SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Hydro MaidHydromaid International, Inc.
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(Name of Registrant as Specified In Its Charter)
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HYDROMAID INTERNATIONAL, INC.
12222 South 10001350 East Suite 1Draper Parkway
Draper, Utah 84020
PROXY STATEMENT
October 20, 1999April 19, 2001
----------------------
SOLICITATION OF PROXIES
DATE, TIME, AND PLACE
This Proxy Statement and the accompanying proxy/voting instruction form
("Proxy Form") are being mailed beginning on or about the date shown above, to
holders of common shares (the "Stockholders") in connection with the
solicitation of proxies by the Board of Directors (the "Board of Directors" or
"Board") of HYDROMAID INTERNATIONAL, INC., a Nevada corporation (the "Company"),
to be used at the Annual Meeting of Stockholders (the "Meeting"), to be held November 20, 1999May
19, 2001 at the Salt Palace Convention Center, 90 South West Temple, Salt Lake
City, Utah 84101,telephone number (801) 521-2822, at 7:4:00 p.m. local time, or
any adjournment thereof.
QUORUM AND VOTING
Proxies are solicited to give all Stockholders of record at the close of
business on October 1, 1999April 12, 2001 (the "Record Date"), an opportunity to vote on
matters that come before the Meeting. This procedure is necessary because
Stockholders live in various states and many may not be able to attend the
Meeting. Shares of Common Stock (the "Shares") can be voted only if the
Stockholder is present in person or is represented by proxy. The presence, in
person or by proxy, of the holders of a majority of the total outstanding voting
Shares is necessary to constitute a quorum at the Meeting.
When your Proxy Form is returned properly signed, the Shares represented
will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the enclosed Proxy Form. If your Proxy Form
is signed and returned without specifying choices, the Shares will be voted as
recommended by the Board of Directors. Abstentions marked on the Proxy Form and
broker non-votes are voted neither "for" nor "against" items being voted upon,
but are counted in the determination of a quorum.
As of the Record Date, there were 23,990,55926,914,538 Shares outstanding. Each
outstanding Share is entitled to one vote on each matter properly brought before
the Meeting other than the election of Directors which isif any stockholders elect to
vote by cumulative voting.
No stockholder may cumulate votes in the election of directors unless the
candidates' names have been placed in nomination prior to commencement of the
voting and the stockholder has given notice at the Meeting, prior to the voting,
of the stockholder's intention to cumulate votes. If any stockholder has given
such a notice, then every stockholder entitled to vote may cumulate votes for
candidates in nomination and give one candidate a number of votes equal to the
number of directors to be elected, multiplied by the number of votes to which
that stockholder's shares are entitled, or distribute the stockholder's votes on
the same principle among any or all of the candidates, as the stockholder thinks
fit. The candidates receiving the highest number of votes, up to the number of
directors to be elected, shall be elected.
1
SOLICITATION AND COST
The Company will bear all costs and expenses related to this solicitation
of proxies by the Board of Directors, including the costs of preparing,
printing, and mailing to the Stockholders this Proxy Statement and accompanying
materials. In addition to the solicitation of proxies by use of the mails, the
Directors, Officers, and employees of the Company, without receiving additional
compensation, may solicit proxies personally, by telephone, or by any other
means of communication.
REVOCABILITY OF PROXY
If you wish to give your proxy to someone other than the persons designated
by the Board of Directors, all names appearing on the enclosed Proxy Form must
be crossed out and the name of another person or persons inserted. The signed
cardProxy Form must be presented at the Meeting by the person or persons
representing you. You may revoke your proxy at any time before it is voted at
the Meeting by executing a later-dated proxy, by voting by ballot at the
Meeting, or by filing a written revocation of your proxy with the Company before
the Meeting.
YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND RETURN THE
ACCOMPANYING PROXY FORM WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. If you do
attend, you may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
As a matter of policy, proxies, ballots, and voting tabulations that
identify individual Stockholders are kept private by the Company. Such documents
are available for examination only by the inspectors of election and certain
personnel associated with processing Proxy Forms and tabulating the vote. The
vote of any Stockholder is not disclosed except as may be necessary to meet
legal requirements.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for the year
ended December 31, 1998,2000, filed as part of the 19982000 Annual Report on Form 10-KSB
in response to Item 13 of the 10-KSB.10-KSB (the "Annual Report"). The Annual Report
and accompanying Financial Statements should have been enclosed in the mailing
containing this Proxy Statement. If you did not receive a copy of the Annual
Report and Financial Statements, please contact the Company and request that the
information be sent to you. A copy of the 19982000 Annual Report may be obtained
from the Company without cost to the requesting Stockholder by contacting the
Company.
INTERESTS OF PERSONS IN MATTERS TO BE ACTED UPON
The Board of Directors is recommending the Stockholders ratify the
1999 Stock Option and Incentive Plan adopted by the Board on September 20,
1999 (the "1999 Plan") which provides for 1,200,000 shares of the Company's
Common Stock to be set aside for grant in accordance with the directions of
the Compensation Committee as approved by the Board of Directors. The options
to be granted pursuant to the 1999 Stock Option and Incentive Plan are
intended primarily for grant to Officers, Directors, and key employees of and
key service providers to the Company.
If the 1999 Plan is ratified by the Stockholders at the Meeting,
Culley W. Davis, Ronald L. LaFord, Mark S. Brewer, John W. Nagel, Bruce H.
Haglund, and Bradley E. Zarbock will each receive an option to purchase
50,000 shares of the Company's Common Stock at a price of $5.00 per share,
the fair market value upon the date of grant. One quarter of the options
granted to each named Director shall become subject to exercise upon the
successful completion of each calendar quarter of service as a Director. If a
named Director is unable to complete his term as a Director, he will forfeit
any options not exercisable at the time of his resignation or dismissal as a
Director.
Culley W. Davis will receive an option to purchase an additional
250,000 shares of the Company's Common Stock at $5.00 per shares if the 1999
Plan is ratified for his services as an Officer and Chairman of the Board.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
VOTING SECURITIES
As of the Record Date for the Annual Meeting of Stockholders, the number of
issued and outstanding shares of Common Stock totaled 23,990,559.26,914,538.
PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Shares as of October 1, 1999December 31, 2000 for (i) each current
Director and each nominee for Director (ii) each named executive officer of the
Company as defined in 402(a)(2) of Regulation S-B of the Securities Act of 1933,
(iii) all persons known by the Company to beneficially own more than 5% of the
Company's voting Shares, and (iv) all officers and Directors of the Company as a
group. See also "Certain Relationships and Related Transactions" below.
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Amount and
Nature of Percentage of
Name Title Ownership(1)AMOUNT AND NATURE PERCENTAGE OF
NAME TITLE OF OWNERSHIP(1)(2) Class(3)CLASS(3)
- ----------------------------- -------------------------------- --------------- ------------------------------------------------------- ---------------------------- ----------------- -------------
Culley W. Davis (4) CEO and Chairman 40,923 *
Pinnacle Enterprises, Inc. (4)530,923 1.9%
Family Legacy, Ltd. (5) Beneficial Owner 3,013,424 12.56%
Ronald L. LaFord President and Director -0- -0-3,325,524 12.4%
Mark S. Brewer (6) Vice President and Director 36,000 *
Paul A. Kujanpaa Vice President of Manufacturing 76,000209,333 *
John W. Nagel (7) CFO and Director -0- -0-118,334 *
Bruce H. Haglund (8) Secretary and Director 72,000 *
Bradley E. Zarbock Director 8,000177,667 *
J. Steven Young (5) Director Nominee -0-170,000 *
George Taylor Munroe (9) Beneficial Owner 1,892,500 7.0%
Bart C. Warner (10) Beneficial Owner 1,540,333 5.7%
All Directors and Executive Officers as a Group 3,246,347 13.5%(11) 4,531,781 16.3%
- -------------------
* Less than one percent.
(1) Unless otherwise noted, the Company believes that all Shares are
beneficially owned and that all persons named in the table or family
members have sole voting and investment power with respect to all Shares
owned by them. Unless otherwise indicated, the contact address of each
individual is 12222 South 10001350 East #1,Draper Parkway, Draper, Utah 84020.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options.
(3) Assumes 23,990,559 Shares26,914,538 shares outstanding plus, for each individual, any
securities that specific personsuch individual has the right to acquire upon exercise of
presently exercisable stock options. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised.
An
additional 354,441 Shares issuable upon conversion by ESSI (defined below)
stockholders who have not yet converted their stock(4) Includes options to purchase 48,333 shares at an exercise price of $.25,
225,000 shares at an exercise price of $1.00, and 216,667 shares at an
exercise price of $5.50.
(5) Family Legacy, Ltd. is not included ina Utah limited partnership, the percentageGeneral Manager of
class calculation. Inclusion of such shares would reduce the
ownership percentages shown.
(4)which is Eagle Gate, LC for which Culley W. Davis serves as the Operating
Manager.
(6) Includes options to purchase 100,000 shares at an exercise price of $.25,
16,666 shares at an exercise price of $1.00, 6,667 shares at an exercise
price of $5.00, and 50,000 shares at an exercise price of $5.50.
(7) Includes options to purchase 26,667 shares at an exercise price of $.25,
25,000 shares at an exercise price of $1.00, 6,667 shares at an exercise
price of $5.00, and 50,000 shares at an exercise price of $5.50.
(8) Includes options to purchase 66,667 shares at an exercise price of $.25,
25,000 shares at an exercise price of $1.00, and 50,000 shares at an
exercise price of $5.50.
(9) George Taylor Munroe directly owns 100% of the issued and outstanding shares of Pinnacle
Enterprises Group, Inc.
(5) Mr. Young was appointed to the Board on October 20, 1999. For his services20,500 shares. He acts as a Director, he will receiveTrustee for
seven trusts that own the other 1,872,000 shares indicated. Mr. Munroe's
address is 889 South Williams Street, Denver, Colorado 80209.
(10) Bart C. Warner directly owns 294,000 shares. He acts as a totalTrustee for three
trusts that own the other 1,246,333 shares indicated. Mr. Warner's address
is 2240 South 5370 West, West Valley City, Utah 84120.
(11) Includes options to purchase 241,667 shares at an exercise price of 300,000$.25,
491,667 shares at an exercise price of the Company's
Common Stock, 200,000$1.00, 13,333 shares for the first yearat an exercise
price of service$5.00, and 100,000366,667 shares for the second yearat an exercise price of service.$5.50.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS DURINGIn December 2000, the Company granted a total of 500,000 non-statutory
stock options, outside of the Company's existing stock option plan to the
following persons: Robert C. Gay, 200,000 options, a former director of the
Company; Culley W. Davis, 225,000 options; Lester W.B. Moore, a consultant to
the Company, 50,000 options; and Bruce H. Haglund, 25,000 options. All of the
options granted are exercisable at $1.00 per share and expire 10 years after the
date of grant.
On November 8, 2000, the Company extended a $300,000 loan to Lighthouse
Capital, Inc., which is solely owned by entities controlled by Culley W. Davis.
The note pertaining thereto bears interest at the rate of 6.2 percent per annum
and is payable on or before November 8, 2001.
In October 2000, the Company entered into a month-to-month lease with
Lighthouse Capital, Inc., which is solely owned by entities controlled by Culley
W. Davis. The monthly lease payment totals $9,200.
John W. Nagel, the Company's Chief Financial Officer and a Director is the
brother-in-law of the Company's legal counsel, Bruce H. Haglund, who also serves
as a Director and the Secretary of the Company, and is a stockholder.
Gibson, Haglund & Paulsen, the Company's attorneys, were paid approximately
$150,000 and $230,000 in legal fees for services rendered during 2000 and 1999,
respectively. Bruce H. Haglund, a Director, the Secretary, and stockholder of
the Company, is a member of the law firm.
On October 20, 1999, J. Steven Young was appointed as a Director of the
Company. For his service as a Director and a consultant for a two-year period,
the Company entered into an agreement with Mr. Young providing that the Company
will receivecompensate him by issuing a total of 300,000 shares of the Company's Common
Stock,Stock. The Company issued 200,000 shares for the first year of service and
recorded compensation expense of approximately $974,000 and $239,000 for the
years ended December 31, 2000 and 1999, respectively. The additional 100,000
shares for the second year of service.service have not been issued as of the date of
this Proxy Statement, and Mr. Young has agreed that the additional shares will
be issued as he performs consulting services in the future.
During 1999, Culley W. Davis, has made working capital advances to
the Company, such that as of August 31, 1999, the balance of this liability
totals $291,134.22. This may be settled with a cash payment to Mr. Davis out
of private placement proceeds or it may be settled by an issuance of common
stock shares at the same price that is realized in a private placement to
third parties.
TRANSACTIONS DURING 1998
On December 11, 1998, the Company entered into an Agreement and Plan
of Reorganization (the "Reorganization") which resulted in the acquisition by
the Company of no less than 80% of the issued and outstanding shares of
restricted Common Stock of Environmental Systems & Solutions, Inc. ("ESSI"),
a Nevada corporation. The Reorganization qualified as a tax-free
reorganization under Section 368 (a) (1) (B) of the 1986 Internal Revenue
Code. Effective with the closing of the Reorganization, certain of the Company's stockholders agreed to cancel approximately 2,555,000 of their
common shares. Under the terms of the Reorganization, the former stockholders
of ESSI received four shares of the Company for each one share of ESSI and in
the aggregate acquired approximately 92% of the issued and outstanding Common
Stock of the Company. ESSI was previously a privately held company with no
public market for its stock. As of October 1, 1999, the former stockholders
of ESSI owned about 90% of the 24,000,000 post-ReorganizationChief Executive Officer,
purchased 745,000 shares of the Company's issued and outstanding Common Stock. Such shares are currently
restricted under Federal law.
In 1998 Culley W. Davis made unsecured advances to the Company
totaling $1,478,467, which included $1,427,000 of proceeds from sales of the
Company'sprivate stock to investors at $8.00 per share. The stock sold by Mr. Davis
was personally owned by him or Pinnacle Enterprises Group, Inc., which he
owns, and the proceeds were advanced to the Company according to an agreement
between the parties. During December 1998, the Company issued 178,375 shares
of Common Stock to Culley W. Davis, or his assigns, valued at $8.00 per share
as reimbursement stockoffering for his personal shares sold. The stock sale proceeds
received by the Company have been reported as an original stock issuance in
the accompanying financial statements.
