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 ss. 240.14a-11(c) or ss. 240.14a-12
AmeriVest Properties Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
James F. Etter, President and Chief Executive Officer
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1. Title of each class of securities to which transaction applies:
Not applicable
2. Aggregate number of securities to which transaction applies:
Not applicable
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):
Not applicable
4. Proposed maximum aggregate value of transaction:
Not applicable
5. Total fee paid:
Not applicable
|_| 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: Not applicable
2. Form, Schedule or Registration Statement No.: Not applicable
3. Filing Party: Not applicable
4. Date Filed: Not applicable
<PAGE>
AMERIVEST PROPERTIES INC.
7100 Grandview Avenue, Suite 1
Arvada, Colorado 80002
(303) 421-1224
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held May 21, 1998
The Annual Meeting of the stockholders of AmeriVest Properties Inc. (the
"Company") will be held on May 21, 1998 at 3:00 p.m. (local time) at Denver
Marriott West, 1717 Denver West Boulevard, Golden, Colorado, for the following
purposes:
1. To elect one Class 2 director of the Company's Board Of Directors;
2. To consider and vote upon a proposal recommended by the Board Of
Directors to approve the Company's 1998 Stock Option Plan;
3. To ratify the selection of Wheeler Wasoff, P.C. to serve as the
Company's independent certified accountants for the year ending
December 31, 1998; and
4. To transact any other business that properly may come before the
meeting.
Only the stockholders of record as shown on the transfer books of the
Company at the close of business on March 31, 1998 are entitled to notice of,
and to vote at, the Stockholder Meeting.
All stockholders, regardless of whether they expect to attend the meeting
in person, are requested to complete, date, sign and return promptly the
enclosed form of proxy in the accompanying envelope (which requires no postage
if mailed in the United States). The person executing the proxy may revoke it at
any time before it is exercised by delivering written notice of revocation to
the Company, by substituting a new proxy executed at a later date, or by
requesting, in person at the Stockholder Meeting, that the proxy be returned.
ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE
STOCKHOLDER MEETING.
By the Board Of Directors
JAMES F. ETTER
President
Arvada, Colorado
April 13, 1998
<PAGE>
PROXY STATEMENT
AMERIVEST PROPERTIES INC.
7100 Grandview Avenue, Suite 1
Arvada, Colorado 80002
(303) 421-1224
ANNUAL MEETING OF STOCKHOLDERS
to be held
May 21, 1998
This Proxy Statement is provided in connection with the solicitation of
proxies by the Board Of Directors of AmeriVest Properties Inc., a Delaware
corporation (the "Company" or "AmeriVest"), to be voted at the Annual Meeting Of
Stockholders of the Company to be held at 3:00 p.m. (local time) on May 21, 1998
at the Denver Marriott West, 1717 Denver West Boulevard, Golden, Colorado or at
any adjournment or postponement of the meeting. The Company anticipates that
this Proxy Statement and the accompanying form of proxy will be first mailed or
given to stockholders of the Company on or about April 13, 1998.
The shares represented by all proxies that are properly executed and
submitted will be voted at the meeting in accordance with the instructions
indicated on the proxies. Unless otherwise directed, the shares represented by
proxies will be voted for Charles R. Hoffman as the nominee for Cl ass 2
director, in favor of the adoption of the 1998 Stock Option Plan, and in favor
of ratification of the selection of Wheeler Wasoff, P.C. as the Company's
independent auditors, as described in this Proxy Statement.
A stockholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in person
at the Annual Meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail; however,
following the original solicitation, further solicitations may be made by
telephone or oral communication with stockholders of the Company. Officers,
directors and employees of the Company may solicit proxies, but without
compensation for such solicitation other than their regular compensation as
employees of the Company. Arrangements also will be made with brokerage houses
and other custodians, nominees and fiduciaries to forward solicitation materials
to beneficial owners of the shares held of record by those persons. The Company
may reimburse those persons for reasonable out-of-pocket expenses incurred by
them in so doing. All expenses involved in preparing, assembling and mailing
this Proxy Statement and the enclosed material will be paid by the Company. A
majority of the issued and outstanding shares of the Company's common stock (the
"Common Stock") entitled to vote, represented either in person or by proxy,
constitutes a quorum at any meeting of the stockholders.
Unless the context indicates otherwise, the term the "Company" or
"AmeriVest" shall be used in the Proxy Statement to include AmeriVest Properties
Inc. and all its subsidiaries that existed during the period of reference.
<PAGE>
ELECTION OF DIRECTOR
AmeriVest's Amended And Restated Certificate Of Incorporation provides that
the Board Of Directors of the Company be divided into three classes, designated
Class 1, Class 2 and Class 3. Directors from each class are elected once every
three years for a three-year term. John Labate and James F. Etter serve as the
Class 1 directors, Charles R. Hoffman serves as the Class 2 director, and Robert
J. McFann serves as the Class 3 director. The term of the current Class 2
director expires at the Annual Meeting. At the Annual Meeting, the stockholders
will elect one Class 2 director to hold office until the annual meeting of
stockholders to be held in the year 2001 and thereafter until his successor is
elected and has qualified. The affirmative vote of a majority of the shares
represented at the meeting is required to elect the director. Cumulative voting
is not permitted in the election of directors. Consequently, each stockholder is
entitled to one vote for each share of Common Stock held in the stockholder's
name. In the absence of instructions to the contrary, the person named in the
accompanying proxy shall vote the shares represented by that proxy for Mr.
Hoffman as nominee of the Board Of Directors for Class 2 director of AmeriVest.
There is no nominating committee of the Board Of Directors.
Mr. Hoffman has consented to be named herein and to serve on the Board if
elected. It is not anticipated that Mr. Hoffman will become unable or unwilling
to accept nomination or election, but, if that should occur, the persons named
in the proxy intend to vote for the election of such oth er person as the Board
Of Directors may recommend.
AmeriVest completed a public offering of its common stock and redeemable
common stock purchase warrants in November 1996. The underwriter of that public
offering, I.A. Rabinowitz & Co., now known as I.A.R. Securities Corp. (the
"Underwriter"), has the right until November 1999 to designat e one person to
serve as a member of the Company's Board Of Directors pursuant to the
Underwriting Agreement between the Underwriter and the Company. The
Underwriter's designee as director must be reasonably acceptable to AmeriVest.
There is no restriction on whether the person designated is a director, officer,
partner, employee, or affiliate of the Underwriter. As of the date of this Proxy
Statement, the Underwriter has not indicated a designee for director and has not
informed the Company of wheth er the Underwriter intends to designate a
director.
The following table sets forth, with respect to each director, the
director's age, his positions and offices with AmeriVest, the expiration of his
term as a director, and the year in which he first became a director of
AmeriVest. Individual background information concerning each of the di rectors
follows the table. For additional information concerning the directors,
including stock ownership and compensation, see "EXECUTIVE COMPENSATION", "STOCK
OWNERSHIP OF DIRECTORS AND PRINCIPAL STOCKHOLDERS", and "CERTAIN TRANSACTIONS
WITH MANAGEMENT AND PRINCIPAL STOCKHOLDERS".
<TABLE>
<CAPTION>
Expiration Of Term As Initial Date
Name Age Position With The Company Director As Director
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James F. Etter 55 President; Chief Executive 2000 Annual Meeting 1995
Officer; Chief Financial
Officer; and Director
John Labate(1)(2) 49 Director 2000 Annual Meeting 1995
Charles R. Hoffman(1) 61 Chairman Of The Board 1998 Annual Meeting 1994
Robert J. McFann(2) 81 Director; and Secretary 1999 Annual Meeting 1994
===========================================================================================================
2
</TABLE>
<PAGE>
(1) Member of the Audit Committee of the Board Of Directors.
(2) Member of the Acquisition Committee of the Board Of Directors.
James F. Etter has served as President of AmeriVest since May 1995, as a
director since December 1995, as Chief Executive Officer since January 1997, and
as Chief Financial Officer since July 1996. From 1994 until he joined the
Company, Mr. Etter acted as a consultant with respect to acquisitions. Mr. Etter
served as President and Chief Executive Officer of Recycling Management Company
from 1990 until 1994. From 1988 until 1990, Mr. Etter acted as a real estate
consultant for real estate development/resort projects in South Carolina. From
1985 until 1988, Mr. Etter served as Vice President, Chief Financial Officer for
Wild Dunes Resort, and President of Wild Dunes Real Estate, Inc. Mr. Etter also
assisted in establishing a chain of restaurants when he served as President and
Chief Executive Officer of BEST Food Systems, Inc. He also served as Vice
President of Finance for Braswell Shipyards, Inc., assisting with negotiations
for a $28 million financing package with multiple lenders. In addition, Mr.
Etter has been the chief financial officer of Sam Solomon & Company, a public
company which subsequently was acquired by Service Merchandise & Company, and a
principal at Arthur Young & Company, now known as Ernst & Young, an
international accounting firm. Mr. Etter received his Masters of Business
Administration and his Bachelors of Business Administration degrees from the
University of Cincinnati.
John A. Labate has served as a director of AmeriVest since May 1995. Mr.
