Check the appropriate box:
[ ] Preliminary information statement
[X] Definitive information statement
For use of the Commission only (as permitted by Rule 14c-5(d)(2))
(NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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.
(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.
MEGACHAIN.COM,
LTD.
34 West
8th Avenue o Vancouver, BC V5Y 1M7
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December 8, 2000
Dear Stockholder:
This
Information Statement is being provided to inform you that the holders of a
majority of the outstanding Common Stock of MegaChain.com, Ltd., a Delaware
corporation (the “Company”), have delivered to the Company written
consent to the following actions:
1. Authorizing the board of directors of the Company to change the corporate name to any name selected by the board of
directors. See "Amendment to the Certificate of Incorporation to Change Name of Company."
2. Authorizing a reduction in the total number of shares of Common Stock of the Company at the ratio of one new share for
twenty (20) old shares. As of the date of the enclosed Information Statement, there are 20,404,000 shares of
Common Stock issued and outstanding. After the reduction, the total number of outstanding shares of Common
Stock will be approximately 1,020,200. See "Reduction in Total Number of Outstanding Shares of Common Stock."
3. Approving and adopting the MegaChain.com, Ltd. Directors and Employees Stock Option and Stock Award Plan (the "Plan"). The
purpose of the Plan is to maintain the ability of the Company and its subsidiaries to attract and retain highly
qualified and experienced directors, employees and consultants and to give such directors, employees and
consultants a continued proprietary interest in the success of the Company and its subsidiaries. See
"MegaChain.com, Ltd. Directors and Employees Stock Option and Stock Award Plan."
The
actions taken by the holders of a majority of the outstanding Common Stock will
become effective twenty-one (21) days from the date hereof.
The
Company urges you to follow the instructions set forth in the enclosed
Information Statement under the section entitled “Reduction in the Total
Number of Outstanding Shares of Common Stock – How to Exchange Old
Certificates for New Certificates” to surrender the certificate(s)
representing your shares for certificate(s) representing new shares of Common
Stock.
This
Information Statement is being provided to you for information purposes only.
Your vote is not required to approve the above actions. This Information
Statement does not relate to an annual meeting or special meeting in lieu of an
annual meeting. You are not being asked to send a proxy and you are requested
not to send one.
Very truly yours,
__________
Tom Lavin, President and CEO
4
INFORMATION
STATEMENT
OF
MEGACHAIN.COM,
LTD.
NOTICE TO
STOCKHOLDERS PURSUANT TO
SECTION
14(c) OF THE SECURITIES EXCHANGE ACT OF 1934
This
Information Statement is being furnished to the holders of Common Stock, par
value $.0001 per share (the “Common Stock”), of MegaChain.com, Ltd., a
Delaware corporation (the “Company”) to inform you that the Board of
Directors of the Company and the holders of a majority of the outstanding Common
Stock (“Majority Holders”) have authorized, by written consent dated
November 30, 2000, (i) the board of directors of the Company to change the
corporate name of the Company to any name selected by the board of directors,
(ii) authorize a reduction in the total number of issued and outstanding shares
of Common Stock of the Company at the ratio of one new share for twenty (20) old
shares, and (iii) approve and adopt the MegaChain.com, Ltd. Directors and
Employees Stock Option and Stock Award Plan.
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WE ARE NOT
ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED
NOT TO SEND US A PROXY
---------------------------------------------------------------------------------------------------------------------------------------
AMENDMENT TO
THE CERTIFICATE OF
INCORPORATION
TO CHANGE NAME OF COMPANY
Pursuant
to the written consent, the name of the Company may be changed by resolution of
the Board of Directors from “MegaChain.com, Ltd.” to any name selected
by the Board of Directors. The name change will become effective upon the proper
filing of Certificate of Amendment to the Certificate of Incorporation without
any further action by the stockholders.
The
decision to authorize the Board of Directors to change the name of the Company
was based on the desire of management to enable a name change in the event the
Company merges with or acquires a business different from the Company’s
present business purpose.
A
COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2000 MAY BE OBTAINED BY WRITTEN REQUEST FROM TOM LAVIN,
PRESIDENT AND CHIEF EXECUTIVE OFFICER, 34 WEST 8TH AVENUE, VANCOUVER,
BC V5Y 1M7.
REDUCTION IN
TOTAL NUMBER OF OUTSTANDING SHARES OF COMMON STOCK
The
Board of Directors and Majority Holders have approved and adopted by written
consent a reduction in the total number of outstanding shares of Common Stock of
the Company at the ratio of one new share for twenty (20) old shares. As of the
date of the enclosed Information Statement, there are 20,404,000 shares of
Common Stock issued and outstanding. After the reduction, the total number of
outstanding shares of Common Stock will be approximately 1,020,200.
Principal
Reasons for the Share Reduction
The
Board of Directors and Majority Holders believe that the Common Stock will
attract the support of more market makers and security analysts if there are
fewer shares and, therefore, a higher price per share. In addition, the Common
Stock is likely to be more attractive to individual and institutional investors
as well as investment bankers if there are fewer shares outstanding and each
share trades at a proportionally higher price.
How to
Exchange Old Certificates for New Certificates
Enclosed
are (i) a form letter of transmittal and (ii) instructions for effecting the
surrender of the Company Certificates in exchange for new certificates. Upon
surrender of a Company Certificate for cancellation to the Company, together
with a duly executed letter of transmittal, the holder of such Company
Certificate shall, as soon as practicable following the Effective Date, be
entitled to receive in exchange therefore a post-reduction certificate
representing that number of whole shares of Common Stock into which the Common
Stock theretofore represented by the Company Certificate so surrendered have
been converted as a result of the reduction and the Company Certificate so
surrendered will be canceled.