The Company is indebted to Culley W. Davis, who financed the
purchase of a 1999 Ford truck used by the Company for product demonstrations
at remote locations. The note is payable in monthly installments of $770
including principal and interest, is secured by the truck, and bears interest
at a fixed rate of 7.9%.
John W. Nagel, the Company's CFO and a Director is the
brother-in-law of the Company's legal counsel Bruce H. Haglund who also
serves as a Director and is a stockholder.
Gibson, Haglund & Johnson, ESSI's attorneys, were paid approximately
$162,000 in legal fees for services rendered during 1998. Bruce H. Haglund,
an Officer and Director of the Company, is a member of the law firm.
4
$3,200,000
cash infusion.
COMPLIANCE WITH SECTION 16 (a)16(a) OF THE EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act requires the Company's
officers, Directors, and persons who own more than 10% of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership with the SEC and NASDA.SEC. Officers, Directors, and greater than 10% beneficial
owners are required by SECSecurities and Exchange Commission ("SEC") regulation to
furnish the Company with copies of all Section 16 (a) forms they file. TheOfficers
of the Company did not file Form 4 regarding some shares acquired and options
granted to them during 2000. Forms 4 and 5 were filed in 2001 regarding the
transactions during 2000; accordingly, the Company believes that all filing
requirements applicable to its Officers, Directors, and greater than 10%
beneficial owners werehave now been complied with.
4
BOARD OF DIRECTORS
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate governance principles, the Board is not
involved in day-to-day operating details. Members of the Board of Directors are
kept informed of the Company's business through discussions with the Chairman
and other officers, by reviewing analyses and reports sent to them, and by
participating in Board and committee meetings.
The Board held fourthree meetings during 1998.2000. All Directors attended more than
75% of the Meetings held.
COMMITTEES OF THE BOARD
During the third quarter of 1999, the Board of Directors established a number of committees,
including a Finance Committee, an Audit Committee, and a Compensation Committee,
each of which is briefly described below. Upon the election of Directors at the
Meeting, the Committees will be reconstituted for the ensuing year.
The Finance Committee was established to oversee Company expenditures and
approve contracts entered into by the Company requiring the payment of $50,000
or more. The Committee consists of Culley W. Davis, Ronald
L. LaFord,John W. Nagel, and Mark S.
Brewer.
The Audit Committee was established to meet with management to consider the
adequacy of the internal controls and the objectivity of financial reporting;
the committee meets with the independent auditors and with appropriate Company
financial personnel about these matters. The committee recommends to the Board
of Directors the appointment of the independent auditors, subject to
ratification by the Stockholders at the Annual Meeting. Both the internal auditors and theThe independent auditors
periodically meet alone with the committee and always have unrestricted access
to the committee. The committee consists of John W. Nagel, Mark S. Brewer, and
Bruce H. Haglund.
The Compensation Committee negotiates employment contracts, recommends to
the Board of Directors compensation for officers, Directors, and employees, and
administers management incentive compensation plans, including stock option
plans. The committee consists of Culley W. Davis Ronald L. LaFord, and Bruce H. Haglund. UponThere is
one vacancy on the election of DirectorsCompensation Committee at the Meeting, the Committees will
be reconstituted.this time.
COMPENSATION OF DIRECTORS
The Company's policy is not to pay cash compensation to directors who are
employees or consultants of the Company for their services as directors, but
reimburses reasonable out-of-pocket expenses of directors for attendance at
meetings. The Company has agreed to issue Mr. Young a total of 300,000 shares of
the Company's Common Stock, 200,000 shares the first year of service and 100,000
5
shares the second year of service. AllSee "Certain Relationships and Related
Transactions" above. In 2000, all other Directors will receivereceived options to purchase
shares of Common Stock ifat $1.00 per share as reflected in the 1999 Plan is approved as outlined
above.beneficial
ownership table on page 3 hereof.
LIMITATION ONOF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Nevada law. Such limitation of
liability does not apply to liabilities arising under the federal securities
laws and does not affect the availability of equitable remedies such as
injunctive relief or rescission.
5
The Company's Bylaws provide that the Company shall indemnify its directors
and executive officers and may indemnify its other officers and employees and
other agents to the fullest extent permitted by law. The Company believes that
indemnification under its Bylaws covers at least negligence and gross negligence
on the part of indemnified parties. The Company's Bylaws also permit it to
secure insurance on behalf of any officer, director, employee, or other agent
for any liability arising out of his or her actions in such capacity, regardless
of whether the Bylaws permit such indemnification.
At present, there is no pending litigation or proceeding involving any
director, officer, employee, or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.
PRICE RANGE OF COMMON STOCK
The following table sets forth, for the period from October 1998
through September 1999, the high and low bid quotations each quarter for the
Common Stock during the most recent fiscal year as reported by the OTC
Bulletin Board. The Company's stock began trading on October 12, 1998. The
prices represent quotations between dealers, without adjustment for retail
markup, mark down or commission, and do not necessarily represent actual
transactions.
COMMON STOCK PRICE ACTUAL
High Low
---- ---
1999
----
1st Quarter 4.50 2.25
2nd Quarter 5.875 2.5625
3rd Quarter 7.125 4.625
1998
----
4th Quarter 4.0 0.437
The Company has not paid any cash dividends on its Common Stock
since its incorporation and anticipates that, for the foreseeable future,
earnings, if any, will continue to be retained for use in its business. As of
October 1, 1999, the approximate number of record holders of the Company's
Common Stock was 1,154.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY FORM)
The Bylaws of the Company provide for the Directors to number at least
three and no more than seven. SevenFive members of the Board of Directors are to be
elected at the Meeting. The nominees selected
6
by the Board of Directors are
listed on the following pages. Stockholders have cumulative voting rights when
voting for Directors; accordingly, any Stockholder may multiply the number of
Shares he or she is entitled to vote by the number of Directors to be elected
and allocate votes among the candidates in any manner. There are no conditions precedentmanner provided such candidate
was in nomination prior to the exercise
of the right to cumulate votes in the election of Directors of the Company:meeting. Stockholders may exercise such
cumulative voting rights, either in person or by proxy, with or without advance
notice to the Company. The seven Director
nominees receiving the highest number of votes will be elected. Any Shares not voted, whether by abstention, broker
non-vote, or otherwise, have no impact on the vote.
The Board of Directors intends to vote proxies equally for the nominees
unless otherwise instructed on the Proxy Form. If you do not wish your Shares to
be voted for particular nominees, please identify the exceptions in the
designated space provided on the Proxy Form. If at the time of the Meeting one
or more of the nominees have become unavailable to serve, Shares represented by
proxies will be voted for the remaining nominees and for any substitute nominee
or nominees designated by the Board of Directors.
Directors elected at the Meeting will hold office until the next Annual
Meeting or until their successors have been elected and qualified. For each
nominee there follows a brief listing of principal occupation for at least the
past five years, other major affiliations, and age as of OctoberApril 1, 1999.2001.
NOMINEES FOR ELECTION AS DIRECTORS
The names, ages, and positions of the nominees for election as Directors
are as follows:
Name Age Position with the Company First ElectedNAME AGE POSITION WITH THE COMPANY FIRST ELECTED
---- --- ------------------------- -------------
Culley W. Davis 4345 CEO, Chairman, Director 1998
Ronald L. LaFord 52 President,Bruce H. Haglund 49 Secretary, Director 1998
John W. Nagel 60 CFO, Director 1998
Mark S. Brewer 41 Vice President,43 VP Marketing, Director 1998
John W. Nagel 58 CFO, Director 1998
Bruce H. Haglund 47 Secretary, Director 1998
Bradley E. Zarbock 40 Director 1999
J. Steven Young 3739 Director 1999
CULLEY W. DAVIS, CHIEF EXECUTIVE OFFICER,DIRECTOR, CHAIRMAN OF THE BOARD DIRECTOR
Mr.AND CHIEF EXECUTIVE OFFICER
Culley W. Davis was thea founder of ESSI and since itsEnvironmental Systems & Solutions, Inc.
("ESSI"), a predecessor of the Company. Since ESSI's inception in 1992, hashe held
various positions including President, Secretary, Chief Financial
Officer, Treasurer, and Director. Mr. Davis currently holds the positions of
Chief Executive Officer, and Chairman of the Board ofand
Director, which positions he assumed in December 1998 when the Company.Company acquired
ESSI. Since 1992, Mr. Davis has also served as Chief Executive Officer and Chairman of the Board of Liquitek
Enterprises, Inc. and its predecessor, Dancor, Inc., which became VitriSeal, Inc. through a reorganization
on March 18, 1999 (OTC/BB: "VTSL" (jointly referred to
"Liquitek"), whose stock is
6
traded on the developerOTC Bulletin Board. He served as the Chief Executive Officer of
Vitroseal -TM-, a
patented coating technology for the metal coating market.Liquitek from 1992 until August 2000. From 1989 until 1992, Mr. Davis was
President and Chief Executive Officer of Lubrication Research, Inc., a company
engaged in the development and marketing of technology used in the automobile
industry. During the period of 1984 until 1990, Mr. Davis founded and served as
President of Vencor International, Inc., a developer of form-fitted, reusable,
cloth diapers for medical and non-medical applications.
From 1979 until 1984, Mr. Davis founded and
operated Capital Diamond Corporation, a diamond and jewelry wholesaling
company.
In May, 1996, Mr. Davis entered into a stipulation for judgment and
permanent injunction (the "Injunction") with the Department of Finance of the State of Idaho (the "State") in
connection with a complaint (the "Complaint")
filed by the State of Idaho alleging that Mr. Davis
violated provisions of the Idaho Securities Act. In accordance with the
Injunction,injunction, Mr. Davis paid a $50,000 fine to the state and was permanently
enjoined from violating the Idaho Securities Act, from offering or selling
unregistered 7
securities in Idaho, and from transacting securities business in
Idaho without applicable securities licenses.
RONALD L. LAFORD, PRESIDENT,BRUCE H. HAGLUND, DIRECTOR Mr. LaFordAND SECRETARY
Bruce H. Haglund served as Presidenta Director and Secretary of ESSI from 1992 until
December 1998 and has served in the same positions for the Company since
December 1998. Mr. Haglund is a principal in the law firm of Gibson, Haglund &
Paulsen, with offices in Orange County, California, and Sandy, Utah, where he
has been engaged in the private practice of law since 1980. He is a member of
the Board of Directors and the Secretary of Metalclad Corporation, a public
company whose stock is traded on the Nasdaq Small Cap Market. Mr. Haglund is
also the Secretary and a member of the Board of Directors of ESSI from September 1997 untilAviation
Distributors, Inc. and serves as the Reorganization and currently
serves inSecretary of Liquitek Enterprises, Inc.,
public companies whose stocks are traded on the same positions with the Company. From March 1994 until
September 1997, Mr. LaFord served as Director of National Marketing and
Advertising for Flying J Corporation, a Utah-based company engaged in the
development and operation of truck stops and service stations. From 1986 to
1994, he served in various capacities for Citizens Utilities Company
including, Director of Administration and Supply, Managing Coordinator of
Marketing and Sales and Coordinator of Vehicle Procurement and Maintenance.
From 1980 until 1985, Mr. LaFord was a Senior Manager for Union Carbide
Corporation. From 1974 until 1979, he was a Senior Consultant for General
Telephone and Electronics (GTE). Mr. LaFord received his A.A. degree in Civil
Engineering and B.A. degree in Marketing and Business Administration from
Central Washington University.OTC Bulletin Board. He is a
graduate of the General TelephoneUniversity of Utah College of Law.
JOHN W. NAGEL, DIRECTOR AND CHIEF FINANCIAL OFFICER
John W. Nagel joined ESSI as its Chief Financial Officer and Electronics Schoola member of
Management.the Board of Directors in October 1998, and has served in the same capacities
with the Company since December 1998. He also currently serves as Chief
Financial Officer of Liquitek Enterprises, Inc. Mr. Nagel served as Director of
Finance for a network affiliate television station in New Orleans, Louisiana,
from 1988 through 1998. During the period of 1983 to 1988, he was the operator
and part owner of several franchised ice cream parlors. From 1980 to 1983, Mr.
Nagel held positions in administration and management for The Nautilus Group,
Inc., a private venture capital firm. From 1968 to 1980, Mr. Nagel worked for
Arthur Andersen & Co. in numerous capacities related to consulting for the
design and implementation of computer-based management information systems. He
served as an officer in the U.S. Navy Supply Corps from 1962 to 1966. Mr. Nagel
has an M.B.A. degree from Harvard University and a B.S. degree in accounting
from The Ohio State University.
MARK S. BREWER, DIRECTOR AND VICE PRESIDENT, DIRECTOR
Mr.MARKETING
Mark S. Brewer served as Vice President and a member of the Board of
Directors of ESSI from September 1997 to the Reorganization and currently
serveshas continued in the same positionscapacities with the
Company. HeCompany since December 1998. Mr. Brewer also serves as President of Search
International and Onkli, Incorporated. Search International was founded by Mr.
Brewer in 1990 for the purpose of developing and marketing new products. He
founded Onkli, Incorporated in 1991 for the purpose of creating and packaging
consumer houseware products. In 1979, Mr. Brewer joined Advertising
Professionals, a full service advertising agency which he acquired in 1989 and
operated until 1996.
JOHN W. NAGEL, CHIEF FINANCIAL OFFICER, DIRECTOR
Mr. Nagel joined ESSI as Chief Financial Officer and a member of the
Board of Directors in September 1998 and served until the Reorganization and
currently serves in the same positions with the Company. From 1988 to August
1998, Mr. Nagel served as Director of Finance for WVUE Television of New
Orleans, Louisiana. During the period of 1983 to 1988, he was operator and
part owner of several franchised ice cream parlors. From 1980 to 1983, Mr.
Nagel held positions in administration and management for The Nautilus Group,
Inc., a poultry incubation equipment manufacturer and portable electronic
stage lighting system manufacturer. From 1968 to 1980, Mr. Nagel worked for
Arthur Anderson & Co. in numerous capacities relating to consulting for the
design and implementation of computer-based management information systems.
He served as an officer in the U.S. Navy Supply Corps from 1962 to 1966. Mr.
Nagel was awarded his M.B.A. degree from Harvard University and his B.S.
degree in accounting from Ohio State University.
