option or Stock
Purchase Right under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of this Section 3. If Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan. Notwithstanding the provisions
of this Section 3, no Shares may again be optioned, granted or awarded if such
action would cause an Incentive Stock Option to fail to qualify as an Incentive
Stock Option under Code Section 422.
4. Administration of the Plan.
--------------------------
(a) Administrator. Unless and until the Board delegates
-------------
administration to a Committee as set forth below, the Plan shall be administered
by the Board. The Board may delegate administration of the Plan to a Committee
or Committees of one or more members of the Board, and the term "Committee"
shall apply to any person or persons to whom such authority has been delegated.
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. Notwithstanding the
foregoing, however, from and after the Public Trading Date, a Committee of the
Board shall administer the Plan and the Committee shall consist solely of two or
more Independent Directors each of whom is both an "outside director," within
the meaning of Section 162(m) of the Code, and a "non-employee director" within
the meaning of Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Independent Directors the authority to grant awards under the Plan
to eligible persons who are either (1) not then "covered employees," within the
meaning of Section 162(m) of the Code and are not expected to be "covered
employees" at the time of recognition of income resulting from such award or (2)
not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (ii) delegate to a committee of one or more members of
the Board who are not "non-employee directors," within the meaning of Rule 16b-
3, the authority to grant awards under the Plan to eligible persons who are
not then subject to
4
<PAGE>
Section 16 of the Exchange Act. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may only be filled by the Board.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, the Administrator shall
have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each
such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option or
Stock Purchase Right granted hereunder (such terms and conditions include, but
are not limited to, the exercise price, the time or times when Options or Stock
Purchase Rights may vest or be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or Stock Purchase Right or
the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine);
(vi) to determine whether to offer to buyout a previously
granted Option as provided in subsection 10(i) and to determine the terms and
conditions of such offer and buyout (including whether payment is to be made in
cash or Shares);
(vii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(viii) to allow Holders to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld based on the statutory
withholding rates for federal and state tax purposes that apply to supplemental
taxable income. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Holders to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(ix) to amend the Plan or any Option or Stock Purchase Right
granted under the Plan as provided in Section 15; and
5
<PAGE>
(x) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan and to exercise such powers and perform such acts
as the Administrator deems necessary or desirable to promote the best interests
of the Company which are not in conflict with the provisions of the Plan.
(c) Effect of Administrator's Decision. All decisions,
----------------------------------
determinations and interpretations of the Administrator shall be final and
binding on all Holders.
5. Eligibility. Non-Qualified Stock Options and Stock Purchase Rights
-----------
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees. If otherwise eligible, an Employee or Consultant who has been
granted an Option or Stock Purchase Right may be granted additional Options or
Stock Purchase Rights.
6. Limitations.
-----------
(a) Each Option shall be designated by the Administrator in the
Option Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares subject to a Holder's Incentive Stock
Options and other incentive stock options granted by the Company, any Parent or
Subsidiary, which become exercisable for the first time during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options or other options shall be treated as Non-Qualified Stock
Options.
For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan, any Option nor any Stock Purchase Right shall
confer upon a Holder any right with respect to continuing the Holder's
employment or consulting relationship with the Company, nor shall they interfere
in any way with the Holder's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
(c) No Service Provider shall be granted, in any calendar year,
Options or Stock Purchase Rights to purchase more than 2,000,000 Shares;
provided, however, that the foregoing limitation shall not apply prior to the
Public Trading Date and, following the Public Trading Date, the foregoing
limitation shall not apply until the earliest of: (i) the first material
modification of the Plan (including any increase in the number of shares
reserved for issuance under the Plan in accordance with Section 3); (ii) the
issuance of all of the shares of Common Stock reserved for issuance under the
Plan; (iii) the expiration of the Plan; (iv) the first meeting of stockholders
at which Directors of the Company are to be elected that occurs after the close
of the third calendar year following the calendar year in which occurred the
first registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. The foregoing limitation shall
be adjusted proportionately in connection with any change in the
6
<PAGE>
Company's capitalization as described in Section 13. For purposes of this
Section 6(c), if an Option is canceled in the same calendar year it was granted
(other than in connection with a transaction described in Section 13), the
canceled Option will be counted against the limit set forth in this Section
6(c). For this purpose, if the exercise price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option.
7. Term of Plan. The Plan shall become effective upon its initial
------------
adoption by the Board and shall continue in effect until it is terminated under
Section 15 of the Plan. No Options or Stock Purchase Rights may be issued under
the Plan after the tenth (10th) anniversary of the earlier of (i) the date upon
which the Plan is adopted by the Board or (ii) the date the Plan is approved by
the stockholders.
8. Term of Option. The term of each Option shall be stated in the Option
--------------
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to a Holder who, at the time the Option is granted, owns (or is treated as
owning under Code Section 424) stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of such
Option, owns (or is treated as owning under Code Section 424) stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant.
(B) granted to any other Employee, the per Share exercise
price shall be no less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the exercise
price shall be set by the Administrator; provided, however, such price shall be
no less than the par value of a share of Common Stock, unless otherwise
permitted by applicable state law.
7
<PAGE>
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, a full recourse promissory
note bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code) and payable upon such terms as may be
prescribed by the Administrator, (4) with the consent of the Administrator,
other Shares which (x) in the case of Shares acquired from the Company, have
been owned by the Holder for more than six (6) months on the date of surrender,
and (y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (5)
with the consent of the Administrator, surrendered Shares then issuable upon
exercise of the Option having a Fair Market Value on the date of exercise equal
to the aggregate exercise price of the Option or exercised portion thereof, (6)
property of any kind which constitutes good and valuable consideration, (7) with
the consent of the Administrator, delivery of a notice that the Holder has
placed a market sell order with a broker with respect to Shares then issuable
upon exercise of the Options and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price, provided, that payment of such
proceeds is then made to the Company upon settlement of such sale, or (8) with
the consent of the Administrator, any combination of the foregoing methods of
payment.