Because
of the reduction in the total number of shares outstanding, holders of Company
Common Stock are not required to exchange their Company Certificates for
post-reduction certificate(s). Dividends and other distributions declared after
the Effective Date with respect to Common Stock and payable to holders of record
thereof after the Effective Date will be paid to the holder of any unsurrendered
Company Certificate with respect to the shares of Common Stock, which by virtue
of the reduction are represented thereby and such holder will be entitled to
exercise any right as a holder of Common Stock, until such holder has
surrendered the Company Certificate.
MEGACHAIN.COM,
LTD. DIRECTORS
AND
EMPLOYEES STOCK OPTION AND STOCK AWARD PLAN
The
Board of Directors and the Majority Holders have approved and adopted by written
consent, the Plan. The purpose of the Plan is to maintain the ability of the
Company and its subsidiaries to attract and retain highly qualified and
experienced directors, employees and consultants and to give such directors,
employees and consultants a continued proprietary interest in the success of the
Company and its subsidiaries. In addition the Plan is intended to encourage
ownership of Common Stock by the directors, employees and consultants of the
Company and its Affiliates (as defined) and to provide increased incentive for
such persons to render services and to exert maximum effort for the success of
the Company business. The following description of the Plan is qualified by the
Plan itself, attached hereto as Exhibit “A.”
General
Provisions of the Plan
The
Plan provides eligible employees and consultants the opportunity to participate
in the enhancement of shareholder value by the grants of options, stock
appreciation rights, awards of restricted stock, bonuses and/or fees payable in
unrestricted stock, or any combination thereof. In addition, the Company expects
that the Plan will further strengthen the identification of the directors,
employees and consultants with the stockholders. Certain options to be granted
under this Plan are intended to qualify as Incentive Stock Options
(“ISOs”) pursuant to Section 422 of the Internal Revenue Code of 1986,
as amended (“Code”), while other options granted under this Plan will
be nonqualified options which are not intended to qualify as ISOs
(“Nonqualified Options”). Employees, consultants and directors who
participate or become eligible to participate in this Plan from time to time are
referred to collectively herein as “Participants.” As used in the
Plan, the term “Affiliates” means any “parent corporation”
of the Company and any “subsidiary corporation” of the Company within
the meaning of Code Sections 424(e) and (f), respectively.
Stock Options
The
Committee shall have sole and absolute discretionary authority (i) to determine,
authorize, and designate those persons pursuant to this Plan who are to receive
options, restricted stock, or Common Stock under the Plan, (ii) to determine the
number of shares of Common Stock to be covered by such grant or such options and
the terms thereof, (iii) to determine the type of Common Stock granted:
Restricted stock unrestricted Common Stock or a combination of restricted and
unrestricted Common Stock, and (iv) to determine the type of option granted:
ISO, Nonqualified Option or a combination of ISO and Nonqualified Options. The
Committee shall thereupon grant options in accordance with such determinations
as evidenced by a written option agreement.
The
aggregate fair market value (determined in accordance with Section 6(b) of this
Plan at the time the option is granted) of the Common Stock with respect to
which ISOs may be exercisable for the first time by any Participant during any
calendar year under all such plans of the Company and its Affiliates shall not
exceed $500,000.
The
purchase price of each share of Common Stock subject to each option granted
pursuant to the Plan shall be determined by the Committee at the time the option
is granted and, in the case of ISOs, shall not be less than 100% of the fair
market value of a share of Common Stock on the date the option is granted, as
determined by the Committee. In the case of an ISO granted to a Ten Percent
Stockholder, the option price shall not be less than 110% of the fair market
value of a share of Common Stock on the date the option is granted. The purchase
price of each share of Common Stock subject to a Nonqualified Option under this
Plan shall be determined by the Committee prior to granting the option. The
Committee shall set the purchase price for each share subject to a Nonqualified
Option at either the fair market value of each share on the date the option is
granted, or at such other price as the Committee in its sole discretion shall
determine.
Any
person granted an incentive stock option under the Plan who makes a disposition,
within the meaning of §425(c) of the Internal Revenue Code of 1986, as
amended (“Code”), and the regulations promulgated thereunder, of any
shares of the Common Stock issued to him pursuant to his exercise of an option
within two years from the date of the granting of such option or within one year
after the date any shares are transferred to him pursuant to the exercise of the
incentive stock option must within ten days of the disposition notify the
Company and immediately deliver to the Company any amount of federal income tax
withholding required by law.
A
person to whom a stock option or stock appreciation right is awarded will have
no rights as a stockholder with respect to any shares of the Common Stock
issuable pursuant to the stock option or stock appreciation rights until actual
issuance of a stock certificate for the Common Stock.
Restricted
Stock
Awards
of restricted stock under this Plan shall be subject to all the applicable
provisions of this Plan, including the following terms and conditions, and to
such other terms and conditions not inconsistent therewith, as the Committee
shall determine:
(a)
Awards of restricted stock may be in addition to or in lieu of option grants.
Awards may be conditioned on the attainment of particular performance goals
based on criteria established by the Committee at the time of each award of
restricted stock. During a period set forth in the agreement (the
“Restriction Period”), the recipient shall not be permitted to sell,
transfer, pledge, or otherwise encumber the shares of restricted stock; except
that such shares may be used, if the agreement permits, to pay the option price
pursuant to any option granted under this Plan, provided an equal number of
shares delivered to the Participant shall carry the same restrictions as the
shares so used. Shares of restricted stock shall become free of all restrictions
if during the Restriction Period, (i) the recipient dies, (ii) the
recipient’s directorship, employment, or consultancy terminates by reason
of permanent disability, as determined by the Committee, (iii) the recipient
retires after attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a division or subsidiary, or (iv) if provided in
the agreement, there is a “change in control” of the Company (as
defined in such agreement). The Committee may require medical evidence of
permanent disability, including medical examinations by physicians selected by
it. Unless and to the extent otherwise provided in the agreement, shares of
restricted stock shall be forfeited and revert to the Company upon the
recipient’s termination of directorship, employment or consultancy during
the Restriction Period for any reason other than death, permanent disability, as
determined by the Committee, retirement after attaining both 59 1/2 years of age
and five years of continuous service with the Company and/or a subsidiary or
division, or, to the extent provided in the agreement, a “change in
control” of the Company (as defined in such agreement), except to the
extent the Committee, in its sole discretion, finds that such forfeiture might
not be in the best interests of the Company and, therefore, waives all or part
of the application of this provision to the restricted stock held by such
recipient. Certificates for restricted stock shall be registered in the name of
the recipient but shall be imprinted with the appropriate legend and returned to
the Company by the recipient, together with a stock power endorsed in blank by
the recipient. The recipient shall be entitled to vote shares of restricted
stock and shall be entitled to all dividends paid thereon, except that dividends
paid in Common Stock or other property shall also be subject to the same
restrictions.