BRUCE H. HAGLUND, SECRETARY, DIRECTOR
Mr. Haglund served as a Director and Secretary of ESSI from
September 1998 until the Reorganization and currently serves in the same
positions with the Company. Mr. Haglund is a principal in the law firm of
Gibson, Haglund & Paulsen in Orange County, California where he has been
engaged in the private practice of law since 1980. Mr. Haglund is also the
Secretary and a member of the Board of Directors of Metalclad Corporation
(Nasdaq SmallCap: MTLC), Aviation Distributors, Inc. (OTC/BB: ADIN),
Renaissance Golf Products, Inc. (OTC/BB: FGLF), and VitriSeal, Inc. (OTC/BB:
VTSL). He is a graduate of the University of Utah College of Law.
87
BRADLEY E. ZARBOCK, DIRECTOR
Mr. Zarbock has served as a Director of the Company since April
1999. Since 1980, Mr. Zarbock has been employed by and is currently Vice
President of Plumbers Supply Co., a Utah-based company which has been
nationally ranked among the top 100 plumbing, heating, ventilation, and air
conditioning companies according to sales volume for the past 10 years. Since
1996, Mr. Zarbock has served as a director of the American Supply
Association's ("ASA") Education Foundation and, concurrently since 1998, he
has served as President of the Young Executive's Division of the ASA and a
member of the ASA's political action committee. The ASA is a federation of
regional and national organizations serving the
plumbing-heating-cooling-piping industry. During 1998, he served as the Young
Executives Chairman of the Board of the ASA. Mr. Zarbock graduated from
Westminster College with a B.S. degree in International Business Management
in 1985.
J. STEVEN YOUNG, DIRECTOR
Mr.J. Steven Young has served as a Director of the Company since October 1999.
Mr. Young holds the honor of the highest quarterback rating in National Football
League ("NFL") history. Mr. Young has beenwas a member of the NFL sincefrom 1985 through 1999
and has received numerous NFL and collegiate awards, including, but not limited to,
Most Valuable Player of Super Bowl XXIX, SPORTS ILLUSTRATED AND
SPORTING NEWS'Sports Illustrated and Sporting News'
1994, 1993 and 1992 Player of the Year, NFL's Most Valuable Player 1994 and
1992, a Consensus 1983 All-American and Heisman Trophy Winner Runner-up.
Throughout his NFL history, Mr. Young has provided marketing endorsements at various
times for Nike, Sprint, VISA, Sun Microsystems, Power Bar, Pert Plus, National
Dairy Association, Wheaties, and Advil. In 1993, Mr. Young established the
Forever Young Foundation, an international, non-profit public charity, based in
Los Altos, California, that provides funding for charitable organizations which
encourage the development, security, strength, and spiritual vitality of the
family. Mr. Young is currently a spokesperson for The Children's Miracle
Network, NFL F.A.C.T., a national program promoting education for youth, and NFL
P.L.A.Y. Football. In 1994, Mr. Young received his Juris Doctorate degree from
Brigham Young University College of Law.
VOTE REQUIRED
The five Director nominees receiving the highest number of votes will be
elected. Management intends to vote for"FOR" all of the directors as nominated.Director nominees set forth
above.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE FOREGOING SLATE OF NOMINEES FOR THE
BOARD OF DIRECTORS, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY
OTHERWISE.
EXECUTIVE OFFICERS
The name and position of the Company's executive officerofficers who isare not also
a nomineenominees for Directors are as follows:
PAUL A. KUJANPAA, VICE PRESIDENT, OF MANUFACTURING
Mr. Kujanpaa served ashas been Vice President of Manufacturing offor ESSI fromand the
Company since July 1998 until the Reorganization and currently serves in the same positions
with the Company.1998. From 1997 to 1998 he served as Senior Manager of Order
Fulfillment and Logistics for Haworth, Inc. From 1994 until 1997 Mr. Kujanpaa
was a Management Consulting Manager for Grant Thornton LLP, the country's
seventh largest accounting and management consulting firm. During the period of
1991 to 1993 he held the position of Senior Management Consultant for Booz,
Allen & Hamilton, an international management consulting firm ranked among the
top five in the world. From 1989 until 1991, Mr. Kujanpaa worked as Management
Consultant for A.T. Kearney Incorporated, an international management consulting
firm based in Chicago, Illinois. During the period of 1988 to 1989, Mr. Kujanpaa
was a partner of and Engineer Consultant for Metz and Associates Incorporated, a
manufacturing engineering consulting firm whichthat was sold to A.T. Kearney
Incorporated in 1989. From 1986 to 1988 he held the position of Manufacturing
Engineering Consultant for Ingersoll Engineers Incorporated of Rockford,
Illinois. Mr. Kujanpaa received his B.S. in Manufacturing Engineering from
Brigham Young University.
9
APPROVAL OF HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
(ITEM 2 ON THE PROXY FORM)
On September 20, 1999, the Board of Directors ofRONALD M. TURNER, VICE PRESIDENT, SALES
Ronald M. Turner joined the Company subjectas National Sales Director in late 1999
and was promoted to stockholder approval, adopted the 1999 Stock Option and Incentive
Plan (the "Plan"),Vice President, Sales in October 2000. Mr. Turner, a
copy of which is attached hereto as Exhibit "A." The
Plan is intended to provide incentive to key employees and Directors of, and
key consultants, vendors, customers, and others expected to provide
significant servicesCertified Marketing Executive, came to the Company to encourage proprietary interest in
the Company, to encourage such key employees to remain in the employ of the
Company and its subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants, vendors,
customers, and others to increase their efforts in providing significant
services to the Company. The Company has reserved 1,200,000 shares of Common
Stock for issuance under the Plan. The Plan provides that incentive stock
options ("Incentive Stock Options") may be granted to full-time employees
(who may also be Directors) and non-statutory stock options ("Non-statutory
Stock Options") may be granted to non-employee Directors and consultants from
time to time on a discretionary basis by the Board or the Committee. The Plan
also provides for the grant of Non-statutory Stock Options to outside members
of the Board of Directors on a "formula award" basis as provided in Rule
16b-3 of the Securities Exchange Act of 1934 ("Rule 16b-3").
The Plan provides for administration by the Board in compliance with
Rule 16b-3, or by a Committee (the "Committee") appointed by the Board, which
Committee shall be constituted to permit the Plan to comply with Rule 16b-3,
and which shall consist of not less than two members, each of whom has not
participated in the Plan by way of receipt of any discretionary grant of an
option (Incentive Stock Options and Non-statutory Stock Options are together
hereinafter referred to as "Option" or "Options", unless the context
otherwise requires), and who will not so participate while serving as a
member of the Committee, and each of whom has not participated under any
other plan or have received options of the Company during the year preceding
adoption of the Plan by the stockholders (other than pursuant to a formula
award grant under the Plan). A member of the Board or a Committee member
shall in no event participate in any determination related to Options held by
or to be granted on a discretionary basis to such Board or Committee member.
The aggregate number of shares of the Company's authorized but
unissued Common Stock which may be issued upon exercise of Options under the
Plan may not exceed the Shares reserved under the Plan. If any unexercised
option, or any portion thereof, for any reason expires or is terminated, does
not vest or is not delivered, the unexercised or unvested shares allocable to
such Option may again be made subject to any Award.
Options must be evidenced by written stock option agreements in such
form as the Committee may from time to time determine. Each Option must state
the number of shares to which it pertains and must provide for the adjustment
thereof if the outstanding shares of Common Stock are exchanged for cash or a
different number or kind of shares or securities of the Company, or if the
outstanding shares of the Common Stock are increased, decreased, exchanged
for, or otherwise changed, or if additional shares or new or different shares
or securities are distributed with respect to the outstanding shares of the
Common Stock, through a reorganization or merger in which the Company is the
surviving entity or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation, or other capital change or adjustment. In addition, the Board
or the Committee may grant such additional rights in the foregoing
circumstances as the Board or the Committee deems to be in the best interests
of any participant and the Company in order to preserve for the participant
the benefits of the Award.
The exercise price in the case of any Incentive Stock Option must
not be less than the fair market value on the date of grant and, in the case
of any Option granted to an optionee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company,
must
10
not be less than 110% of the fair market value on the date of grant. The
exercise price, in the case of any Non-statutory Stock Option, must not be
less than 85% of the fair market value on the date of grant.
The purchase price is payable in full in United States dollars upon
the exercise of the Option; provided, however, that if the applicable Option
agreement so provides, the purchase price may be paid (i) by the surrender of
shares in good form for transfer, owned by the participant and having a fair
market value on the date of exercise equal to the purchase price, or in any
combination of cash and shares, as long as the sum of the cash so paid and
the fair market value of the shares so surrendered equals the purchase price;
(ii) by cancellation of indebtedness owed by the Company to the participant;
(iii) with a full recourse promissory note executed by the participant; or
(iv) any combination of the foregoing. The interest rate and other terms and
conditions of such note must be determined by the Board or the Committee. The
Board or Committee may require that the participant pledge his or her shares
of Common Stock to the Company for the purpose of securing the payment of
such note, in which event the stock certificate(s) representing such shares
may not be released to the participant until such note has been paid in full.
Each Option must state the time or times which all or part thereof
becomes exercisable. No Option may be exercised after the expiration of 10
years from the date it was granted,position of
Executive Director of Sales and no Option granted to an optionee who
owns more than 10%Marketing Executives of Madison, Inc., a
position he held for eight years. He spent the total combined voting power of all classes of
outstanding stock of the Company may be exercised after the expiration of
fiveprevious 28 years from the date it was granted. During the lifetime of a participant
in the Plan, such Options may be exercisable only by the participant and
shall not be assignable or transferable. If a participant dies while Options
are exercisable, they may be exercised, subject to the condition that no
option shall be exercisable after the expiration of 10 years from the date
granted and to the extent the right to exercise the Option accrued at any
time within 12 months after the death of the participant, by the executors or
administrators of the deceased participant or by persons who acquired the
option directly from the deceased option holder by bequest or inheritance.
Within the limitations of the Plan, the Board or Committee may
modify, extend, or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting
of new Options in substitution therefor. No modification of an Option may,
without the consent of the participant, alter or impair any rights or
obligations under any Option previously granted.
In the case of Incentive Stock Options granted under the Plan, the
aggregate fair market value (determined as of the date of the grant thereof)
of the shares with respect to which Incentive Stock Options become
exercisable by any participant for the first time during any calendar year
(under the Plan and all other plans maintained by the Company) may not exceed
$100,000. The Board or Committee may, however,sales
management with the participant's
consent, authorize an amendment to the Incentive Stock Option which renders
itAmerican Breeders Service where he consistently exceeded his
annual sales goals. Mr. Turner studied sales management and marketing at
Syracuse University and holds a Nonstatutory Stock Option.
The stock option agreements authorized under the Plan may contain
such other provisions not inconsistent with the terms of the Plan (including,
without limitation, restrictions upon the exercise of the Options) as the
Board or the Committee deems advisable.
VOTE REQUIRED
The affirmative vote of a majority of the outstanding Shares is
required to approve this proposal. Management intends to vote "FOR" the
proposal to approve the 1999 Stock Option and Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMEND THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE PROPOSAL TO APPROVE THE 1999 STOCK OPTION AND
INCENTIVE PLAN, AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
11B.S. degree from Utah State University.
8
RATIFICATION OF APPOINTMENT OF AUDITORS
(ITEM 32 ON PROXY FORM)
The Board of Directors has selected Squar, Milner & Reehl, LLP as
independent public accountants for the Company for the fiscal year ending
December 31, 1999, subject to the approval of the Stockholders. To the
knowledge of the Company, at no time has Squar, Milner & Reehl, LLP had any
direct or indirect financial interest in or any connection with the Company
other than as independent public accountants. A representative of Squar,
Milner & Reehl, LLP will be available at the Meeting to make a statement if
the representative so desires and to respond to appropriate questions.GENERAL
In conjunction with a merger and reorganization of ESSI and the Company,
the Company changed auditors in January 1999. The Company's former accountants,
Jones, Jensen & Co., were dismissed effective January 26, 1999, and Squar,
Milner, Reehl & Reehl,Williamson, LLP was("Squar Milner"), were appointed as the
Company's principal accountants. There were no disagreements with the former
accountantaccountants and are no disagreements with the current Accountantaccountants on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. At a meeting on March 23, 2001, the Board of
Directors unanimously approved the recommendation of the Audit Committee for the
appointment of Squar Milner to audit the financial statements of the Company for
2001. This selection is subject to ratification or rejection by the
Stockholders.
Squar Milner has no financial interest in the Company. A representative of
Squar Milner is expected to be present at the Annual Meeting, will have an
opportunity to make a statement if he or she so desires, and is expected to be
available to respond to appropriate questions.
Squar Milner performed various audit and other services for the Company
during 2000. Such services included an audit of annual financial statements,
interim reviews of quarterly financial statements, review and consultation
connected with certain filings with the SEC, internal control reviews required
by certain contractual agreements or requested by the Company's management,
consultation on tax, financial accounting and reporting matters, and meetings
with the Audit Committee of the Board of Directors.
AUDIT FEES
Following is a summary of the 2000 fees paid to Squar Milner for the audit
of the Company's December 31, 1999 financial statements and reviews of quarterly
reports filed with the SEC in 2000:
ALL OTHER
----------------------
PAYMENTS IN ANNUAL AUDIT- NON-AUDIT- TOTAL
YEAR ENDED AUDIT TAX RELATED RELATED ALL OTHER TOTAL
----------- ------ --- ------- ---------- --------- -----
December 31, 2000 $60,185 $2,941 $1,000 $-0- $1,000 $64,126
The Company has accrued approximately $40,000 through March 31, 2001 for
the audit of the December 31, 2000 financial statements by Squar Milner, and the
Company is current in the payment of fees due the auditors.
ALL OTHER FEES
The Company paid fees of approximately $1,000 to Squar Milner for all other
services provided by it during 2000, including audit-related services of $1,000.
No fees were paid for non-audit services.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors of the Company has appointed an Audit Committee
composed of three directors, Messrs. Nagel, Brewer, and Haglund.
The Board of Directors has adopted a written charter for the Audit
Committee. A copy of that Charter is included as Exhibit "A" to this Proxy
Statement. The Audit Committee's job is one of oversight as set forth in its
Charter. It is not the duty of the Audit Committee to prepare the Company's
financial
9
statements, to plan or conduct audits, or to determine that the Company's
financial statements are complete and accurate and are in accordance with
generally accepted accounting principles. The Company's management is
responsible for preparing the Company's financial statements and for maintaining
internal control. The independent auditors are responsible for auditing the
financial statements and for expressing an opinion as to whether those audited
financial statements fairly present the financial position, results of
operations, and cash flows of the Company in conformity with generally accepted
accounting principles. The Audit Committee met four times in 2000.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management and with Squar Milner, the Company's
independent auditors for 2000.