10. Exercise of Option.
------------------
(a) Vesting; Fractional Exercises. Options granted hereunder shall be
-----------------------------
vested and exercisable according to the terms hereof at such times and under
such conditions as determined by the Administrator and set forth in the Option
Agreement; provided, however, that, except with regard to Options granted to
Officers, Directors or Consultants, in no event shall an Option granted
hereunder become vested and exercisable at a rate of less than twenty percent
(20%) per year over five (5) years from the date the Option is granted, subject
to reasonable conditions, such as continuing to be a Service Provider. An Option
may not be exercised for a fraction of a Share.
(b) Deliveries upon Exercise. All or a portion of an exercisable
------------------------
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his or her office:
(i) A written or electronic notice complying with the
applicable rules established by the Administrator stating that the Option, or a
portion thereof, is exercised. The notice shall be signed by the Holder or other
person then entitled to exercise the Option or such portion of the Option;
(ii) Such representations and documents as the Administrator, in
its absolute discretion, deems necessary or advisable to effect compliance with
Applicable Laws.
8
<PAGE>
The Administrator may, in its absolute discretion, also take whatever additional
actions it deems appropriate to effect such compliance, including, without
limitation, placing legends on share certificates and issuing stop transfer
notices to agents and registrars;
(iii) Upon the exercise of all or a portion of an unvested Option
pursuant to Section 10(h), a Restricted Stock purchase agreement in a form
determined by the Administrator and signed by the Holder or other person then
entitled to exercise the Option or such portion of the Option; and
(iv) In the event that the Option shall be exercised pursuant to
Section 10(f) by any person or persons other than the Holder, appropriate proof
of the right of such person or persons to exercise the Option.
(c) Conditions to Delivery of Share Certificates. The Company shall
--------------------------------------------
not be required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(i) The admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed;
(ii) The completion of any registration or other qualification
of such Shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Administrator shall, in its absolute discretion, deem
necessary or advisable;
(iii) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Administrator shall, in its
absolute discretion, determine to be necessary or advisable;
(iv) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and
(v) The receipt by the Company of full payment for such Shares,
including payment of any applicable withholding tax, which in the discretion of
the Administrator may be in the form of consideration used by the Holder to pay
for such Shares under Section 9(b).
(d) Termination of Relationship as a Service Provider. If a Holder
-------------------------------------------------
ceases to be a Service Provider other than by reason of the Holder's disability
or death, such Holder may exercise his or her Option within such period of time
as is specified in the Option Agreement to the extent that the Option is vested
on the date of termination (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the Holder's termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option immediately cease to be issuable
under the Option and shall again become available for issuance under the
9
<PAGE>
Plan. If, after termination, the Holder does not exercise his or her Option
within the time period specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under
the Plan.
(e) Disability of Holder. If a Holder ceases to be a Service Provider
-------------------
as a result of the Holder's disability, the Holder may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Holder's
termination. If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock
Option from and after the day which is three (3) months and one (1) day
following such termination. If, on the date of termination, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan. If, after
termination, the Holder does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan.
(f) Death of Holder. If a Holder dies while a Service Provider, the
---------------
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Holder's estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option is vested on the date of death. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Holder's termination. If, at the time of death,
the Holder is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall immediately cease to be issuable under
the Option and shall again become available for issuance under the Plan. The
Option may be exercised by the executor or administrator of the Holder's estate
or, if none, by the person(s) entitled to exercise the Option under the Holder's
will or the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall again become available for issuance under the Plan.
(g) Regulatory Extension. A Holder's Option Agreement may provide
--------------------
that if the exercise of the Option following the termination of the Holder's
status as a Service Provider (other than upon the Holder's death or Disability)
would be prohibited at any time solely because the issuance of shares would
violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option
set forth in Section 8 or (ii) the expiration of a period of three (3) months
after the termination of the Holder's status as a Service Provider during which
the exercise of the Option would not be in violation of such registration
requirements.
10
<PAGE>
(h) Early Exercisability. The Administrator may provide in the terms
--------------------
of a Holder's Option Agreement that the Holder may, at any time before the
Holder's status as a Service Provider terminates, exercise the Option in whole
or in part prior to the full vesting of the Option; provided, however, that
subject to Section 20, Shares acquired upon exercise of an Option which has not
fully vested may be subject to any forfeiture, transfer or other restrictions as
the Administrator may determine in its sole and absolute discretion.
(i) Buyout Provisions. The Administrator may at any time offer to
-----------------
buyout for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Holder at the time that such offer is made.
11. Non-Transferability of Options and Stock Purchase Rights.
--------------------------------------------------------
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Holder, only by the Holder.
12. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock Purchase Rights may be issued either
------------------
alone, in addition to, or in tandem with Options granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
(b) Repurchase Right. Unless the Administrator determines otherwise,
----------------
the Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 20, the purchase price for Shares repurchased by the Company
pursuant to such repurchase right and the rate at with such repurchase right
shall lapse shall be determined by the Administrator in its sole discretion, and
shall be set forth in the Restricted Stock purchase agreement.
(c) Other Provisions. The Restricted Stock purchase agreement shall
----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
----------------------
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is
11
<PAGE>
prior to the date the Stock Purchase Right is exercised, except as provided in
Section 13 of the Plan.
13. Adjustments upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) In the event that the Administrator determines that any dividend
or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Option, Stock Purchase Right or Restricted
Stock, then the Administrator shall, in such manner as it may deem equitable,
adjust any or all of:
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Stock Purchase Rights
may be granted or awarded (including, but not limited to, adjustments of the
limitations in Section 3 on the maximum number and kind of shares which may be
issued and adjustments of the maximum number of Shares that may be purchased by
any Holder in any calendar year pursuant to Section 6(c));
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Stock Purchase Rights or
Restricted Stock; and
(iii) the grant or exercise price with respect to any Option or
Stock Purchase Right.