(b)
Restricted Stock shall become free of the foregoing restrictions upon expiration
of the applicable Restriction Period and the Company shall then deliver to the
recipient Common Stock certificates evidencing such stock. Restricted stock and
any Common Stock received upon the expiration of the restriction period shall be
subject to such other transfer restrictions and/or legend requirements as are
specified in the applicable agreement.
Bonuses and
Past Salaries and Fees Payable in Unrestricted Stock
(a)
In lieu of cash bonuses otherwise payable under the Company’s or applicable
division’s or subsidiary’s compensation practices to employees and
consultants eligible to participate in this Plan, the Committee, in its sole
discretion, may determine that such bonuses shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly in cash. Such
bonuses shall be in consideration of services previously performed and as an
incentive toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine in its sole
discretion. The number of shares of unrestricted Common Stock payable in lieu of
a bonus otherwise payable shall be determined by dividing such bonus amount by
the fair market value of one share of Common Stock on the date the bonus is
payable, with fair market value determined as of such date in accordance with
Section 6(b).
(b)
In lieu of salaries and fees otherwise payable by the Company’s to
employees and consultants eligible to participate in this Plan that were
incurred for services rendered during the years of 2000, the Committee, in its
sole discretion, may determine that such unpaid salaries and fees shall be
payable in unrestricted Common Stock or partly in unrestricted Common Stock and
partly in cash. Such awards shall be in consideration of services previously
performed and as an incentive toward future services and shall consist of shares
of unrestricted Common Stock subject to such terms as the Committee may
determine in its sole discretion. The number of shares of unrestricted Common
Stock payable in lieu of a salaries and fees otherwise payable shall be
determined by dividing each calendar month’s of unpaid salary or fee amount
by the average trading value of the Common Stock for the calendar month during
which the subject services were provided.
Relinquishment
of Options
Any
option granted under this Plan, and the option agreement evidencing such option,
may provide that the Participant, or his or her heirs or other legal
representatives to the extent entitled to exercise the option under the terms
thereof, in lieu of purchasing the entire number of shares subject to purchase
thereunder, shall have the right to relinquish all or any part of the then
unexercised portion of the option (to the extent then exercisable) for a number
of shares of Common Stock rounded to the next greater number of full shares, as
shall be equal to the quotient obtained by dividing (i) the Appreciated Value by
(ii) the purchase price for each of such shares specified in such option, (iii)
“Appreciated Value” means the excess, if any, of (x) the total current
market value of the shares of Common Stock covered by the option or the portion
thereof to be relinquished over (y) the total purchase price for such shares
specified in such option.
Tax Information
(a)
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
options granted under this Plan.
(b)
Any Participant may pay all or any portion of the taxes required to be withheld
by the Company or paid by him or her in connection with the exercise of a
nonqualified option by electing to have the Company withhold shares of Common
Stock, or by delivering previously owned shares of Common Stock, having a fair
market value equal to the amount required to be withheld or paid. A Participant
must make the foregoing election on or before the date that the amount of tax to
be withheld is determined (“Tax Date”). All such elections are
irrevocable and subject to disapproval by the Committee. Elections by Covered
Participants are subject to the following additional restrictions: (i) such
election may not be made within six months of the grant of an option, provided
that this limitation shall not apply in the event of death or disability, and
(ii) such election must be made either six months or more prior to the Tax Date
or in a Window Period. Where the Tax Date in respect of an option is deferred
until six months after exercise and the Covered Participant elects share
withholding, the full amount of shares of Common Stock will be issued or
transferred to him upon exercise of the option, but he or she shall be
unconditionally obligated to tender back to the Company the number of shares
necessary to discharge the Company’s withholding obligation or his
estimated tax obligation on the Tax Date.
EXHIBIT A
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MEGACHAIN.COM,
LTD.
DIRECTORS
AND EMPLOYEES
STOCK OPTION
AND STOCK AWARD PLAN
SECTION
1. PURPOSE OF THE PLAN. The purpose of the MegaChain.com, Ltd. Directors and
Employees Stock Option and Stock Award Plan (the “Plan”) is to
maintain the ability of MegaChain.com, Ltd., a Delaware corporation (the
“Company”) and its subsidiaries to attract and retain highly qualified
and experienced directors, employees and consultants and to give such directors,
employees and consultants a continued proprietary interest in the success of the
Company and its subsidiaries. In addition the Plan is intended to encourage
ownership of common stock, $.0001 par value (“Common Stock”), of the
Company by the directors, employees and consultants of the Company and its
Affiliates (as defined below) and to provide increased incentive for such
persons to render services and to exert maximum effort for the success of the
Company business. The Plan provides eligible employees and consultants the
opportunity to participate in the enhancement of shareholder value by the grants
of options, stock appreciation rights, awards of restricted stock, bonuses
and/or fees payable in unrestricted stock, or any combination thereof. In
addition, the Company expects that the Plan will further strengthen the
identification of the directors, employees and consultants with the
stockholders. Certain options to be granted under this Plan are intended to
qualify as Incentive Stock Options (“ISOs”) pursuant to Section 422 of
the Internal Revenue Code of 1986, as amended (“Code”), while other
options granted under this Plan will be nonqualified options which are not
intended to qualify as ISOs (“Nonqualified Options”), either or both
as provided in the agreements evidencing the options as provided in Section 6
hereof. Employees, consultants and directors who participate or become eligible
to participate in this Plan from time to time are referred to collectively
herein as “Participants”. As used in this Plan, the term
“Affiliates” means any “parent corporation” of the Company
and any “subsidiary corporation” of the Company within the meaning of
Code Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
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(a)
Composition of Committee. The Plan shall be administered by the
Compensation Committee (the “Committee”) designated by the Board of
Directors of the Company (the “Board”), which shall also designate the
Chairman of the Committee. If the Company is governed by Rule 16b-3 promulgated
by the Securities and Exchange Commission (“Commission”) pursuant to
the Securities Exchange Act of 1934, as amended (“Exchange Act”), no
director shall serve as a member of the Committee unless he or she is a
“disinterested person” within the meaning of such Rule 16b-3.
