SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
takeoutmusic.com Holdings Corp.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
takeoutmusic.com Holdings Corp.
381 Broadway, Suite 201
New York, NY 10013
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on September 27, 2000
To the Stockholders of
takeoutmusic.com Holdings Corp.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
takoutmusic.com Holdings Corp. (the "Company") will be held at the Company's
offices located at 381 Broadway, Suite 201, New York, NY 10013 on September 27,
2000 at 10:00 a.m., New York time, for the following purposes:
(1) To elect four (4) Directors to serve for a term of one (1) year
and until a successor has been duly elected and qualified;
(2) To consider and act on a proposal authorizing the adoption of the
1999 Incentive Compensation Plan as set forth in Appendix A; and
(3) To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The close of business on August 21, 2000 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting and any adjournment thereof.
Enclosed is a Proxy Statement, a Proxy and a self-addressed envelope in
which to return the Proxy. You are cordially invited to attend the Annual
Meeting. Whether or not you plan to attend, please complete, date and sign the
accompanying Proxy and return it promptly in the enclosed envelope to assure
that your shares are represented at the Annual Meeting. If you do attend, you
may revoke any prior Proxy and vote your shares in person if you wish to do so.
Any prior Proxy will automatically be revoked if you execute the accompanying
Proxy or if you notify the Secretary of the Company, in writing, prior to the
Annual Meeting of Stockholders.
By Order of the Board of Directors
/s/ JOHN LAVALLO,
Executive Vice President of Business Affairs
Dated: August 25, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
takeoutmusic.com Holdings Corp.
381 Broadway, Suite 201
New York, New York 10013
PROXY STATEMENT
FOR
Annual Meeting of Stockholders
To Be Held on September 27, 2000
This Proxy Statement and the accompanying form of Proxy have been mailed on
or about August 25, 2000 to the holders of the Common Stock of record on August
21, 2000 (the "Record Date") of takeoutmusic.com Holdings Corp., a Washington
corporation (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 381 Broadway, Suite 201, New
York, New York, 10013 on September 27, 2000 and at any adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
On the Record Date there were 12,499,373 shares of Common Stock, par value
$.01 per share, issued and outstanding. Only holders of Common Stock of record
at the close of business on the Record Date are entitled to receive notice of,
and to vote at, the Annual Meeting. Each share of Common Stock entitles the
holder thereof to one vote on each matter submitted to stockholders. The Common
Stock vote together as a single class and voting may be done on a cumulative
basis. All votes shall be tabulated by the inspector of elections appointed for
the Annual Meeting, who shall separately tabulate affirmative and negative
votes, abstentions, and broker non-votes. The presence, in person or by proxy,
of a majority of shares entitled to vote will constitute a quorum for the
meeting. Votes withheld from director nominees and abstentions will be counted
in determining whether a quorum has been reached.
Shares of the Company's Common Stock represented by a properly executed
Proxy in the accompanying form will, unless contrary instructions are specified
in the proxy, be voted (i) FOR the election of the five (5) nominees identified
on the Proxy for a director to serve for a term of one (1) year, and (ii) FOR
the proposal to adopt the Company's 1999 Incentive Compensation Plan as set
forth in Appendix A. The Proxy also provides that the persons authorized
thereunder may, in the absence of instructions to the contrary, vote or act in
accordance with their judgment on any other matters properly presented for
action at the Annual Meeting or any adjournment thereof.
Any Proxy may be revoked at any time before it is voted. A stockholder may
revoke the Proxy by notifying the Secretary of the Company either in writing
prior to the Annual Meeting or in person at the Annual Meeting, by submitting a
Proxy bearing a later date or by voting in person at the Annual Meeting. The
affirmative vote of the holders of the shares of Common Stock present or
represented at the Annual Meeting is required for election of Directors, with
the four persons receiving the highest vote totals to be elected as Directors of
the Company. Accordingly, abstentions and broker non-votes will not affect the
outcome of the election of Directors. The affirmative vote of the holders of a
majority of the shares of Common Stock present or represented at the Annual
Meeting is required for the adoption of the 1999 Incentive Compensation Plan.
Abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the number of shares present and entitled to vote with
respect to any particular matter, but will not be counted as a vote in favor of
such matter. Accordingly, an abstention from voting on a matter has the same
legal effect as a vote against the matter (except with respect to election of
Directors). Broker non-votes will not be considered as present and entitled to
vote with respect to any matter so indicated on the proxy. Accordingly, a broker
non-vote on a matter has no effect on the voting on such matter.
The Company will bear the cost of the solicitation of Proxies by the Board
of Directors. The Board of Directors may use the services of its executive
officers and certain Directors to solicit Proxies from stockholders in person
and by mail, telegram and telephone. Arrangements may also be made with brokers,
fiduciaries,
<PAGE>
custodians, and nominees to send Proxies, proxy statements and other material to
the beneficial owners of the Common Stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket expenses incurred by
them in so doing.
The Annual Report to Stockholders for the fiscal year ended December 31,
1999, including financial statements, accompanies this Proxy Statement. The
Annual Report to Stockholders is not deemed to be part of the Company's proxy
solicitation materials.
The principal executive offices of the Company are located at 381 Broadway,
Suite 201, New York, New York 10013; the Company's telephone number is (212)
871-0715.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Company's Common
Stock, $.01 par value. There were 12,499,373 shares of Common Stock outstanding
on the Record Date. Each share of Common Stock entitles its holder to one vote
on each matter submitted to stockholders. The Common Stock vote together as a
single class and voting of the shares of Common Stock is on a non-cumulative
basis.
The table on the following page sets forth certain information as of August
18, 2000 with respect to the ownership of Common Stock by (i) the persons
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), known by the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities, (ii) each Director and each executive officer of
the Company, and (iii) all Directors and executive officers as a group. Except
to the extent indicated in the footnotes to the following table, each of the
individuals listed below possesses sole voting power with respect to the shares
listed opposite such individual's name.
(BALANCE OF SHEET INTENTIONALLY LEFT BLANK)
<PAGE>
NAME AND ADDRESS AMOUNT OF AND NATURE PERCENTAGE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
Sofisco Nominees Limited............ 1,724,964 13.8%
Le Panorama AB
57 Rue Grimaldi, Mc 98000 Monaco
Mori S. Ninomiya.................... 1,642,660(1) 13.0%
381 Broadway, Suite 201
New York, NY 10013
Jason Brunka........................ 1,188,410(2) 9.5%
381 Broadway, Suite 201
New York, NY 10013
Rich Pangilinan..................... 1,109,750(3) 8.8%
381 Broadway, Suite 201
New York, NY 10013
John Lavallo........................ 987,160(4) 7.9%
381 Broadway, Suite 201
New York, NY 10013
Steven A. Saltzman.................. 43,125(5) *
6, Rue Malher
Code de Porte B247
75004 Paris, France
Edwin O'Loughlin.................... 43,125(5) *
381 Broadway, Suite 201
New York, NY 10013
All Officers and Director-Officers as
a Group (4 persons in number)....... 2,716,070(1)(4)(5) 21.3%
----------
* Less than one percent.
(1) Includes 1,527,660 shares of Common Stock and options to purchase 115,000
shares of Common Stock.
(2) Includes 1,113,660 shares of Common Stock and options to purchase 74,750
shares of Common Stock.
(3) Includes 1,035,000 shares of Common Stock and options to purchase 74,750
shares of Common Stock.
(4) Includes 895,160 shares of Common Stock and options to purchase 92,000
shares of Common Stock.
(5) Includes options to purchase 43,125 shares of Common Stock.
Certain Reports
No person who, during the fiscal year ended December 31, 1999, was a
Director, officer or beneficial owner of more than ten percent of the Company's
Common Stock (which is the only class of securities of the Company registered
under Section 12 of the Exchange Act) (a "Reporting Person") failed to file, on
a timely basis, reports required by Section 16 of the Exchange Act during the
most recent fiscal year or prior years. The foregoing is based solely upon a
review by the Company of Forms 3 and 4 during the most recent fiscal year as
furnished to the Company under Rule 16a-3(d) under the Exchange Act, and Forms 5
and amendments thereto furnished to the Company with respect to its most recent
fiscal year, and any representation received by the Company from any reporting
person that no Form 5 is required.
<PAGE>
PROPOSAL I. ELECTION OF DIRECTORS
General
The following table sets forth the persons who currently serve as Directors
and provides the year in which their current term expires.
Director Term Expires
-------- ------------
Mori S. Ninomiya 2000
John Lavallo 2000
Edwin O'Loughlin 2000
Steven A. Saltzman 2000
The Board of Directors has nominated four (4) persons, Mori S. Ninomiya,
John Lavallo, Edwin O'Loughlin and Steven A. Saltzman, for election as Directors
to the Board of Directors for terms expiring at the Annual Meeting in the year
2001. Stockholders will be voting for five (5) Directors with terms of one (1)
year. The affirmative vote of a plurality of the outstanding shares of Common
Stock thereon, voting together as a single class at the Annual Meeting, is
required to elect the Directors. Accordingly, abstentions and broker non-votes
will not affect the outcome of the election of Directors. Abstentions and broker
non-votes will, however, be considered as votes represented at the Annual
Meeting for quorum purposes. All proxies received by the Board of Directors will
be voted for the election of Messrs. Ninomiya, Lavallo, O'Loughlin and Saltzman
as Directors if no direction to the contrary is given. In the event that any
nominee is unable to serve, the proxy solicited hereby may be voted, in the
discretion of the proxies, for the election of another person in his stead. The
Board of Directors knows of no reason to anticipate that this will occur. No
family relationship exists between any nominee for election as a Director.