(b) In the event of any transaction or event described in Section
13(a), the Administrator, in its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, either by the terms of the Option, Stock
Purchase Right or Restricted Stock or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Holder's request,
is hereby authorized to take any one or more of the following actions whenever
the Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option, Stock Purchase
Right or Restricted Stock granted or issued under the Plan or to facilitate such
transaction or event:
(i) To provide for either the purchase of any such Option,
Stock Purchase Right or Restricted Stock for an amount of cash equal to the
amount that could have been obtained upon the exercise of such Option or Stock
Purchase Right or realization of the Holder's rights had such Option, Stock
Purchase Right or Restricted Stock been currently
12
<PAGE>
exercisable or payable or fully vested or the replacement of such Option, Stock
Purchase Right or Restricted Stock with other rights or property selected by the
Administrator in its sole discretion;
(ii) To provide that such Option or Stock Purchase Right shall
be exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the provisions of such Option or Stock Purchase Right;
(iii) To provide that such Option, Stock Purchase Right or
Restricted Stock be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices;
(iv) To make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding Options
and Stock Purchase Rights, and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding Options,
Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or
Restricted Stock which may be granted in the future; and
(v) To provide that immediately upon the consummation of such
event, such Option or Stock Purchase Right shall not be exercisable and shall
terminate; provided, that for a specified period of time prior to such event,
such Option or Stock Purchase Right shall be exercisable as to all Shares
covered thereby, and the restrictions imposed under an Option Agreement or
Restricted Stock purchase agreement upon some or all Shares may be terminated
and, in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase, notwithstanding anything to the
contrary in the Plan or the provisions of such Option, Stock Purchase Right or
Restricted Stock purchase agreement.
(c) Subject to Section 3, the Administrator may, in its discretion,
include such further provisions and limitations in any Option, Stock Purchase
Right, Restricted Stock agreement or certificate, as it may deem equitable and
in the best interests of the Company.
(d) If the Company undergoes an Acquisition, then any surviving
corporation or entity or acquiring corporation or entity, or affiliate of such
corporation or entity, may assume any Options, Stock Purchase Rights or
Restricted Stock outstanding under the Plan or may substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 13(d)) for those
outstanding under the Plan. In the event any surviving corporation or entity or
acquiring corporation or entity in an Acquisition does not assume such Options,
Stock Purchase Rights or Restricted Stock or does not substitute similar stock
awards for those outstanding under the Plan, then with respect to (i) Options,
Stock Purchase Rights or Restricted Stock held by participants in the Plan whose
status as a Service Provider has not terminated prior to such event, the vesting
of such Options, Stock Purchase Rights or Restricted Stock (and, if applicable,
the time during which such awards may be exercised) shall be accelerated and
made fully exercisable and all restrictions thereon shall lapse at least ten
(10) days prior to the closing of the Acquisition (and the Options or Stock
Purchase Rights terminated if not exercised prior to the closing of such
Acquisition), and (ii) any
13
<PAGE>
other Options or Stock Purchase Rights outstanding under the Plan, such Options
or Stock Purchase rights shall be terminated if not exercised prior to the
closing of the Acquisition.
(e) Notwithstanding the foregoing, in the event that the Company
becomes a party to a transaction that is intended to qualify for "pooling of
interests" accounting treatment and, but for one or more of the provisions of
this Plan or any Option Agreement or any Restricted Stock purchase agreement
would so qualify, then this Plan and any such agreement shall be interpreted so
as to preserve such accounting treatment, and to the extent that any provision
of the Plan or any such agreement would disqualify the transaction from pooling
of interests accounting treatment (including, if applicable, an entire Option
Agreement or Restricted Stock purchase agreement), then such provision shall be
null and void. All determinations to be made in connection with the preceding
sentence shall be made by the independent accounting firm whose opinion with
respect to "pooling of interests" treatment is required as a condition to the
Company's consummation of such transaction.
(f) The existence of the Plan, any Option Agreement or Restricted
Stock purchase agreement and the Options or Stock Purchase Rights granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
14. Time of Granting Options and Stock Purchase Rights.
--------------------------------------------------
The date of grant of an Option or Stock Purchase Right shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option or Stock Purchase Right, or such other date as is
determined by the Administrator. Notice of the determination shall be given to
each Employee or Consultant to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time wholly or
-------------------------
partially amend, alter, suspend or terminate the Plan. However, without approval
of the Company's stockholders given within twelve (12) months before or after
the action by the Board, no action of the Board may, except as provided in
Section 13, increase the limits imposed in Section 3 on the maximum number of
Shares which may be issued under the Plan or extend the term of the Plan under
Section 7.
(b) Stockholder Approval. The Board shall obtain stockholder approval
--------------------
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
14
<PAGE>
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Holder,
unless mutually agreed otherwise between the Holder and the Administrator, which
agreement must be in writing and signed by the Holder and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options, Stock Purchase
Rights or Restricted Stock granted or awarded under the Plan prior to the date
of such termination.
16. Stockholder Approval.
--------------------
The Plan will be submitted for the approval of the Company's
stockholders within twelve (12) months after the date of the Board's initial
adoption of the Plan. Options, Stock Purchase Rights or Restricted Stock may be
granted or awarded prior to such stockholder approval, provided that such
Options, Stock Purchase Rights and Restricted Stock shall not be exercisable,
shall not vest and the restrictions thereon shall not lapse prior to the time
when the Plan is approved by the stockholders, and provided further that if such
approval has not been obtained at the end of said twelve-month period, all
Options, Stock Purchase Rights and Restricted Stock previously granted or
awarded under the Plan shall thereupon be canceled and become null and void.
17. Inability to Obtain Authority.
-----------------------------
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
18. Reservation of Shares.
---------------------
The Company, during the term of this Plan, shall at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
19. Information to Holders and Purchasers.
-------------------------------------
Prior to the Public Trading Date and to the extent required by Section
260.140.46 of Title 10 of the California Code of Regulations, the Company shall
provide to each Holder and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Holder or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
Notwithstanding the preceding sentence, the Company shall not be required to
provide such statements to key employees whose duties in connection with the
Company assure their access to equivalent information.