Labate has served as a member of each of the Audit Committee and of the
Acquisition Committee of the Board Of Directors since July 1995. Mr. Labate has
served as Vice President and Chief Financial Officer of GeoBiotics, Inc. since
August 1997, a Denver based mining technology company. From 1992 to 1997, Mr.
Labate served as the Chief Financial Officer, Secretary, and Treasurer of Crown
Resources Corporation, a publicly traded, Denver, Colorado based international
gold mining and exploration company. From 1987 through 1991, Mr. Labate served
as Corporate Controller of Bond International Gold, Inc., a New York Stock
Exchange listed international mining and processing company based in Denver,
Colorado. Prior to 1987, Mr. Labate served as controller and manager of other
mining companies and equipment manufacturing companies. Mr. Labate received his
Bachelor of Science degree in accounting from San Diego State University.
Charles R. Hoffman has served as a director of AmeriVest since August 1994
and as Chairman of the Board since May 1995. Mr. Hoffman has served as a member
of the Audit Committee of the Board Of Directors since July 1995. In July 1994,
Mr. Hoffman retired as President of Texaco Pipeline I nc. In that capacity he
had executive responsibility for more than 1,200 employees and over 2,900 miles
of pipeline. He also has experience in the crude oil terminal and transportation
business with companies such as Getty Pipeline, Inc., Getty Trading And
Transportation Company, and Skelly Pipe Line, Inc. He has served on the boards
of directors of a number of pipeline systems and as president of two pipeline
systems. Mr. Hoffman received his Bachelor of Science and Masters of
Science/Civil Engineeri ng degrees from the Missouri School Of Mines And
Metallurgy.
Robert J. McFann has served as a director of AmeriVest since August 1994
and as Secretary since May 1995. Mr. McFann has served as a member of the
Acquisition Committee of the Board Of Directors since July 1995. Mr. McFann has
been retired since 1996. He previously was the principal own er and President of
Hy Grade Meat Company, a private company which grew to a mid-sized hotel and
restaurant supply house under his direction. Prior to this, he worked for Cudahy
Meat Company in its sales department as well as other positions. He has served
on the Board Of Directors of the Bank Of Aurora and for several years managed a
diverse family owned investment portfolio of commercial real estate, family
owned businesses and other investments.
3
<PAGE>
Committees And Meetings.
The Board Of Directors maintains an Audit Committee and an Acquisition
Committee. The Audit Committee was formed to perform the following functions:
recommend to the Board Of Directors the independent auditors to be employed;
discuss the scope of the independent auditors' examination; review the financial
statements and the independent auditors' report; solicit recommendations from
the independent auditors regarding the internal controls and other matters;
review all related party transactions for potential conflicts of interest; make
recommendations to the Board Of Directors; and perform other related tasks as
requested by the Board. During the year ended December 31, 1997, the Audit
Committee, currently consisting of Messrs. Hoffman and Labate, met one time.
The Acquisitions Committee was formed to perform the following functions:
recommend to the Board Of Directors an acquisitions policy and strategy; review
and update the acquisitions policy and strategy periodically; review proposed
acquisitions and make recommendations to the Board concerning those
acquisitions; review past acquisitions and make recommendations to the Board;
and perform other related tasks as requested by the Board. During the year ended
December 31, 1997, the Acquisitions Committee, currently consisting of Messrs.
Labate and McFann, did not meet as its functions were conducted by the Board Of
Directors meeting in full.
The Board Of Directors met five times during 1997 and each director
participated in all meetings of the Board Of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's common stock to file with the
Securities and Exchange Commission initial reports of ownership and report s of
changes in ownership of common stock and other equity securities of the Company.
The Company believes that during the year ended December 31, 1997, its officers,
directors and holders of more than 10% of the Company's Common Stock complied
with all Section 16(a) filing requirements. In making these statements, the
Company has relied upon the written representations of its directors and
officers and the Company's review of the monthly statements of changes filed
with the Company by its officers and directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth in summary form the compensation received
during each of the Company's last three completed fiscal years by the Company's
President. No other employee of the Company received total salary and bonus
exceeding $100,000 during any of the last three fiscal years.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Long-Term
Name and Year Compensation Other Annual
Principal Position Ended Salary ($)(1) Bonus ($) Options Compensation ($)
- ------------------ ----- ------------- --------- ------- ----------------
<S> <C> <C> <C> <C> <C>
James F. Etter, President 1997 $100,000 $ 15,000 20,000 $ 9,000 (2)
1996 $ 90,000 $ 5,000 10,000 $ 6,000 (3)
1995 $ 42,000 -0- 20,000 $17,400 (4)
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(1) The dollar value of base salary (cash and non-cash) received.
(2) Consists of $6,000 to reimburse for medical insurance coverage and $3,000
contribution to SIMPLE IRA Plan.
(3) Reimbursement for medical insurance coverage.
(4) Consists of $15,000 to reimburse for moving expenses and $2,400 to
reimburse for medical insurance coverage.
Option Grants Table
- -------------------
The following table sets forth information concerning individual grants of
stock options made during the fiscal year ended December 31, 1997 to the
Company's President. See "-Employment Contracts And Termination Of Employment
And Change-In-Control Arrangements - 1995 Stock Option Plan", a nd -Option
Grants", below.
Option Grants For Fiscal Year Ended December 31, 1997
-----------------------------------------------------
% of Total Options
Options Granted to Employees Exercise or Base Expiration
Name Granted (#) in Fiscal Year Price ($/Share) Date
- ---- ----------- -------------- --------------- ----
<S> <C> <C> <C> <C>
James F. Etter, President 20,000 100% $4.4375/Share 12/8/02
Aggregated Option Exercises And Fiscal Year-End Option Value Table
- ------------------------------------------------------------------
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended December 31, 1997 by the Company's
President, and the fiscal year-end value of unexercised options held by the
President.
Aggregated Option Exercises
For Fiscal Year Ended December 31, 1997
And Year-End Option Values
Number of Value of
Unexercised Unexercised
Options In-The-Money
at Fiscal Options at Fiscal
Year-End (#)(3) Year-End ($)(4)
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#)(1) Realized ($)(2) Unexercisable Unexercisable
- ---- --------------- --------------- ------------- -------------
James F. Etter, President -0- -0- 21,000/29,000 Not applicable (5)
- ----------
(1) The number of shares received upon exercise of options during the fiscal
year ended December 31, 1997.
(2) With respect to options exercised during the Company's fiscal year ended
December 31, 1997, the dollar value of the difference between the option
price and the market value of the option shares purchased on the date of
the exercise of the options.
(3) The total number of unexercised options held as of December 31, 1997
separated between those options that were exercisable and those options
that were not exercisable.
5
</TABLE>
<PAGE>
(4) For all unexercised options held as of December 31, 1997, the aggregate
dollar value of the excess is the market value of the stock underlying
those options over the exercise price of those unexercised options. For
purposes of this table, the market value used for the Common Stock is its
closing sales price on December 31, 1997 of $4.4375 per share as reported
on the Nasdaq SmallCap Stock Market.
(5) The option exercise prices of $5.00 and $4.4375 per share are equal to or
greater than the closing sales price of $4.4375 for the Common Stock on
December 31, 1997 as reported on the Nasdaq SmallCap Stock Market. The
unexercised options therefore were not "in-the-money" and did not have a ny
value on December 31, 1997.
Employment Contracts And Termination Of Employment And Change-In-Control
Arrangements
- --------------------------------------------------------------------------------
Employment Agreement With James F. Etter. The Company entered into an
Employment Agreement with James F. Etter effective as of January 1, 1996, which
was amended effective as of January 1, 1997. Pursuant to the Employment
Agreement, Mr. Etter will serve as the President and Chief Executi ve Officer of
the Company and will devote substantially all his business time to the Company.
For the 1997 fiscal year, the Employment Agreement provided for the payment of
salary at the rate of $8,333 per month and a bonus to be determined by the Board
Of Directors at year end. The Agreement also provides that the Company will
reimburse Mr. Etter for up to $6,000 annually for medical/insurance expenses
paid by Mr. Etter.
Pursuant to the amendment to the Employment Agreement effective as of
January 1, 1998, Mr. Etter's salary was increased to $9,583 per month and the
Company agreed to consider paying Mr. Etter a bonus at the end of each year of
the Employment Agreement, which bonus will be at the discretion of the Board and
will be based on criteria determined by the Board. At the time of amending the
Employment Agreement, the Board also granted to Mr. Etter options to purchase
20,000 shares of Common Stock. See below, "--Option Grants".
If the Company is acquired by another company, and if the acquiring company
does not offer Mr. Etter a position in the Denver area at a salary level equal
to or greater than his then current salary, then all unexercised stock options
held by Mr. Etter would immediately become exercisable, and the Company would
pay Mr. Etter a bonus equal to one year's salary.
As the Company's operations are instituted, it is anticipated that
additional personnel and outside consultants may be hired.