Set forth below is certain biographical information regarding Messrs.
Ninomiya, Lavallo, O'Loughlin and Saltzman.
Mori S. Ninomiya. Mr. Ninomiya was elected to the Board of Directors on
February 4, 2000, at which time he was also appointed President and Chief
Executive Officer of the Company. Mr. Ninomiya has served as Chairman of the
Board, President and Chief Executive Officer of takeoutmusic.com, Inc. from July
1999 until present. From February 1999 through July 1999, Mr. Ninomiya was
primarily engaged in activities related to the formation of takeoutmusic.com,
Inc. From September, 1997 until February, 1999, Mr. Ninomiya served in the
Artist & Repertoire department at Tommy Boy Music LLC, an affiliate of
Time-Warner, Inc. From June, 1995 until September, 1997, Mr. Ninomiya was an
audio and music product for Time Warner Interactive. From June, 1991 until
September, 1992, Mr. Ninomiya was an audio engineer at Atlantic Recording
Studios. Mr. Ninomiya obtained a B.M. from New York University in 1994.
John Lavallo. Mr. Lavallo was elected to the Board of Directors on February
4, 2000, at which time he was also appointed Executive Vice-President, Business
Affairs and Secretary of the Company. Mr. Lavallo has served Executive
Vice-President, Business Affairs and Secretary of takeoutmusic.com, Inc. from
August 1999 until present. From December 1997 through August 1999, Mr. Lavallo
served as an attorney in the Business Affairs/Legal Department at Tommy Boy
Music LLC. From August 1997 through December 1997, Mr. Lavallo served as a legal
consultant to the law firm of McCarter & English, LLP. From March 1995 through
May, 1997, Mr. Lavallo worked as a Contract/Business Analyst At EMI Capital
Music. Mr. Lavallo holds a J.D., cum laude, from Michigan State University and a
B.A., cum laude, from Drew University.
Edwin O'loughlin. Mr. O'Loughlin was elected to the Board of Directors on
February 4, 2000. Mr. O'Loughlin has served as a Director of takeoutmusic.com,
Inc. from August 2, 1999 until present. From December 1999 through the present,
Mr. O'Loughlin has served as an advisor to Sharp End Records Ltd. From April
1998 through present Mr. O'Loughlin has served as a producer in the Artist &
Repertoire Department at Tommy Boy Music LLC. Prior to such time, Mr. O'Loughlin
served as Chairman of Next Plateau Records, a rap and dance music label, where
Mr. O'Loughlin was credited with over thirty top-40 Billboard hits and the
sextuple-platinum "Very Necessary" by Salt N' Pepa. In addition, during the
1970's Mr. O'Loughlin founded Midland International, a Disco label whose roster
included Silver Convention and Carol Douglas.
<PAGE>
Steven A. Saltzman. Mr. Saltzman was elected to the Board of Directors on
April 9, 2000. Since October, 1998, Mr. Saltzman has been a radio consultant for
the Finelco radio group, based in Milan and Monaco. During 1997 through 1998,
Mr. Saltzman was a founder and director of a German radio consortium, Mega
Radio. During 1993 through 1997, Mr. Saltzman was the radio consultant to
Scandinavian Broadcasting (SBS). Over the last ten years, Mr. Saltzman has
served as a consultant to various radio groups including Hachette/Europe
Communications of France. In 1983, Mr. Saltzman set up global radio syndicator
Radio International Inc. Mr.
Saltzman received his B.A. from the University of South Florida in 1981.
Compensation of Directors
Employee Directors of the Company do not receive any fee for serving on the
Board of Directors however, such Directors are reimbursed for travel expenses
for attendance at board meetings. Non-employee Directors are granted 5,000
options annually.
Board Meetings
During the fiscal year ended December 31, 1999, one (1) meeting of the
Board of Directors was held and action was taken on ten (10) occasions by
unanimous written consent of the Board of Directors in lieu of meeting. Each
Director of the Company participated in every action taken by unanimous consent
in lieu of a meeting during the year. Each incumbent Director of the Company
attended at least 75% of all meetings of the Board.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" MESSRS.
NINOMIYA, LAVALLO, O'LOUGHLIN AND SALTZMAN AS THE NOMINEES FOR DIRECTORS.
EXECUTIVE COMPENSATION AND RELATED MATTERS
Summary Compensation
The following provides certain information concerning all plan and non-plan
(as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded to,
earned by, paid or accrued by the Company during the years ended December 31,
1999, 1998 and 1997, to the former Chief Executive Officer. Additionally the
following provides the same information for the present Chief Executive Officer
for the period beginning February 4, 2000 and ending May 31, 2000. No director
or executive officer received total compensation in respect of the 1999 or 1998
fiscal year exceeding $100,000.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
ANNUAL COMPENSATION RESTRICTED SECURITIES PAYOUTS
---------------------------- ------------------------------- -------
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION STOCK AWARD(S) OPTIONS COMPENSATION
------------------ ---- ------ ------------ -------------- ------- ------------
($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Steven A. Rothstein 1999 -- $26,917(2) -- -- --
President and Chief 1998 -- $34,333(3) -- -- --
Executive Officer(1) 1997 -- $ 8,000(4) -- -- --
</TABLE>
----------
(1) President and Chief Executive Officer from November 1, 1997 to February 4,
2000.
<PAGE>
(2) Includes: (i) $14,000 in management fees which included assisting the
Company in finding new business opportunities; and (ii) $12,917 in interest
accrued on certain notes issued by the Company, of which a portion was paid
through the issuance of Common Stock of the Company and the balance was
aggregated with the principal under the Note (as defined in "Item 7 -
Certain Relationships and Related Transactions").
(3) Includes: (i) $6,000 in accrued management fees which included assisting
the Company in finding new business opportunities; (ii) $15,000 in finance
fees paid in connection with the granting of a loan to the Company; and
(iii) $13,333 in interest accrued on certain notes issued by the Company to
Mr. Rothstein, of which a portion was paid through the issuance of Common
Stock of the Company and the balance was aggregated with the principal
under the Note (see "Item 7 - Certain Relationships and Relations
Transactions").
(4) Includes $8,000 in interest accrued on certain notes issued by the Company
to Mr. Rothstein, of which a portion was paid through the issuance of
Common Stock of the Company and the balance was aggregated with the
principal under the Note (see "Item 7 Certain Relationships and Related
Transactions").
Options/SAR Grants in Fiscal Year Ended December 31, 1999
There were no option/SAR grants awarded to Mr. Rothstein in fiscal year
ended December 31, 1999.
Aggregated Options/SAR Exercises in Most Recent Fiscal Year
and Fiscal Year-End Options/SAR Values.
The following table summarizes options exercised by the named executive
officers during the year ended December 31, 1999, and the number and value of
options held by Mr. Rothstein at the year end. The Company does not have any
outstanding stock appreciation rights granted to executive officers.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED IN-THE-MONEY
OPTIONS/WARRANTS OPTIONS/WARRANTS
AT FY-END AT FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
Steven A. Rothstein -- -- 233,333/0 $2,199,980/0
</TABLE>
Compensation of Directors
Employee Directors of the Company did not receive any fees for serving on
the Board of Directors during the year ended December 31, 1999. However, such
Directors were reimbursed for travel expenses for attendance at board meetings.
Non-employee Directors shall be granted 5,000 options annually commencing two
(2) years into their term as a Director of the Company.
Employment Agreements
On August 31, 1999, the Company entered into an employment agreement with
Mori S. Ninomiya in which he was employed as President/Chief Executive Officer.
During his employment he is to receive a base salary (the "Base Salary") for the
calendar year commencing August 31, 1999 of $51,000 per annum. He is also
entitled to receive health insurance benefits. All options granted to Mr.
Ninomiya prior to December 31, 1999 vested on March 1, 2000 and are presently
exercisable, may be exercised through August 31, 2009.
On August 31, 1999, the Company entered into an employment agreement with
John Lavallo, in which he was employed as Executive Vice-President of Business
Affairs. During his employment he is to be compensated at the rate of $50,000
per annum. He is also entitled to receive health insurance benefits. All options
granted to Mr. Lavallo prior to December 31, 1999 vested on March 1, 2000 and
are presently exercisable, may be exercised through August 31, 2009.
<PAGE>
On August 31, 1999, the Company entered into an employment agreement with
Jason T. Brunka, in which he was employed as Executive Vice-President of A&R and
Artist/ Label Relations. During his employment he is to be compensated at the
rate of $40,000 per annum. He is also entitled to receive health insurance
benefits. All options granted to Mr. Brunka prior to December 31, 1999 vested on
March 1, 2000 and are presently exercisable, may be exercised through August 31,
2009.
On August 31, 1999, the Company entered into an employment agreement with
Rich Pangilinan, in which he was employed as Executive Vice-President of
Marketing. During his employment he is to be compensated at the rate of $42,000
per annum. He is also entitled to receive health insurance benefits. All options
granted to Mr. Pangilinan prior to December 31, 1999 vested on March 1, 2000 and
are presently exercisable, may be exercised through August 31, 2009.