20. Repurchase Provisions.
---------------------
15
<PAGE>
The Administrator in its discretion may provide that the Company may
repurchase Shares acquired upon exercise of an Option or Stock Purchase Right
upon a Holder's termination as a Service Provider; provided, however that any
such repurchase right shall be set forth in the applicable Option Agreement or
Restricted Stock purchase agreement or in another agreement referred to in such
agreement and, provided further, that to the extent required by Section
260.140.41 and Section 260.140.42 of Title 10 of the California Code of
Regulations, any such repurchase right set forth in an Option or Stock Purchase
Right granted prior to the Public Trading Date to a person who is not an
Officer, Director or Consultant shall be upon the following terms: (i) if the
repurchase option gives the Company the right to repurchase the shares upon
termination as a Service Provider at not less than the Fair Market Value of the
shares to be purchased on the date of termination of status as a Service
Provider, then (A) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of status as a Service Provider (or in the case of shares
issued upon exercise of Options or Stock Purchase Rights after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Administrator and the Plan participant
and (B) the right terminates when the shares become publicly traded; and (ii) if
the repurchase option gives the Company the right to repurchase the Shares upon
termination as a Service Provider at the original purchase price for such
Shares, then (A) the right to repurchase at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the shares per year over
five (5) years from the date the Option or Stock Purchase Right is granted
(without respect to the date the Option or Stock Purchase Right was exercised or
became exercisable) and (B) the right to repurchase shall be exercised for cash
or cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of status as a Service Provider (or, in the case of shares
issued upon exercise of Options or Stock Purchase Rights, after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Plan participant.
21. Investment Intent.
-----------------
The Company may require a Plan participant, as a condition of
exercising or acquiring stock under any Option or Stock Purchase Right, (i) to
give written assurances satisfactory to the Company as to the participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option or Stock Purchase
Right; and (ii) to give written assurances satisfactory to the Company stating
that the participant is acquiring the stock subject to the Option or Stock
Purchase Right for the participant's own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of stock under the applicable Option or Stock Purchase Right has been registered
under a then currently effective registration statement under the Securities Act
or (B) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on
16
<PAGE>
stock certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
22. Governing Law.
-------------
The validity and enforceability of this Plan shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
otherwise governing principles of conflicts of law.
17
<PAGE>
APPENDIX "E"
2000 EQUITY INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. PURPOSES OF THE PLAN................................................ 1
2. DEFINITIONS......................................................... 1
3. STOCK SUBJECT TO THE PLAN........................................... 4
4. ADMINISTRATION OF THE PLAN.......................................... 4
5. ELIGIBILITY......................................................... 6
6. LIMITATIONS......................................................... 6
7. TERM OF PLAN........................................................ 7
8. TERM OF OPTION...................................................... 7
9. OPTION EXERCISE PRICE AND CONSIDERATION............................. 7
10. EXERCISE OF OPTION.................................................. 8
11. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS............ 11
12. STOCK PURCHASE RIGHTS............................................... 11
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.... 12
14. TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS.................. 14
15. AMENDMENT AND TERMINATION OF THE PLAN............................... 14
16. STOCKHOLDER APPROVAL................................................ 15
17. INABILITY TO OBTAIN AUTHORITY....................................... 15
18. RESERVATION OF SHARES............................................... 15
19. INFORMATION TO HOLDERS AND PURCHASERS............................... 15
20. REPURCHASE PROVISIONS............................................... 15
21. INVESTMENT INTENT................................................... 16
22. GOVERNING LAW....................................................... 17
</TABLE>
i
<PAGE>
IJNT.NET, INC.
2000 EQUITY INCENTIVE PLAN
1. Purposes of the Plan.
--------------------
The purposes of the IJNT.NET, Inc. 2000 Equity Incentive Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Non-Qualified Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.
2. Definitions.
-----------
As used herein, the following definitions shall apply:
(a) "Acquisition" means (i) any consolidation or merger of the Company
-----------
with or into any other corporation or other entity or person in which the
stockholders of the Company prior to such consolidation or merger own less than
fifty percent (50%) of the Company's voting power immediately after such
consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (ii) a sale of all or
substantially all of the assets of the Company.
(b) "Administrator" means the Board or the Committee responsible for
-------------
conducting the general administration of the Plan, as applicable, in accordance
with Section 4 hereof.
(c) "Applicable Laws" means the requirements relating to the
---------------
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.
(d) "Board" means the Board of Directors of the Company.
-----
(e) "Code" means the Internal Revenue Code of 1986, as amended.
----
(f) "Committee" means a committee appointed by the Board in accordance
---------
with Section 4 hereof.
(g) "Common Stock" means the Common Stock of the Company, par value
------------
$.001 per share.
(h) "Company" means IJNT.NET, Inc., a Delaware corporation.
-------
1
<PAGE>
(i) "Consultant" means any consultant or adviser if: (i) the
----------
consultant or adviser renders bona fide services to the Company or any Parent or
Subsidiary; (ii) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and (iii) the consultant or adviser is a natural person who has
contracted directly with the Company or any Parent or Subsidiary to render such
services.
(j) "Director" means a member of the Board.
--------
(k) "Employee" means any person, including an Officer or Director, who
--------
is an employee (as defined in accordance with Section 3401(c) of the Code) of
the Company or any Parent or Subsidiary of the Company. A Service Provider shall
not cease to be an Employee in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed ninety (90) days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient, by itself, to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" means, as of any date, the value of a share of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for a share of such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for a share of the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "Holder" means a person who has been granted or awarded an Option
------
or Stock Purchase Right or who holds Shares acquired pursuant to the exercise of
an Option or Stock Purchase Right.
(o) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.
2
<PAGE>
(p) "Independent Director" means a Director who is not an Employee of
--------------------
the Company.
(q) "Non-Qualified Stock Option" means an Option (or portion thereof)
--------------------------
that is not designated as an Incentive Stock Option by the Administrator, or
which is designated as an Incentive Stock Option by the Administrator but fails
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(r) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
------
(t) "Option Agreement" means a written agreement between the Company
----------------
and a Holder evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(u) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(v) "Plan" means the IJNT.NET, Inc. 2000 Equity Incentive Plan.
----
(w) "Public Trading Date" means the first date upon which Common Stock
-------------------
of the Company is listed (or approved for listing) upon notice of issuance on
any securities exchange or designated (or approved for designation) upon notice
of issuance as a national market security on an interdealer quotation system.
(x) "Restricted Stock" means Shares acquired pursuant to the exercise
----------------
of an unvested Option in accordance with Section 10(h) below or pursuant to a
Stock Purchase Right granted under Section 12 below.