The Audit Committee has discussed with Squar Milner the matters required to
be discussed by Statement on Auditing Standards No. 61.
The Audit Committee has received from Squar Milner the written statements
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed Squar Milner's independence
with them, and has considered the compatibility of non-audit services with the
auditors' independence.
Based on the review and discussions referred to above, the Audit Committee
has recommended to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2000 for filing with the Securities and Exchange Commission.
The Audit Committee
John W. Nagel, Chairman
Mark S. Brewer
Bruce H. Haglund
USE OF THE REPORT OF THE AUDIT COMMITTEE AND AUDIT COMMITTEE CHARTER
In accordance with and to the extent permitted by applicable law or
regulation, the information contained in the Report of the Audit Committee and
the Audit Committee Charter shall not be incorporated by reference into any
future filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and shall not be deemed to be soliciting
material or to be filed with the SEC under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
VOTE REQUIRED
Ratification of the appointment of auditors requires a majority of the
votes cast thereon. Any Shares not voted, whether by abstention, broker
non-vote, or otherwise, have no impact on the vote. If the Stockholders do not
ratify this appointment, other independent auditors will be considered by the
Board orof Directors upon recommendation of the Audit Committee.
VOTE REQUIRED The affirmative
vote of a majority of the outstanding Shares is required to approve this
proposal. Management intends to vote "FOR" the proposal to ratify the auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDRECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE AUDITORS, AND YOUR PROXY WILL BE
SO VOTED UNLESS YOU SPECIFY OTHERWISE.
10
REPORT ON EXECUTIVE COMPENSATION
The Company's compensation programs are designed to link executives'
compensation to the performance of the Company. The annual salary paid to
executives over the past three years reflect fixed amounts that are deemed
competitive for executives with comparable ability and experience in the
industry.
COMPENSATION OF OFFICERS
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated.indicated to the Company's
Chief Executive Officer and all officers whose compensation exceeded $100,000
for the year. Management of the Company was completely replaced in conjunction
with the Reorganizationreorganization between the Company and ESSI.
12
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------------------------------------------------------------
Other Annual
Salary Bonus Compensation
Name and Principal Position YearANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- -----------------------------------------
OTHER AWARDS PAYOUTS
ANNUAL ----------------------- -----------
NAME AND COMPEN- RESTRICTED OPTIONS/ LTIP ALL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) SATION ($) -------------------------------- --------STOCK ($) SARS (#) PAYOUTS ($) OTHER (1)
- ------------------ ---- ---------- --------- ---------- ---------- -------- ----------------------- ---------
Culley W. Davis, 2000 240,000 -- -- -- 225,000(3) -- --
Chairman, 1999 115,845 -- -- -- 300,000(4) -- --
CEO (1) 1998 95,000 -- -0-
Chairman, CEO 1997 -0- -- -0--- -- -- --
Ronald L. LaFord, 2000 120,000 -- -- -- -- -- --
President (1)(2) 1999 96,000 -- -- -- 60,000(5) -- --
1998 88,00096,000 -- -0-
President 1997 18,750 -- -0-
Mark S. Brewer, 1998 78,550 -- -0-
Vice President 1997 72,685 -0-
Joe K. Johnson, 1998 -0- -0-
Former President 1997 -0- -0--- -- --
- -------------------
(1) The remuneration described in the table does not include the cost to the
Company of benefits furnished to the named executive officers, including
premiums for health insurance and other personal benefits provided to such
individual that are extended to all employees of the Company in connection
with their employment. The value of such benefits cannot be precisely
determined; however, the executive Officers named above did not receive
other compensation in excess of the lesser of $50,000 or 10% of such
Officers' cash compensation.
(2) Mr. LaFord's services as President were terminated as of January 1, 2001.
(3) In December 2000, Mr. Davis was granted a non-statutory stock option to
purchase 225,000 shares of common stock in the Company at $1.00 per share
that expires on December 31, 2010.
(4) In September 1999, Mr. Davis was granted stock options to purchase 300,000
shares of common stock of the Company exercisable at $5.50 per share, which
vest in three equal installments on January 1, 2000, 2001, and 2002. Of the
300,000 options, 50,000 expire ten years from the date of grant and 250,000
expire five years from the date of grant.
(5) In September 1999, Mr. LaFord was granted stock options to purchase 60,000
shares of common stock in the Company, of which 50,000 are exercisable at
$5.50 per share and 10,000 are exercisable at $5.00 per share, all of which
vest in three equal installments on January 1, 2000, 2001, and 2002, and
all of which expire ten years from the date of grant.
11
OPTION GRANTS IN LAST FISCAL YEAR--INDIVIDUAL GRANTS
The following table sets forth the number of options granted to each of the
named executive officers of the Company:
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR(1) PRICE ($/SH) DATE
---- ----------- -------------- ---------------- ----------
Culley W. Davis 225,000 47.6% $1.00 12/31/2010
- -------------------
(1) An aggregate of 472,500 options were granted to employees during 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth the number of options, both exercisable and
unexercisable, held by each of the named executive officers of the Company and
the value of any in-the-money options at December 31, 2000 (assuming a market
value of $1.00 on December 31, 2000):
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED AT FISCAL YEAR-END AT FISCAL YEAR-END
UPON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- -------- -------- ------------------- -------------------
Culley W. Davis -0- -0- 382,500/215,000 $18,125/$36,250
Ronald L. LaFord 33,333 $41,667 -0-/66,667 $-0-/$50,000
SUBMISSION OF STOCKHOLDER PROPOSALS
StockholdersStockholder proposals intended for inclusion in next year's proxy statement
should be sent via certified mail-return receipt requested to Bruce H. Haglund,
Secretary, 12226 South 1000 East,Jamboree Center, 2 Park Plaza, Suite 11, Draper, Utah 84020,450, Irvine, California 92614
and must be received by February 28, 2000.2002.
MISCELLANEOUS AND OTHER MATTERS
Management knows of no matters to come before the Meeting other than those
specified herein. If any other matter should come before the Meeting, then the
persons named in the enclosed form of proxy will have discretionary authority to
vote all proxies with respect thereto in accordance with their judgment.
DOCUMENTS INCORPORATED BY REFERENCE
The Company specifically incorporates the Financial Statements for the year
ended December 31, 1998,2000, filed as part of the 19982000 Annual Report on Form 10-KSB
in response to Item 13 of the 10-KSB. The Annual Report and attached Financial
Statements should have been enclosed in the mailing containing this Proxy
Statement.
If you did not receive a copy of the Annual
Report and attached Financial Statement, please contact the Company and
request that the information be sent to you. A copy of the 1998Company's current Annual Report on Form 10-KSB as filed with
the Securities and Exchange Commission, including the financial statements and
schedules thereto but without other exhibits, is being mailed to each
Stockholder together with this Proxy Statement. Additional copies may be
obtained by Stockholders without charge by writing to: HydroMaid International,
Inc., 1350 East Draper Parkway, Draper, Utah 84020. Copies of any exhibits to
the Annual Report, specifically listed in the Annual Report, may be obtained fromby
Stockholders with a charge equal to the Company withoutCompany's cost to the requesting stockholder
by contacting the Company.
A COPY OF THE COMPANY'S CURRENT ANNUAL REPORT ON FORM 10-KSB AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, IS BEING MAILED TO EACH STOCKHOLDER
TOGETHER WITH THIS PROXY STATEMENT. ADDITIONAL COPIES MAY BE OBTAINED BY
STOCKHOLDERS WITHOUT CHARGE BY WRITING TO: HYDROMAID INTERNATIONAL, INC.,
12222 SOUTH 1000 EAST, SUITE 1, DRAPER, UTAH 84020. COPIES OF ANY EXHIBITS TO
THE ANNUAL REPORT, SPECIFICALLY LISTED IN THE ANNUAL REPORT, MAY BE OBTAINED
BY STOCKHOLDERS WITH A CHARGE EQUAL TO THE COMPANY'S COST TO COPY AND SEND
ANY REQUESTED EXHIBIT.
13copy and send any
requested exhibit.
12
EXHIBIT "A"
HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
Page
I. PURPOSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
V. PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Ten Percent Stockholders . . . . . . . . . . . . . . . . . . . 4
5.3 Stock Ownership. . . . . . . . . . . . . . . . . . . . . . . . 4
5.4 Outstanding Stock. . . . . . . . . . . . . . . . . . . . . . . 4
VI. STOCK SUBJECT TO THE PLAN. . . . . . . . . . . . . . . . . . . . . . 5
VII. OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1 Stock Option Agreements. . . . . . . . . . . . . . . . . . . . 5
7.2 NumberAUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of Shares . . . . . . . . . . . . . . . . . . . . . . . 5
7.3 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . 5
7.4 Medium and Time of Payment . . . . . . . . . . . . . . . . . . 5
7.5 Term and Transferability of Options. . . . . . . . . . . . . . 5
7.6 Modification, Extension, and Renewal of Options. . . . . . . . 6
7.7 Limitation on Grant of Incentive Stock Options . . . . . . . . 6
7.8 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . 6
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS,
AND BENEFICIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . 6
8.1 Employee Status. . . . . . . . . . . . . . . . . . . . . . . . 6
8.2 No Employment Contract . . . . . . . . . . . . . . . . . . . . 6
8.3 No Transferability . . . . . . . . . . . . . . . . . . . . . . 6
8.4 Plan Not Funded. . . . . . . . . . . . . . . . . . . . . . . . 7
8.5 Adjustments upon Recapitalizations and Corporate Changes . . . 7
8.6 Termination of Employment. . . . . . . . . . . . . . . . . . . 7
8.7 Death of Participant . . . . . . . . . . . . . . . . . . . . . 8
8.8 Disability of Participant. . . . . . . . . . . . . . . . . . . 8
8.9 Retirement of Participant. . . . . . . . . . . . . . . . . . . 8
8.10 Rights as a Stockholder. . . . . . . . . . . . . . . . . . . . 8
8.11 Deferral of Payments . . . . . . . . . . . . . . . . . . . . . 8
8.12 Acceleration of Awards . . . . . . . . . . . . . . . . . . . . 8
i
IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
9.1 Termination, Suspension, and Amendment . . . . . . . . . . . . 8
9.2 No Fractional Shares . . . . . . . . . . . . . . . . . . . . . 9
9.3 Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . 9
9.4 Restrictions of Elections Made by Participants . . . . . . . . 9
9.5 Limitations on the Corporation's Obligations . . . . . . . . . 10
9.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . 10
9.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 10
9.8 Securities Law Requirements. . . . . . . . . . . . . . . . . . 10
9.9 Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ii
HYDROMAID INTERNATIONAL, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
I. PURPOSE
The HydroMaid International, Inc. 1999 Stock Option and Incentive Plan
is intended to provide incentive to key employees and directors of, and key
consultants, vendors, customers, and others expected to provide significant
services to, the Corporation, to encourage proprietary interest in the
Corporation, to encourage such key employees to remain in the employ of the
Corporation and its Subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants, vendors,
customers, and others to increase their efforts in providing significant
services to the Corporation.
II. DEFINITIONS.
2.1 "Award" shall mean an Option, which may be designated an
Incentive Stock Option or a Nonstatutory Stock Option, in each case as
granted pursuant to the Plan.
2.2 "Award Agreement" shall mean any written agreement, contract,
or other instrument or document evidencing an Award.
2.3 "Beneficiary" shall mean the person, persons, trust, or trusts
entitled by will or the laws of descent and distribution to receive the
benefits specified under the Plan in the event of a Participant's death.
2.4 "Board" shall mean the Board of Directors of the Corporation.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.6 "Committee" shall mean the committee, if any, appointed by the
Board in accordance with Section 4 of the Plan, or the Board if no Committee
has been appointed.
2.7 "Common Stock" shall mean the Common Stock, $.001 par value,
of the Corporation.
2.8 "Corporation" shall mean("Board") for HYDROMAID
INTERNATIONAL, INC., a Nevada corporation and its Subsidiaries.
2.9 "Disability" shall mean the condition of a Participant who is
unable("Corporation"), to perform his or her substantial and material job duties due to
injury or sickness or such other conditionbe known as the
Board orAudit Committee may
determine in its sole discretion and/or engage in any substantial gainful
activity("Committee"). At such time as required by reasonNasdaq-listing
requirements, the Committee shall be composed of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months.
2.10 "Effective Date" shall mean September 20, 1999, the date the
Plan was adopted by the Board provided the stockholdersdirectors who are independent
of the Company ratify
the Plan within one year from its adoption by the Board.
1
2.11 "Eligible Employee" shall mean an individual who is employed
(within the meaning of Code Section 3401 and the regulations thereunder) by
the Corporation. Additionally for purposes of this Plan, a Participant who
is a director or a consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
an Eligible Employee, and service as a director, consultant, vendor,
customer, or other provider of significant services to the Corporation or a
Subsidiary shall be deemed to be employment, except that no Incentive Stock
Option may be granted to a non-employee director or non-employee consultant,
vendor, customer, or other provider of significant services to the
Corporation or a Subsidiary.
2.12 "Event" shall mean any of the following:
(a) Any person or entity (or group of affiliated persons or
entities) acquires in one or more transactions, whether before or after the
effective date of the Plan, ownership of more than 50% of the outstanding
shares of stock entitled to vote in the election of directors of the
Corporation; or
(b) The dissolution or liquidationmanagement of the Corporation or a
reorganization, merger, or consolidationand are free of any relationship that, in
the opinion of the CorporationBoard, would interfere with onetheir exercise of independent
judgment as a Committee member.
The Committee shall be comprised of three (3) or more entities, as a result of which the Corporation is not the surviving entity,
or a sale of all or substantially all of the assets of the Corporation as an
entirety to another entity.
For purposes of this definition, ownership does not include ownership
(i) by a person owning such shares merely of record (such as a member of a
securities exchange, a nominee, or a securities depository system), (ii) by a
person as a bona fide pledgee of shares prior to a default and determination
to exercise powers as an owner of the shares, (iii) by a person who is not
required to file statements on Schedule 13D by virtue of Rule 13d-1(b, or
(iv) by a person who owns or holds shares as an underwriter acquired in
connection with an underwritten offering pending and for purposes of resale.
2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
2.14 "Exercise Price" shall mean the price per Share of Common
Stock, determined by the Board or the Committee, at which an Award may be
exercised.