II. PROPOSED ADOPTION OF 1999 INCENTIVE COMPENSATION PLAN
The Board of Directors pursuant to the Agreement and Plan of Merger, dated
January 26, 2000 and effective as of February 4, 2000, adopted, subject to
shareholder approval, the 1999 Incentive Compensation Plan (the "1999 Incentive
Plan") of takeoutmusic.com, Inc., a Delaware corporation, for use in connection
with the issuance of stock, options and other stock purchase rights to executive
officers, key employees, directors and other persons who render significant
services to the Company.
The adoption of the 1999 Incentive Plan was prompted by the Company's
desire to provide the Board with sufficient flexibility regarding the forms of
incentive compensation which the Company will have at its disposal in rewarding
executive officers, key employees, directors and consultants who render
significant services to the Company. The Board of Directors intends to offer key
personnel equity ownership in the Company through the grant of stock options and
other rights pursuant to the 1999 Incentive Plan to enable the Company to
attract and retain qualified personnel without unnecessarily depleting the
Company's cash reserves. Management believes that, to implement the anticipated
expansion of the Company's operations over the next several years, the Company
will be faced with an increasing demand for additional qualified personnel. In
order to attract and retain such personnel, the Company will require a wide
array of compensation alternatives. The 1999 Incentive Plan is intended to
enable the Company to offer executives, key employees, directors and consultants
a personal interest in the Company's growth and success through awards of either
shares of Common Stock or rights to acquire shares of Common Stock.
The 1999 Incentive Plan is intended to attract, retain, and reward
high-quality executives, employees, directors and other persons who provide
services to the Company and/or its subsidiaries, enabling such persons to
acquire or increase a proprietary interest in the Company to strengthen the
mutuality of interests between such persons and the Company's shareholders, and
providing such persons with annual and long-term performance incentives to
expend their maximum efforts in the creation of shareholder value. The 1999
Incentive Plan is also intended to qualify certain compensation awarded
thereunder for tax deductibility under Section 162(m) of the Internal Revenue
Code of 1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations thereto (the "Code") to the extent deemed
appropriate by the Committee (as hereafter defined) of the Board of Directors of
the Company. It is contemplated that each executive officer, other officers,
employees and other persons who perform services of special importance to the
Company, including directors of the Company, will be eligible to participate
under the 1999 Incentive Plan. An employee on a leave of absence may be
considered as still in the employ for purposes of eligibility under the 1999
Incentive Plan. A total of one million two hundred thousand (1,380,000) shares
of Common Stock will be reserved for issuance under the 1999 Incentive Plan. The
vesting periods are subject to the discretion of the Committee.
Except to the extent that the Board elects to administer the 1999 Incentive
Plan, it is anticipated that it will be administered by a committee designated
by the Board of Directors (the Board or such committee, as the case may be, are
referred to herein as the "Committee"). The Committee shall have full and final
authority, in each case subject to and consistent with the provisions of the
1999 Incentive Plan, to select eligible persons to become participants, grant
awards, determine the type, number and other terms and conditions of, and all
other matters relating to, awards, prescribe award agreement and rules and
regulations for the administration of the 1999 Incentive Plan, construe and
interpret the 1999 Incentive Plan and award agreements and correct defects,
supply omissions or reconcile inconsistencies therein, and to make all other
decisions and determinations as the Committee may deem necessary or advisable
for the administration of the 1999 Incentive Plan.
<PAGE>
Generally, the 1999 Incentive Plan may be amended by action of the Board of
Directors, except that any amendment or alteration to the 1999 Incentive Plan
shall be subject to the approval of the Company's shareholders not later than
the annual meeting next following such Board action if such shareholder approval
is required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Common Stock may then be
listed or quoted. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue or terminate any award theretofore granted
and any award agreement relating thereto, except as otherwise provided in the
1999 Incentive Plan.
As more particularly set forth in the 1999 Incentive Plan, at any time,
awards granted thereunder may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other award granted thereunder or any award granted under another plan
of the Company, any subsidiary, or any business entity to be acquired by the
Company or a subsidiary, or any other right of a holder to receive payment from
the Company. If an award is granted in substitution or exchange for another
award, the Committee shall require the surrender of such other award in
consideration for the grant of the new award. In addition, awards may be granted
in lieu of cash compensation. The term of each award shall be for such period as
may be determined by the Committee; provided that in no event shall the term of
any option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under Code Section 422).
Subject to the terms of the 1999 Incentive Plan and any applicable award
agreement, payments to be made by the Company or a subsidiary upon the exercise
of an option or other award or settlement of an award may be made in such forms
as the Committee shall determine, including, without limitation, cash, Common
Stock, other awards or other property, and may be made in a single payment or
transfer, in Installments, or on a deferred basis. The settlement of any award
may be accelerated, and cash paid in lieu of Common Stock in connection with
such settlement, in the discretion of the Committee or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or permitted at the election
of the holder on terms and conditions established by the Committee. Payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Common Stock.
The 1999 Incentive Plan generally provides that, unless the Committee
determines otherwise, each option or right granted thereunder will become
exercisable in full upon certain "change of control" events as described
therein.
In general, the Committee may impose on any award (subject to the
provisions of the 1999 Incentive Plan), such additional terms and conditions not
inconsistent with the provisions of the 1999 Incentive Plan as the Committee
shall determine, including terms requiring forfeiture of awards in the event of
termination of employment of the holder and terms permitting a holder to make
elections relating to his or her award. The Committee shall retain full power
and discretion to accelerate, waive or modify, at any time, any term or
condition of an award that is not mandatory under the 1999 Incentive Plan;
provided, however, that the Committee shall not have any discretion to
accelerate, waive or modify any term or condition of an award that is intended
to qualify as "performance-based compensation" for purposes of Code Section
162(m) if such discretion would cause the award not to so qualify. Except in
cases in which the Committee is authorized to require other forms of
consideration under the 1999 Incentive Plan, or to the extent other forms of
consideration must by paid to satisfy the requirements of state law, no
consideration other than services may be required for the grant (but not the
exercise) of any award. The 1999 Incentive Plan provides several types of
awards: stock options, stock appreciation rights (including limited stock
appreciation rights), restricted stock, restricted stock units or RSUs, bonus
stock and awards in lieu of obligations, dividend equivalents, annual incentive
and performance awards, and other stock-based awards, as further described
below.
<PAGE>
Stock Options. Options granted under the 1999 Incentive Plan may be either
incentive stock options ("ISOs") or options which do not qualify as ISOs. The
Committee shall determine the exercise price of stock purchasable under an
option, provided that such exercise price shall be not less than the fair market
value of a share of stock on the date of grant of such option except as
otherwise provided in the 1999 Incentive Plan. The Committee shall determine the
times at or circumstances under which an option may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without limitation, cash, stock,
other awards or awards granted under other plans of the Company or any
subsidiary, or other property (including notes or other contractual obligations
of holders to make payment on a deferred basis), and the methods by or forms in
which stock will be delivered or deemed to be delivered to holders. In no event
may an option remain exercisable more than ten years following the date of
grant.
The terms of any ISO granted under the 1999 Incentive Plan shall comply in
all respects with the provisions of Code Section 422.
Stock Appreciation Rights. SARs may be granted to recipients of options
under the 1999 Incentive Plan. An SAR shall confer a right to receive, upon
exercise thereof, the excess of (A) the fair market value of one share of Common
Stock on the date of exercise (or, in the case of a "Limited SAR," the fair
market value determined by reference to the Change in Control Price, as defined
under Section 9(c) of the 1999 Incentive Plan) over (B) the grant price of the
SAR as determined by the Committee provided that such grant price shall not be
less than the fair market value of a share of Common Stock on the date of grant
of such SAR except as provided under Section 7(a) of the 1999 Incentive Plan.
The Committee shall determine at the date of grant or thereafter, the time or
times at which and the circumstances under which a SAR may be exercised in whole
or in part (including based on achievement of performance goals and/or future
service requirements), the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Common Stock
will be delivered or deemed to be delivered to holders, whether or not an SAR
shall be in tandem or in combination with any other award, and any other terms
and conditions of any SAR. Limited SARs that may only be exercised in connection
with a Change in Control or other event as specified by the Committee may be
granted on such terms as the Committee may determine. SARs and Limited SARs may
be either freestanding or in tandem with other awards.
Restricted Stock. Restricted shares awarded under the 1999 Incentive Plan
will be subject to such restrictions on transferability, risk of forfeiture and
other restrictions as are imposed by the Committee, which restrictions may lapse
separately or in combination at such times, under such circumstances (including
based on achievement of performance goals and/or future service requirements),
in such installments or otherwise, as the Committee may determine at the date of
grant or thereafter. Except to the extent restricted under the terms of the 1999
Incentive Plan and any award agreement relating to the restricted stock, a
holder granted restricted stock shall have all of the rights of a shareholder,
including the right to vote the restricted stock and the right to receive
dividends thereon (subject to any mandatory reinvestment or other requirement
imposed by the Committee). During the restricted period applicable to the
restricted stock, subject to provisions of the 1999 Incentive Plan, the
restricted stock may not be sold, transferred, pledged, hypothecated, margined
or otherwise encumbered by the holder.
Restricted stock granted under the 1999 Incentive Plan shall be evidenced
in the manner determined by the Committee. The Committee may require that
certificates representing restricted stock, if any, registered in the name of a
holder bear a legend, that the Company retain physical possession of the
certificates, and that the holder deliver a stock power to the Company, endorsed
in blank, relating to the restricted stock. As a condition to the grant of an
award of restricted stock, the Committee may require or permit a holder to elect
that any cash dividends paid on a share of restricted stock be automatically
reinvested in additional shares of restricted stock or applied to the purchase
of additional awards under the 1999 Incentive Plan. Unless otherwise determined
by the Committee, stock distributed in connection with a stock split or stock
dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the restricted stock
with respect to which such stock or other property has been distributed. Except
as otherwise determined by the Committee, upon termination of employment during
the applicable restriction period, restricted stock that is at that time subject
to restrictions shall be forfeited and reacquired by the Company.