(y) "Rule 16b-3" means that certain Rule 16b-3 under the Exchange
----------
Act, as such Rule may be amended from time to time.
(z) "Section 16(b)" means Section 16(b) of the Exchange Act.
-------------
(aa) "Securities Act" means the Securities Act of 1933, as amended.
--------------
(bb) "Service Provider" means an Employee, Director or Consultant.
----------------
(cc) "Share" means a share of Common Stock, as adjusted in accordance
-----
with Section 13 below.
(dd) "Stock Purchase Right" means a right to purchase Common Stock
--------------------
pursuant to Section 12 below.
3
<PAGE>
(ee) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
-------------------------
Subject to the provisions of Section 13 of the Plan, the shares of
stock subject to Options or Stock Purchase Rights shall be Common Stock,
initially shares of the Company's Common Stock, par value $.001 per share.
Subject to the provisions of Section 13 of the Plan, the maximum aggregate
number of Shares which may be issued upon exercise of such Options or Stock
Purchase Rights is 3,000,000 Shares. Shares issued upon exercise of Options or
Stock Purchase Rights may be authorized but unissued, or reacquired Common
Stock. If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated). Shares which are delivered by the Holder or withheld
by the Company upon the exercise of an Option or Stock Purchase Right under the
Plan, in payment of the exercise price thereof or tax withholding thereon, may
again be optioned, granted or awarded hereunder, subject to the limitations of
this Section 3. If Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan. Notwithstanding the provisions of this Section 3, no
Shares may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock Option under
Code Section 422.
4. Administration of the Plan.
--------------------------
(a) Administrator. Unless and until the Board delegates administration
-------------
to a Committee as set forth below, the Plan shall be administered by the Board.
The Board may delegate administration of the Plan to a Committee or Committees
of one or more members of the Board, and the term "Committee" shall apply to any
person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Notwithstanding the foregoing,
however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more
Independent Directors each of whom is both an "outside director," within the
meaning of Section 162(m) of the Code, and a "non-employee director" within the
meaning of Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Independent Directors the authority to grant awards under the Plan
to eligible persons who are either (1) not then "covered employees," within the
meaning of Section 162(m) of the Code and are not expected to be "covered
employees" at the time of recognition of income resulting from such award or (2)
not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (ii) delegate to a committee of one or more members of
the Board who are not "non-employee directors," within the meaning of Rule 16b-
3, the authority to grant awards under the Plan to eligible persons who are not
then subject to
4
<PAGE>
Section 16 of the Exchange Act. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may only be filled by the Board.
(b) Powers of the Administrator. Subject to the provisions of the Plan
---------------------------
and the specific duties delegated by the Board to such Committee, and subject to
the approval of any relevant authorities, the Administrator shall have the
authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each
such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any Option or
Stock Purchase Right granted hereunder (such terms and conditions include, but
are not limited to, the exercise price, the time or times when Options or Stock
Purchase Rights may vest or be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or Stock Purchase Right or
the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine);
(vi) to determine whether to offer to buyout a previously
granted Option as provided in subsection 10(i) and to determine the terms and
conditions of such offer and buyout (including whether payment is to be made in
cash or Shares);
(vii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(viii) to allow Holders to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld based on the statutory
withholding rates for federal and state tax purposes that apply to supplemental
taxable income. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Holders to have Shares withheld for this purpose
shall be made in such form and under such conditions as the Administrator may
deem necessary or advisable;
(ix) to amend the Plan or any Option or Stock Purchase Right
granted under the Plan as provided in Section 15; and
5
<PAGE>
(x) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan and to exercise such powers and perform such acts
as the Administrator deems necessary or desirable to promote the best interests
of the Company which are not in conflict with the provisions of the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations
----------------------------------
and interpretations of the Administrator shall be final and binding on all
Holders.
5. Eligibility.
-----------
Non-Qualified Stock Options and Stock Purchase Rights may be granted to
Service Providers. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option or
Stock Purchase Right may be granted additional Options or Stock Purchase Rights.
6. Limitations.
-----------
(a) Each Option shall be designated by the Administrator in the Option
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of Shares subject to a Holder's Incentive Stock Options and
other incentive stock options granted by the Company, any Parent or Subsidiary,
which become exercisable for the first time during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options or other options shall be treated as Non-Qualified Stock Options.
For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan, any Option nor any Stock Purchase Right shall
confer upon a Holder any right with respect to continuing the Holder's
employment or consulting relationship with the Company, nor shall they interfere
in any way with the Holder's right or the Company's right to terminate such
employment or consulting relationship at any time, with or without cause.
(c) No Service Provider shall be granted, in any calendar year,
Options or Stock Purchase Rights to purchase more than 150,000 Shares; provided,
however, that the foregoing limitation shall not apply prior to the Public
Trading Date and, following the Public Trading Date, the foregoing limitation
shall not apply until the earliest of: (i) the first material modification of
the Plan (including any increase in the number of shares reserved for issuance
under the Plan in accordance with Section 3); (ii) the issuance of all of the
shares of Common Stock reserved for issuance under the Plan; (iii) the
expiration of the Plan; (iv) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of the Code and
the rules and regulations promulgated thereunder. The foregoing limitation shall
be adjusted proportionately in connection with any change in the
6
<PAGE>
Company's capitalization as described in Section 13. For purposes of this
Section 6(c), if an Option is canceled in the same calendar year it was granted
(other than in connection with a transaction described in Section 13), the
canceled Option will be counted against the limit set forth in this Section
6(c). For this purpose, if the exercise price of an Option is reduced, the
transaction shall be treated as a cancellation of the Option and the grant of a
new Option.
7. Term of Plan.
------------
The Plan shall become effective upon its initial adoption by the Board
and shall continue in effect until it is terminated under Section 15 of the
Plan. No Options or Stock Purchase Rights may be issued under the Plan after the
tenth (10th) anniversary of the earlier of (i) the date upon which the Plan is
adopted by the Board or (ii) the date the Plan is approved by the stockholders.