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(b)
Committee Action. The Committee shall hold its meetings at such times and
places as it may determine. A majority of its members shall constitute a quorum,
and all determinations of the Committee shall be made by not less than a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully as effective as if it had
been made by a majority vote of its members at a meeting duly called and held.
The Committee may designate the Secretary of the Company or other Company
employees to assist the Committee in the administration of the Plan, and may
grant authority to such persons to execute award agreements or other documents
on behalf of the Committee and the Company. Any duly constituted committee of
the Board satisfying the qualifications of this Section 2 may be appointed as
the Committee.
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(c) Committee Expenses. All expenses and liabilities incurred by the Committee in the administration of the Plan
-------------------
shall be borne by the Company. The Committee may employ attorneys, consultants, accountants or other persons.
SECTION
3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as provided in Section
6(m) hereof and increase as provided in this Section 3, the aggregate number of
shares of Common Stock that may be issued or optioned under the Plan is 200,000.
The shares subject to the Plan shall consist of authorized but unissued shares
of Common Stock and such number of shares shall be and is hereby reserved for
sale for such purpose. Any of such shares which may remain unsold and which are
not subject to outstanding options at the termination of the Plan shall cease to
be reserved for the purpose of the Plan, but until termination of the Plan or
the termination of the last of the options granted under the Plan, whichever
last occurs, the Company shall at all times reserve a sufficient number of
shares to meet the requirements of the Plan. Should any option expire or be
cancelled prior to its exercise in full, the shares theretofore subject to such
option may again be made subject to an option under the Plan.
At
any time that additional shares of Common Stock of the Company are issued, but
not less often than annually the number of shares of Common Stock that may be
issued or optioned under the Plan will be increased. The number of shares of
such increase shall be an amount so that immediately after such increase the
total number of shares issuable under the Plan, in addition to shares previously
issued or reserved for issuance upon exercise of outstanding options, will equal
15% of the total number of issued and outstanding shares of Common Stock of the
Company. The increase in the number of shares of Common Stock that may be issued
or optioned under the Plan will occur without any further or additional action
or authorizati8on by the Board, the Committee or the stockholders.
SECTION
4. ELIGIBILITY. The Participants shall include directors, employees,
including officers, of the Company and its divisions and subsidiaries, and
consultants who provide bona fide services to the Company. Participants are
eligible to be granted options, restricted stock, unrestricted stock and other
awards under this Plan and to have their bonuses and/or consulting fees payable
in restricted stock, unrestricted stock and other awards. A Participant who has
been granted an option hereunder may be granted an additional option or options,
if the Committee shall so determine.
SECTION 5. GRANT OF OPTIONS.
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(a)
Committee Discretion. The Committee shall have sole and absolute
discretionary authority (i) to determine, authorize, and designate those persons
pursuant to this Plan who are to receive options, restricted stock, or Common
Stock under the Plan, (ii) to determine the number of shares of Common Stock to
be covered by such grant or such options and the terms thereof, (iii) to
determine the type of Common Stock granted: Restricted stock unrestricted Common
Stock or a combination of restricted and unrestricted Common Stock, and (iv) to
determine the type of option granted: ISO, Nonqualified Option or a combination
of ISO and Nonqualified Options. The Committee shall thereupon grant options in
accordance with such determinations as evidenced by a written option agreement.
Subject to the express provisions of the Plan, the Committee shall have
discretionary authority to prescribe, amend and rescind rules and regulations
relating to the Plan, to interpret the Plan, to prescribe and amend the terms of
the option agreements (which need not be identical) and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
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(b)
Stockholder Approval. All options granted under this Plan are subject to,
and may not be exercised before, the approval of this Plan by the stockholders
prior to the first anniversary date of the Board meeting held to approve the
Plan, by the affirmative vote of the holders of a majority of the outstanding
shares of the Company present, or represented by proxy, and entitled to vote
thereat, or by written consent in accordance with the laws of the State of
Delaware, provided that if such approval by the stockholders of the Company is
not forthcoming, all options previously granted under this Plan shall be void.
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(c)
Limitation on Incentive Stock Options. The aggregate fair market value
(determined in accordance with Section 6(b) of this Plan at the time the option
is granted) of the Common Stock with respect to which ISOs may be exercisable
for the first time by any Participant during any calendar year under all such
plans of the Company and its Affiliates shall not exceed $500,000.
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SECTION
6. TERMS AND CONDITIONS. Each option granted under the Plan shall be
evidenced by an agreement, in a form approved by the Committee, which shall be
subject to the following express terms and conditions and to such other terms
and conditions as the Committee may deem appropriate.