<PAGE>
Restricted Stock Units. The 1999 Incentive Plan also provides for the award
of Restricted Stock Units ("RSUs"). These are rights to receive Common Stock,
cash or a combination thereof at the end of a specified deferral period. The
satisfaction of an RSU award occurs on the expiration of the deferral period
specified for such RSU by the Committee. RSUs may be satisfied by the delivery
of stock, cash equal to the fair market value of the specified number of shares
of Common Stock covered by the RSUs, or a combination thereof, as determined by
the Committee. Except as otherwise determined by the Committee, upon termination
of employment during the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the award agreement evidencing the
RSUs), all RSUs that are at that time subject to deferral (other than a deferral
at the election of the Holder) shall be forfeited; provided that the Committee
may waive such restriction or forfeiture condition in whole or in part in the
event of terminations resulting from specified causes, and the Committee may in
other cases waive in whole or in part the forfeiture of RSUs. Unless otherwise
determined by the Committee at date of grant, Dividend Equivalents (as defined
herein) on the specified number of shares of Common Stock covered by an award of
RSUs shall be either (A) paid with respect to such RSUs at the dividend payment
date in cash or in shares of unrestricted Common Stock having a fair market
value equal to the amount of such dividends, or (B) deferred with respect to
such RSUs and the amount or value thereof automatically deemed reinvested in
additional RSUs, other awards or other investment vehicles, as the Committee
shall determine or permit the Holder to elect.
Bonus Stock and Awards in Lieu of Obligations. The Committee is also
authorized to grant Common Stock as a bonus, or to grant Common Stock or other
awards in lieu of obligations to pay cash or deliver other property under the
1999 Incentive Plan, provided that, in the case of holders subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of Common
Stock or other awards are exempt from liability under Section 16(b) of the
Exchange Act. Common Stock or awards granted thereunder shall be subject to such
other terms as determined by the Committee.
Dividend Equivalents. The 1999 Incentive Plan also authorizes the Committee
to grant Dividend Equivalents to a Holder, entitling the holder to receive cash,
Common Stock, other awards, or other property equal in value to dividends paid
with respect to a specified number of shares of Common Stock, or other periodic
payments ("Dividend Equivalents"). Dividend Equivalents may be awarded on a
freestanding basis or in connection with another award. The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Common Stock, awards, or
other investment vehicles, and subject to such restrictions on transferability
and risks of forfeiture, as the Committee may specify.
Annual Incentive and Performance Awards. Under the 1999 Incentive Plan, the
Committee is authorized to make Annual Incentive Awards and Performance Awards
payable in cash, shares of Common Stock, or other awards, on terms and
conditions established by the Committee, subject to certain conditions. The
right of a holder to exercise or receive a grant or settlement of any award, and
the timing thereof, may be subject to such performance conditions as may be
specified by the Committee. It is the intent of the Company that Performance
Awards and Annual Incentive Awards granted to persons who are designated by the
Committee as likely to be "covered employees" within the meaning of Code Section
162(m) and regulations thereunder (including Regulation 1.162-27 and successor
regulations thereto) shall, if so designated by the Committee, constitute
"performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder.
Performance Awards. In determining a Performance Award, the Committee may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any award subject to
performance conditions, except as limited in the case of a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m). If the
Committee determines that a Performance Award should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon
achievement of preestablished performance goals and other terms set forth in the
1999 Incentive Plan. The Committee may establish a Performance Award pool, which
shall be an unfunded pool, for purposes of measuring performance of the Company
in connection with Performance Awards. The amount of such Performance Award pool
shall be based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in the 1999 Incentive Plan during the
given performance period, as specified by the Committee in accordance with the
1999 Incentive Plan. The Committee may specify the amount of the Performance
Award pool as a percentage of any of such business criteria, a percentage
thereof in excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such business criteria.
<PAGE>
Annual Awards. The Committee may establish an Annual Incentive Award pool,
which shall be an unfunded pool, for purposes of measuring performance of the
Company in connection with Annual Incentive Awards. The amount of such Annual
Incentive Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the business criteria set forth in the 1999
Incentive Plan during the given performance period, as specified by the
Committee in accordance therewith. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business criteria.
The Committee shall determine potential recipients of Annual Incentive
Awards, and the amounts potentially payable thereunder, for each fiscal year,
not later than the end of the 90th day of each such fiscal year, or at such
other date as may be required or permitted in the case of awards intended to be
"performance-based compensation" under Code Section 162(m). In the case of
individual Annual Incentive Awards intended to qualify under Code Section
162(m), the amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria in the
given performance year, as specified by the Committee; in other cases, such
amounts shall be based on such criteria as shall be established by the
Committee. In all cases, the maximum Annual Incentive Award of any holder shall
be subject to the limitations set forth in the 1999 Incentive Plan.
After the end of each fiscal year, the Committee shall determine the
amount, if any, of (A) the Annual Incentive Award pool, and the maximum amount
of potential Annual Incentive Award payable to each holder in the Annual
Incentive Award pool, or (B) the amount of potential Annual Incentive Award
otherwise payable to each holder. The Committee may, in its discretion,
determine that the amount payable to any holder as a final Annual Incentive
Award shall be increased or reduced from the amount of his or her potential
Annual Incentive Award, except in the case of an Annual Incentive Award intended
to qualify under Code Section 162(m). The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in
the event of termination of employment by the holder prior to the end of a
fiscal year or settlement of such Annual Incentive Award.
Other Stock-based Awards. The 1999 Incentive Plan also authorizes the
Committee, subject to limitations under applicable law, to grant to holders such
other awards that may be denominated or payable in, valued in whole or in part
by reference to, or otherwise based on, or related to, Common Stock, as deemed
by the Committee to be consistent with the purposes of the 1999 Incentive Plan,
including, without limitation, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Common Stock, purchase rights for
Common Stock, awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee, and awards valued by
reference to the book value of Common Stock or the value of securities of or the
performance of specified subsidiaries. The Committee shall determine the terms
and conditions of such awards. Common Stock delivered pursuant to an award in
the nature of a purchase right granted shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Common Stock, other awards, or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other award under the 1999 Incentive Plan, may also be
granted.
<PAGE>
Options Granted Automatically to Non-employee Directors. Directors who are
not otherwise employed by the Company are eligible for participation in the 1999
Incentive Plan. Each non-employee director will receive a non-employee director
annual option to purchase 5,000 shares of the company's common stock at the
close of business on the last trading day of each July. The exercise price per
share of stock purchasable upon exercise of a non-employee director annual
option will be equal to 100% of the fair market value of a share of stock on the
date of grant of the option. Each non-employee director annual option will
become exercisable in three equal installments after each of the first, second
and third anniversaries of the date of grant. Unless otherwise provided in the
1999 Incentive Plan, the exercise price must be paid in full either in cash, by
delivery of shares of Common Stock of the Company or by a combination of cash
and shares. A non-employee director annual option will expire at the earlier of
(a) 10 years after the date of grant or (b) three months after the date the
holder ceases to serve as a director of the company for any reason.
It is the intent of the Company that the grant of any awards to or other
transaction by a holder who is subject to Section 16 of the Exchange Act shall
be exempt from Section 16 pursuant to an applicable exemption (except for
transactions acknowledged in writing to be non-exempt by such holder).
Accordingly, if any provision of the 1999 Incentive Plan or any award agreement
does not comply with the requirements of Rule 16b-3 as then applicable to any
such transaction, such, provision shall be construed or deemed amended to the
extent necessary to conform to the applicable requirements of Rule 16b-3 so that
such holder shall avoid liability under Section 16(b).
No award or other right or interest granted under the 1999 Incentive Plan
shall be pledged, hypothecated or otherwise encumbered or subject to any lien,
obligation or liability of the holder thereof to any party (other than the
Company or a subsidiary), or assigned or transferred by such holder otherwise
than by will or the laws of descent and distribution or to a beneficiary upon
the death of a holder, and such awards or rights that may be exercisable shall
be exercised during the lifetime of the holder only by the holder or his or her
guardian or legal representative, except that awards and other rights (other
than ISOs and SARs in tandem therewith) may be transferred to one or more
beneficiaries or other transferees during the lifetime of the holder, and may be
exercised by such transferees in accordance with the terms of such award, but
only if and to the extent such transfers are permitted by the Committee pursuant
to the express terms of an award agreement (subject to any terms and conditions
which the Committee may impose thereon). A beneficiary, transferee, or other
person claiming any rights under the 1999 Incentive Plan from or through any
holder shall be subject to all terms and conditions of the 1999 Incentive Plan
and any award agreement applicable to such holder, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock issued and outstanding on the record date, voting
together as a single class, is required for the adoption of the 1999 Incentive
Plan. The Directors and Director-Officers of the Company and other principal
shareholders owning of record, beneficially, directly and indirectly, an
aggregate of approximately 2,716,070 shares of the Company's Common Stock
constituting approximately 21.1% of such shares outstanding on the record date,
have agreed to vote in favor of approval of this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. II TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
FINANCIAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1999 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO STOCKHOLDERS WITHOUT CHARGE
UPON WRITTEN REQUEST THEREFOR SENT TO JOHN LAVALLO, EXECUTIVE VICE PRESIDENT OF
BUSINESS AFFAIRS, TAKEOUTMUSIC.COM HOLDINGS CORP., 381 BROADWAY, SUITE 201, NEW
YORK, NEW YORK 10013. EACH SUCH REQUEST MUST SET FORTH A GOOD FAITH
REPRESENTATION THAT AS OF JULY 28, 2000 THE PERSON MAKING THE REQUEST WAS THE
BENEFICIAL OWNER OF COMMON SHARES ENTITLED TO VOTE AT THE 2000 ANNUAL MEETING OF
STOCKHOLDERS.