8. Term of Option.
--------------
The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from the
date of grant thereof. In the case of an Incentive Stock Option granted to a
Holder who, at the time the Option is granted, owns (or is treated as owning
under Code Section 424) stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of
such Option, owns (or is treated as owning under Code Section 424) stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of grant.
(B) granted to any other Employee, the per Share exercise
price shall be no less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option granted to a
Service Provider who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no
less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of the grant.
7
<PAGE>
(iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price other than as required above pursuant to a merger or
other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, a full recourse promissory
note bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code) and payable upon such terms as may be
prescribed by the Administrator, (4) with the consent of the Administrator,
other Shares which (x) in the case of Shares acquired from the Company, have
been owned by the Holder for more than six (6) months on the date of surrender,
and (y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (5)
with the consent of the Administrator, surrendered Shares then issuable upon
exercise of the Option having a Fair Market Value on the date of exercise equal
to the aggregate exercise price of the Option or exercised portion thereof, (6)
property of any kind which constitutes good and valuable consideration, (7) with
the consent of the Administrator, delivery of a notice that the Holder has
placed a market sell order with a broker with respect to Shares then issuable
upon exercise of the Options and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price, provided, that payment of such
proceeds is then made to the Company upon settlement of such sale, or (8) with
the consent of the Administrator, any combination of the foregoing methods of
payment.
10. Exercise of Option.
------------------
(a) Vesting; Fractional Exercises. Options granted hereunder shall be
-----------------------------
vested and exercisable according to the terms hereof at such times and under
such conditions as determined by the Administrator and set forth in the Option
Agreement; provided, however, that, except with regard to Options granted to
Officers, Directors or Consultants, in no event shall an Option granted
hereunder become vested and exercisable at a rate of less than twenty percent
(20%) per year over five (5) years from the date the Option is granted, subject
to reasonable conditions, such as continuing to be a Service Provider. An Option
may not be exercised for a fraction of a Share.
(b) Deliveries upon Exercise. All or a portion of an exercisable
------------------------
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his or her office:
(i) A written or electronic notice complying with the applicable
rules established by the Administrator stating that the Option, or a portion
thereof, is exercised. The notice shall be signed by the Holder or other person
then entitled to exercise the Option or such portion of the Option;
(ii) Such representations and documents as the Administrator, in
its absolute discretion, deems necessary or advisable to effect compliance with
Applicable Laws.
8
<PAGE>
The Administrator may, in its absolute discretion, also take whatever additional
actions it deems appropriate to effect such compliance, including, without
limitation, placing legends on share certificates and issuing stop transfer
notices to agents and registrars;
(iii) Upon the exercise of all or a portion of an unvested
Option pursuant to Section 10(h), a Restricted Stock purchase agreement in a
form determined by the Administrator and signed by the Holder or other person
then entitled to exercise the Option or such portion of the Option; and
(iv) In the event that the Option shall be exercised pursuant
to Section 10(f) by any person or persons other than the Holder, appropriate
proof of the right of such person or persons to exercise the Option.
(c) Conditions to Delivery of Share Certificates. The Company shall
--------------------------------------------
not be required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(i) The admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed;
(ii) The completion of any registration or other qualification
of such Shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Administrator shall, in its absolute discretion, deem
necessary or advisable;
(iii) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Administrator shall, in its
absolute discretion, determine to be necessary or advisable;
(iv) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and
(v) The receipt by the Company of full payment for such
Shares, including payment of any applicable withholding tax, which in the
discretion of the Administrator may be in the form of consideration used by the
Holder to pay for such Shares under Section 9(b).
(d) Termination of Relationship as a Service Provider. If a Holder
-------------------------------------------------
ceases to be a Service Provider other than by reason of the Holder's disability
or death, such Holder may exercise his or her Option within such period of time
as is specified in the Option Agreement to the extent that the Option is vested
on the date of termination (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the Holder's termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option immediately cease to be issuable
under the Option and shall again become available for issuance under the
9
<PAGE>
Plan. If, after termination, the Holder does not exercise his or her Option
within the time period specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under
the Plan.
(e) Disability of Holder. If a Holder ceases to be a Service Provider
--------------------
as a result of the Holder's disability, the Holder may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Holder's
termination. If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock
Option from and after the day which is three (3) months and one (1) day
following such termination. If, on the date of termination, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan. If, after
termination, the Holder does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan.
(f) Death of Holder. If a Holder dies while a Service Provider, the
---------------
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Holder's estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option is vested on the date of death. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Holder's termination. If, at the time of death,
the Holder is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall immediately cease to be issuable under
the Option and shall again become available for issuance under the Plan. The
Option may be exercised by the executor or administrator of the Holder's estate
or, if none, by the person(s) entitled to exercise the Option under the Holder's
will or the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall again become available for issuance under the Plan.
(g) Regulatory Extension. A Holder's Option Agreement may provide
--------------------
that if the exercise of the Option following the termination of the Holder's
status as a Service Provider (other than upon the Holder's death or Disability)
would be prohibited at any time solely because the issuance of shares would
violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option
set forth in Section 8 or (ii) the expiration of a period of three (3) months
after the termination of the Holder's status as a Service Provider during which
the exercise of the Option would not be in violation of such registration
requirements.
10
<PAGE>
(h) Early Exercisability. The Administrator may provide in the terms
--------------------
of a Holder's Option Agreement that the Holder may, at any time before the
Holder's status as a Service Provider terminates, exercise the Option in whole
or in part prior to the full vesting of the Option; provided, however, that
subject to Section 20, Shares acquired upon exercise of an Option which has not
fully vested may be subject to any forfeiture, transfer or other restrictions as
the Administrator may determine in its sole and absolute discretion.
(i) Buyout Provisions. The Administrator may at any time offer to
-----------------
buyout for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Holder at the time that such offer is made.
11. Non-Transferability of Options and Stock Purchase Rights.
--------------------------------------------------------
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Holder, only by the Holder.
12. Stock Purchase Rights.
---------------------
(a) Rights to Purchase. Stock Purchase Rights may be issued either
------------------
alone, in addition to, or in tandem with Options granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
(b) Repurchase Right. Unless the Administrator determines otherwise,
----------------
the Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 20, the purchase price for Shares repurchased by the Company
pursuant to such repurchase right and the rate at with such repurchase right
shall lapse shall be determined by the Administrator in its sole discretion, and
shall be set forth in the Restricted Stock purchase agreement.