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(a)
Option Period. The Committee shall promptly notify the Participant of the
option grant and a written agreement shall promptly be executed and delivered by
and on behalf of the Company and the Participant, provided that the option grant
shall expire if a written agreement is not signed by said Participant (or his
agent or attorney) and returned to the Company within 60 days from date of
receipt by the Participant of such agreement. The date of grant shall be the
date the option is actually granted by the Committee, even though the written
agreement may be executed and delivered by the Company and the Participant after
that date. Each option agreement shall specify the period for which the option
thereunder is granted (which in no event shall exceed ten years from the date of
grant) and shall provide that the option shall expire at the end of such period.
If the original term of an option is less than ten years from the date of grant,
the option may be amended prior to its expiration, with the approval of the
Committee and the Participant, to extend the term so that the term as amended is
not more than ten years from the date of grant. However, in the case of an ISO
granted to an individual who, at the time of grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or its Affiliate (“Ten Percent Stockholder”), such period
shall not exceed five years from the date of grant.
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(b)
Option Price. The purchase price of each share of Common Stock subject to
each option granted pursuant to the Plan shall be determined by the Committee at
the time the option is granted and, in the case of ISOs, shall not be less than
100% of the fair market value of a share of Common Stock on the date the option
is granted, as determined by the Committee. In the case of an ISO granted to a
Ten Percent Stockholder, the option price shall not be less than 110% of the
fair market value of a share of Common Stock on the date the option is granted.
The purchase price of each share of Common Stock subject to a Nonqualified
Option under this Plan shall be determined by the Committee prior to granting
the option. The Committee shall set the purchase price for each share subject to
a Nonqualified Option at either the fair market value of each share on the date
the option is granted, or at such other price as the Committee in its sole
discretion shall determine.
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At
the time a determination of the fair market value of a share of Common Stock is
required to be made hereunder, the determination of its fair market value shall
be made by the Committee in such manner as it deems appropriate.
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(c)
Exercise Period. The Committee may provide in the option agreement that
an option may be exercised in whole, immediately, or is to be exercisable in
increments. In addition, the Committee may provide that the exercise of all or
part of an option is subject to specified performance by the Participant.
However, no portion of any option may be exercisable by a Participant prior to
the approval of the Plan by the stockholders of the Company.
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(d)
Procedure for Exercise. Options shall be exercised by the delivery of
written notice to the Secretary of the Company setting forth the number of
shares with respect to which the option is being exercised. Such notice shall be
accompanied by cash or cashier’s check, bank draft, postal or express money
order payable to the order of the Company, or at the option of the Committee, in
Common Stock theretofore owned by such Participant (or any combination of cash
and Common Stock). Notice may also be delivered by fax or telecopy provided that
the purchase price of such shares is delivered to the Company via wire transfer
on the same day the fax is received by the Company. The notice shall specify the
address to which the certificates for such shares are to be mailed. A
Participant shall be deemed to be a stockholder with respect to shares covered
by an option on the date the Company receives such written notice and such
option payment. As promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the Participant
certificates for the number of shares with respect to which such option has been
so exercised, issued in the Participant’s name or such other name as
Participant directs; provided, however, that such delivery shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
Participant at the address specified pursuant to this Section 6(d).
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(e)
Termination of Employment. If an executive officer to whom an option is
granted ceases to be employed by the Company for any reason other than death or
disability, any option which is exercisable on the date of such termination of
employment may be exercised during a period beginning on such date and ending at
the time set forth in the option agreement; provided, however, that if a
Participant’s employment is terminated because of the Participant’s
theft or embezzlement from the Company, disclosure of trade secrets of the
Company or the commission of a willful, felonious act while in the employment of
the Company (such reasons shall hereinafter be collectively referred to as
“for cause”), then any option or unexercised portion thereof granted
to said Participant shall expire upon such termination of employment.
Notwithstanding the foregoing, no ISO may be exercised later than three months
after an employee’s termination of employment for any reason other than
death or disability.
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(f)
Disability or Death of Participant. In the event of the determination of
disability or death of a Participant under the Plan while he or she is employed
by the Company, the options previously granted to him may be exercised (to the
extent he or she would have been entitled to do so at the date of the
determination of disability or death) at any time and from time to time, within
a period beginning on the date of such determination of disability or death and
ending at the time set forth in the option agreement, by the former employee,
the guardian of his estate, the executor or administrator of his estate or by
the person or persons to whom his rights under the option shall pass by will or
the laws of descent and distribution, but in no event may the option be
exercised after its expiration under the terms of the option agreement.
Notwithstanding the foregoing, no ISO may be exercised later than one year after
the determination of disability or death. A Participant shall be deemed to be
disabled if, in the opinion of a physician selected by the Committee, he or she
is incapable of performing services for the Company of the kind he or she was
performing at the time the disability occurred by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration. The date of
determination of disability for purposes hereof shall be the date of such
determination by such physician.
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(g)
Assignability. An option shall not be assignable or otherwise
transferable except by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined in the Code or Title
I of the Employee Retirement Income Security Act, as amended, or the rules
thereunder. During the lifetime of a Participant, an option shall be exercisable
only by him.
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(h) Incentive Stock Options. Each option agreement may contain such terms and provisions as the Committee may
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determine to be necessary or desirable in order to qualify an option designated as an incentive stock option.
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(i)
Restricted Stock Awards. Awards of restricted stock under this Plan shall
be subject to all the applicable provisions of this Plan, including the
following terms and conditions, and to such other terms and conditions not
inconsistent therewith, as the Committee shall determine:
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(A)
Awards of restricted stock may be in addition to or in lieu of option grants.