<PAGE>
OTHER BUSINESS
As of the date of this Proxy Statement, the foregoing is the only business
which the Board of Directors intends to present, and it is not aware of any
other matters which may come before the Annual Meeting. If any other matter or
matters are properly brought before the Annual Meeting, or any adjournments
thereof, it is the intention of the persons named in the accompanying form of
Proxy to vote the Proxy on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS FOR 2001 MEETING
Proposals of Stockholders intended to be presented at the Company's 2001
Annual Meeting of Stockholders must be received by the Company on or prior to
April 27, 2001, to be eligible for inclusion in the Company's proxy statement
and form of proxy to be used in connection with the 2001 Annual Meeting of
Stockholders.
By Order of the Board of Directors
/s/ JOHN LAVALLO,
EXECUTIVE VICE PRESIDENT OF BUSINESS AFFAIRS
Dated: August 25, 2000
<PAGE>
APPENDIX A
TAKEOUTMUSIC.COM HOLDINGS CORP.
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1999 INCENTIVE COMPENSATION PLAN
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
1. Purpose................................................................................................-1-
2. Definitions............................................................................................-1-
3. Administration.........................................................................................-4-
(a) Authority of the Committee....................................................................-4-
(b) Manner of Exercise of Committee Authority.....................................................-4-
(c) Limitation of Liability.......................................................................-4-
4. Stock Subject to Plan..................................................................................-5-
(a) Overall Number of Shares Available for Delivery...............................................-5-
(b) Application of Limitation to Grants of Awards.................................................-5-
(c) Availability of Shares Not Delivered under Awards.............................................-5-
5. Eligibility; Per-Person Award Limitations..............................................................-5-
6. Specific Terms of Awards...............................................................................-6-
(a) General.......................................................................................-6-
(b) Options.......................................................................................-6-
(c) Stock Appreciation Rights.....................................................................-7-
(d) Restricted Stock..............................................................................-7-
(e) RSUs..........................................................................................-8-
(f) Bonus Stock and Awards in Lieu of Obligations.................................................-9-
(g) Dividend Equivalents..........................................................................-9-
(h) Annual Incentive and Performance Awards.......................................................-9-
(i) Other Stock-based Awards......................................................................-9-
7. Certain Provisions Applicable to Awards...............................................................-10-
(a) Stand-Alone, Additional, Tandem, and Substitute Awards.......................................-10-
(b) Term of Awards...............................................................................-10-
(c) Form and Timing of Payment Under Awards; Deferrals...........................................-10-
(d) Exemptions from Section 16(b) Liability......................................................-10-
8. Performance and Annual Incentive Awards...............................................................-11-
(a) Performance Conditions.......................................................................-11-
(b) Performance Awards Granted to Designated Covered Employees...................................-11-
</TABLE>
(i)
<PAGE>
<TABLE>
<S> <C>
(c) Annual Incentive Awards Granted to Designated Covered Employees..............................-12-
(d) Written Determinations.......................................................................-13-
(e) Status of Section 8(b) and Section 8(c) Awards under Code Section 162(m).....................-14-
9. Change in Control.....................................................................................-14-
(a) Effect of "Change in Control"................................................................-14-
(b) Definition of "Change in Control"............................................................-14-
(c) Definition of "Change in Control Price"......................................................-15-
10. Options Granted Automatically to Non-Employee Directors...............................................-16-
(a) Annual Option Grants.........................................................................-16-
(b) Number of Shares Subject to Automatic Option Grants..........................................-16-
(c) Other Non-Employee Director Annual Option Terms..............................................-16-
(d) Method of Exercise...........................................................................-17-
(e) Availability of Shares.......................................................................-17-
11. General Provisions....................................................................................-17-
(a) Compliance with Legal and Other Requirements.................................................-17-
(b) Limits On Transferability; Beneficiaries.....................................................-17-
(c) Adjustments..................................................................................-18-
(d) Taxes........................................................................................-18-
(e) Changes to the Plan and Awards...............................................................-19-
(f) Limitation on Rights Conferred Under Plan....................................................-19-
(g) Unfunded Status of Awards, Creation of Trusts................................................-19-
(h) Nonexclusivity of the Plan...................................................................-19-
(i) Payments in the Event of Forfeitures; Fractional Shares......................................-19-
(j) Governing Law................................................................................-19-
(k) Plan Effective Date and Shareholder Approval.................................................-19-
</TABLE>
(ii)
<PAGE>
TAKEOUTMUSIC.COM HOLDINGS CORP.
1999 Incentive Compensation Plan
1. Purpose. The purpose of this 1999 Incentive Compensation Plan (the
"Plan") is to assist takeoutmusic.com Holdings Corp., a Washington corporation
(the "Corporation"), and its subsidiaries in attracting, retaining, and
rewarding high-quality executives, employees, directors and other persons who
provide services to the Corporation and/or its subsidiaries, enabling such
persons to acquire or increase a proprietary interest in the Corporation to
strengthen the mutuality of interests between such persons and the Corporation's
shareholders, and providing such persons with annual and long-term performance
incentives to expend their maximum efforts in the creation of shareholder value.
The Plan is also intended to qualify certain compensation awarded under the Plan
for tax deductibility under Code Section 162(m) (as hereafter defined) to the
extent deemed appropriate by the Committee (or any successor committee) of the
Board of Directors of the Corporation.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of
a specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, RSU, Stock granted as a bonus or in lieu of another award, Dividend
Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive
Award, together with any other right or interest granted to a Participant
under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards
or other rights are transferred if and to the extent permitted under
Section 11 (b) hereof. If, upon a Participant's death, there is no
designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means person, persons, trust or trusts entitled by will or the
laws of descent and distribution to receive such benefits.
(d) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d- 3 under the Exchange Act and any successor to such Rule.
(e) "Board" means the Corporation's Board of Directors.
(f) "Change in Control" means Change in Control as defined with
related terms in Section 9 of the Plan.
<PAGE>
(g) "Change In Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means a committee of two or more directors designated
by the Board to administer the Plan; provided, however, that, unless
otherwise determined by the Board, the Committee shall consist solely of
two or more directors, each of whom shall be (i) a "non employee director"
within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by "non-employee directors" is not then required
in order for exemptions under Rule 16b-3 to apply to transactions under the
Plan, and (ii) an "outside director" as defined under Code Section 162(m),
unless administration of the Plan by "outside directors" is not then
required to qualify for tax deductibility under Code Section 162(m).
(j) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(k) "Dividend Equivalent" means a right granted to a Participant under
Section 6(g), to receive cash, Stock, other Awards or other property equal
in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.
(l) "Effective Date" means July 16, 1999, subject to approval by
stockholders of the Company.
(m) "Eligible Person" means each Executive Officer and other officers
and employees of the Corporation or of any subsidiary, and other persons
who provide services to the Corporation or any of its subsidiaries
including directors of the Corporation. An employee on leave of absence may
be considered as still in the employ of the Corporation or a subsidiary for
purposes of eligibility for participation in the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(o) "Executive Officer" means an executive officer of the Corporation
as defined under the Exchange Act.
-2-
<PAGE>
(p) "Fair Market Value" means the fair market value of Stock, Awards
or other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee,
the Fair Market Value of Stock shall be the last reported sale price, or,
in case no such reported sale takes place on such day, the average of the
last reported sale prices for the last three (3) trading days, in either
case as officially reported by the principal securities exchange on which
the Stock is listed or admitted to trading or by the Nasdaq National Market
or the Nasdaq Small Cap Market, or, if the Stock is not listed or admitted
to trading on any national securities exchange or quoted by the National
Association of Securities Dealers Automated Quotation System ("Nasdaq"),
the average closing bid price as furnished by the National Association of
Securities Dealers, Inc. through Nasdaq or by the OTC Electronic Bulletin
Board or similar organization if Nasdaq is no longer reporting such
information.
(q) "Incentive Stock Option" or "ISO" means any Option intended to be
and designated as an incentive stock option within the meaning of Code
Section 422 or any successor provision thereto.
(r) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.
(s) "Option" means a right, granted to a Participant under Section
6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(t) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(u) "Participant" means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(v) "Performance Award" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee.
(w) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
and shall include a "group" as defined in Section 13(d) thereof.
(x) "Qualified Member" means a member of the Committee who is a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3) and an
"outside director" within the meaning of Regulation 1-162-27 under Code
Section 162(m).
(y) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.
(z) "Restricted Stock Unit" or "RSU" means a right, granted to a
Participant under Section 6(e) hereof, to receive Stock, cash or a
combination thereof at the end of a specified deferral period.
(aa) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
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(bb) "Stock" means the Corporation's Common Stock, $0.01 par value per
share, and such other securities as may be substituted (or resubstituted)
for Stock pursuant to Section 11(c) hereof.