1995 Stock Option Plan. Pursuant to the Company's 1995 Stock Option Plan
(the "1995 Plan"), the Company may grant options to purchase an aggregate of
130,000 shares of the Company's Common Stock to key employees, directors, and
other persons who have or are contributing to the success of the Company. The
options granted pursuant to the 1995 Plan may be incentive options qualifying
for beneficial tax treatment for the recipient or they may be non-qualified
options. With respect to options granted to persons other than directors of the
Company who are not also employees of the Company, the 1995 Plan is administered
by an option committee that determines the terms of the options subject to the
requirements of the 1995 Plan. Directors of the Company who are not also
employees of the Company ("Outside Directors") automatically receive options to
purchase 12,000 shares pursuant to the 1995 Plan at the time of their election
as an Outside Director. These options held by Outside Directors are not
exercisable at the time of grant, but options to purchase 4,000 shares become
exercisable for each Outside Director on December 30 of each of the first three
years immediately following the date of grant of the options to that Outside
Director. The exercise price for options granted to Outside Directors is equal
to the last sale price for the Company's Common Stock on the Nasdaq SmallCap
Market on December 30 following the date of the grant. The last sale price at
December 30, 1997 was $4.4375 per share, and all options granted to Outside
Directors expire five years from the date of grant. On the date that all of an
Outside Director's options have become exercisable, options to purchase an
additional 12,000 shares, which are not exercisable at the time of grant, shall
be granted to that Outside Director. In May 1995, the Outside Directors were
granted an aggregate of 48,000 options with an exercise price of $5.00 per share
pursuant to the 1995 Plan, 12,000 of which subsequently expired without being
exercised. In December 1997, the Outside Directors were granted an aggregate of
36,000 options with an exercise price of $4.4375 per share pursuant to the 1995
Plan.
6
<PAGE>
Compensation Of Outside Directors. Outside Directors are paid $250 per
month plus $300 for each meeting of the Board Of Directors that they attend.
Directors also will be reimbursed for expenses incurred in attending meetings
and for other expenses incurred on behalf of the Company. In addition, each
director who is not an employee automatically receives options to purchase
shares of Common Stock pursuant to the 1995 Plan. See above, "-1995 Stock Option
Plan".
Option Grants. In addition to the automatic grants of options to Outside
Directors described above under "-1995 Stock Option Plan", stock options have
been granted pursuant to the Company's 1995 Plan on three occasions. In May
1995, the Company granted to Mr. Etter options to acquire up to 20,000 shares of
the Company's Common Stock at an exercise price of $5 per share. 4,000 of these
options became exercisable on each of December 30, 1995, 1996 and 1997, an
additional 4,000 of these options will become exercisable on each of December
30, 1998 and 1999, and all of these options expire on May 20, 2000. On December
9, 1996, the Company granted to Mr. Etter options to purchase up to an
additional 10,000 shares of Common Stock at an exercise price of $5 per share.
On that date, the last sales price for the Company's Common Stock on the Nasdaq
SmallCap Stock Market was $4.50. 2,000 of these options became exercisable on
each of December 30, 1996 and 1997, an additional 2,000 of these options will
become exercisable on each of December 30, 1998, 1999 and 2000, and all of these
options expire on December 9, 2001. On December 8, 1997, the Company granted to
Mr. Etter options to purchase up to an additional 20,000 shares of Common Stock
at an exercise price equal to the last sales price for the Company's Common
Stock on the Nasdaq SmallCap Stock Market on December 30, 1997, which was
$4.4375 per share. 5,000 of these options became exercisable on December 30,
1997, an additional 5,000 of options will become exercisable on each of December
30, 1998, 1999 and 2000, and all of these options expire on December 8, 2002.
STOCK OWNERSHIP OF DIRECTORS AND PRINCIPAL STOCKHOLDERS
The following table summarizes certain information as of March 10, 1998
with respect to the beneficial ownership of the Company's common stock (i) by
the Company's directors, (ii) by stockholders known by the Company to own 5% or
more of the Company's common stock, and (iii) by all officers and directors as a
group.
As Of March 10, 1997
--------------------------------------------
Name And Address Of Percentage Of Class
Beneficial Owner Number Of Shares Beneficially Owned
- ---------------- ---------------- ------------------
Charles R. Hoffman 67,500(1) 4.7%
208 Somerset
Bentonville, Arizona 72712
John A. Labate 12,000(1) *
5260 South Beeler Court
Englewood, Colorado 80111
Robert J. McFann 64,800(1) 4.5%
3260 Zephyr Court
Wheat Ridge, Colorado 80033
James F. Etter 43,600(2) 3.0%
7100 Grandview Avenue
Suite 1
Arvada, Colorado 80002
All Officers And Directors
As A Group (Four Persons) 187,900(1)(2) 12.5%
7
<PAGE>
S. Kris Bandal 98,000(3) 6.9%
6043 Hudson Road, #140
Woodbury, Minnesota 55126
Rimrock Partners LLC 122,256 (4) 8.6%
1136 East Stuart, Suite 4203
Fort Collins, Colorado 80525-1193
- ---------------
*Less than one percent
(1) Includes or consists of options to purchase 12,000 shares of Common Stock
that currently are exercisable that were granted to each Outside Director
pursuant to the 1995 Plan. See "EXECUTIVE COMPENSATION--Employment Contracts And
Termination Of Employment And Change-In-Control Arrangements--19 95 Stock Option
Plan." The number of shares indicated also includes the following number of
shares underlying common stock purchase warrants ("Warrants") that currently are
exercisable that are held by each of the following persons: Charles Hoffman,
8,000; and Robert J. McFann, 4,000.
(2) Consists of an aggregate of 17,100 shares of Common Stock owned by Mr.
Etter, his wife, and minor daughter, 21,000 shares of Common Stock issuable upon
one exercise of currently exercisable options, and an aggregate of 5,500 shares
of Common Stock issuable upon the exercise of Warrants owned by Mr. Etter and
his wife. See "EXECUTIVE COMPENSATION--Employment Contracts And Termination Of
Employment And Change-In-Control Arrangements--Option Grants".
(3) Consists of 98,000 shares over which Mr. Bandal has sole voting power as
disclosed in a Schedule 13D dated March 5, 1997 provided to the Company by Mr.
Bandal.
(4) Consists of 122,256 shares over which Rimrock Partners LLC ("Rimrock") has
sole voting power as disclosed in a Schedule 13D dated March 17, 1998 provided
to the Company by Rimrock Partners LLC.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The Company has been involved, or proposes to be involved, in the following
transactions with its current and past directors and officers and by persons
known by the Company to be the beneficial owners of 5% or more of the Company's
Common Stock.
Transactions With Founder. C. J. Hedlund was a founder, former President
and a former director of the Company. Mr. Hedlund has interests in certain of
the transactions with the Company that are described below.
Stock Transactions With Promoters, Initial Officers, Directors And
Affiliates. In August 1993, the Company issued an aggregate of 100,000 shares of
Common Stock at a purchase price of $.005 per share in connection with the
formation of the Company. 62,000 of these shares were issued to C . J. Hedlund
and certain persons with whom he is affiliated, and 4,000 of these shares were
issued to each of Mr. Hedlund's two adult sons. Subsequently, Mr. Hedlund
returned 32,000 shares to the Company, Mr. Hedlund's wife returned 6,000 shares
to the Company, and an unrelated party returned an additional 12,000 shares to
the Company. The shares were returned to the Company in order to make the
Company's capital structure more desirable for a public offering, and the
Company did not compensate the tra nsferors. In December 1995, the Maxine G.
Hedlund Trust, a living trust which Maxine Hedlund, the wife of C. J. Hedlund,
is the beneficiary, sold 33,000 shares of the Company's Common Stock to Robert
J. McFann and Wandeline McFann for $4.50 per share. Mr. McFann is a director and
the Secretary of the Company.
Ownership Of Consolidated Broadway Properties, Ltd. In August 1995,
pursuant to a Purchase And Sale Agreement (the "Broadway Agreement") with
Consolidated Broadway Properties, Ltd. ("CBP"), the Company acquired the
industrial office/showroom building located at 5961 Broadway, Adams County,
Colorado (the "Broadway Property"). As consideration for the Broadway Property,
the Company issued 84,000 shares of its Common Stock to CBP and assumed a
mortgage in the original face amount of $1,232,000, which had an outstanding
principal balance of $1,205,000 at July 1, 1995. CBP previously had purchased
the Broadway Property on October 1, 1993 for aggregate consideration of
$1,332,000, consisting of a cash payment of $83,418 and the assumption of
8
<PAGE>
$1,232,000 in debt. The price paid by CBP in 1993 was determined through
negotiations between CBP and the prior owner. Mr. Hedlund is the general partner
of CBP. Continental Western Services, Inc., an entity of which Mr. Hedlund's
wife is the President, a director and a 34 percent shareholder, owned 56.8% of
CBP at the time of the Company's acquisition of the Broadway Property. Also at
that time, Charles Hoffman and Robert McFann, who are directors of the Company,
owned approximately 2.2% and 2.5%, respectively, of CBP. In December 1995, the
84,000 shares of the Company's Common Stock received by CBP in exchange for the
Broadway Property were transferred pro rata to the partners of CBP. Mr. Hoffman,
together with his wife received 6,300 shares of the Company's Common Stock, and
Mr. McFann received 7,000 shares, from the pro rata transfer made by CBP in
December 1995. In December 1995, Continental Western Services, Inc., which
received 55,160 shares of the Company's Common Stock from the CBP pro rata
assignment, sold 53,620 of those shares for $4.50 per share to three purchasers,
one of whom was a former director of the Company and one of whom already was a
stockholder of the Company at that time.