(c) Other Provisions. The Restricted Stock purchase agreement shall
----------------
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
-----------------------
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is
11
<PAGE>
prior to the date the Stock Purchase Right is exercised, except as provided in
Section 13 of the Plan.
13. Adjustments upon Changes in Capitalization, Merger or Asset Sale.
----------------------------------------------------------------
(a) In the event that the Administrator determines that any dividend
or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Option, Stock Purchase Right or Restricted
Stock, then the Administrator shall, in such manner as it may deem equitable,
adjust any or all of:
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Stock Purchase Rights
may be granted or awarded (including, but not limited to, adjustments of the
limitations in Section 3 on the maximum number and kind of shares which may be
issued and adjustments of the maximum number of Shares that may be purchased by
any Holder in any calendar year pursuant to Section 6(c));
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Stock Purchase Rights or
Restricted Stock; and
(iii) the grant or exercise price with respect to any Option or
Stock Purchase Right.
(b) In the event of any transaction or event described in Section
13(a), the Administrator, in its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, either by the terms of the Option, Stock
Purchase Right or Restricted Stock or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Holder's request,
is hereby authorized to take any one or more of the following actions whenever
the Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option, Stock Purchase
Right or Restricted Stock granted or issued under the Plan or to facilitate such
transaction or event:
(i) To provide for either the purchase of any such Option,
Stock Purchase Right or Restricted Stock for an amount of cash equal to the
amount that could have been obtained upon the exercise of such Option or Stock
Purchase Right or realization of the Holder's rights had such Option, Stock
Purchase Right or Restricted Stock been currently
12
<PAGE>
exercisable or payable or fully vested or the replacement of such Option, Stock
Purchase Right or Restricted Stock with other rights or property selected by the
Administrator in its sole discretion;
(ii) To provide that such Option or Stock Purchase Right shall
be exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the provisions of such Option or Stock Purchase Right;
(iii) To provide that such Option, Stock Purchase Right or
Restricted Stock be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices;
(iv) To make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding Options
and Stock Purchase Rights, and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding Options,
Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or
Restricted Stock which may be granted in the future; and
(v) To provide that immediately upon the consummation of such
event, such Option or Stock Purchase Right shall not be exercisable and shall
terminate; provided, that for a specified period of time prior to such event,
such Option or Stock Purchase Right shall be exercisable as to all Shares
covered thereby, and the restrictions imposed under an Option Agreement or
Restricted Stock purchase agreement upon some or all Shares may be terminated
and, in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase, notwithstanding anything to the
contrary in the Plan or the provisions of such Option, Stock Purchase Right or
Restricted Stock purchase agreement.
(c) Subject to Section 3, the Administrator may, in its discretion,
include such further provisions and limitations in any Option, Stock Purchase
Right, Restricted Stock agreement or certificate, as it may deem equitable and
in the best interests of the Company.
(d) If the Company undergoes an Acquisition, then any surviving
corporation or entity or acquiring corporation or entity, or affiliate of such
corporation or entity, may assume any Options, Stock Purchase Rights or
Restricted Stock outstanding under the Plan or may substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 13(d)) for those
outstanding under the Plan. In the event any surviving corporation or entity or
acquiring corporation or entity in an Acquisition does not assume such Options,
Stock Purchase Rights or Restricted Stock or does not substitute similar stock
awards for those outstanding under the Plan, then with respect to (i) Options,
Stock Purchase Rights or Restricted Stock held by participants in the Plan whose
status as a Service Provider has not terminated prior to such event, the vesting
of such Options, Stock Purchase Rights or Restricted Stock (and, if applicable,
the time during which such awards may be exercised) shall be accelerated and
made fully exercisable and all restrictions thereon shall lapse at least ten
(10) days prior to the closing of the Acquisition (and the Options or Stock
Purchase Rights terminated if not exercised prior to the closing of such
Acquisition), and (ii) any
13
<PAGE>
other Options or Stock Purchase Rights outstanding under the Plan, such Options
or Stock Purchase rights shall be terminated if not exercised prior to the
closing of the Acquisition.
(e) Notwithstanding the foregoing, in the event that the Company
becomes a party to a transaction that is intended to qualify for "pooling of
interests" accounting treatment and, but for one or more of the provisions of
this Plan or any Option Agreement or any Restricted Stock purchase agreement
would so qualify, then this Plan and any such agreement shall be interpreted so
as to preserve such accounting treatment, and to the extent that any provision
of the Plan or any such agreement would disqualify the transaction from pooling
of interests accounting treatment (including, if applicable, an entire Option
Agreement or Restricted Stock purchase agreement), then such provision shall be
null and void. All determinations to be made in connection with the preceding
sentence shall be made by the independent accounting firm whose opinion with
respect to "pooling of interests" treatment is required as a condition to the
Company's consummation of such transaction.
(f) The existence of the Plan, any Option Agreement or Restricted
Stock purchase agreement and the Options or Stock Purchase Rights granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
14. Time of Granting Options and Stock Purchase Rights.
--------------------------------------------------
The date of grant of an Option or Stock Purchase Right shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option or Stock Purchase Right, or such other date as is
determined by the Administrator. Notice of the determination shall be given to
each Employee or Consultant to whom an Option or Stock Purchase Right is so
granted within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time wholly or
-------------------------
partially amend, alter, suspend or terminate the Plan. However, without approval
of the Company's stockholders given within twelve (12) months before or after
the action by the Board, no action of the Board may, except as provided in
Section 13, increase the limits imposed in Section 3 on the maximum number of
Shares which may be issued under the Plan or extend the term of the Plan under
Section 7.
(b) Stockholder Approval. The Board shall obtain stockholder approval
--------------------
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
14
<PAGE>
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Holder,
unless mutually agreed otherwise between the Holder and the Administrator, which
agreement must be in writing and signed by the Holder and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options, Stock Purchase
Rights or Restricted Stock granted or awarded under the Plan prior to the date
of such termination.