(cc) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee except to the extent the Board elects to administer the Plan, in which
case references herein to the "Committee" shall be deemed to include references
to the "Board." The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to select Eligible
Persons to become Participants, grant Awards, determine the type, number and
other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant)
and rules and regulations for the administration of the Plan, construe and
interpret the Plan and Award agreements and correct defects, supply omissions or
reconcile inconsistencies therein, and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan.
(b) Manner of Exercise of Committee Authority. At any time that a member of
the Committee is not a Qualified Member, any action of the Committee relating to
an Award granted or to be granted to a Participant who is then subject to
Section 16 of the Exchange Act in respect of the Corporation, or relating to an
Award intended by the Committee to qualify as "performance-based compensation"
within the meaning of Code Section 162(m) and regulations thereunder, may be
taken either (i) by a subcommittee, designated by the Committee, composed solely
of two or more Qualified Members, or (ii) by the Committee but with each such
member who is not a Qualified Member abstaining or recusing himself or herself
from such action; provided, however, that, upon such abstention or recusal, the
Committee remains composed solely of two or more Qualified Members. Such action,
authorized by such a subcommittee or by the Committee upon the abstention or
recusal of such non-Qualified Member(s), shall be the action of the Committee
for purposes of the Plan. Any action of the Committee shall be final, conclusive
and binding on all persons, including the Corporation, its subsidiaries,
Participants, Beneficiaries, transferees under Section 11(b) hereof or other
persons claiming rights from or through a Participant, and shareholders. The
express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Corporation or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee shall determine, to perform such
functions, including administrative functions, as the Committee may determine,
to the extent that such delegation will not result in the loss-of an exemption
under Rule 16b-3(d)(1) for Awards granted to Participants subject to Section 16
of the Exchange Act in respect of the Corporation and will not cause Awards
intended to qualify as "performance-based compensation" under Code Section
162(m) to fail to so qualify. The Committee may appoint agents to assist it in
administering the Plan.
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(c) Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any executive officer, other officer or employee of
the Corporation or a subsidiary, the Corporation's independent auditors,
consultants or any other agents assisting in the administration of the Plan.
Members of the Committee and any officer or employee of the Corporation or a
subsidiary acting at the direction or on behalf of the Committee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation with respect to any such action or
determination.
4. Stock Subject to Plan.
(a) Overall Number of Shares Available for Delivery. Subject to adjustment
as provided in Section 11(c) hereof, the total number of shares of Stock
reserved and available for delivery in connection with Awards under the Plan
shall be 1,200,000. Any shares of stock delivered under the Plan shall consist
of authorized and unissued shares or treasury shares.
(b) Application of Limitation to Grants of Awards. No Award may be granted
if the number of shares of Stock to be delivered in connection with such Award
or, in the case of an Award relating to shares of Stock but settleable only in
cash (such as cash-only SARs), the number of shares to which such Award relates,
exceeds the number of shares of Stock remaining available under the Plan minus
the number of shares of Stock issuable in settlement of or relating to then
outstanding Awards. The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for example, in the case
of tandem or substitute awards) and make adjustments if the number of shares of
Stock actually delivered differs from the number of shares previously counted in
connection with an Award.
(c) Availability of Shares Not Delivered Under Awards. Shares of Stock
subject to an Award under the Plan that are canceled, expired, forfeited,
settled in cash or otherwise terminated without a delivery of shares to the
Participant, including (i) the number of shares withheld in payment of any
exercise or purchase price of an Award or award or taxes relating to Awards or
awards, and (ii) the number of shares surrendered in payment of any exercise or
purchase price of an Award or award or taxes relating to any Award or award,
will again be available for Awards under the Plan, except that if any such
shares could not again be available for Awards to a particular Participant under
any applicable law or regulation, such shares shall be available exclusively for
Awards to Participants who are not subject to such limitation.
5. Eligibility; Per-person Award Limitations. Awards may be granted under
the Plan only to Eligible Persons. In each fiscal year during any part of which
the Plan is in effect, an Eligible Person may not be granted Awards relating to
more than a number of shares of Common Stock recommended by the Compensation
Committee, subject to adjustment as provided in Section 11 (c), under each of
Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h), 8(b) and 8(c). In addition,
the maximum cash amount that may be earned under the Plan as a final Annual
Incentive Award or other cash annual Award in respect of any fiscal year by any
one Participant shall not exceed an amount recommended by the Compensation
Committee, and the maximum cash amount that may be earned under the Plan as a
final Performance Award or other cash Award in respect of a performance period
other than an annual period by any one Participant on an annualized basis shall
not exceed an amount recommended by the Compensation Committee.
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6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in
this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 11
(e)), such additional terms and conditions, not inconsistent with the provisions
of the Plan, as the Committee shall determine, including terms requiring
forfeiture of Awards in the event of termination of employment by the
Participant and terms permitting a Participant to make elections relating to his
or her Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under the Plan; provided, however, that the Committee shall not
have any discretion to accelerate, waive or modify any term or condition of an
Award that is intended to qualify as "performance-based compensation" for
purposes of Code Section 162(m) if such discretion would cause the Award not to
so qualify. Except in cases in which the Committee is authorized to require
other forms of consideration under the Plan, or to the extent other forms of
consideration must by paid to satisfy the requirements of state law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award.
(b) Options. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee, provided that such
exercise price shall be not less than the Fair Market Value of a share of
Stock on the date of grant of such Option except as provided under Section
7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the methods by which
such exercise price may be paid or deemed to be paid, the form of such
payment, including, without limitation, cash, Stock, other Awards or awards
granted under other plans of the Corporation or any subsidiary, or other
property (including notes or other contractual obligations of Participants
to make payment on a deferred basis), and the methods by or forms in which
Stock will be delivered or deemed to be delivered to Participants. In no
event may an Option remain exercisable more than ten years following the
date of grant.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Code Section 422. Anything in the
Plan to the contrary notwithstanding, no term of the Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify either the Plan or any ISO under Code
Section 422, unless the Participant has first requested the change that
will result in such disqualification.
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(c) Stock Appreciation Rights. The Committee is authorized to grant SAR's
to Participants on the following terms and conditions:
(i) Right to Payment. a SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise (or, in the
case of a "Limited SAR", the Fair Market Value determined by reference to
the Change in Control Price, as defined under Section 9(c) hereof) over (B)
the grant price of the SAR as determined by the Committee provided that
such grant price shall not be less than the Fair Market Value of a share of
Stock on the date of grant of such SAR except as provided under Section
7(a) hereof.
(ii) Other Terms. The Committee shall determine at the date of grant
or thereafter, the time or times at which and the circumstances under which
a SAR may be exercised in whole or in part (including based on achievement
of performance goals and/or future service requirements), the method of
exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed
to be delivered to Participants, whether or not a SAR shall be in tandem or
in combination with any other Award, and any other terms and conditions of
any SAR. Limited SARs that may only be exercised in connection with a
Change in Control or other event as specified by the Committee may be
granted on such terms, not inconsistent with this Section 6(c), as the
Committee may determine. SARs and Limited SARs may be either freestanding
or in tandem with other Awards.
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock
to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions,
if any, as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service
requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter. Except to the extent
restricted under the terms of the Plan and any Award agreement relating to
the Restricted Stock, a Participant granted Restricted Stock shall have all
of the rights of a shareholder, including the right to vote the Restricted
Stock and the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). During the
restricted period applicable to the Restricted Stock, subject to Section
11(b) below, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Corporation; provided that the Committee
may provide, by rule or regulation or in any Award agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be waived in whole or in part
in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Restricted Stock.
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(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of
the Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Corporation retain physical
possession of the certificates, and that the Participant deliver a stock
power to the Corporation, endorsed in blank, relating to the Restricted
Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require or permit a Participant to
elect that any cash dividends paid on a share of Restricted Stock be
automatically reinvested in additional shares of Restricted Stock or
applied to the purchase of additional Awards under the Plan. Unless
otherwise determined by the Committee, Stock distributed in connection with
a Stock split or Stock dividend, and other property distributed as a
dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Stock or
other property has been distributed.
(e) RSUs. The Committee is authorized to grant RSUs to Participants, which
are rights to receive Stock, cash, or a combination thereof at the end of a
specified deferral period, subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of RSUs shall
occur upon expiration of the deferral period specified for such RSUs by the
Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, RSUs shall be subject to such restrictions
(which may include a risk of forfeiture) as the Committee may impose, if
any, which restrictions may lapse at the expiration of the deferral period
or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine.
RSUs may be satisfied by delivery of Stock, cash equal to the Fair Market
Value of the specified number of shares of Stock covered by the RSUs, or a
combination thereof, as determined by the Committee at the date of grant or
thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable deferral period or portion
thereof to which forfeiture conditions apply (as provided in the Award
agreement evidencing the RSUs), all RSUs that are at that time subject to
deferral (other than a deferral at the election of the Participant) shall
be forfeited; provided that the Committee, may provide, by rule or
regulation or in any Award agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to RSUs shall be
waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of RSUs.
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(iii) Dividend Equivalents. Unless otherwise determined by the
Committee at date of grant, Dividend Equivalents on the specified number of
shares of Stock covered by an Award of RSUs shall be either (A) paid with
respect to such RSUs at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such RSUs and the amount or
value thereof automatically deemed reinvested in additional RSUs, other
Awards or other investment vehicles, as the Committee shall determine or
permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of obligations to pay cash or deliver other property under the Plan or under
other plans or compensatory arrangements, provided that, in the case of
Participants subject to Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall
be subject to such other terms as Shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock, or other periodic payments. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be paid
or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.