Property Management; Administrative Services. The Company has entered into
property management contracts pursuant to which AmeriCo manages the following
properties owned by the Company: four private self storage facilities located in
Colorado (the "Self-Storage Facilities"), an office building in Appleton,
Wisconsin (the "Giltedge Office Building") and the Broadway Property. These
agreements are effective as of the date on which the Company acquired the
respective property. Although the property management contracts do not provide
for changes to their terms, the Company can terminate any of them after one year
from their respective effective dates. AmeriCo will receive 5% of the gross
rental income, reimbursement of the cost of any on-site personnel, and an amount
equal to 5% of the total costs related to on-site personnel. In addition, the
Company has entered into an agreement with AmeriCo pursuant to which AmeriCo
provides the Company with accounting and clerical services as well as general
office support, including telephone, fax, and other services, for an aggregate
cost of $1,250 per month. C.J. Hedlund beneficially owns 51% of the outstanding
common stock of AmeriCo.
Property Acquisition; Brokerage Services. C.J. Hedlund, the Company, and
Colorado Bighorn entered into an agreement effective as of October 30, 1996
pursuant to which Mr. Hedlund and Colorado Bighorn have granted to the Company
the right of first refusal to participate in any real estate transaction in
which Mr. Hedlund, Colorado Bighorn, or any of their affiliated entities is
involved or for which Mr. Hedlund, Colorado Bighorn, or any of their affiliated
entities otherwise receives compensation, except that the right of first refusal
will not apply to any proposed transaction that relates solely to their serving
in a brokerage function, such as a listing or selling broker. Also as part of
this transaction, the Company entered into broker listing agreements with
Colorado Bighorn pursuant to which Colorado Bighorn will serve as the Company's
broker for all purchase and sale transactions during the period of the
agreement. Pursuant to these listing agreements, the Company will pay Colorado
Bighorn a standard real estate commission for each purchase or sale transaction
entered into by the Company, including those pursuant to the right of first
refusal granted to the Company by Mr. Hedlund and Colorado Bighorn. This
agreement and the listing agreements are for one year terms beginning on October
30, 1996 and have been renewed for successive one year terms pursuant to the
provisions described below. The agreement may be terminated by the Company
earlier than the end of the one year period in the event that either Mr. Hedlund
or Colorado Bighorn does not perform its duties satisfactorily, as determined by
the Board Of Directors of the Company in its sole discretion. In addition, this
agreement and the listing agreements may be renewed by the Company, at its
election, for five additional one year terms. Mr. Hedlund is the beneficial
owner of Colorado Bighorn.
Purchase Of The Stock Of CSP And GBI. In October 1996, the Company
purchased the stock of Consolidated Storage Properties, Inc. ("CSP"), which
owned the Self-Storage Facilities, and the stock of Giltedge Office Building,
Inc. ("GBI"), which owned the Giltedge Office Building. The respect ive purchase
prices were $2,604,000 for the stock of CSP and $721,000 for the stock of GBI.
C. J. Hedlund is the former general partner, the current representative, and a
0.83% beneficial owner of the entity that was the seller of the stock of CSP and
GBI, and two directors of the Company, Messrs. Hoffman and McFann, beneficially
owned 2.4% and 1.0%, respectively, of the seller of the stock of CSP and GBI at
the time of the transaction.
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Loans To The Company. During 1993 and 1994, Electro-Media of Colorado, Inc.
("Electro-Media") advanced the Company a total of $219,290 for organizational,
operational, and other expenses. This amount was repaid, with interest of
$10,157, in July 1994. During 1995, Electro-Media loaned t he Company $125,000
for the Company's operating expenses prior to completion of the Company's
initial public offering. The loan accrued interest at 11% per annum. An
additional $75,000 was loaned to the Company in 1996 at the same interest rate
of 11% per annum. These two loans from Electro-Media totaling $200,000 were
repaid, with interest of $16,125, as of October 30, 1996. At the time of these
transactions, C.J. Hedlund was the Chairman of the Board of Directors of
Electro-Media, and his wife was Electro-Media's majority shareholder.
Purchase Of Three Properties In Texas. In August and September 1997, the
Company acquired three office buildings located in Texas that are leased to
various Texas government agencies. The aggregate purchase price for these
buildings was $1,149,700 and 46,200 shares of the Company's Commo n Stock. As
part of those acquisitions, Colorado Bighorn received from the sellers of those
properties aggregate commissions of $13,700 and 1,000 shares of the Company's
Common Stock.
Proposed Purchase Of Eleven Office Buildings. The Company has executed
eleven contracts to purchase eleven small office buildings located in Texas that
are leased to various Texas government agencies. The acquisition of these
properties is expected to be completed on or before July 1, 19 98. The aggregate
purchase price for these buildings includes approximately $6,300,000 and up to
204,300 shares of the Company's Common Stock at the rate of $5.00 per share. As
part of those transactions, the seller of the properties will be obligated to
pay Colorado Bighorn aggregate commissions of $75,830 and 4,390 shares of the
Company's Common Stock.
Conflicts Of Interest Policies. The Company's Board Of Directors and its
officers are subject to certain provisions of Delaware law which are designed to
eliminate or minimize the effects of certain potential conflicts of interest. In
addition, the Bylaws provide that any transaction bet ween the Company and an
interested party must be fully disclosed to the Board Of Directors, and that a
majority of the directors not otherwise interested in the transaction (including
a majority of independent directors) must make a determination that such
transaction is fair, competitive and commercially reasonable and on terms and
conditions not less favorable to the Company than those available from
unaffiliated third parties.
All future transactions between the Company and the Company's officers,
directors and 5% stockholders will be on terms no less favorable than could be
obtained from independent third parties and will be approved by a majority of
the independent, disinterested directors of the Company. The Company believes
that by following these procedures it will be able to mitigate the possible
effects of these conflicts of interest.
PROPOSAL TO ADOPT 1998 STOCK OPTION PLAN
The Board Of Directors has adopted, subject to stockholder approval, the
Company's 1998 Stock Option Plan (the "1998 Plan"). The 1998 Plan will
terminate, and all options granted under the 1998 Plan will be void, if the 1998
Plan is not approved by the Company's stockholders on or before March 8, 1999.
Options (the "Options") to purchase 200,000 shares of Common Stock may be
granted pursuant to the 1998 Plan. The Options granted pursuant to the 1998 Plan
may be either Incentive Options, Non-Qualified Options or Non-Qualified
Non-Discretionary Options. The 1998 Plan is intended to provide incentives to
key employees, directors and other persons who have or are contributing to the
success of the Company by offering them Options to purchase shares of the
Company's Common Stock. The effect of the adoption of the 1998 Plan will be to
increase the number of shares issuable upon the exercise of options that may be
granted under all the Company's stock option plans, which will allow the Company
to grant more options from time to time and thereby augment its program of
providing incentives to employees and other persons. The terms of the 1998 Plan
concerning Incentive Options and Non-Qualified Options are substantially the
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same except that only employees of the Company or its subsidiaries are eligible
for Incentive Options and employees and other persons who have contributed or
are contributing to the success of the Company are eligible for Non-Qualified
Options. Non-Qualified Non-Discretionary Options may only be granted to Outside
Directors who are contributing to the success of the Company. The number of
Options authorized is a maximum aggregate so that the number of Incentive
Options granted reduces the remaining number of Options that can be granted as
Non-Qualified Options, NonQualified Non-Discretionary Options or Incentive
Options; and similarly for grants of Non-Qualified Options and Non-Qualified
Non-Discretionary Options. There currently is one employee eligible to receive
Incentive Options, three Outside Directors eligible to receive Non-Qualified
Non-Discretionary Options and an unspecified number of persons eligible to
receive Non-Qualified Options.
The portion of the 1998 Plan concerning Incentive Options and Non-Qualified
will be administered by the Option Committee, which may consist of either (i)
the Company's Board Of Directors, or (ii) a committee, appointed by the Board Of
Directors, of two or more non-employee directors. A non-employee director is a
director who (i) is not currently an officer or employee of the Company or any
of its subsidiaries; (ii) does not receive compensation from the Company in
excess of $60,000 for services rendered other than as a director; and (iii) is
not involved in any transaction that is required to be disclosed in the
Company's Form 10-KSB and proxy reports as a related party transaction. The
Option Committee has discretion to select the persons to whom Incentive Options
and Non-Qualified Options will be granted ("Optionees"), the number of shares to
be granted, the term of these Options and the exercise price of these Options.
However, no Option may be exercisable more than 10 years after the granting of
the Option, and no Option may be granted under the 1998 Plan after March 9,
2008.