16. Stockholder Approval.
--------------------
The Plan will be submitted for the approval of the Company's
stockholders within twelve (12) months after the date of the Board's initial
adoption of the Plan. Options, Stock Purchase Rights or Restricted Stock may be
granted or awarded prior to such stockholder approval, provided that such
Options, Stock Purchase Rights and Restricted Stock shall not be exercisable,
shall not vest and the restrictions thereon shall not lapse prior to the time
when the Plan is approved by the stockholders, and provided further that if such
approval has not been obtained at the end of said twelve-month period, all
Options, Stock Purchase Rights and Restricted Stock previously granted or
awarded under the Plan shall thereupon be canceled and become null and void.
17. Inability to Obtain Authority.
-----------------------------
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
18. Reservation of Shares.
---------------------
The Company, during the term of this Plan, shall at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
19. Information to Holders and Purchasers.
-------------------------------------
Prior to the Public Trading Date and to the extent required by Section
260.140.46 of Title 10 of the California Code of Regulations, the Company shall
provide to each Holder and to each individual who acquires Shares pursuant to
the Plan, not less frequently than annually during the period such Holder or
purchaser has one or more Options or Stock Purchase Rights outstanding, and, in
the case of an individual who acquires Shares pursuant to the Plan, during the
period such individual owns such Shares, copies of annual financial statements.
Notwithstanding the preceding sentence, the Company shall not be required to
provide such statements to key employees whose duties in connection with the
Company assure their access to equivalent information.
20. Repurchase Provisions.
---------------------
15
<PAGE>
The Administrator in its discretion may provide that the Company may
repurchase Shares acquired upon exercise of an Option or Stock Purchase Right
upon a Holder's termination as a Service Provider; provided, however that any
such repurchase right shall be set forth in the applicable Option Agreement or
Restricted Stock purchase agreement or in another agreement referred to in such
agreement and, provided further, that to the extent required by Section
260.140.41 and Section 260.140.42 of Title 10 of the California Code of
Regulations, any such repurchase right set forth in an Option or Stock Purchase
Right granted prior to the Public Trading Date to a person who is not an
Officer, Director or Consultant shall be upon the following terms: (i) if the
repurchase option gives the Company the right to repurchase the shares upon
termination as a Service Provider at not less than the Fair Market Value of the
shares to be purchased on the date of termination of status as a Service
Provider, then (A) the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of status as a Service Provider (or in the case of shares
issued upon exercise of Options or Stock Purchase Rights after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Administrator and the Plan participant
and (B) the right terminates when the shares become publicly traded; and (ii) if
the repurchase option gives the Company the right to repurchase the Shares upon
termination as a Service Provider at the original purchase price for such
Shares, then (A) the right to repurchase at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the shares per year over
five (5) years from the date the Option or Stock Purchase Right is granted
(without respect to the date the Option or Stock Purchase Right was exercised or
became exercisable) and (B) the right to repurchase shall be exercised for cash
or cancellation of purchase money indebtedness for the shares within ninety (90)
days of termination of status as a Service Provider (or, in the case of shares
issued upon exercise of Options or Stock Purchase Rights, after such date of
termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Plan participant.
21. Investment Intent.
-----------------
The Company may require a Plan participant, as a condition of
exercising or acquiring stock under any Option or Stock Purchase Right, (i) to
give written assurances satisfactory to the Company as to the participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option or Stock Purchase
Right; and (ii) to give written assurances satisfactory to the Company stating
that the participant is acquiring the stock subject to the Option or Stock
Purchase Right for the participant's own account and not with any present
intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of stock under the applicable Option or Stock Purchase Right has been registered
under a then currently effective registration statement under the Securities Act
or (B) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on
16
<PAGE>
stock certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
22. Governing Law.
-------------
The validity and enforceability of this Plan shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to otherwise governing principles of conflicts of law.
17
<PAGE>
--------------------------------------------------------------------------------
PROXY
IJNT.NET, INC.
Common Stock Proxy
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael A. Sternberg and Jeffrey R. Matsen
as proxies (each with the power to appoint his substitute and with power to act
alone) of the undersigned to vote all the shares of Common Stock of IJNT.net,
Inc. (the "Company") which the undersigned would be entitled to vote as
designated on the reverse side of the Annual Meeting of Stockholders of the
Company, to be held on July 25, 2000, and any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS LISTED IN PROPOSAL 1
AND FOR PROPOSALS 2, 3, 4 AND 5.
IF YOU FAIL TO PROVIDE AUTHORIZATION AND DIRECTION THIS PROXY WILL BE VOTED
IN THE SAME PROPORTION AS SHARES OF COMMON STOCK FOR WHICH THE TRUSTEE DID
RECEIVE DIRECTIONS FOR PROPOSALS 1, 2, 3, 4 AND 5.
IJNT.NET, INC.
2030 MAIN STREET, SUITE 500
IRVINE, CA 92614
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE: [X] IN BLUE OR BLACK INK.
1. To elect eight (8) Directors to serve as such until the next Annual
Meeting of Stockholders and until their successors are elected and
qualified
[_] FOR all nominees [_] WITHHOLD AUTHORITY
listed below for all nominees listed
Nominees: Mary E. Blake, Richard F. Charles, H. Dean Cubley, Terry O.
Kramer, Jon H. Marple, Stephen E. Pazian, Michael A. Sternberg,
Richard W. Torney
(Instructions: To withhold authority to vote for any individual, write that
Nominee's name on the line below).
------------------------------------------------------------
(Continued, and to be dated and signed, on the other side)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. To approve the Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve and adopt the Company's 2000 Equity Incentive Plan and the
Company's 2000 Management Equity Incentive Plan
[_] FOR [_] AGAINST [_] ABSTAIN
4. To ratify the appointment of BDO Seidman, LLP as independent accountants
for the Company for March 31, 2000
[_] FOR [_] AGAINST [_] ABSTAIN
5. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name(s) appear on this proxy. If signing for
estates, trusts or corporations, your title and capacity should be stated. If
shares are held jointly, each holder should sign.
---------------------------------
(Signature)
---------------------------------
(Signature if held jointly)
---------------------------------
(Date)
PLEASE MAKE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