(h) Annual Incentive and Performance Awards. The Committee is authorized to
make Annual Incentive Awards and Performance Awards payable in cash, Shares, or
other Awards, on terms and conditions established by the Committee, subject to
Section 8 in the event of Annual Incentive Awards or Performance Awards intended
to qualify as "performance-based compensation" for purposes of Code Section
162(m).
(i) Other Stock-based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Corporation or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
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7. Certain Provisions Applicable to Awards.
(a) Stand-alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Corporation, any
subsidiary, or any business entity to be acquired by the Corporation or a
subsidiary, or any other right of a Participant to receive payment from the
Corporation or any subsidiary. Such additional, tandem, and substitute or
exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award or award, the Committee shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Corporation
or any subsidiary, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation (for example, RSUs or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price Adiscounted@ by
the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided that in no event shall the term of any
Option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under Code Section 422).
(c) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Corporation or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or upon occurrence of one or more specified events (in addition to
a Change in Control). Installment or deferred payments may be required by the
Committee (subject to Section 11(e) of the Plan, including the consent
provisions thereof in the case of any deferral of an outstanding Award not
provided for in the original Award agreement) or permitted at the election of
the Participant on terms and conditions established by the Committee. Payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(d) Exemptions From Section 16(b) Liability. It is the intent of the
Corporation that the grant of any Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act shall be exempt
from Section 16 pursuant to an applicable exemption (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly, if
any provision of this Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 as then applicable to any such transaction, such
provision shall be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 so that such Participant
shall avoid liability under Section 16(b).
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8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Sections 8(b)
and 8(c) hereof in the case of a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m).
(b) Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as "performance-based compensation" for purposes of Code Section
162(m), the grant, exercise and/or settlement of such Performance Award shall be
contingent upon achievement of preestablished performance goals and other terms
set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder (including
Regulation 1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the
Committee result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise and/or
settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different
Participants.
(ii) Business Criteria. One or more of the following business criteria
for the Corporation, on a consolidated basis, and/or for specified
subsidiaries or business or geographical units of the Corporation (except
with respect to the total shareholder return and earnings per share
criteria), shall be used by the Committee in establishing performance goals
for such Performance Awards: (1) earnings per share; (2) increase in
revenues or margin; (3) increase in cash flow; (4) operating margin; (5)
return on net assets, return on assets, return on investment, return on
capital, return on equity; (6) economic value added; (7) direct
contribution; (8) net income; pretax earnings; pretax earnings before
interest; depreciation and amortization (EBITDA); pretax earnings after
interest expense and before extraordinary or special items; operating
income; income before interest income or expense, unusual items and income
taxes (local, state or federal) and excluding budgeted and actual bonuses
which might be paid under any ongoing bonus plans of the Corporation; (9)
working capital; (10) management of fixed costs or variable costs; (11)
identification or consummation of investment opportunities or completion of
specified projects in accordance with corporate business plans, including
strategic mergers, acquisitions or divestitures; (12) total shareholder
return; (13) debt reduction; and (14) any of the above goals determined on
an absolute or relative basis or as compared to the performance of a
published or special index deemed applicable by the Committee including,
but not limited to, the Standard & Poors 500 Stock Index or a group of
comparator companies. One or more of the foregoing business criteria shall
also be exclusively used in establishing performance goals for Annual
Incentive Awards granted to a Covered Employee under Section 8(c) hereof.
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(iii) Performance Period; Timing for Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards
shall be measured over a performance period of up to ten years, as
specified by the Committee. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable
to such Performance Awards, or at such other date as may be required or
permitted for "performance-based compensation" under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a Performance
Award pool, which shall be an unfunded pool, for purposes of measuring
performance of the Corporation in connection with Performance Awards. The
amount of such Performance Award pool shall be based upon the achievement
of a performance goal or goals based on one or more of the business
criteria set forth in Section 8(b)(ii) hereof during the given performance
period, as specified by the Committee in accordance with Section 8(b)(iii)
hereof. The Committee may specify the amount of the Performance Award pool
as a percentage of any of such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria.
(v) Settlement of Performance Awards; Other Terms. After the end of
each performance period, the Committee shall determine the amount, if any,
of (A) the Performance Award pool, and the maximum amount of potential
Performance Award payable to each Participant in the Performance Award
pool, or (B) the amount of potential Performance Award otherwise payable to
each Participant. Settlement of such Performance Awards shall be in cash,
Stock, other Awards or other property, in the discretion of the Committee.
The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance Awards, but may
not exercise discretion to increase any such amount payable to a Covered
Employee in respect of a Performance Award subject to this Section 8(b).
The Committee shall specify the circumstances in which such Performance
Awards shall be paid or forfeited in the event of termination of employment
by the Participant prior to the end of a performance period or settlement
of Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees. If the
Committee determines that an Annual Incentive Award to be granted to an Eligible
Person who is designated by the Committee as likely to be a Covered Employee
should qualify as a "performance-based compensation" for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such Annual Incentive
Award shall be contingent upon achievement of preestablished performance goals
and other terms set forth in this Section 8(c).
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(i) Annual Incentive Award Pool. The Committee may establish an Annual
Incentive Award pool, which shall be an unfunded pool, for purposes of
measuring performance of the Corporation in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall be
based upon the achievement of a performance goal or goals based on one or
more of the business criteria set forth in Section 8(b)(ii) hereof during
the given performance period, as specified by the Committee in accordance
with Section 8(b)(iii) hereof. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship to
such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the end of the
90th day of each fiscal year, or at such other date as may be required or
permitted in the case of Awards intended to be "performance-based
compensation" under Code Section 162(m), the Committee shall determine the
Eligible Persons who will potentially receive Annual Incentive Awards, and
the amounts potentially payable thereunder, for that fiscal year, either
out of an Annual Incentive Award pool established by such date under
Section 8(c)(i) hereof or as individual Annual Incentive Awards. In the
case of individual Annual Incentive Awards intended to qualify under Code
Section 162(m), the amount potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof in the given
performance year, as specified by the Committee; in other cases, such
amount shall be based on such criteria as shall be established by the
Committee. In all cases, the maximum Annual Incentive Award of any
Participant shall be subject to the limitation set forth in Section 5
hereof.
(iii) Payout of Annual Incentive Awards. After the end of each fiscal
year, the Committee shall determine the amount, if any, of (A) the Annual
Incentive Award pool, and the maximum amount of potential Annual Incentive
Award payable to each Participant in the Annual Incentive Award pool, or
(B) the amount of potential Annual Incentive Award otherwise payable to
each Participant. The Committee may, in its discretion, determine that the
amount payable to any Participant as a final Annual Incentive Award shall
be increased or reduced from the amount of his or her potential Annual
Incentive Award, including a determination to make no final Award
whatsoever, but may not exercise discretion to increase any such amount in
the case of an Annual Incentive Award intended to qualify under Code
Section 162(m). The Committee shall specify the circumstances in which an
Annual Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of a fiscal
year or settlement of such Annual Incentive Award.
(d) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the achievement of performance
goals relating to Performance Awards under Section 8(b), and the amount of any
Annual Incentive Award pool or potential individual Annual Incentive Awards and
the amount of final Annual Incentive Awards under Section 8(c), shall be made in
writing in the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards.
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<PAGE>
(e) Status of Section 8(b) and Section 8(c) Awards Under Code Section
162(m). It is the intent of the Corporation that Performance Awards and Annual
Incentive Awards under Sections 8(b) and B(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder (including Regulation 1.162-27
and successor regulations thereto) shall, if so designated by the Committee,
constitute "performance-based compensation" within the meaning of Code Section
162(m) and regulations thereunder. Accordingly, the terms of Sections 8(b), (c),
(d) and (e), including the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect to that fiscal year. If
any provision of the Plan as in effect on the date of adoption or any agreements
relating to Performance Awards or Annual Incentive Awards that are designated as
intended to comply with Code Section 162(m) does not comply or is inconsistent
with the requirements of Code Section 182(m) or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.
9. Change in Control.
(a) Effect of "Change in Control." In the event of a "Change in Control,"
the following provisions shall apply unless otherwise provided in the Award
agreement:
(i) Any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested as of the
time of the Change in Control and shall remain exercisable and vested for
the balance of the stated term of such Award without regard to any
termination of employment by the Participant, subject only to applicable
restrictions set forth in Section 11 (a) hereof;
(ii) Any optionee who holds an Option shall be entitled to elect,
during the 60 day period immediately following a Change in Control, in lieu
of acquiring the shares of Stock covered by such Option, to receive, and
the Corporation shall be obligated to pay, in cash the excess of the Change
in Control Price over the exercise price of such Option, multiplied by the
number of shares of Stock covered by such Option;
(iii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse
and such Awards shall be deemed fully vested as of the time of the Change
in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 11(a) hereof; and
(iv) With respect to any outstanding Award subject to achievement of
performance goals and conditions under the Plan, such performance goals and
other conditions will be deemed to be met if and to the extent so provided
in the Award agreement relating to such Award.