Awards may be conditioned on the attainment of particular performance goals
based on criteria established by the Committee at the time of each award of
restricted stock. During a period set forth in the agreement (the
“Restriction Period”), the recipient shall not be permitted to sell,
transfer, pledge, or otherwise encumber the shares of restricted stock; except
that such shares may be used, if the agreement permits, to pay the option price
pursuant to any option granted under this Plan, provided an equal number of
shares delivered to the Participant shall carry the same restrictions as the
shares so used. Shares of restricted stock shall become free of all restrictions
if during the Restriction Period, (i) the recipient dies, (ii) the
recipient’s directorship, employment, or consultancy terminates by reason
of permanent disability, as determined by the Committee, (iii) the recipient
retires after attaining both 59 1/2 years of age and five years of continuous
service with the Company and/or a division or subsidiary, or (iv) if provided in
the agreement, there is a “change in control” of the Company (as
defined in such agreement). The Committee may require medical evidence of
permanent disability, including medical examinations by physicians selected by
it. Unless and to the extent otherwise provided in the agreement, shares of
restricted stock shall be forfeited and revert to the Company upon the
recipient’s termination of directorship, employment or consultancy during
the Restriction Period for any reason other than death, permanent disability, as
determined by the Committee, retirement after attaining both 59 1/2 years of age
and five years of continuous service with the Company and/or a subsidiary or
division, or, to the extent provided in the agreement, a “change in
control” of the Company (as defined in such agreement), except to the
extent the Committee, in its sole discretion, finds that such forfeiture might
not be in the best interests of the Company and, therefore, waives all or part
of the application of this provision to the restricted stock held by such
recipient. Certificates for restricted stock shall be registered in the name of
the recipient but shall be imprinted with the appropriate legend and returned to
the Company by the recipient, together with a stock power endorsed in blank by
the recipient. The recipient shall be entitled to vote shares of restricted
stock and shall be entitled to all dividends paid thereon, except that dividends
paid in Common Stock or other property shall also be subject to the same
restrictions.
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(B)
Restricted Stock shall become free of the foregoing restrictions upon expiration
of the applicable Restriction Period and the Company shall then deliver to the
recipient Common Stock certificates evidencing such stock. Restricted stock and
any Common Stock received upon the expiration of the restriction period shall be
subject to such other transfer restrictions and/or legend requirements as are
specified in the applicable agreement.
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(j) Bonuses and Past Salaries and Fees Payable in Unrestricted Stock.
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(A)
In lieu of cash bonuses otherwise payable under the Company’s or applicable
division’s or subsidiary’s compensation practices to employees and
consultants eligible to participate in this Plan, the Committee, in its sole
discretion, may determine that such bonuses shall be payable in unrestricted
Common Stock or partly in unrestricted Common Stock and partly in cash. Such
bonuses shall be in consideration of services previously performed and as an
incentive toward future services and shall consist of shares of unrestricted
Common Stock subject to such terms as the Committee may determine in its sole
discretion. The number of shares of unrestricted Common Stock payable in lieu of
a bonus otherwise payable shall be determined by dividing such bonus amount by
the fair market value of one share of Common Stock on the date the bonus is
payable, with fair market value determined as of such date in accordance with
Section 6(b).
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(B)
In lieu of salaries and fees otherwise payable by the Company’s to
employees and consultants eligible to participate in this Plan that were
incurred for services rendered during the years of 2000, the Committee, in its
sole discretion, may determine that such unpaid salaries and fees shall be
payable in unrestricted Common Stock or partly in unrestricted Common Stock and
partly in cash. Such awards shall be in consideration of services previously
performed and as an incentive toward future services and shall consist of shares
of unrestricted Common Stock subject to such terms as the Committee may
determine in its sole discretion. The number of shares of unrestricted Common
Stock payable in lieu of a salaries and fees otherwise payable shall be
determined by dividing each calendar month’s of unpaid salary or fee amount
by the average trading value of the Common Stock for the calendar month during
which the subject services were provided.
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(k)
No Rights as Stockholder. No Participant shall have any rights as a
stockholder with respect to shares covered by an option until the option is
exercised by the written notice and accompanied by payment as provided in clause
(d) above.
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(l)
Extraordinary Corporate Transactions. The existence of outstanding
options shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, exchanges, or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or any
issuance of Common Stock or other securities or subscription rights thereto, or
any issuance of bonds, debentures, preferred or prior preference stock ahead of
or affecting the Common Stock or the rights thereof, 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. If the Company recapitalizes or otherwise
changes its capital structure, or merges, consolidates, sells all of its assets
or dissolves (each of the foregoing a “Fundamental Change”), then
thereafter upon any exercise of an option theretofore granted the Participant
shall be entitled to purchase under such option, in lieu of the number of shares
of Common Stock as to which option shall then be exercisable, the number and
class of shares of stock and securities to which the Participant would have been
entitled pursuant to the terms of the Fundamental Change if, immediately prior
to such Fundamental Change, the Participant had been the holder of record of the
number of shares of Common Stock as to which such option is then exercisable. If
(i) the Company shall not be the surviving entity in any merger or consolidation
(or survives only as a subsidiary of another entity), (ii) the Company sells all
or substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary), (iii) any person or entity (including a
“group” as contemplated by Section 13(d)(3) of the Exchange Act)
acquires or gains ownership or control of (including, without limitation, power
to vote) more than 50% of the outstanding shares of Common Stock, (iv) the
Company is to be dissolved and liquidated, or (v) as a result of or in
connection with a contested election of directors, the persons who were
directors of the Company before such election shall cease to constitute a
majority of the Board (each such event in clauses (i) through (v) above is
referred to herein as a “Corporate Change”), the Committee, in its
sole discretion, may accelerate the time at which all or a portion of a
Participant’s options may be exercised for a limited period of time before
or after a specified date.
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(m)
Changes in Company’s Capital Structure. If the outstanding shares of
Common Stock or other securities of the Company, or both, for which the option
is then exercisable shall at any time be changed or exchanged by declaration of
a stock dividend, stock split, combination of shares, recapitalization, or
reorganization, the number and kind of shares of Common Stock or other
securities which are subject to the Plan or subject to any options theretofore
granted, and the option prices, shall be appropriately and equitably adjusted so
as to maintain the proportionate number of shares or other securities without
changing the aggregate option price.