2.15 "Fair Market Value" shall mean the value of one Share of
Common Stock, determined as follows:
(a) If the Shares are traded on an exchange, the price at
which Shares traded at the close of business on the date of valuation; or
(b) If the Shares are traded over-the-counter on the OTC
System, the closing price if one is available, or the mean between the bid
and asked prices on such System at the close of business on the date of
valuation; or
(c) If neither (i) nor (ii) above applies, the fair market
valuedirectors as determined by
the Board orBoard. All members of the Committee in good faith. Such
determination shall be conclusivehave a working familiarity with
basic finance and binding on all persons.
2.16 "Incentive Stock Option" shall mean an option described in
Section 422A(b)accounting practices, and at least one member of the Code.
2.17 "Initial Grant"Committee
shall mean the initial grant of Awards as set
forthhave accounting or related financial management expertise. Committee
members may enhance their familiarity with finance and accounting by
participating in Exhibit "A," if any, attached hereto and incorporated herein by
reference.
2.18 "Nonstatutory Stock Option" shall mean an option not described
in Section 422(b), 422A(b), 423(b) or 424(b) of the Code.
2
2.19 "Option" shall mean either an Incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.
2.20 "Participant" shall mean an Eligible Employee who has received
an Award under the Plan.
2.21 "Plan" shall mean the HydroMaid International, Inc. 1999 Stock
Option and Incentive Plan, as it may be amended from time to time.
2.22 "Purchase Price" shall mean the Exercise Price times the number
of Shares with respect to which an Award is exercised.
2.23 "Restricted Stock Awards" shall mean any Award of shares of
Common Stock that may be subject to certain restrictions and to a risk of
forfeiture.
2.24 "Retirement" shall mean the voluntary termination of employment
by an Employee upon the attainment of age 65 and the completion of not less
than 20 years of service with the Corporation or a Subsidiary.
2.25 "Rule 16b" shall mean Rule 16b of the Securities and Exchange Act
of 1934.
2.26 "Share" shall mean one share of Common Stock, adjusted in
accordance with Section 8.5 of the Plan (if applicable).
2.27 "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
2.28 "Stock Appreciation Right" shall mean the right granted to a
Participant to be paid an amount measured by the appreciation in the Fair
Market Value of the Common Stock from the date of grant to the date of
exercise of the right, with payment to be made in cash, Common Stock, or
property as specified in the Award or determined by the Committee.
2.29 "Stock Option Agreements" shall mean an Award Agreement
granting Options under the Plan.
2.30 "Stock Purchase Agreement" shall mean an agreement to exercise
Options under the Plan.
2.31 "Subsidiary" shall mean any corporation at least 50% of the
total combined voting power of which is ownededucational programs conducted by the Corporation or by
another Subsidiary.
2.32 "Tax Date" shall have the meaning set forth in Section 9.3
hereof.
III. EFFECTIVE DATEan outside
consultant.
The Effective Date of the Plan is September 20, 1999.
IV. ADMINISTRATION
The Plan shall be administered by the Board in compliance with Rule
16b-3, or by a Committee appointed by the Board, which Committee shall be
constituted to permit the Plan to comply with Rule 16b-3, and which shall
consist of not less than two members. The Board shall appoint one of the
3
members of the Committee, if there be one, as Chairman of the Committee. If
a Committee has been appointed, the Committee shall hold meetings at such
times and places as it may determine. Acts of a majority of the Committee at
which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee shall be elected by the valid acts ofBoard at the Committee. The Board, or the Committee if there be one, shall from time to
time at its discretion select the Eligible Employees and consultants who are
to be granted Awards, determine the number of Shares to be applicable to such
Award, and designate any Options as Incentive Stock Options or Nonstatutory
Stock Options, except that no Incentive Stock Option may be granted to a
non-employee director or a non-employee consultant. A memberannual
organizational meeting of the Board or a Committee member shall in no event participate in any determination
relating to Awards held by or to be granted to such Board or Committee
member; however, a member of the Board or a Committee memberuntil their successors shall be entitled to receive Awards approvedduly
elected and qualified. Unless a chair is elected by the stockholders in accordance withfull Board, the provisions of Rule 16b-3. The interpretation and construction by the
Board, or by the Committee if there be one, of any provision of the Plan or
of any Award granted thereunder shall be final. No member of the Board ormembers
of the Committee may designate a chair by majority vote of the full Committee
membership.
PURPOSE
The Committee shall be liable for any action or determination made in good
faith with respectprovide assistance to the Plan or any Award granted thereunder. In addition
to any right of indemnification provided by the Articles of Incorporation or
Bylaws of the Corporation, such person shall be indemnified and held harmless
by the Corporation from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by himdirectors in connection with any claim,
suit, action, or proceeding to which he may be a party by reason of any
action or omission under the Plan.
V. PARTICIPATION
5.1 ELIGIBILITY. Subjectfulfilling their
responsibility to the termsshareholders, potential shareholders, and conditions of Section
5.2 below, the Participants shall be such persons as the stockholders may
approve or as the Committee may select from among the following classes of
persons: (i) Eligible Employees of the Corporation or of a Subsidiary (who
may be officers, whether or not they are directors); and (ii) consultants,
vendors, customers, and others expectedinvestment
community relating to provide significant services to
the Corporation or a Subsidiary.
For purposes of this Plan, a Participant who is a director or a
consultant, vendor, customer, or other provider of significant services to
the Corporation or a Subsidiary shall be deemed to be an Eligible Employee,
and service as a director, consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
employment, except that no Incentive Stock Option may be granted to a
non-employee director or non-employee consultant, vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary, and
except that no Nonstatutory Stock Option may be granted to a non-employee
director or non-employee consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary other than upon a
vote of a majority of disinterested directors finding that the value of the
services rendered or to be rendered to the Corporation or a Subsidiary by
such non-employee director or non-employee consultant, vendor, customer, or
other provider of services is at least equal to the value of the Awards
granted.
5.2 TEN-PERCENT STOCKHOLDERS. An Eligible Employee who owns more
than 10% of the total combined voting power of all classes of outstanding
stock of the Corporation, its parent or any of its Subsidiaries shall not be
eligible to receive an Award for an Incentive Stock Option unless (i) the
Exercise Price of the Shares subject to such Award is at least 110% of the
Fair Market Value of such Shares on the date of grant; and (ii) such Award by
its terms is not exercisable after the expiration of five years from the date
of grant.
5.3 STOCK OWNERSHIP. For purposes of Section 5.2 above, in
determining stock ownership an Eligible Employee shall be considered as
owning the stock owned, directly or indirectly, by or for his brothers,
sisters, spouses, ancestors, and lineal descendants. Stock owned, directly
or indirectly, by or for a corporation, partnership, estate, or trust shall
be considered as being owned proportionately by or
4
for its stockholders, partners, or beneficiaries. Stock with respect to
which such Eligible Employee holds an Award shall not be counted.
5.4 OUTSTANDING STOCK. For purposes of Section 5.2 above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the Award to the Participant. "Outstanding
stock" shall not include shares authorized for issue under outstanding
Options or Purchase Rights held by the Participant or by any other person.
VI. STOCK SUBJECT TO THE PLAN
The stock subject to Awards granted under the Plan shall be Shares of
the Corporation's authorized but unissued or reacquired Common Stock. The
aggregate number of Shares which may be issued as Awards or upon exercise of
Awards under the Plan shall not exceed 1,200,000 shares. The number of
Shares subject to unexercised Options plus the number of Shares previously
issued under the Plan shall not at any time exceed the number of Shares
available for issuance under the Plan. In the event that any unexercised
Option, or any portion thereof, for any reason expires or is terminated, the
unexercised or unvested Shares allocable to such Option may again be made
subject to any Award. Any Shares withheld by the Corporation pursuant to
Section 9.3 shall not be deemed to be issued. The number of withheld Shares
shall be deducted from the applicable Award and shall not entitle the
Participant to receive additional Shares. The limitations established by
this Article VI shall be subject to adjustment in the manner provided in
Section 8.5 hereof upon the occurrence of an event specified therein.
VII. OPTIONS
7.1 STOCK OPTION AGREEMENTS. Options shall be evidenced by written
Stock Option Agreements in such form as the Committee shall from time to time
determine. Such agreements shall comply with and be subject to the terms and
conditions set forth below.
7.2 TYPE AND NUMBER OF SHARES. Each Option shall state the type of
Award and the number of Shares to which it pertains and shall provide for the
adjustment thereof in accordance with the provisions of Section 8.5 hereof.
7.3 EXERCISE PRICE. Each Option shall state the Exercise Price
thereof. The Exercise Price in the case of any Incentive Stock Option shall
not be less than the Fair Market Value on the date of grant and, in the case
of any Option granted to an Optionee described in Section 5.2 hereof, shall
not be less than 110% of the Fair Market Value on the date of grant. The
Exercise Price in the case of any Nonstatutory Stock Option shall not be less
than 85% of the Fair Market Value on the date of grant.
7.4 MEDIUM AND TIME OF PAYMENT. The Purchase Price shall be
payable in full in United States dollars upon the exercise of the Option;
provided, however, that if the applicable Stock Option Agreement so provides
the Purchase Price may be paid (i) by the surrender of Shares in good form
for transfer, owned by the Participant and having a Fair Market Value on the
date of exercise equal to the Purchase Price, or in any combination of cash
and Shares, as long as the sum of the cash so paid and the Fair Market Value
of the Shares so surrendered equal the Purchase Price, (ii) by cancellation
of indebtedness owed by the Corporation to the Participant, (iii) with a full
recourse promissory note executed by the Participant, or (iv) any combination
of the foregoing. The interest rate and other terms and conditions of such
note shall be determined by the Committee. The Committee may require that
the Participant pledge his or her Shares to the Corporation for the purpose
of securing the payment of such note. In no event shall the stock
certificate(s) representing such Shares be released to the Participant until
such note is paid in full.
5
7.5 TERM AND NON-TRANSFERABILITY OF OPTIONS. Each Option shall
state the time or times which all or part thereof becomes exercisable. No
Option shall be exercisable after the expiration of 10 years from the date it
was granted, and no Option granted to a Participant described in Section 5.2
hereof shall be exercisable after the expiration of five years from the date
it was granted. During the lifetime of the Participant, the Option shall be
exercisable only by the Participant and shall not be assignable or
transferable. In the event of the Participant's death, the Option shall not
be transferable by the Participant other than by will or the laws of descent
and distribution.
7.6 MODIFICATION, EXTENSION, AND RENEWAL OF OPTION. Within the
limitations of the Plan, the Committee may modify, extend, or renew
outstanding Options or accept the cancellation of outstanding Options (to the
extent not previously exercised) for the granting of new Options in
substitution therefor. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Participant, alter or impair any
rights or obligations under any Option previously granted.
7.7 LIMITATION ON GRANT OF INCENTIVE STOCK OPTIONS. In the case of
Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect
to which Incentive Stock Options become exercisable by any Participant for
the first time during any calendar year (under this Plan and all other Plans
maintained by the Corporation, its parent, or its Subsidiaries) shall not
exceed $100,000. The Board or Committee may, however, with the Participant's
consent authorize an amendment to the Incentive Stock Option which renders it
a Nonstatutory Stock Option.
7.8 OTHER PROVISIONS. The Stock Option Agreements authorized under
the Plan may contain such other provisions not inconsistent with the terms of
the Plan (including, without limitation, restrictions upon the exercise of
the Option) as the Committee shall deem advisable.
XIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS, AND BENEFICIARIES
8.1 EMPLOYEE STATUS. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under the Plan to an
Eligible Employee or to Eligible Employees generally.
8.2 NO EMPLOYMENT CONTRACT. Nothing contained in the Plan (or in
the Award Agreements or in any other documents related to the Plan or to
Awards) shall confer upon any Eligible Employee or any Participant any right
to continue in the employ of the Corporation or constitute any contract or
agreement of employment, or interfere in any way with the right of the
Corporation to reduce such person's compensation or to terminate the
employment of such Eligible Employee or Participant, with or without cause,
but nothing contained in the Plan or any document related thereto shall
affect any other contractual right of any Eligible Employee or Participant.
Nothing contained in the Plan (or in the Award Agreements or in any other
documents related to the Plan or the Awards) shall confer upon any director
of the Corporation any right to continue as a director of the Corporation.
8.3 NO TRANSFERABILITY. Awards may be exercised only by, and
amounts payable or shares issuable pursuant to an Award shall be paid only to
or registered only in the name of, the Participant or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Disability, to the Participant's Personal Representative or, if
there is none, to the Participant. Other than by will or the laws of descent
and distribution, no right or benefit under the Plan or any Award, including,
without limitation, any Option or share of Restricted Stock that has not
vested, shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge and any such attempted
action shall be void and no such right or benefit shall be, in any manner,
liable for, or subject to, debts, contract, liabilities, engagements, or
torts of any Eligible Employee, Participant, or Beneficiary, in any case
except as may otherwise be expressly
6
required by applicable law. The Board or the Committee shall disregard any
attempt at transfer, assignment, or other alienation prohibited by the
preceding sentence and shall pay or deliver such cash or shares of Common
Stock in accordance with the provisions of the Plan. Notwithstanding the
foregoing, the Board or the Committee may authorize exercise by or transfers
or payments to a third party in a specific case or more generally; provided,
however, with respect to any option or similar right (including any Stock
Appreciation Right), such discretion may only be exercised to the extent that
applicable rules under Section 16 of the Exchange Act would so permit without
disqualifying the Plan from certain benefits thereunder.
8.4 PLAN NOT FUNDED. No Participant, Beneficiary, or other person
shall have any right, title, or interest in any fund or in any specific asset
(including shares of Common Stock) of the Corporation by reason of any Award
granted hereunder. There shall be no funding of any benefits which may
become payable hereunder. Neither the provisions of the Plan (or of any
documents related hereto), nor the creation or adoption of the Plan, nor any
action taken pursuant to the provisions of the Plan shall create, or be
construed to create, a trust of any kind or a fiduciary relationship between
the Corporation and any Participant, Beneficiary, or other person. To the
extent that a Participant, a Beneficiary, or other person acquires a right to
receive an Award hereunder, such right shall be no greater than the right of
any unsecured general creditor of the Corporation. Awards payable under the
Plan shall be paid in shares of Common Stock or from the general assetscorporate accounting, reporting practices of the
Corporation, and no special or separate fund or depositthe quality and integrity of the financial reports of the
Corporation. It shall be established and no segregation of assets or shares shall be made to assure
payment of such Awards.