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<PAGE>
(b) Definition of "Change in Control." A "Change in Control" shall be
deemed to have occurred if:
(i) Any Person (other than the Corporation, any trustee or other
fiduciary holding securities under any employee benefit plan of the
Corporation, or any company owned, directly or indirectly, by the
stockholders of the Corporation immediately prior to the occurrence with
respect to which the evaluation is being made in substantially the same
proportions as their ownership of the common stock of the Corporation)
acquires securities of the Corporation and immediately thereafter is the
Beneficial Owner (except that a Person shall be deemed to be the Beneficial
Owner of all shares that any such Person has the right to acquire pursuant
to any agreement or arrangement or upon exercise of conversion rights,
warrants or options or otherwise, without regard to the sixty day period
referred to in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Corporation representing 20% or more of the combined
voting power of the Corporation's then outstanding securities (except that
an acquisition of securities directly from the Corporation shall not be
deemed an acquisition for purposes of this clause (i));
(ii) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Corporation to effect a transaction described in clause
(i), (iii), or (iv) of this paragraph) whose election by the Board or
nomination for election by the Corporation's stockholders was approved by a
vote of at least two thirds of the directors then still in office who
either were directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved but
excluding for this purpose any such new director whose initial assumption
of office occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 148-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of an individual,
corporation, partnership, group, associate or other entity or Person other
than the Board, cease for any reason to constitute at least a majority of
the Board;
(iii) The consummation of a merger or consolidation of the Corporation
with any other entity, other than (i) a merger or consolidation which would
result in the voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving or resulting
entity) more than 50% of the combined voting power of the surviving or
resulting entity outstanding immediately after such merger or consolidation
or (ii) a merger or consolidation in which no premium is intended to be
paid to any shareholder participating in the merger or consolidation;
(iv) The stockholders of the Corporation approve a plan or agreement
for the sale or disposition of all or substantially all of the consolidated
assets of the Corporation (other than such a sale or disposition
immediately after which such assets will be owned directly or indirectly by
the stockholders of the Corporation, in substantially the same proportions
as their ownership of the common stock of the Corporation immediately prior
to such sale or disposition) in which case the Board shall determine the
effective date of the Change in Control resulting therefrom; or
(v) Any other event occurs which the Board determines, in its
discretion, would materially alter the structure of the Corporation or its
ownership.
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<PAGE>
For purposes of this definition:
(1) The term "Beneficial Owner" shall have the meaning ascribed to
such term in Rule 13d-3 under the Exchange Act (including any successor to
such Rule).
(2) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, or any successor act thereto.
(3) The term "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including "group" as defined in Section 13(d) thereof.
(c) Definition of "Change in Control Price." The "Change in Control Price"
means an amount in cash equal to the higher of (i) the amount of cash and fair
market value of property that is the highest price per share paid (including
extraordinary dividends) in any transaction triggering the Change in Control or
any liquidation of shares following a sale of substantially all assets of the
Corporation, or (ii) the highest Fair Market Value per share at any time during
the 60-day period preceding and 60-day period following the Change in Control.
10. Options Granted Automatically to Non-employee Directors.
(a) Annual Option Grants. A Non-Employee Director Annual Option will be
automatically granted at the close of business on the last trading day of each
March.
(b) Number of Shares Subject to Automatic Option Grants. Unless otherwise
determined by the Board in a resolution adopted on or prior to the date of the
annual meeting of the Company's shareholders that coincides with or most
recently precedes the date of grant of an Option to a Non-Employee Director, the
number of shares of Stock to be subject to each Annual Option shall be 5,000, in
each case subject to adjustment as provided in Section 11(c).
(c) Other Non-employee Director Annual Option Terms. Unless otherwise
determined by the Board, other terms of Annual Options shall be as follows:
(i) The exercise price per share of Stock purchasable upon exercise of
a Non-Employee Director Annual Option will be equal to 100% of the Fair
Market Value of a share of Stock on the date of grant of the Option.
(ii) A Non-Employee Director Annual Option will expire at the earlier
of (A) 10 years after the date of grant or (B) three months after the date
the Participant ceases to serve as a director of the Company for any
reason.
(iii) Each Non-Employee Director Annual Option will become exercisable
in three equal installments after each of the first, second and third
anniversaries of the date of grant.
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<PAGE>
(d) Method of Exercise. A Participant may exercise a Non-Employee Director
Annual Option, in whole or in part, at such time as it is exercisable and prior
to its expiration, by giving written notice of exercise to the Secretary of the
Company, specifying the Option to be exercised and the number of shares to be
purchased, and paying in full the exercise price in cash (including by check) or
by surrender of shares of Stock already owned by the Participant (except for
shares acquired from the Company by exercise of an option less than six months
before the date of surrender) having a Fair Market Value at the time of exercise
equal to the exercise price, or by a combination of cash and shares.
(e) Availability of Shares. If an automatic grant of Options authorized
under Section 10(a) or (b) cannot be made in full due to the limitation set
forth in Section 4(a), such grant shall be made (together with other automatic
grants to occur at the same time) to the greatest extent then permitted under
Section 4(a).
11. General Provisions.
(a) Compliance With Legal and Other Requirements. The Corporation may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of Stock or payment of other benefits under any Award until
completion of such registration or qualification of such Stock or other required
action under any federal or state law, rule or regulation, listing or other
required action with respect to any stock exchange or automated quotation system
upon which the Stock or other securities of the Corporation are listed or
quoted, or compliance with any other obligation of the Corporation, as the
Committee may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and reasons, listing requirements, or other obligations.
(b) Limits On Transferability; Beneficiaries. No Award or other right or
interest granted under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party (other than the Corporation or a subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such
Awards or rights that may be exercisable shall be exercised during the lifetime
of the Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs and SARs in
tandem therewith) may be transferred to one or more Beneficiaries or other
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers are permitted by the Committee pursuant to the express
terms of an Award agreement (subject to any terms and conditions which the
Committee may impose thereon). A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional terms and conditions deemed necessary or appropriate by
the Committee.
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<PAGE>
(c) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar transaction or event affects the Stock such that an adjustment is
determined by the Committee to be appropriate under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the business unit, or
the financial statements of the Corporation or any subsidiary, or in response to
changes in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee's assessment of
the, business strategy of the Corporation, any subsidiary or business unit
thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances
deemed relevant; provided, that no such adjustment shall be authorized or made
if and to the extent that such authority or the making of such adjustment would
cause Options, SARs, Performance Awards granted under Section 8(b) hereof or
Annual Incentive Awards granted under Section 8(c) hereof to Participants
designated by the Committee as Covered Employees and intended to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder to otherwise fail to qualify as "performance-based compensation"
under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Corporation and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Corporation and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participants tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
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<PAGE>
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Corporation's shareholders not later than the annual meeting next following such
Board action if such shareholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to the Plan
to shareholders for approval; provided that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any previously granted and outstanding Award. The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue or terminate any Award theretofore granted and any Award agreement
relating thereto, except as otherwise provided in the Plan; provided that,
without the consent of an affected Participant, no such Committee action may
materially and adversely affect the rights of such Participant under such Award.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting shall be available, including the substitution of
Stock having a Fair Market Value equal to the cash otherwise payable hereunder
for that right which caused the transaction to be ineligible for pooling of
interest accounting. In addition, the Board shall also have the authority to
modify the Plan, to the extent it deems necessary or desirable in its sole
discretion, to minimize the taxes incurred by either the Company or any
Participant relating to any Award.
(f) Limitation on Rights Conferred under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Corporation or a subsidiary, (ii) interfering in any
way with the right of the Corporation or a subsidiary to terminate any Eligible
Person's or Participant's employment or service at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under the Plan
or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a shareholder of the
Corporation unless and until the Participant is duly issued or transferred
shares of Stock in accordance with the terms of an Award.
(g) Unfunded Status of Awards, Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for certain incentive awards and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Corporation.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Corporation for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(j) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Shareholder Approval. The Plan has been adopted
by the Board effective February 4, 2000, subject to approval by the shareholders
of the Corporation.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TAKEOUTMUSIC.COM HOLDINGS CORP.
ANNUAL MEETING OF STOCKHOLDERS: 10:00 a.m., SEPTEMBER 27, 2000
The undersigned stockholder of takeoutmusic.com Holdings Corp., a
Washington corporation (the "Company"), hereby appoints Mr. Mori S. Ninomiya and
Mr. John Lavallo, or any of them, voting singly in the absence of the others, as
his/her/its attorney(s) and proxy(ies), with full power of substitution and
revocation, to vote all of the shares of Common Stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at 381 Broadway, Suite 201, New York, New York 10013 at 10:00
a.m. (local time), on Wednesday, September 27, 2000, or any adjournment or
adjournments thereof, in accordance with the instructions provided below.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted "FOR" Proposals No. 1 and No. 2. The proxies are authorized to vote as
they may determine, in their discretion, upon such other business as may
properly come before the Meeting.
[X] Please mark your votes as
indicated in this example
The Board of Directors recommends a vote "FOR" Proposals No. 1 and No. 2
Proposal No. 1 - ELECTION OF DIRECTORS:
FOR all nominees listed WITHHOLD AUTHORITY
below (except as withheld |_| to vote for all nominees listed |_|
in the space provided ) below
Mori S. Ninomiya, John Lavallo, Edwin O'Loughlin and Steven A. Saltzman.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
--------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" all nominees.
Proposal No. 2- APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1999 STOCK OPTION
PLAN:
FOR |_| AGAINST |_| ABSTAIN |_|
--------------------------
Affix Label Here
--------------------------
---------------------------------- ----------------------------------
Signature Signature
Dated: ________________, 2000
Note: This Proxy should be marked, dated and signed by the shareholder(s)
exactly as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should do indicate. If shares
are held by joint tenants or as community property, both should sign.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS MAILED
IN THE UNITED STATES OF AMERICA.