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(n)
Acceleration of Options. Except as hereinbefore expressly provided, (i)
the issuance by the Company of shares of stock or any class of securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, (ii) the payment of a dividend in property
other than Common Stock or (iii) the occurrence of any similar transaction, and
in any case whether or not for fair value, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number of shares of Common
Stock subject to options theretofore granted or the purchase price per share,
unless the Committee shall determine, in its sole discretion, that an adjustment
is necessary to provide equitable treatment to Participant. Notwithstanding
anything to the contrary contained in this Plan, the Committee may, in its sole
discretion, accelerate the time at which any option may be exercised, including,
but not limited to, upon the occurrence of the events specified in this Section
6, and is authorized at any time (with the consent of the Participant) to
purchase options pursuant to Section 7.
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SECTION 7. RELINQUISHMENT OF OPTIONS.
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(a)
The Committee, in granting options hereunder, shall have discretion to determine
whether or not options shall include a right of relinquishment as hereinafter
provided by this Section 7. The Committee shall also have discretion to
determine whether an option agreement evidencing an option initially granted by
the Committee without a right of relinquishment shall be amended or supplemented
to include such a right of relinquishment. Neither the Committee nor the Company
shall be under any obligation or incur any liability to any person by reason of
the Committee’s refusal to grant or include a right of relinquishment in
any option granted hereunder or in any option agreement evidencing the same.
Subject to the Committee’s determination in any case that the grant by it
of a right of relinquishment is consistent with Section 1 hereof, any option
granted under this Plan, and the option agreement evidencing such option, may
provide:
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(i)
That the Participant, or his or her heirs or other legal representatives to the
extent entitled to exercise the option under the terms thereof, in lieu of
purchasing the entire number of shares subject to purchase thereunder, shall
have the right to relinquish all or any part of the then unexercised portion of
the option (to the extent then exercisable) for a number of shares of Common
Stock to be determined in accordance with the following provisions of this
clause (i):
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(A) The written notice of exercise of such right of relinquishment shall state the percentage of
the total number of shares of Common Stock issuable pursuant to such relinquishment (as defined below) that
the Participant elects to receive;
(B) The number of shares of Common Stock, if any, issuable pursuant to such relinquishment shall
be the number of such shares, rounded to the next greater number of full shares, as shall be equal to the
quotient obtained by dividing (i) the Appreciated Value by (ii) the purchase price for each of such shares
specified in such option;
(C) For the purpose of this clause (C), "Appreciated Value" means the excess, if any, of (x) the
total current market value of the shares of Common Stock covered by the option or the portion thereof to be
relinquished over (y) the total purchase price for such shares specified in such option;
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(ii)
That such right of relinquishment may be exercised only upon receipt by the
Company of a written notice of such relinquishment which shall be dated the date
of election to make such relinquishment; and that, for the purposes of this
Plan, such date of election shall be deemed to be the date when such notice is
sent by registered or certified mail, or when receipt is acknowledged by the
Company, if mailed by other than registered or certified mail or if delivered by
hand or by any telegraphic communications equipment of the sender or otherwise
delivered; provided, that, in the event the method just described for
determining such date of election shall not be or remain consistent with the
provisions of Section 16(b) of the Exchange Act or the rules and regulations
adopted by the Commission thereunder, as presently existing or as may be
hereafter amended, which regulations exempt from the operation of Section 16(b)
of the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method consistent
with Section 16(b) of the Exchange Act or the rules and regulations thereunder
as the Committee shall in its discretion select and apply;
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(iii)
That the “current market value” of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that date as
determined in accordance with Paragraph 6(b); and
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(iv)
That the option, or any portion thereof, may be relinquished only to the extent
that (A) it is exercisable on the date written notice of relinquishment is
received by the Company, and (B) the holder of such option pays, or makes
provision satisfactory to the Company for the payment of, any taxes which the
Company is obligated to collect with respect to such relinquishment.
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(b)
The Committee shall have sole discretion to consent to or disapprove, and
neither the Committee nor the Company shall be under any liability by reason of
the Committee’s disapproval of, any election by a holder of an option to
relinquish such option in whole or in part as provided in Paragraph 7(a), except
that no such consent to or approval of a relinquishment shall be required under
the following circumstances. Each Participant who is subject to the short-swing
profits recapture provisions of Section 16(b) of the Exchange Act (“Covered
Participant”) shall not be entitled to receive shares of Common Stock when
options are relinquished during any window period commencing on the third
business day following the Company’s release of a quarterly or annual
summary statement of sales and earnings and ending on the twelfth business day
following such release (“Window Period”). A Covered Participant shall
be entitled to receive shares of Common Stock upon the relinquishment of options
outside a Window Period.
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(c)
The Committee, in granting options hereunder, shall have discretion to determine
the terms upon which such options shall be relinquishable, subject to the
applicable provisions of this Plan, and including such provisions as are deemed
advisable to permit the exemption from the operation from Section 16(b) of the
Exchange Act of any such relinquishment transaction, and options outstanding,
and option agreements evidencing such options, may be amended, if necessary, to
permit such exemption. If an option is relinquished, such option shall be deemed
to have been exercised to the extent of the number of shares of Common Stock
covered by the option or part thereof which is relinquished, and no further
options may be granted covering such shares of Common Stock.
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(d)
Neither any option nor any right to relinquish the same to the Company as
contemplated by this Paragraph 7 shall be assignable or otherwise transferable
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act, as amended, or the rules thereunder.
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(e)
Except as provided in Section 7(f) below, no right of relinquishment may be
exercised within the first six months after the initial award of any Option
containing, or the amendment or supplementation of any existing option agreement
adding, the right of relinquishment.