8.5 ADJUSTMENT UPON RECAPITALIZATIONS AND CORPORATE CHANGES. If
the outstanding shares of Common Stock are changed into or exchanged for
cash or a different number or kind of shares or securitiesresponsibility of the Corporation, or ifCommittee to maintain free
and open means of communication between the outstanding sharesdirectors, the independent auditors,
and the financial management of the Common Stock are increased,
decreased, exchanged for, or otherwise changed, or if additional shares or
new or different shares or securities are distributedCorporation. Consistent with respectthis function,
the Committee should encourage continuous improvement of, and should foster
adherence to, the outstanding shares of the Common Stock, through a reorganization or merger in
which the Corporation is the surviving entity or through a combination,
consolidation, recapitalization, reclassification, stock split, stock
dividend, reverse stock split, stock consolidation, or other capital change
or adjustment, an appropriate adjustment shall be made in the numberCorporation's policies, procedures and kind
of shares of other consideration that is subject to or may be delivered under
the Plan and pursuant to outstanding Awards. A corresponding adjustment to
the consideration payable with respect to Awards granted prior to any such
change and to the price, if any, to be paid in connection with Restricted
Stock Awards shall also be made as appropriate. Corresponding adjustments
shall be made with respect to Stock Appreciation Rights related to Options to
which they are related. In addition, the Board orpractices at all
levels.
While the Committee may grant
such additional rights inhas the foregoing circumstances as the Board or the
Committee deems to be in the best interest of any Participantresponsibilities and the
Corporation in order to preserve for the Participant the benefits of an Award.
8.6 TERMINATION OF EMPLOYMENT, EXCEPT BY DEATH, DISABILITY, OR
RETIREMENT. If a Participant ceases to be an Employee for any reason other
than his or her death, Disability or Retirement, such Participant shall have
the right, subject to the restrictions of Section 8.3 above, to exercise any
Award at any time within three months after termination of employment, but
only to the extent that, at the date of termination of employment, the
Participant's right to exercise such Award had accrued pursuant to the terms
of the applicable agreement and had not previously been exercised; provided,
however, that if the Participant was terminated (i) "for cause" as defined in
any applicable employment agreement, (ii) pleads or is found guilty of a
felony involving an act of dishonesty or moral turpitude by a court of
competent jurisdiction; (iii) has engaged in serious misconduct; (iv) has
made any material misrepresentation to the Company; (v) has committed a
willful, unexcused breach of his duty in the course of Executive's
employment; (vi) has been guilty of habitual neglect of Executive's duties;
or (vii) has usurped a corporate opportunity, is guilty of fraudulent
embezzlement of property or funds of the Company, or committed any act of
fraud or intentional misrepresentation or any other act involving moral
turpitude, dishonesty, or other misconduct that would constitute a felony,
any Award not exercised in full prior to such termination shall be canceled.
For this purpose, the employment
7
relationship shall be treated as continuing intact while the Participant is
on military leave, sick leave, or other bona fide leave of absence (to be
determined in the sole discretion of the Board or the Committee). The
foregoing notwithstanding, in the case of an Incentive Stock Option,
employment shall not be deemed to continue beyond the 90th day after the
Participant's reemployment rights are guaranteed by statute or by contract.
8.7 DEATH OF PARTICIPANT. If a Participant dies while an Employee,
or after ceasing to be an Employee but during the period while he or she
could have exercised the Award under this Section 8.7, and has not fully
exercised the Award, then the Award may be exercised in full at any time
within 12 months after the Participant's death (but not later than the date
of termination fixed in the applicable agreement), by the executors or
administrators of his or her estate or by any person or persons who have
acquired the Award directly from the Participant by bequest or inheritance,
but only to the extent that, at the date of death, the Participant's right to
exercise such Award had accrued and had not been forfeited pursuant to the
terms of the applicable agreement and had not previously been exercised.
8.8 DISABILITY OF PARTICIPANT. If a Participant ceases to be an
Employee by reason of Disability, such Participant shall have the right to
exercise the Award at any time within 12 months after termination of
employment (but not later than the termination date fixed in the applicable
Agreement), but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable Award Agreement and had not
previously been exercised.
8.9 RETIREMENT OF PARTICIPANT. If a Participant ceases to be an
Employee by reason of Retirement, such Participant shall have the right to
exercise the Award at any time within three months after termination of
employment (but not later than the termination date fixed in the applicable
Award Agreement), but only to the extent that, at the date of termination of
employment, the Participant's right to exercise such Award had accrued
pursuant to the terms of the applicable Award Agreement and had not
previously been exercised.
8.10 RIGHTS AS A STOCKHOLDER. A Participant, or a transferee of a
Participant, shall have no rights as a stockholder with respect to any Shares
covered by his or her Award until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities, or other property),
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 8.5 hereof.
8.11 DEFERRAL OF PAYMENTS. The Board or the Committee may approve
the deferral of any payments that may become due under the Plan. Such
deferrals shall be subject to any conditions, restrictions, or requirements
as the Board or the Committee may determine.
8.12 ACCELERATION OF AWARDS. Immediately prior to the occurrence of
an Event, (i) each Option and Stock Appreciation Right under the Plan shall
become exercisable in full; (ii) Restricted Stock delivered under the Plan
shall immediately vest free of restrictions; and (iii) each other Award
outstanding under the Plan shall be fully vested or exercisable, unless,
prior to the Event, the Board or the Committee otherwise determines that
there shall be no such acceleration or vesting of an Award or otherwise
determines those Awards which shall be accelerated or vested and to the
extent to which they shall be accelerated or vested, or that an Award shall
terminate, or unless in connection with such Event the Board provides (A) for
the assumption of such Awards theretofore granted; or (B) for the
substitution for such Awards of new awards covering securities or obligations
(or any combination thereof) of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind of
shares and prices; or (C) for the payment of the fair market value of the
then outstanding Awards. In addition, the Board or the Committee may grant
such additional rights in the foregoing circumstances as the Board or the
Committee deems to be in the best interest of the Participant and the
Corporation in order to preserve for the Participant the benefits of an
Award. For
8
purposes of this Section 8.12 only, Board shall mean the Board of Directors
of the Corporation as constituted immediately prior to the Event. In
addition, the Board may in its sole discretion accelerate the exercisability
or vesting of any or all Awards outstanding under the Plan in circumstances
under which the Board or the Committee determines such acceleration
appropriate.
IX. MISCELLANEOUS
9.1 TERMINATION, SUSPENSION, AND AMENDMENT. The Board or the
Committee may, at any time, suspend, amend, modify, or terminate the Plan (or
any part thereof) and may, with the consent of a Participant, authorize such
modifications of the terms and conditions of such Participant's Award as it
shall deem advisable; provided that, except as permitted under the provisions
of Section 8.5 hereof, no amendment or modification of the Plan may be
adopted without approval by a majority of the shares of the Common Stock
represented (in person or by proxy) at a meeting of stockholders at which a
quorum is present and entitled to vote thereat, if such amendment or
modification would:
(i) materially increase the benefits accruing to
Participants under the Plan within the meaning of Rule 16b-3 under the
Exchange Act or any successor provision;
(ii) materially increase the aggregate number of shares which
may be delivered pursuant to Awards granted under the Plan; or
(iii) materially modify the requirements of eligibility for
participation in the Plan.
Neither adoption of the Plan nor the provisions hereof shall limit the
authority of the Board to adopt other Plans or to authorize other payments of
compensation and benefits under applicable law. No Awards under the Plan may
be granted or amended during any suspension of the Plan or after its
termination. The amendment, suspension, or termination of the Plan shall
not, without the consent of the Participant, alter or impair any rights or
obligations pertaining to any Awards granted under the Plan prior to such
amendment, suspension, or termination.
9.2 NO FRACTIONAL SHARES. No Award or installment thereof shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.
9.3 TAX WITHHOLDING. As required by law, federal, state, or local
taxes that are subject to the withholding of tax at the source shall be
withheld by the Corporation as necessary to satisfy such requirements. The
Corporation is entitled to require deduction from other compensation payable
to each Participant or, in the alternative: (i) the Corporation may require
the Participant to advance such sums; or (ii) if a Participant elects, the
Corporation may withhold (or require the return of) Shares having the Fair
Market Value equal to the sums required to be withheld. If the Participant
elects to advance such sums directly, written notice of that election shall
be delivered prior to such exercise and, whether pursuant to such election or
pursuant to a requirement imposed by the Corporation, payment in cash or by
check of such sums for taxes shall be delivered within 10 days after the
exercise date. If the Participant elects to have the Corporation withhold
Shares (or be entitled to the return of Shares) having a Fair Market Value
equal to the sums required to be withheld, the value of the Shares to be
withheld (or returned) will be equal to the Fair Market Value on the date the
amount of tax to be withheld (or subject to return) is to be determined (the
"Tax Date").
9.4 RESTRICTIONS ON ELECTIONS MADE BY PARTICIPANTS. Elections by
Participants to have Shares withheld (or subject to return) for this purpose
will be subject to the following restrictions: (i) the election must be made
prior to the Tax Date; (ii) the election must be irrevocable; (iii) the
election will be subject to the Board's disapproval; and (iv) if the
Participant is an "officer" within the meaning of Section 16 of the Exchange
Act, the election shall be subject to such additional restrictions as
9
the Board or the Committee may impose in an effort to secure the benefits of
any regulations thereunder.
9.5 LIMITATIONS ON THE CORPORATION'S OBLIGATIONS. The Corporation
shall not be obligated to issue shares and/or distribute cash to the
Participant upon any Award exercise until such payment has been received or
Shares have been withheld, unless withholding (or offset against a cash
payment) as of or prior to the exercise date is sufficient to cover all such
sums due or which may be due with respect to such exercise. In addition, the
Board or the Committee may grant to a Participant a cash bonus in any amount
required by federal, state, or local tax law to be withheld with respect to
an Award.
9.6 COMPLIANCE WITH LAWS. The Plan, the granting of Awards under
the Plan, the Stock Option Agreements, and Stock Purchase Agreements and the
delivery of Options, Shares, and Awards (and/or the payment of money or
Common Stock) pursuant thereto and the extension of any loans hereunder are
subject to such additional requirements as the Board or the Committee may
impose to assure or facilitate compliance with all applicable federal and
state laws, rules and regulations (including, without limitation, securities
laws and margin requirements) and to such approvals by any regulatory or
governmental agency which may be necessary or advisable in connection
therewith. In connection with the administration of the Plan or the grant of
any Award, the Board or the Committee may impose such further limitations or
conditions as in its opinion may be required or advisable to satisfy, or
secure the benefits of, applicable regulatory requirements (including those
rules promulgated under Section 16 of the Exchange Act or those rules that
facilitate exemption from or compliance with the Securities Act or the
Exchange Act), the requirements of any stock exchange upon which such shares
or shares of the same class are then listed, and any blue sky or other
securities laws applicable to such shares.
9.7 GOVERNING LAWS. The Plan and all Awards granted under the Plan
and the documents evidencing Awards shall be governed by, and construed in
accordance with, the laws of the State of Utah as the Corporation's
principle place of business.
9.8 SECURITIES LAW REQUIREMENTS.
(a) LEGALITY OF ISSUANCE. The issuance of any Shares upon
the exercise of any Option and the grant of any Option shall be contingent
upon the following:
(i) the Corporation and the Participant shall have
taken all actions required to register the Shares under the Securities Act of
1933, as amended (the "Securities Act"), and to qualify the Option and the
Shares under any and all applicable state securities or "blue sky" laws or
regulations, or to perfect an exemption from the respective registration and
qualification requirements thereof;
(ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or
Federal law shall have been satisfied.
(b) RESTRICTIONS ON TRANSFER. Regardless of whether the
offering and sale of Shares under the Plan has been registered under the
Securities Act or has been registered or qualified under the securities laws
of any state, the Corporation may impose restrictions on the sale, pledge, or
other transfer of such Shares (including the placement of appropriate legends
on stock certificates) if, in the judgment of the Corporation and its
counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Securities Act, the securities laws of
any state, or any other law. In the event that the sale of Shares under the
Plan is not registered under the Securities Act
10
but an exemption is available which required an investment representation or
other representation, each Participant shall be required to represent that
such Shares are being acquired for investment, and not with a view to the
sale or distribution thereof, and to make such other representations as are
deemed necessary or appropriate by the Corporation and its counsel. Any
determination by the Corporation and its counsel in connection with any of
the matterspowers set forth in this
Section 9.8(b) shall be conclusiveCharter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Corporation's financial statements are complete and binding
on all persons. Stock certificates evidencing Shares acquired underaccurate
and are in accordance with generally accepted accounting principles. This is the
Plan
pursuantresponsibility of management and the independent auditor. Nor is it the duty of
the Committee to an unregistered transaction shall bear a restrictive legend
reading substantially as followsconduct investigations, to resolve disagreements, if any,
between management and such other restrictive legends as are
requiredthe independent auditor or deemed advisable underto assure compliance with laws
and regulations and the provisions of any applicable law:
THESE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN ISSUED
IN RELIANCE UPON EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS.
THESE SHARES OR ANY INTEREST HEREIN MAY NOT, BE OFFERED, SOLD OR
TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.
(c) REGISTRATION OR QUALIFICATION OF SECURITIES. The
Corporation may, but shall not be obligated to register or qualifyCorporation's business conduct guidelines.
In carrying out its responsibilities, the issuance of Awards and/or the sale of Shares under the Securities Act or any
other applicable law. The Corporation shall not be obligated to take any
affirmative actionCommittee believes its policies and
procedures should remain flexible in order to causebest react to changing conditions
and to ensure to the issuance of Awards ordirectors and shareholders that the sale of
Shares under the Plan to comply with any law.
(d) EXCHANGE OF CERTIFICATES. If, in the opinioncorporate accounting
and reporting practices of the Corporation and its counsel, any legend placed on a stock certificate
representing shares issued under the Plan is no longer required, the holder
of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares but lacking such legend.
9.9 EXECUTION. To record the adoption of the Plan in the form set
forth above by the Board effective as of September 20, 1999, the Corporation
has caused this Plan to be executed in the name and on behalf of the
Corporation where provided below by an officer of the Corporation thereunto
duly authorized.
HYDROMAID INTERNATIONAL, INC.