The 1998 Plan provides that the exercise price of Incentive Options granted
cannot be less than the fair market value of the underlying Common Stock on the
date the Incentive Options are granted. No Incentive Option may be granted to an
employee who, at the time the Incentive Option would be granted, owns more than
ten percent of the outstanding stock of the Company unless the exercise price of
the Incentive Option granted to the employee is at least 110 percent of the fair
market value of the stock subject to the Incentive Option, and the Incentive
Option is not exercisable more than five years from the date of grant. In
addition, the aggregate fair market value (determined as of the date an Option
is granted) of the Common Stock underlying Incentive Options granted to a single
employee which become exercisable in any single calendar year may not exceed the
maximum permitted by the Internal Revenue Code of 1986, as amended (the "Code"),
for incentive stock options. This amount currently is $100,000.
The portion of the 1998 Plan concerning Non-Qualified Non-Discretionary
Option provides that Outside Directors automatically receive options to purchase
12,000 shares pursuant to the 1998 Plan at the time of their initial election as
an Outside Director. The Options held by Outside Directors are not exercisable
at the time of grant, but Options to purchase 4,000 shares become exercisable
for each Outside Director on December 30 of each of the first three years
immediately following the date of grant of these Options to the Outside
Director. The exercise price for the Non-Qualified Non-Discretionary Options
shall be the fair market value of the Company's Common Stock on the date these
Options are granted. Shares acquired upon exercise of these Options cannot be
sold for six months following the date of grant. If not previously exercised,
Non-Qualified Non-Discretionary Options that have been granted expire upon the
later to occur of five years after the date of grant and two years after the
date these Options first became exercisable. The Non-Qualified Non-Discretionary
Options also expire 90 days after the optionholder ceases to be a director of
the Company. At any time all of an Outside Director's Options have become
exercisable, Non-Qualified Non-Discretionary Options to purchase an additional
12,000 shares, which are not exercisable at the time of grant, shall be granted
to that Outside Director.
All options granted under the 1998 Plan will become fully exercisable upon
the occurrence of a change in control of the Company or certain mergers or other
reorganizations or asset sales described in the 1998 Plan.
Options granted pursuant to the 1998 Plan will not be transferable during
the Optionee's lifetime. Subject to the other terms of the 1998 Plan, the Option
Committee has discretion to provide vesting requirements and specific expiration
provisions with respect to the Incentive Options and Non-Qualified Options
granted.
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Although the Company may in the future register with a registration
statement the issuance of the options and underlying shares of Common Stock
issuable pursuant to the 1998 Plan, the Company currently plans to use the
exemption from registration set forth in Section 4(2) of the Securities Act Of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder due to the limited number, and of the relationship to the
Company, of the persons currently anticipated to participate in the 1998 Plan.
The Common Stock acquired through the exercise of the Options may be reoffered
or resold only pursuant to an effective registration statement or pursuant to
Rule 144 under the Securities Act or another exemption from the registration
requirements of the Securities Act.
In the event a change, such as a stock split, is made in the Company's
capitalization which results in an exchange or other adjustment of each share of
Common Stock for or into a greater or lesser number of shares, appropriate
adjustment shall be made in the exercise price and in the number of shares
subject to each outstanding Option. In the event of a stock dividend, each
Optionee shall be entitled to receive, upon exercise of the Option, the
equivalent of any stock dividend that the Optionee would have received had he or
she been the holder of record of the shares purchased upon exercise. The Option
Committee also may make provisions for adjusting the number of shares subject to
outstanding Options in the event the Company effects one or more
reorganizations, recapitalizations, rights offerings, or other increases or
reductions of shares of the Company's outstanding Common Stock.
The Board Of Directors may at any time terminate the 1998 Plan or make such
amendments or modifications to the 1998 Plan that the Board Of Directors deems
advisable, except that no amendments may impair previously outstanding Options
and amendments that materially modify eligibility requirements for receiving
Options, that materially increase the benefits accruing to persons eligible to
receive Options, or that materially increase the number of shares under the 1998
Plan must be approved by the Company's stockholders.
The Incentive Options issuable under the 1998 Plan are structured to
qualify for favorable tax treatment provided for "incentive stock options" by
Section 422 of the Code. All references to the tax treatment of the Incentive
Options are under the Code as currently in effect. Pursuant to Section 422 of
the Code, Optionees will not be subject to federal income tax at the time of the
grant or at the time of exercise of an Incentive Option. In addition, provided
that the stock underlying the Incentive Option is not sold less than two years
after the grant of the Incentive Option and is not sold less than one year after
the exercise of the Incentive Option, then the difference between the exercise
price and the sales price will be treated as long-term capital gain or loss. An
Optionee also may be subject to the alternative minimum tax upon exercise of his
Incentive Options. The Company will not be entitled to receive any income tax
deductions with respect to the granting or exercise of Incentive Options or the
sale of the Common Stock underlying the Incentive Options.
Non-Qualified and Non-Qualified Non-Discretionary Options will not qualify
for the special tax benefits given to Incentive Options under Section 422 of the
Code. An Optionee does not recognize any taxable income at the time the Optionee
is granted a Non-Qualified Option or Non-Qualified Non-Discretionary Option.
However, upon exercise of these Options, the Optionee recognizes ordinary income
for federal income tax purposes measured by the excess, if any, of the then fair
market value of the shares over the exercise price. Upon an Optionee's sale of
shares acquired pursuant to the exercise of a Non-Qualified Option and
Non-Qualified Non-Discretionary Option, any difference between the sale price
and the fair market value of the shares on the date when the Option was
exercised will be treated as long-term or short-term capital gain or loss. Upon
an Optionee's exercise of a Non-Qualified Option or Non-Qualified
Non-Discretionary Option, the Company will be entitled to a tax deduction in the
amount recognized as ordinary income to the Optionee provided that the
compensation amount is reasonable and the Company satisfies the applicable
reporting requirements required under U.S. Treasury regulations.
12
<PAGE>
No options are outstanding under the 1998 Plan. There currently are options
to purchase 122,000 shares of Common Stock outstanding under the 1995 Plan. The
Option Committee may grant additional options to purchase 8,000 shares pursuant
to that plan.
The approval of holders of shares representing a majority of the votes
represented at the Annual Meeting will be necessary to adopt the 1998 Plan.
The Board Of Directors recommends a vote "FOR" the proposal to adopt the
1998 Plan.
PROPOSAL TO RATIFY THE SELECTION OF WHEELER WASOFF, P.C. AS AUDITORS
The Board Of Directors recommends that the stockholders of the Company vote
in favor of ratifying the selection of the certified public accounting firm of
Wheeler Wasoff, P.C. of Denver, Colorado as the auditors who will continue to
audit financial statements, review tax returns, and perform other accounting and
consulting services for the Company for the fiscal year ending December 31, 1998
or until the Board Of Directors, in its discretion, replaces them. Wheeler
Wasoff, P.C. has audited the Company's financial statements since the fiscal
year ended December 31, 1995.
An affirmative vote of the majority of shares represented at the meeting is
necessary to ratify the selection of auditors. There is no legal requirement for
submitting this proposal to the stockholders; however, the Board Of Directors
believes that it is of sufficient importance to seek r atification. Whether the
proposal is approved or defeated, the Board may reconsider its selection of
Wheeler Wasoff, P.C. It is expected that one or more representatives of Wheeler
Wasoff, P.C. will be present at the Annual Meeting and will be given an
opportunity to make a statement if they desire to do so and to respond to
appropriate questions from stockholders.
OTHER BUSINESS
The Board Of Directors of the Company is not aware of any other matters
that are to be presented at the Annual Meeting, and it has not been advised that
any other person will present any other matters for consideration at the
meeting. Nevertheless, if other matters should properly come before the Annual
Meeting, the stockholders present, or the persons, if any, authorized by a valid
proxy to vote on their behalf, shall vote on such matters in accordance with
their judgment.
VOTING PROCEDURES
Votes at the Annual Meeting Of Stockholders are counted by Inspectors Of
Election appointed by the Chairman of the meeting. If a quorum is present, an
affirmative vote of a majority of the votes entitled to be cast by those present
in person or by proxy is required for the approval of items submitted to
stockholders for their consideration, including the election of directors and
the ratification of the selection of the independent auditors, unless a
different number of votes is required by statute or the Company's Certificate Of
Incorporation. Abstentions by those present at the meeting are tabulated
separately from affirmative and negative votes and do not constitute affirmative
votes. If a stockholder returns his proxy card and withholds authority to vote
for any or all of the nominees, the votes represented by the proxy card will be
deemed to be present at the meeting for purposes of determining the presence of
a quorum but will not be counted as affirmative votes. Shares in the name of
brokers that are not voted are treated as not present.
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS
In order to be considered for inclusion in the Company's Proxy Statement
and form of proxy relating to the Company's next Annual Meeting Of Stockholders
following the end of the Company's 1998 fiscal year, proposals by individual
stockholders must be received by the Company no later than December 15, 1998.