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(f)
No right of relinquishment may be exercised after the initial award of any
option containing, or the amendment or supplementation of any existing option
agreement adding the right of relinquishment, unless such right of
relinquishment is effective upon the Participant’s death, disability or
termination of his relationship with the Company for a reason other than
“for cause.”
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SECTION
8. AMENDMENTS OR TERMINATION. The Board may amend, alter or discontinue the
Plan, but no amendment or alteration shall be made which would impair the rights
of any Participant, without his consent, under any option theretofore granted,
or which, without the approval of the stockholders, would: (i) except as is
provided in Section 6(k) of the Plan, increase the total number of shares
reserved for the purposes of the Plan, (ii) change the class of persons eligible
to participate in the Plan as provided in Section 4 of the Plan, (iii) extend
the applicable maximum option period provided for in Section 6(a) of the Plan,
(iv) extend the expiration date of this Plan set forth in Section 15 of the
Plan, (v) except as provided in Section 6(k) of the Plan, decrease to any extent
the option price of any option granted under the Plan or (vi) withdraw the
administration of the Plan from the Committee.
SECTION
9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of options thereunder, and the obligation of the Company to sell and
deliver shares under such options, shall be subject to all applicable federal
and state laws, rules and regulations and to such approvals by any governmental
or regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to the
completion of any registration or qualification of such shares under any federal
or state law or issuance of any ruling or regulation of any government body
which the Company shall, in its sole discretion, determine to be necessary or
advisable. Any adjustments provided for in subparagraphs 6(j), (k) and (i) shall
be subject to any shareholder action required by Delaware corporate law.
SECTION
10. PURCHASE FOR INVESTMENT. Unless the options and shares of Common Stock
covered by this Plan have been registered under the Securities Act of 1933, as
amended, and the Company has determined that such registration is unnecessary,
each person acquiring or exercising an option under this Plan may be required by
the Company to give a representation in writing that he or she is acquiring such
option or such shares for his own account for investment and not with a view to,
or for sale in connection with, the distribution of any part thereof.
SECTION 11. TAXES.
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(a)
The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
options granted under this Plan.
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(b)
Notwithstanding the terms of Paragraph 11 (a), any Participant may pay all or
any portion of the taxes required to be withheld by the Company or paid by him
or her in connection with the exercise of a nonqualified option by electing to
have the Company withhold shares of Common Stock, or by delivering previously
owned shares of Common Stock, having a fair market value, determined in
accordance with Paragraph 6(b), equal to the amount required to be withheld or
paid. A Participant must make the foregoing election on or before the date that
the amount of tax to be withheld is determined (“Tax Date”). All such
elections are irrevocable and subject to disapproval by the Committee. Elections
by Covered Participants are subject to the following additional restrictions:
(i) such election may not be made within six months of the grant of an option,
provided that this limitation shall not apply in the event of death or
disability, and (ii) such election must be made either six months or more prior
to the Tax Date or in a Window Period. Where the Tax Date in respect of an
option is deferred until six months after exercise and the Covered Participant
elects share withholding, the full amount of shares of Common Stock will be
issued or transferred to him upon exercise of the option, but he or she shall be
unconditionally obligated to tender back to the Company the number of shares
necessary to discharge the Company’s withholding obligation or his
estimated tax obligation on the Tax Date.
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SECTION
12. REPLACEMENT OF OPTIONS. The Committee from time to time may permit a
Participant under the Plan to surrender for cancellation any unexercised
outstanding option and receive from the Company in exchange an option for such
number of shares of Common Stock as may be designated by the Committee. The
Committee may, with the consent of the person entitled to exercise any
outstanding option, amend such option, including reducing the exercise price of
any option to not less than the fair market value of the Common Stock at the
time of the amendment and extending the term thereof.
SECTION
13. NO RIGHT TO COMPANY EMPLOYMENT. Nothing in this Plan or as a result of
any option granted pursuant to this Plan shall confer on any individual any
right to continue in the employ of the Company or interfere in any way with the
right of the Company to terminate an individual’s employment at any time.
The option agreements may contain such provisions as the Committee may approve
with reference to the effect of approved leaves of absence.
SECTION 14. LIABILITY OF COMPANY. The Company and any Affiliate which is in existence or hereafter comes into existence
shall not be liable to a Participant or other persons as to:
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(a)
The Non-Issuance of Shares. The non-issuance or sale of shares as to
which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any shares hereunder; and
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(b) Tax Consequences. Any tax consequence expected, but not realized, by any Participant or other person due to the
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exercise of any option granted hereunder.
SECTION
15. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be effective on the
date the Board adopts the Plan. If the stockholders of the Company fail to
approve the Plan within twelve months of the date the Board approved the Plan,
the Plan shall terminate and all options previously granted under the Plan shall
become void and of no effect. The Plan shall expire ten years after the date the
Board approves the Plan and thereafter no option shall be granted pursuant to
the Plan.
SECTION
16. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption 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 of the Board to adopt such
other incentive arrangements as it may deem desirable, including without
limitation, the granting of restricted stock or stock options otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
SECTION 17. GOVERNING LAW. This Plan and any agreements hereunder shall be interpreted and construed in accordance with
the laws of the State of Delaware and applicable federal law.
SECTION
18. CASHLESS EXERCISE. The Committee also may allow cashless exercises as
permitted under Federal Reserve Board’s Regulation T, subject to applicable
securities law restrictions. or by any other means which the Committee
determines to be consistent with the Plan’s purpose and applicable law. The
proceeds from such a payment shall be added to the general funds of the Company
and shall be used for general corporate purposes.
IN
WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing by
directors of the Company, MegaChain.com, Ltd., has caused these presents to be
duly executed in its name and behalf by its proper officers thereunto duly
authorized as of this 30th day of November, 2000.
MEGACHAIN.COM, LTD.
By:/s/Tom Lavin
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Tom Lavin, President and CEO
ATTEST:
By:/s/Bill Lavin
-----------------------------------------
Bill Lavin, Secretary