By:
-------------------------------------
Culley W. Davis, Chief Executive Officer
ATTEST:
- -------------------------------
Bruce H. Haglund, SECRETARY
(Corporate Seal)
11
EXHIBIT A
INITIAL GRANTS
EMPLOYEES/SERVICE PROVIDERS
(All Options to Vest Equally Over Three Years)
NAME ISO/NQ NUMBER
--------------------- ---------- ----------
Benjamin Aguayo ISO 22,500
Jennifer Lee ISO 10,000
Heather Bateman ISO 10,000
Mark S. Brewer ISO 10,000
Lorene B. Childs ISO 20,000
Culley W. Davis ISO 250,000
Tina M. Ellis ISO 10,000
Tom L. Grissom, Sr. ISO 10,000
James Hadlock ISO 10,000
Stacey Holdaway ISO 10,000
Paul Kujanpaa ISO 30,000
Ronald L. LaFord ISO 10,000
Tyson LaFord ISO 10,000
John W. Nagel ISO 10,000
Matthew Nagel ISO 2,500
Edward B. Paulsen NQ 25,000
DIRECTORS
(All Options to Vest in
Quarterly Increments Over One Year)
NAME ISO/NQ NUMBER
--------------------- ---------- ----------
Culley W. Davis ISO 50,000
Ronald L. LaFord ISO 50,000
Mark S. Brewer ISO 50,000
John W. Nagel ISO 50,000
Bruce H. Haglund NQ 50,000
Bradley E. Zarbock NQ 50,000
-----------------------
Initial grants total 750,000.
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
HYDROMAID INTERNATIONAL, INC.
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made as of
____________________________ (the "Effective Date") by and between HYDROMAID
INTERNATIONAL, INC., a Utah corporation (the "COMPANY"), and __________________
(the "OPTIONEE") pursuant to the COMPANY's 1999 Stock Option and Incentive Plan
(the "Plan").
The Board of Directors of the COMPANY has adopted the Plan as of
September 20, 1999 to which this Agreement and the option granted hereunder
("Option") are subject, and the Board of Directors of the COMPANY has
determined that it is to the advantage and in the best interest of the
COMPANY and its stockholders to grant the Option provided for herein to
OPTIONEE as an inducement to remain in the employ of the COMPANY, and as an
incentive for increased effort during such service.
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and
option to purchase from the COMPANY, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of shares of the
authorized $.001 par value Common Stock of the COMPANY, at the purchase
price of $1.00 per share (being not less than the fair market value per share
of said stock on the date hereof) as OPTIONEE may from time to time elect,
exercisable on or after the Effective Date hereof for a period of 10 years
(the latter date hereinafter referred to as the "Terminal Date"), all in accordance with all
requirements and are of the schedule attached heretohighest quality.
The Committee's primary duties and marked Exhibit "A." No
partial exerciseresponsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
o Review and appraise the audit efforts of such Option may be for less than 250 full shares, unless
the number purchased isCorporation's independent
accountants and financial management of the total number atcorporation.
o Provide an open avenue of communication among the time purchasable under the
Option. In no event shall the COMPANY be required to transfer fractional
shares to OPTIONEE. This Agreementindependent
accountants, financial and senior management, and the Option granted hereunder are
subjectBoard.
EXHIBIT "A"
-1-
The Committee will primarily fulfill these responsibilities by carrying out the
activities enumerated in Section IV of this Charter.
MEETINGS
The Committee shall meet at least four (4) times annually, or more frequently as
circumstances dictate. As part of its responsibility to foster open
communication, the Plan, a copyCommittee should meet at least annually with management, and
the independent accountants in separate executive sessions to discuss any
matters that the Committee or each of which is attached hereto and incorporated
herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shallthese groups believe should be exercisable, fromdiscussed
privately. In addition, the Effective Date, as hereinabove provided, by written
notice which shall;
2.1 state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name
the shares are to be issued (if the shares are issued to individuals), the
names, addresses, and Social Security Numbers of such persons;
2.2 contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as
are required by lawCommittee or as may be satisfactory to the COMPANY's counsel;
2.3 be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or persons
other than the OPTIONEE, be accompanied by proof, satisfactory to counsel for
the COMPANY, of the right of such person or persons to exercise the Option;
and
2.4 be accompanied by a payment for the purchase price of
those shares with respect to which the Option is being exercised in the form
of cash or check.
1
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates
for shares of Common Stock as to which the Option shall be exercised shall
be registered in the name of the person or persons exercising the Option.
The COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) complianceits chair should meet with the
terms of this Agreement, (b)
compliance with all then applicable requirements of law;independent accountants and (c) admission of
such shares for trading privileges on any stock exchange on whichmanagement annually to review the stock
may then be listed.
4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the
number of shares of Common Stock of the COMPANY subject to be granted upon
exercise of this Option which it now holds as authorized and unissued shares.
If the Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject
thereto shall be free from any restrictions occasioned by this Option
Agreement. If the COMPANY has been listed on a stock exchange, the COMPANY
will not be required to issue or deliver any certificate or certificates for
shares to be issued hereunder until such shares have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange on which outstanding shares of the same class may then be listed and
until the COMPANY has taken such steps as may, in the opinion of counsel for
the COMPANY, be required by law and applicable regulations, including the
rules and regulations of the Securities and Exchange Commission, and state
blue sky laws and regulations, in connection with the issuance or sale of
such shares. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted
hereunder to the extent such rights shall not have been exercised, shall
terminate and become null and void on the Terminal Date or sooner if OPTIONEE
ceases to be in the continuous employ of the COMPANY (whether by resignation,
retirement, dismissal, or otherwise), except that: (a) in the event of
termination of such employment for any reason other than the permanent
disability of OPTIONEE, as defined in Section 22(e)(3) of the Internal
Revenue Code, as amended and as presently in effect (the "Code"), or for
cause, OPTIONEE may at any time within a period of three months thereafter
exercise the Option granted hereunder to the extent such Option was
exercisable by OPTIONEE on the date of the termination of such employment;
and (b) in the event of the permanent disability of OPTIONEE while in the
employ of the COMPANY, the Option granted hereunder, to the extent that
OPTIONEE was entitled to exercise such Option on the date of OPTIONEE's
disability, may be exercised within one year after such termination as a
result of disability by OPTIONEE or the person or persons to whom OPTIONEE's
rights under the Option granted hereby shall pass by will or by the
applicable laws of descent and distribution. Notwithstanding anything herein
to the contrary, however, the Option and all rights herein granted shall be
exercisable in all events six months prior to the Terminal Date and in all
events terminate and become null and void 10 years from the date of this
Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of OPTIONEE, the
Option and all rights granted hereunder shall be exercisable only by
OPTIONEE, and except as in paragraph 5 otherwise provided, the Option and all
rights granted hereunder shall not be transferred, assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise), and shall
not be subject to execution, attachment, or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of
such Option or of such rights contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon such Option or such rights,
such Option and such rights shall immediately become null and void.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise
the Option granted hereunder as to the first increment of shares as shown in
Exhibit "A," OPTIONEE must remain in the continuous employ of the COMPANY for
the period of at least six months from the date hereof.
8. STOCK AS INVESTMENT. By accepting this Option, the OPTIONEE
acknowledges for OPTIONEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired
2
for investment and not for distribution, and upon the transfer of any or all
of the shares subject to the Option granted hereunder, the OPTIONEE, or heirs
or legatees receiving such shares, shall deliver to the COMPANY a
representation in writing that such shares are being acquired in good faith
for investment and not for distribution. The OPTIONEE shall not dispose
(whether by sale, exchange, gift, or any other transfer) of any shares of
stock acquired pursuant to the exercise of the Option granted hereunder,
within two years after the grant of this Option or one year after the
transfer of such shares to him upon his exercise of such Option. OPTIONEE
further recognizes that any disposition (whether a sale, exchange, gift, or
any other transfer) of any shares of stock prior to the aforementioned
periods will not only be a breach of this Agreement, but will also disqualify
the Option as a Incentive Stock Option under Section 422A of the Code.
9. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of
any change in the Common Stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, thatCorporation's
financials in accordance with Section IV(3) below.
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the provisions of Section 425(a) of the Code, a new Option
may be substituted for the Option granted hereunder or such Option may be
assumed by an employer corporation, or a parent or subsidiary of such
corporation, in connection with any transaction to which such Section is
applicable. Upon the dissolution or liquidation of the COMPANY other than in
connection with a transaction to which such Section is applicable, the Option
granted hereunder shall terminate and become null and void, but OPTIONEE
shall have the right immediately prior to such dissolution or liquidation to
exercise the Option granted hereunder to the full extent not before exercised.
10. RIGHTCommittee shall:
DOCUMENTS/REPORTS REVIEW
1. REVIEW AND UPDATE THIS CHARTER PERIODICALLY (AT LEAST ANNUALLY) AS
STOCKHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges
of a stockholder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the stockholder of
record on the books of the COMPANY.
11. NOTICES. Any notice to be given under the terms of this
Agreement shall be addressed to the COMPANY in care of its Secretary at the
main offices for the transaction of its business, and any notice to be given
to OPTIONEE shall be addressed to OPTIONEE at the address set forth above, or
at such other place as either party may hereafter designate in writing to the
other. Any such notice shall be deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as herein required, certified
and deposited (postage and certification prepaid) in a post office regularly
maintained by the United States Government.
12. BENEFITSCONDITIONS DICTATE.
2. REVIEW THE CORPORATION'S ANNUAL FINANCIAL STATEMENTS AND ANY REPORTS OR
OTHER FINANCIAL INFORMATION SUBMITTED TO ANY GOVERNMENTAL BODY, OR THE
PUBLIC, INCLUDING ANY CERTIFICATION, REPORT, OPINION, OR REVIEW RENDERED BY
THE INDEPENDENT ACCOUNTANTS.
3. REVIEW WITH FINANCIAL MANAGEMENT AND THE INDEPENDENT ACCOUNTANTS, THE
ANNUAL REPORT ON FORM 10-K PRIOR TO ITS FILING OR PRIOR TO THE RELEASE OF
AGREEMENT. This Agreement shall inure to the
benefit of and be binding upon each successor of the COMPANY. All
obligations imposed upon the OPTIONEE and all rights granted to the COMPANY
under this Agreement shall be binding upon the OPTIONEE's heirs, legal
representatives, and successors. This Agreement shall be the sole and
exclusive source of any and all rights which the OPTIONEE, OPTIONEE's heirs,
legal representatives, or successors may have in respect to the Plan or any
options or Common Stock granted or issued thereunder, whether to OPTIONEE,
or to any other person.
13.EARNINGS. THE CHAIRMAN OF THE COMMITTEE MAY REPRESENT THE ENTIRE COMMITTEE
FOR PURPOSES OF THIS REVIEW.
4. ISSUE ANNUALLY A REPORT TO BE INCLUDED IN THE CORPORATION'S PROXY STATEMENT
AS REQUIRED BY THE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.
5. DISCUSS WITH MANAGEMENT AND/OR THE CORPORATION'S GENERAL COUNSEL ANY LEGAL
MATTERS (INCLUDING THE STATUS OF PENDING LITIGATION) THAT MAY HAVE A
MATERIAL IMPACT ON THE CORPORATION'S FINANCIAL STATEMENTS, AND ANY MATERIAL
REPORTS OR INQUIRES FROM REGULATORY OR GOVERNMENTAL AGENCIES.
INDEPENDENT ACCOUNTANTS
1. RECOMMEND TO THE BOARD THE SELECTION OF THE INDEPENDENT ACCOUNTANTS,
CONSIDERING INDEPENDENCE AND EFFECTIVENESS AND APPROVE THE FEES AND OTHER
COMPENSATION TO BE PAID TO THE INDEPENDENT ACCOUNTANTS. ON AN ANNUAL BASIS,
THE COMMITTEE SHOULD REVIEW AND DISCUSS WITH THE ACCOUNTANTS ALL
SIGNIFICANT RELATIONSHIPS THE ACCOUNTANTS HAVE WITH THE CORPORATION TO
DETERMINE THE ACCOUNTANTS' INDEPENDENCE. THE COMMITTEE SHALL BE RESPONSIBLE
FOR OBTAINING A FORMAL WRITTEN STATEMENT FROM THE INDEPENDENT ACCOUNTANTS
DELINEATING ALL RELATIONSHIPS BETWEEN THE ACCOUNTANTS AND THE CORPORATION
CONSISTENT WITH INDEPENDENCE STANDARDS BOARD STANDARD 1.
2. REVIEW THE PERFORMANCE OF THE INDEPENDENT ACCOUNTANTS AND APPROVE ANY
PROPOSED DISCHARGE OF THE INDEPENDENT ACCOUNTANTS WHEN CIRCUMSTANCES
WARRANT.
3. PERIODICALLY CONSULT WITH THE INDEPENDENT ACCOUNTANTS OUT OF THE PRESENCE
OF FINANCIAL MANAGEMENT ABOUT INTERNAL REVENUE CODE. All Options granted hereunder are
granted pursuant to the Internal Revenue Code, as amended, as it is in force
and effect at the date of grant.
14. RESOLUTIONCONTROLS AND THE FULLNESS AND
ACCURACY OF DISPUTES. Any dispute or disagreement which
should arise under, or as a result of, or in any way relate to, the
interpretation, construction, or application of this Agreement will be
submitted first to the Board of Directors for resolution and then to an
appropriate court within the State of Utah, if necessary.
3
THE CORPORATION'S FINANCIAL STATEMENTS.
FINANCIAL REPORTING PROCESSES
1. IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President, to be sealed by its corporate seal,
and attested by its Secretary, and OPTIONEE has hereunto set his or her hand
the date and year first above written, which is the time of the granting of
the Option hereunder.
"COMPANY" "OPTIONEE"
HYDROMAID INTERNATIONAL, INC.,
a Nevada corporation
By:
---------------------------------------- -------------------------------
Culley W. Davis, CHIEF EXECUTIVE OFFICER
-------------------------------
(Corporate Seal)
ATTEST:
By:
-------------------------------
Bruce H. Hagland, SECRETARY
4
CONSULTATION WITH THE INDEPENDENT ACCOUNTANTS AND THE FINANCIAL
MANAGEMENT, REVIEW THE INTEGRITY OF THE CORPORATION'S FINANCIAL REPORTING
PROCESSES, BOTH INTERNAL AND EXTERNAL.
2. CONSIDER THE INDEPENDENT ACCOUNTANTS' JUDGMENTS ABOUT THE QUALITY AND
APPROPRIATENESS OF THE CORPORATION'S ACCOUNTING PRINCIPLES AS APPLIED IN
ITS FINANCIAL REPORTING.
3. CONSIDER AND APPROVE, IF APPROPRIATE, MAJOR CHANGES TO THE CORPORATION'S
AUDITING AND ACCOUNTING PRINCIPLES AND PRACTICES AS SUGGESTED BY THE
INDEPENDENT ACCOUNTANTS, OR FINANCIAL MANAGEMENT.