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AVAILABILITY OF REPORTS ON FORM 10-KSB
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF
ITS ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 TO
ANY OF THE COMPANY'S STOCKHOLDERS OF RECORD, OR TO ANY STOCKHOLDER WHO OWNS THE
COMPANY'S COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER AS NOMINEE, AT THE
CLOSE OF BUSINESS ON MARCH 31, 1998. ANY REQUEST FOR A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB SHOULD BE MAILED TO THE SECRETARY, AMERIVEST
PROPERTIES INC., 7100 GRANDVIEW AVENUE, SUITE 1, ARVADA, COLORADO 80002, (303)
421-1224.
This Notice and Proxy Statement are sent by order of the Board Of
Directors.
Dated: April 13, 1998 James F. Etter
President
* * * * *
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PROXY PROXY
For the Annual Meeting Of Stockholders of
AMERIVEST PROPERTIES INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints James F. Etter and Robert J. McFann, or
either of them, as proxies or __________________ (stockholders may strike the
person(s) designated by Management and insert the name and address of the
person(s) to vote the proxy and mail the proxy to the named proxy holder(s))
with power of substitution to vote all the shares of the undersigned with all of
the powers which the undersigned would possess if personally present at the
Annual Meeting Of Stockholders of AmeriVest Properties Inc. (the "Corporation"),
to be held at 3:00 P.M. on May 21, 1998, at Denver Marriott West, 1717 Denver
West Boulevard, Golden, Colorado, or any adjournments thereof, on the following
matters:
1. Election of Class 2 director.
FOR |_| WITHHOLD AUTHORITY |_|
Charles R. Hoffman to vote for Charles R. Hoffman
2. Proposal to adopt the Corporation's 1998 Stock Option Plan.
___ For ___ Against ___ Abstain
3. Proposal to ratify the selection by the Board of Directors of Wheeler
Wasoff, P.C. as the independent certified accountants for the Corporation
for the year ending December 31, 1998.
___ For ___ Against ___ Abstain
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Unless contrary instructions are given, the shares represented by this
proxy will be voted in favor of Items 1, 2 and 3. This proxy is solicited on
behalf of the Board of Directors of AmeriVest Properties Inc.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE.
Date:
-------------------------------------
Signature:
--------------------------------
Signature:
--------------------------------
(Please sign exactly as shown on your
stock certificate and on the envelope in
which this proxy was mailed. When signing
as partner, corporate officer, attorney,
executor, administrator, trustee,
guardian, etc., give full title as such
and sign your own name as well. If stock
is held jointly, each joint owner should
sign.)
<PAGE>
AMERIVEST PROPERTIES INC.
1998 STOCK OPTION PLAN
As Adopted As Of March 9, 1998
This 1998 Stock Option (the "Plan") is adopted by AmeriVest Properties Inc.
(the "Company") effective as of March 9, 1998.
1. Definitions.
------------
Unless otherwise indicated or required by the particular context, the
terms used in this Plan shall have the following meanings:
Board: The Board Of Directors of the Company.
Code: The Internal Revenue Code of 1986, as amended.
Common Stock: The $.001 par value common stock of the Company.
Company: AmeriVest Properties Inc., a corporation incorporated under
the laws of Delaware, any current or future wholly owned subsidiaries of the
Company, and any successors in interest by merger, operation of law, assignment
or purchase of all or substantially all of the propert y, assets or business of
the Company.
Date Of Grant: The date on which an Option, as defined below, is
granted under the Plan.
Fair Market Value: The Fair Market Value of the Option Shares (defined
below). The Fair Market Value as of any date shall be as reasonably determined
by the Option Committee (defined below); provided, however, that if there is a
public market for the Common Stock, the Fair Market Value of the Option Shares
as of any date shall not be less than the last reported sale price for the
Common Stock on that date (or on the preceding stock market business day if such
date is a Saturday, Sunday, or a holiday), on the New York Stock Exchange
("NYSE"), as reported in The Wall Street Journal, or if not reported in The Wall
Street Journal, as reported in The Denver Post, Denver, Colorado or, if no last
sale price for the NYSE is available, then the last reported sale price on
either another stock exchange or on a national or local over-the-counter market,
as reported by The Wall Street Journal, or if not available there, in The Denver
Post; provided further, that if no such published last sale price is available
and a published bid price is available from one of those sources, then the Fair
Market Value of the shares shall not be less than such last reported bid price
for the Common Stock, and if no such published bid price is available, the Fair
Market Value of such shares shall not be less than the average of the bid prices
quoted as of the close of business on that date by any two independent persons
or entities making a market for the Common Stock, such persons or entities to be
selected by the Option Committee.
Incentive Options: "Incentive stock options" as that term is defined
in Code Section 422 or the successor to that Section.
Key Employee: A person designated by the Option Committee who is
employed by the Company and whose continued employment is considered to be in
the best interests of the Company; provided, however, that Key Employees shall
not include those members of the Board who are not employees of the Company.
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Key Individual: A person, other than an employee of the Company, who
is committed to the interests of the Company; provided, however, that Key
Individuals shall not include those members of the Board who are not employees
of the Company.
Non-Discretionary Options: Options granted to Non-Employee Directors
according to the formula set forth in Section 8 of this Plan.
Non-Employee Director: A director of the Company who (a) is not
currently an officer of the Company or a parent or subsidiary of the Company, or
otherwise currently employed by the Company or a parent or subsidiary of the
Company, (b) does not receive compensation, either directly or indirectly, from
the Company or a parent or subsidiary of the Company, for services rendered as a
consultant or in any capacity other than as a director, except for an amount
that does not exceed the dollar amount for which disclosure would be required
pursuant to Regulation S-K, Item 404(a), under the Securities Act of 1933, as
amended, (c) does not possess an interest in any other transaction for which
disclosure by the Company would be required pursuant to Regulation S-K, Item
404(a), and (d) is not engaged in a business relationship for which disclosure
by the Company would be required pursuant to Regulation S-K, Item 404(a).
Non-Qualified Options: Options that are not intended to qualify, or
otherwise do not qualify, as "incentive stock options" under Code Section 422 or
the successor to that Section. To the extent that Options that are designated by
the Option Committee as Incentive Options do not qualify as "incentive stock
options" under Code Section 422 or the successor to that Section, those Options
shall be treated as Non-Qualified Options.
Option: The rights to purchase Common Stock granted pursuant to the
terms and conditions of an Option Agreement (defined below).
Option Agreement: The written agreement (including any amendments or
supplements thereto) between the Company and either a Key Employee or a Key
Individual or a Non-Employee Director designating the terms and conditions of an
Option.
Option Committee: The Plan shall be administered by an Option
Committee ("Option Committee") composed of the Board or by a committee, selected
by the Board, consisting of two or more Directors, each of whom is a
Non-Employee Director.
Option Shares: The shares of Common Stock underlying an Option granted
pursuant to this Plan.
Optionee: A Key Employee, Key Individual or Non-Employee Director who
has been granted an Option.
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2. Purpose And Scope.
------------------
(a) The purpose of the Plan is to advance the interests of the
Company and its stockholders by affording Key Employees, Key Individuals, and
Non-Employee Directors upon whose initiative and efforts, in the aggregate, the
Company is largely dependent for the successful conduct of its business, an
opportunity for investment in the Company and the incentive advantages inherent
in stock ownership in the Company.
(b) This Plan authorizes the Option Committee to grant Incentive
Options to Key Employees and to grant Non-Qualified Options to Key Employees and
Key Individuals, selected by the Option Committee while considering criteria
such as employment position or other relationship wit h the Company, duties and
responsibilities, ability, productivity, length of service or association,
morale, interest in the Company, recommendations by supervisors, the interests
of the Company, and other matters. This Plan also provides that
Non-Discretionary Options shall be granted to Non-Employee Directors pursuant to
the formula set forth in Section 8 of this Plan.
3. Administration Of The Plan.
---------------------------
(a) Except with respect to the grant of Non-Discretionary
Options, which shall be granted in the manner set forth in Section 8 of this
Plan, the Plan shall be administered by the Option Committee. The Option
Committee shall have the authority granted to it under this Section and under
each other section of the Plan.
(b) In accordance with and subject to the provisions of the Plan,
the Option Committee shall select the Optionees and shall determine (i) the
number of shares of Common Stock to be subject to each Incentive Option and
Non-Qualified Option, (ii) the time at which each Incentive Option and
Non-Qualified Option is to be granted, (iii) whether an Incentive Option and
Non-Qualified Option shall be granted in exchange for the cancellation and
termination of a previously granted option or options under the Plan or
otherwise, (iv) the purchase price for the Incentive Option and Non-Qualified
Option Shares, provided that the purchase price shall be a fixed, and cannot be
a fluctuating, price, (v) the option period, including provisions for the
termination of the Option prior to the expiration of the exercise period upon
the occurrence of certain events, (vi) the manner in which an Incentive Option
and Non-Qualified Option becomes exercisable, including whether portions of the
Incentive Option and Non-Qualified Option become exercisable at different times,
and (vii) such other terms and conditions as the Option Committee may deem
necessary or desirable. The Option Committee shall determine the form of Option
Agreement to evidence each Option.
(c) The Option Committee from time to time may adopt such rules
and regulations for carrying out the purposes of the Plan as it may deem proper
and in the best interests of the Company. The Option Committee shall keep
minutes of its meetings and those minutes shall be distri buted to every member
of the Board.