PROCESS IMPROVEMENT
1. ESTABLISH REGULAR AND SEPARATE SYSTEMS OF REPORTING TO THE COMMITTEE BY
EACH OF FINANCIAL MANAGEMENT, AND THE INDEPENDENT ACCOUNTANTS REGARDING ANY
SIGNIFICANT JUDGMENTS MADE IN FINANCIAL MANAGEMENT'S PREPARATION OF THE
FINANCIAL STATEMENTS AND THE VIEW OF EACH AS TO APPROPRIATENESS OF SUCH
JUDGMENTS.
EXHIBIT "A"
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT-2-
2. FOLLOWING COMPLETION OF THE ANNUAL AUDIT, REVIEW SEPARATELY WITH EACH OF
FINANCIAL MANAGEMENT, AND THE INDEPENDENT ACCOUNTANTS, ANY SIGNIFICANT
DIFFICULTIES ENCOUNTERED DURING THE COURSE OF THE AUDIT, INCLUDING ANY
RESTRICTIONS ON THE SCOPE OF WORK OR ACCESS TO REQUIRED INFORMATION.
3. REVIEW ANY SIGNIFICANT DISAGREEMENT AMONG FINANCIAL MANAGEMENT AND THE
1999 STOCK OPTIONINDEPENDENT ACCOUNTANTS IN CONNECTION WITH THE PREPARATION OF THE FINANCIAL
STATEMENTS.
4. REVIEW WITH THE INDEPENDENT ACCOUNTANTS AND INCENTIVE PLANFINANCIAL MANAGEMENT THE EXTENT
TO WHICH CHANGES OR IMPROVEMENTS IN FINANCIAL OR ACCOUNTING PRACTICES, AS
APPROVED BY THE COMMITTEE, HAVE BEEN IMPLEMENTED; PROVIDED SUCH REVIEW
SHALL BE CONDUCTED AT AN APPROPRIATE TIME SUBSEQUENT TO IMPLEMENTATION OF
HYDROMAID INTERNATIONAL, INC.
-----------------------------
EXERCISE SCHEDULE
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TOCHANGES OR IMPROVEMENTS, AS DECIDED BY THE 1999 STOCK OPTIONCOMMITTEE.
COMPLIANCE
1. REVIEW ACTIVITIES, ORGANIZATIONAL STRUCTURE, AND INCENTIVE PLANQUALIFICATIONS OF
HYDROMAID INTERNATIONAL, INC.FINANCIAL MANAGEMENT OF THE CORPORATION.
2. PERFORM ANY OTHER ACTIVITIES CONSISTENT WITH THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made
as of _________________________ (the "Effective Date") by and between
HYDROMAID INTERNATIONAL, INC., a Utah corporation, (the "COMPANY") and
______________________, (the "OPTIONEE"), pursuant to the COMPANY's 1999
Stock Option and Incentive Plan (the "Plan").
The Board of Directors of the COMPANY has adopted the Plan as of
September 20, 1999 to which this Agreement and the option granted hereunder
("Option") are subject, and the Board of Directors of the COMPANY has
determined that it is to the advantage and in the best interest of the
COMPANY and its stockholders to grant the Option provided for herein to
OPTIONEE to afford additional incentive to consultants, vendors, customers,
and others to increase their efforts in providing significant services to the
COMPANY.
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and
Option to purchase from the COMPANY, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of _________________ shares of the
authorized no par value Common Stock of the COMPANY, at the purchase price
of $1.00 per share (being not less than 85% of the fair market value per
share of said stock on the date hereof) as OPTIONEE may from time to time
elect, exercisable on or after the Effective Date hereof for a period of 10
years (the latter date hereinafter referred to as the "Terminal Date"), all
in accordance with the schedule attached hereto and marked Exhibit "A." No
partial exercise of such Option may be for less than 250 full shares, unless
the number purchased is the total number at the time purchasable under the
option. In no event shall the COMPANY be required to transfer fractional
shares to OPTIONEE. This Agreement and the Option granted hereunder are
subject to the Plan, a copy of which is attached hereto and incorporated
herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from time to time, as hereinabove provided, by written notice
which shall;
2.1 state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name
the shares are to be issued (if the shares are issued to individuals), the
names, addresses, and Social Security Numbers of such persons;
2.2 contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as
are required by law or as may be satisfactory to the COMPANY's counsel;
2.3 be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or persons
other than the OPTIONEE, be accompanied by proof, satisfactory to counsel for
the COMPANY, of the right of such person or persons to exercise the Option;
and
2.4 be accompanied by a payment for the purchase price of
those shares with respect to which the Option is being exercised in the form
of cash or check.
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates
for shares of Common Stock as to which the Option shall be exercised shall
be registered in the name of the person or persons exercising the Option.
The COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b)
compliance with all then applicable requirements of law; and (c)
1
admission of such shares for trading privileges on any stock exchange on
which the stock may then be listed.
4. STOCK SUBJECT TOCHARTER, THE
OPTION. The COMPANY shall set aside the
number of shares of Common Stock of the COMPANY subject to be granted upon
exercise of this Option which it now holds as authorized and unissued shares.
If the Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject
thereto shall be free from any restrictions occasioned by this Option
Agreement. If the COMPANY has been listed on a stock exchange, the COMPANY
will not be required to issue or deliver any certificate or certificates for
shares to be issued hereunder until such shares have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange on which outstanding shares of the same class may then be listed and
until the COMPANY has taken such steps as may, in the opinion of counsel for
the COMPANY, be required by law and applicable regulations, including the
rules and regulations of the Securities and Exchange Commission, and state
blue sky laws and regulations, in connection with the issuance or sale of
such shares. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted
hereunder to the extent such rights shall not have been exercised, shall
terminate and become null and void on the Terminal Date or sooner if OPTIONEE
ceases to provide service to the COMPANY (referred to as "employment" for
purposes of this Agreement) (whether by resignation, retirement, dismissal,
or otherwise), except that: (a) in the event of termination of such
employment for any reason other than the permanent disability of OPTIONEE, as
defined in Section 22(e)(3) of the Internal Revenue Code, as amended and as
presently in effect (the "Code"), or for cause, OPTIONEE may at any time
within a period of three months thereafter exercise the Option granted
hereunder to the extent such Option was exercisable by OPTIONEE on the date
of the termination of such employment; and (b) in the event of the permanent
disability of OPTIONEE while in the employ of the COMPANY, the Option granted
hereunder, to the extent that OPTIONEE was entitled to exercise such Option
on the date of OPTIONEE's disability, may be exercised within one year after
such termination as a result of disability by OPTIONEE or the person or
persons to whom OPTIONEE's rights under the Option granted hereby shall pass
by will or by the applicable laws of descent and distribution.
Notwithstanding anything herein to the contrary, however, the Option and all
rights herein granted shall be exercisable in all events six months prior to
the Terminal Date and in all events terminate and become null and void 10
years from the date of this Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of OPTIONEE, the
Option and all rights granted hereunder shall be exercisable only by OPTIONEE
or OPTIONEE's rightful assigns.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise
the Option granted hereunder as to the first increment of shares as shown in
Exhibit "A," OPTIONEE must remain in the continuous employ of the COMPANY for
the period of at least six months from the date hereof.
8. STOCKCORPORATION'S BY-LAWS AND GOVERNING LAW, AS INVESTMENT. By accepting this Option, the OPTIONEE
acknowledges for OPTIONEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired for investment and not for
distribution, and upon the transfer of any or all of the shares subject to
the Option granted hereunder, the OPTIONEE, or heirs or legatees receiving
such shares, shall deliver to the COMPANY a representation in writing that
such shares are being acquired in good faith for investment and not for
distribution.
9. RECLASSIFICATION, CONSOLIDATION,THE COMMITTEE OR MERGER. In the event of
any change in the Common Stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option
may be substituted for the Option granted hereunder or such Option may be
assumed by an employer corporation, or a parent or subsidiary of such
corporation, in connection with any transaction to which such Section is
applicable. Upon the dissolution or liquidation of the COMPANY other than in
connection with a transaction to which such Section is applicable, the Option
2
granted hereunder shall terminate and become null and void, but OPTIONEE
shall have the right immediately prior to such dissolution or liquidation to
exercise the Option granted hereunder to the full extent not before exercised.
10. RIGHT AS STOCKHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs, or legatees, shall be or have any rights or privileges
of a stockholder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the stockholder of
record on the books of the COMPANY.
11. NOTICES. Any notice to be given under the terms of this
Agreement shall be addressed to the COMPANY in care of its Secretary at the
main offices for the transaction of its business, and any notice to be given
to OPTIONEE shall be addressed to OPTIONEE at the address set forth above, or
at such other place as either party may hereafter designate in writing to the
other. Any such notice shall be deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as herein required, certified,
and deposited (postage and certification prepaid) in a post office regularly
maintained by the United States Government.
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the
benefit of and be binding upon each successor of the COMPANY. All
obligations imposed upon the OPTIONEE and all rights granted to the COMPANY
under this Agreement shall be binding upon the OPTIONEE's heirs, legal
representatives, and successors. This Agreement shall be the sole and
exclusive source of any and all rights which the OPTIONEE, OPTIONEE's
assigns, heirs, legal representatives, or successors may have in respect to
the Plan or any options or Common Stock granted or issued thereunder,
whether to OPTIONEE, or to any other person.
13. RESOLUTION OF DISPUTES. Any dispute or disagreement which
should arise under, or as a result of, or in any way relate to, the
interpretation, construction, or application of this Agreement will be
submitted first to the Board of Directors for resolution and then to an
appropriate court within the State of Utah, if necessary.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President, to be sealed by its corporate seal,
and attested by its Secretary, and OPTIONEE has hereunto set his or her hand
the date and year first above written, which is the time of the granting of
the Option hereunder.
"COMPANY" "OPTIONEE"
HYDROMAID INTERNATIONAL, INC.,
a Nevada corporation
By:
------------------------------------------ -------------------------------
Culley W. Davis, CHIEF EXECUTIVE OFFICER
-------------------------------
(Corporate Seal)
ATTEST:
By:
-------------------------------
Bruce H. Hagland, SECRETARY
3
THE BOARD DEEM
NECESSARY OR APPROPRIATE.
EXHIBIT "A"
NON-QUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1999 STOCK OPTION AND INCENTIVE PLAN
OF
HYDROMAID INTERNATIONAL, INC.
-----------------------------
EXERCISE SCHEDULE
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
4-3-
HYDROMAID INTERNATIONAL, INC.
PROXY FORM FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 20, 1999MAY 19, 2001
The undersigned hereby constitutes and appoints Culley W. Davis and Bruce
H. Haglund, and each of them, the true and lawful attorneys, agents, and proxies
of the undersigned, with full power of substitution, to vote with respect to all
the shares of Common Stock, par value $.001, of HYDROMAID INTERNATIONAL, INC.
(the "Company"), standing in the name of the undersigned at the close of
business on October 1, 1999,April 12, 2000, at the Annual Meeting of Stockholders to be held November 20, 1999,May
19, 2001, and at any and all adjournments and postponements thereof, to vote:
1. Election of Directors:
_____ FOR all nominees listed below
--- (Except as marked to the contrary below)
_____ WITHHOLD AUTHORITY CULLY(Circle nominees for
--- whom voting authority is to be withheld.)
CULLEY W. DAVIS RONALD L. LAFORDBRUCE H. HAGLUND MARK S. BREWER
JOHN W. NAGEL BRUCE H. HAGLUND BRADLEY E. ZARBOCK J. STEVEN YOUNG
2. To approve the Company's 1999 Stock Option and Incentive Plan providing
for a total of 1,200,000 shares of the Company's Common Stock to be set
aside for grant as approved by the Board of Directors:
_____ FOR _____ AGAINST _____ ABSTAIN
3. To consider and ratify the appointment of SQUAR, MILNER, REEHL &
REEHL,WILLIAMSON, LLP as independent auditorauditors of the Company for the fiscal year
ending December 31, 1999:
_____2001:
FOR _____ AGAINST _____ ABSTAIN
4.--- --- ---
3. In their discretion, the Board of Directors is authorized to vote this
Proxy upon such other matters as may properly come before the meeting or
any adjournment or postponement thereof.
The shares represented by this Proxy will be voted in the manner directed
herein by the undersigned stockholder. If no directions to the contrary are
made, this Proxy will be voted FOR the election of all of the director nominees
named above and FOR approval of ProposalsProposal 2 3, and 4 if necessary.
DATED:___________________, 1999.
[LABEL] ----------------------------------- _______________________, 2001
------------------------------------
(Signature)
-----------------------------------------------------------------------
(Signature, if held jointly)
IMPORTANT: Please sign exactly as your name appears at the left. Each joint
owner should sign. Executors, administrators, and trustees should give full
title. If a corporation, please sign in full corporate name by an authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
- -------------------------------------------------------------------------------
TO VOTE BY PROXY, PLEASE MARK, SIGN, DATE AND
RETURN THIS PAGE IN THE ENCLOSED ENVELOPE PROMPTLY.
- -------------------------------------------------------------------------------Please mark, sign, date, and return promptly.
THIS PROXY IS BEING SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF HYDROMAID INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1999
HYDROMAID INTERNATIONAL, INC.
You are cordially invited to attend the Annual Meeting of
Stockholders of HYDROMAID INTERNATIONAL, INC. (the "Company"), which will be
held Saturday, November 20, 1999, at the Salt Palace Convention Center, 90
South West Temple, Salt Lake City, Utah 84101,telephone number (801)
521-2822, at 7:00 p.m. local time, or any adjournment thereof for the
following purposes:
1. To elect Company directors for the upcoming year;
2. To approve the Company's 1999 Stock Option and Incentive Plan
providing for a total of 1,200,000 shares of the Company's Common Stock to be
set aside for grant as approved by the Board of Directors;
3. To consider and ratify the appointment of SQUAR, MILNER & REEHL,
LLP as independent auditor of the Company for the fiscal year ending December
31, 1999; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 1,
1999 will be entitled to vote at the Annual Meeting or adjournment thereof.
By Order of the Board of Directors
/s/ Culley W. Davis
----------------------------------
Culley W. Davis
Chairman of the Board
October 20, 1999
IMPORTANT
PLEASE COMPLETE, DATE, SIGN, AND MAIL PROMPTLY THE ENCLOSED PROXY FORM IN THE
POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO
DO SO EVEN THOUGH YOU HAVE RETURNED YOUR PROXY.