(d) The Board from time to time may make such changes in and
additions to the Plan as it may deem proper and in the best interests of the
Company provided, however, that no such change or addition shall impair any
Option previously granted under the Plan, and that the approval by written
consent of a majority of the holders of the Company's securities entitled to
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vote, or by the affirmative votes of the holders of a majority of the Company's
securities entitled to vote at a meeting duly held in accordance with the
applicable laws of the State of Delaware, shall be required for any amendment
which would do any of the following:
(i) materially modify the eligibility requirements for
receiving Options under the Plan;
(ii) materially increase the benefits accruing to Key
Employees, Key Individuals, or Non-Employee Directors
under the Plan; or
(iii)materially increase the number of shares of Common
Stock that may be issued under the Plan.
(e) Each determination, interpretation or other action made or
taken by the Option Committee, unless otherwise determined by the Board, shall
be final, conclusive and binding on all persons, including without limitation,
the Company, the stockholders, directors, officers and employees of the Company,
and the Optionees and their respective successors in interest. No member of the
Option Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan, and all members of
the Option Committee shall be, in addition to rights they may have as directors
of the Company, fully protected by the Company with respect to any such action,
determination or interpretation. If the Board makes a determination contrary to
the Option Committee's determination, interpretation or other action, then the
Board's determination shall be final and conclusive in the same manner.
4. The Common Stock.
-----------------
The Board is authorized to appropriate, issue and sell for the
purposes of the Plan, and the Option Committee is authorized to grant Options
with respect to, a total number not in excess of 200,000 shares of Common Stock,
either treasury or authorized and unissued, or the number and kind of shares of
stock or other securities which in accordance with Section 10 shall be
substituted for the 200,000 shares or into which such 200,000 shares shall be
adjusted. All or any unsold shares subject to an Option that for any reason
expires or otherwise terminates before it has been exercised, again may be made
subject to Options under the Plan.
5. Eligibility.
------------
Incentive Options may be granted only to Key Employees. Non-Qualified
Options may be granted both to Key Employees and to Key Individuals. Key
Employees and Key Individuals may hold more than one Option under the Plan and
may hold Options under the Plan as well as options grante d pursuant to other
plans or otherwise. Non-Discretionary Options may be granted only to
Non-Employee Directors.
6. Option Price.
-------------
The Option Committee shall determine the purchase price for the Option
Shares; provided, however, that with respect to Option Shares underlying
Incentive Options (a) the purchase price shall not be less than 100 percent of
the Fair Market Value of the Option Shares on the Date Of Grant and (b) the
purchase price shall be a fixed, and cannot be a fluctuating, price. The Option
Price for Option Shares underlying Non-Discretionary Options shall be the Fair
Market Value of the Common Stock on the Date Of Grant.
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7. Duration And Exercise Of Options.
---------------------------------
(a) Except as provided in Section 8 with respect to
Non-Discretionary Options and except as provided in Section 18, the option
period shall commence on the Date Of Grant and shall continue for the period
designated by the Option Committee up to a maximum of ten years from the Date Of
Grant.
(b) During the lifetime of the Optionee, the Option shall be
exercisable only by the Optionee; provided that, subject to the following
sentence and paragraph (d) of this Section 7, in the event of the legal
disability of an Optionee, the guardian or personal representative of the
Optionee may exercise the Option. If the Option is an Incentive Option it may be
exercised by the guardian or personal representative of the Optionee only if the
guardian or personal representative obtains a ruling from the Internal Revenue
Service or an opinion of counsel to the effect that neither the grant nor the
exercise of such power is violative of Code Section 422(b)(5) or the successor
to that provision. Any opinion of counsel must be both from counsel acceptable
to the Option Committee and in a form acceptable to the Option Committee.
(c) If the Optionee's employment or affiliation with the Company
is terminated for any reason including the Optionee's death, any Option then
held, to the extent that the Option was exercisable according to its terms on
the date of termination, may be exercised only to the extent determined by the
Option Committee at the time of grant of the Option, but in no case more than
three months after termination. Any options remaining unexercised shall expire
at the later of termination or the end of the extended exercise period, if any.
(d) Each Option shall be exercised in whole or in part by
delivering to the office of the Treasurer of the Company written notice of the
number of shares with respect to which the Option is to be exercised and by
paying in full the purchase price for the Option Shares purchas ed as set forth
in Section 9 herein; provided, that an Option may not be exercised in part
unless the purchase price for the Option Shares purchased is at least $1,000.
(e) No Option Shares may be sold, transferred or otherwise
disposed of within six months of the Date Of Grant by any person who is subject
to the reporting requirements of Section 16(a) of the Exchange Act on the Date
Of Grant.
8. Non-Discretionary Options.
--------------------------
(a) Grant Of Options: Amount And Timing. Non-Discretionary
Options to purchase 12,000 shares of Common stock shall be granted under the
Plan to each Non-Employee Director on the date he or she becomes a Non-Employee
Director of the Company. In addition, on the date that all of an Optionee's
Non-Discretionary Options to purchase 12,000 shares have become exercisable, as
provided in Section 8(c), Options to purchase an additional 12,000 shares shall
be granted to the Optionee provided that, at that time, he or she is a
Non-Employee Director. All Non-Discretionary Options shall be exercisable only
as set forth in Section 8(c) below and shall be subject to the other terms and
conditions set forth in this Plan or otherwise established by the Company.
Notwithstanding the foregoing, a Non-Employee director shall not receive
Non-Discretionary Options pursuant to this Plan at a time that that Non-Employee
Director may receive a grant of Non-Discretionary Options under the Company's
1995 Stock Option Plan.
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<PAGE>
(b) Option Exercise Price. The exercise price for the
Non-Discretionary Options shall be the Fair Market Value of the Common Stock on
the Date Of Grant.
(c) Exercise. Non-Discretionary Options to purchase 4,000 shares
of Common Stock will become exercisable on each of the first three December 30
dates following the Date Of Grant of the Non-Discretionary Options.
(d) Term. The Non-Discretionary Options shall expire five years
from the Date Of Grant. Notwithstanding the foregoing, Non-Discretionary Options
shall expire, if not exercised, 90 days after the Optionee ceases to be a
director of the Company.
9. Payment For Option Shares.
--------------------------
(a) If the purchase price of the Option Shares purchased by any
Optionee at one time exceeds $1,000, the Option Committee, in its sole
discretion, upon request by the Optionee, may permit all or part of the purchase
price for the Option Shares to be paid by delivery to the Company for
cancellation shares of the Common Stock previously owned by the Optionee
("Previously Owned Shares") with a Fair Market Value as of the date of the
payment equal to the portion of the purchase price for the Option Shares that
the Optionee does not pay in cash. Notwithstanding the above, an Optionee shall
be permitted to exercise his Option by delivering Previously Owned Shares only
if he has held, and provides appropriate evidence of such, the Previously Owned
Shares for more than six months prior to the date of exercise. This period (the
"Holding Period") may be extended by the Option Committee acting in its sole
discretion as is necessary, in the opinion of the Option Committee, so that,
under generally accepted accounting principles, no compensation shall be
considered to have been or to be paid to the Optionee as a result of the
exercise of the Option in this manner. At the time the Option is exercised, the
Optionee shall provide an affidavit, and such other evidence and documents as
the Option Committee shall request, to establish the Optionee's Holding Period.
As indicated above, an Optionee may deliver shares of Common Stock as part of
the purchase price only if the Option Committee, in its sole discretion agrees,
on a case by case basis, to permit this form of payment.
(b) If payment for the exercise of an Option is made other than
by the delivery to the Company for cancellation of shares of the Common Stock,
the purchase price shall be paid in cash, certified funds, or Optionee's check.
Payment shall be considered made when the Treasurer of the Company receives
delivery of the payment at the Company's address, provided that a payment made
by check is honored when first presented to the Optionee's bank.
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10. Change In Stock, Adjustments, Etc.
----------------------------------
In the event that each of the outstanding shares of Common Stock
(other than shares held by dissenting stockholders which are not changed or
exchanged) should be changed into, or exchanged for, a different number or kind
of shares of stock or other securities of the Company, or if further changes or
exchanges of any stock or other securities into which the Common Stock shall
have been changed, or for which it shall have been exchanged, shall be made
(whether by reason of merger, consolidation, reorganization, recapitalization,
stock dividends, reclassification, split-up, combination of shares or
otherwise), then there shall be substituted for each share of Common Stock that
is subject to the Plan but not subject to an outstanding Option hereunder, the
number and kind of shares of stock or other securities into which each
outstanding share of Common Stock (other than shares held by dissenting
stockholders which are not changed or exchanged) shall be so changed or for
which each outstanding share of Common Stock (other than shares held by
dissenting stockholders) shall be so changed or for which each such share shall
be exchanged. Any securities so substituted shall be subject to similar
successive adjustments.
In the event of any such changes or exchanges, (i) the Option
Committee shall determine whether, in order to prevent dilution or enlargement
of rights, an adjustment should be made in the number, or kind, or option price
of the shares or other securities that are then subject to a n Option or Options
granted pursuant to the Plan, (ii) the Option Committee shall make any such
adjustment, and (iii) such adjustments shall be made and shall be effective and
binding for all purposes of the Plan.
11. Relationship To Employment Or Position.
---------------------------------------
Nothing contained in the Plan, or in any Option or Option Share
granted pursuant to the Plan, (i) shall confer upon any Optionee any right with
respect to continuance of his employment by, or position or affiliation with, or
relationship to, the Company, or (ii) shall interfere in any way with the right
of the Company at any time to terminate the Optionee's employment by, position
or affiliation with, or relationship to, the Company.
12. Non-transferability Of Option.
------------------------------
No Option granted under the Plan shall be transferable by the
Optionee, either voluntarily or involuntarily, except (i) with respect to all
Options, by will or the laws of descent and distribution, or (ii) with respect
to Non-Qualified Options, pursuant to a qualified domestic rel ations order as
defined in the Code, the Employee Retirement Income Security Act, or rules
promulgated thereunder. Except as provided in the preceding sentence, any
attempt to transfer the Option shall void the Option.
13. Rights As A Stockholder.
------------------------
No person shall have any rights as a stockholder with respect to any
share covered by an Option until that person shall become the holder of record
of such share and, except as provided in Section 10, no adjustments shall be
made for dividends or other distributions or other rights as to which there is
an earlier record date.
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14. Securities Laws Requirements.
-----------------------------
No Option Shares shall be issued unless and until, in the opinion of
the Company, any applicable registration requirements of the Securities Act of
1933, as amended, any applicable listing requirements of any securities exchange
on which stock of the same class is then listed, and any other requirement of
law or of any regulatory bodies having jurisdiction over such issuance and
delivery, have been fully complied with. Each Option Agreement and each Option
Share certificate may be imprinted with legends reflecting federal and state
securities laws restrictions and conditions, and the Company may comply
therewith and issue "stop transfer" instructions to its transfer agent and
registrar in good faith without liability.
15. Disposition Of Shares.
----------------------
To the extent reasonably requested by the Company, each Optionee, as a
condition of exercise, shall represent, warrant and agree, in a form of written
certificate approved by the Company, as follows: (a) that all Option Shares are
being acquired solely for his own account and not on behalf of any other person
or entity; (b) that no Option Shares will be sold or otherwise distributed in
violation of the Securities Act of 1933, as amended, or any other applicable
federal or state securities laws; (c) that he will report all sales of Option
Shares to the Company in writing on a form prescribed by the Company; and (d)
that if he is subject to reporting requirements under Section 16(a) of the
Exchange Act, (i) he will not violate Section 16(b) of the Exchange Act, (ii) he
will furnish the Company with a copy of each Form 4 and Form 5 filed by him, and
(iii) he will timely file all reports required under the federal securities
laws.
16. Effective Date Of Plan; Termination Date Of Plan.
-------------------------------------------------
Subject to the approval of the Plan on or before March 8, 1999 by the
affirmative vote of the holders of a majority of the shares of Common Stock
entitled to vote and represented at a meeting duly held in accordance with the
applicable laws of the State of Delaware, the Plan shall be deemed effective as
of March 9, 1998. The Plan shall terminate at midnight on the date that is ten
years from that date, except as to Options previously granted and outstanding
under the Plan at that time. No Options shall be granted after the date on which
the Plan terminates. The Plan may be abandoned or terminated at any earlier time
by the Board, except with respect to any Options then outstanding under the
Plan.
17. Limitation On Amount Of Option.
-------------------------------
The aggregate Fair Market Value of the Option Shares underlying all
Incentive Options that have been granted to a particular Optionee and that
become exercisable for the first time during the same calendar year shall not
exceed $100,000, provided that this amount shall be increased or decreased, from
time to time, as Code Section 422 or the successor to that Section, is amended
so that this amount at all times shall equal the amount of the limitation set
forth in the Code. For purposes of the preceding sentence, Fair Market Value of
the Shares underlying any particular Option shall be determined as of the date
that Option is granted.
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<PAGE>
18. Ten Percent Stockholder Rule.
-----------------------------
No Incentive Option may be granted to a Key Employee who, at the time
the Incentive Option is granted, owns stock possessing more than 10 percent of
the total combined voting power of all classes of stock of the Company or of any
"parent corporation" or "subsidiary corporation", as those terms are defined in
Section 424, or its successor provision, of the Code, unless at the time the
Incentive Option is granted the purchase price for the Option Shares is at least
110 percent of the Fair Market Value of the Option Shares on the Date Of Grant
and the Incentive Option by its terms is not exercisable after the expiration of
five years from the Date Of Grant. For purposes of the preceding sentence, stock
ownership shall be determined as provided in Section 424, or its successor
provision, of the Code.
19. Withholding Taxes.
------------------
The Option Agreement shall provide that the Company may take such
steps as it may deem necessary or appropriate for the withholding of any taxes
which the Company is required by any law or regulation or any governmental
authority, whether federal, state or local, domestic or forei gn, to withhold in
connection with any Option including, but not limited to, the withholding of all
or any portion of any payment or the withholding of issuance of Option Shares to
be issued upon the exercise of any Option.
20. Effect Of Changes In Control And Certain Reorganizations.
---------------------------------------------------------
(a) In event of a Change In Control of the Company (as defined
below), then all Options granted pursuant to the Plan shall become exercisable
immediately at the time of such Change In Control, except that this acceleration
would not occur with respect to any Incentive Options for which the acceleration
would result in a violation of Section 17 of this Plan, and, in addition, the
Option Committee, in its sole discretion, shall have the right, but not the
obligation, to do any or all of the following:
(i) provide for an Optionee to surrender an Option (or
portion thereof) and to receive in exchange a cash
payment, for each Option share underlying the
surrendered Option, equal to the excess of the
aggregate Fair Market Value of the Option Share on the
date of surrender over the exercise price for the
Option Share. To the extent any Option is surrendered
pursuant to this Subparagraph 20(a) (ii), it shall be
deemed to have been exercised for purposes of Section 4
hereof; and
(ii) make any other adjustments, or take any other action,
as the Option Committee, in its discretion, shall deem
appropriate provided that any such adjustments or
actions would not result in an Optionee receiving less
value than pursuant to any or al l of Subparagraphs
20(a)(i) or 20(a) (ii) above.
For purposes of this Section 20, a "Change In Control" of the Company shall mean
a change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act regardless of whether the Company is then subject to such reporting
requirement.
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(b) In the event that the Company enters into, or the Board shall
propose that the Company enter into, a Reorganization Event (as defined below),
then all Options granted pursuant to the Plan shall become exercisable
immediately at the time of such Reorganization Event, except that this
acceleration would not occur with respect to any Incentive Options for which the
advance would result in a violation of Section 17 of this Plan, and, in
addition, the Option Committee, in its sole discretion, may make any or all of
the following adjustments:
(i) by written notice to each Optionee provide that such
Optionee's Options shall be terminated or cancelled,
unless exercised within 30 days (or such other period
as the Option Committee shall determine) after the date
of such notice;
(ii) provide for termination or cancellation of an Option in
exchange for payment to the Optionee of an amount in
cash or securities equal to the excess, if any, over
the exercise price of that Option of the Fair Market
Value of the Option Shares subj ect to the Option at
the time of such termination or cancellation; and
(iii)make any other adjustments, or take any other action,
as the Option Committee, in its discretion, shall deem
appropriate, provided that any such adjustments or
actions shall not result in the Optionee receiving less
value than is possible pursuan t to any or all of
Subparagraphs 20(b)(i) and 20(b)(ii) above. Any action
taken by the Option Committee may be made conditional
upon the consummation of the applicable Reorganization
Event.
For purposes of this Section 20, a "Reorganization Event" shall be deemed to
occur if (A) the Company is merged or consolidated with another corporation, (B)
one person becomes the beneficial owner of all of the issued and outstanding
equity securities of the Company (for purposes of this Section 20(b), the terms
"person" and "beneficial owner" shall have the meanings assigned to them in
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder), (C) a division or subsidiary of the Company is acquired by another
corporation, person or entity, (D) all or substantially all the assets of the
Company are acquired by another corporation, or (E) the Company is reorganized,
dissolved or liquidated.
21. Other Provisions.
-----------------
The following provisions are also in effect under the Plan:
(a) The use of a masculine gender in the Plan shall also include
within its meaning the feminine, and the singular may include the plural, and
the plural may include the singular, unless the context clearly indicates to the
contrary.
(b) Any expenses of administering the Plan shall be borne by the
Company.
(c) This Plan shall be construed to be in addition to any and all
other compensation plans or programs. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power or
authority of the Board to adopt such other additional incentive or other
compensation arrangements as the Board may deem necessary or desirable.
10
<PAGE>
(d) The validity, construction, interpretation, administration
and effect of the Plan and of its rules and regulations, and the rights of any
and all persons having or claiming to have an interest therein or thereunder
shall be governed by and determined exclusively and solel y in accordance with
the laws of the State of Colorado, except in those instances where the rules of
conflicts of laws would require application of the laws of the State of
Delaware.
* * * * *
11
