UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant|_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
ADVANCED LUMITECH, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
ADVANCED LUMITECH, INC.
8C PLEASANT STREET S., FIRST FLOOR
SOUTH NATICK, MASSACHUSETTS 01760
July 31, 2006
To Our Stockholders:
On behalf of the Board of Directors of Advanced Lumitech, Inc. d/b/a Brightec, I cordially
invite you to attend the Special Meeting of Stockholders to be held on August 18, 2006, at 10:30
A.M., Boston time, at the Public Meeting Room of the South Natick Public Library, in South Natick,
Massachusetts.
The accompanying Notice of Meeting and Proxy Statement cover the details of the matters to
be presented.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE SPECIAL MEETING, I URGE THAT YOU PARTICIPATE BY
COMPLETING AND RETURNING YOUR PROXY CARD AS SOON AS POSSIBLE. YOUR VOTE IS IMPORTANT AND WILL BE
GREATLY APPRECIATED. RETURNING YOUR PROXY CARD WILL ENSURE THAT YOUR VOTE IS COUNTED IF YOU LATER
DECIDE NOT TO ATTEND THE SPECIAL MEETING.
Cordially,
ADVANCED LUMITECH, INC.
/s/ Patrick Planche
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Patrick Planche
Chief Executive Officer
ADVANCED LUMITECH, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 18, 2006
To Our Stockholders:
You are cordially invited to attend the Special Meeting of the Stockholders, and any
adjournments or postponements thereof, of Advanced Lumitech, Inc. d/b/a Brightec (the "Company"),
which will be held on August 18, 2006 at 10:30 A.M., Boston time at the Public Meeting Room of the
South Natick Public Library, in South Natick, Massachusetts, for the following purposes:
1. To elect two members to serve on the Board of Directors until the next annual
meeting of stockholders and until their successors are duly elected and qualified
(Proposal One);
2. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to increase the total number of authorized shares of all classes of
stock that the Company is authorized to issue, from 100 million shares to 250
million shares, and to increase the total number of authorized shares of Class A
Common Stock from 100 million shares to 245 million shares (Proposal Two);
3. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to create five million shares of "Blank Check" Preferred Stock
(Proposal Three);
4. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to change the Company's name to "Brightec, Inc." (Proposal Four);
5. To consider and vote upon a proposal to adopt a new long-term stock incentive plan
(the "2006 Stock Incentive Plan") pursuant to which an aggregate of 50 million
shares of the Company's Common Stock will be reserved for issuance and available
under such plan (Proposal Five); and
6. To consider and vote upon such other matters as may properly come before the
special meeting, including proposals to adjorn or postpone the special meeting.
Stockholders of record at the close of business on July 28, 2006 are entitled to notice of
and to vote at the meeting.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING. RETURNING YOUR
PROXY CARD WILL ENSURE THAT YOUR VOTE IS COUNTED IF YOU LATER DECIDE NOT TO ATTEND THE SPECIAL
MEETING.
By order of the Board of Directors
/s/ Patrick Planche
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Patrick Planche
Secretary
July 31, 2006
ADVANCED LUMITECH, INC.
8C PLEASANT STREET S., FIRST FLOOR
SOUTH NATICK, MASSACHUSETTS 01760
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PROXY STATEMENT
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SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 18, 2006
INTRODUCTION
Proxy Solicitation and General Information
This Proxy Statement and the enclosed Proxy Card are being furnished to the holders of
common stock, par value $.001 per share, of Advanced Lumitech, Inc. d/b/a Brightec, a Nevada
corporation (which is sometimes referred to in this Proxy Statement as the "Company," "we," or
"us"), in connection with the solicitation of proxies by our Board of Directors for use at the
Special Meeting of Stockholders to be held on August 18, 2006, at 10:30 A.M., Boston time, at the
Public Meeting Room of the South Natick Public Library, in South Natick, Massachusetts, and at any
adjournments or postponements thereof. This Proxy Statement and the Proxy Card are first being sent
to stockholders on or about August 1, 2006. Our principal executive offices are located at 8C
Pleasant Street S., First Floor, South Natick, MA 01760.
At the meeting, stockholders will be asked:
1. To elect two members to serve on the Board of Directors until the next annual
meeting of stockholders and until their successors are duly elected and qualified
(Proposal One);
2. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to increase the total number of authorized shares of all classes of
stock that the Company is authorized to issue, from 100 million shares to 250
million shares, and to increase the total number of authorized shares of Class A
Common Stock from 100 million shares to 245 million shares (Proposal One);
3. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to create five million shares of "Blank Check" Preferred Stock;
(Proposal Two);
4. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation to change the Company's name to "Brightec, Inc." (Proposal Three);
5. To consider and vote upon a proposal to adopt a new long-term stock incentive plan
(the "2006 Stock Incentive Plan") pursuant to which an aggregate of 50 million
shares of the Company's Common Stock will be reserved for issuance and available
under such plan (Proposal Five); and
6. To consider and vote upon such other matters as may properly come before the
special meeting , including proposals to adjorn or postpone the special meeting.
The Board of Directors has fixed the close of business on July 28, 2006 as the record date
for the determination of stockholders entitled to notice of and to vote at the meeting. Each such
stockholder will be entitled to one vote for each share of Common Stock held on all matters to come
before the meeting and may vote in person or by proxy authorized in writing.
Stockholders are requested to complete, sign, date and promptly return the enclosed Proxy
Card in the enclosed envelope. Proxies which are not revoked will be voted at the meeting in
accordance with instructions contained therein. If the Proxy Card is signed and returned without
instructions, the shares will be voted FOR the election to the Board of Directors of the nominees
named herein (Propasal One) and FOR amending the Company's Articles of Incorporation to increase the
total number of authorized shares of all classes of stock that the Company is authorized to issue,
from 100 million shares to 250 million shares, and to increase the total number of authorized shares
of Class A Common Stock (the "Common Stock") from 100 million shares to 245 million shares (Proposal
Two); FOR amending the Company's Articles of Incorporation to create five million shares of "Blank
Check" Preferred Stock (the "Preferred Stock") (Proposal Three); FOR amending the Company's Articles
of Incorporation to change the Company's name to Brightec, Inc. (Proposal Four); and FOR adoption of
the 2006 Stock Incentive Plan (Proposal Five). A stockholder who so desires may revoke his proxy at
any time before it is voted at the meeting by: (i) delivering written notice to us (attention:
Secretary); (ii) duly executing and delivering a proxy bearing a later date; or (iii) casting a
ballot at the meeting. Attendance at the meeting will not in and of itself constitute a revocation
of a proxy.
The Board of Directors knows of no other matters that are to be brought before the meeting
other than as set forth in the Notice of Meeting. If any other matters properly come before the
meeting, the persons named in the enclosed Proxy Card or their substitutes will vote in accordance
with their best judgment on such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Only stockholders as of the close of business on July 28, 2006 (the "Record Date") are
entitled to notice of and to vote at the meeting. As of the Record Date, there were 100,000,000
shares of our Common Stock outstanding and entitled to vote, with each share entitled to one vote.
See "Security Ownership of Certain Beneficial Owners and Management" for information regarding the
beneficial ownership of our Common Stock by our directors, executive officers and stockholders known
to us to own 5% or more of our Common Stock.
Our Common Stock is quoted on the OTC Pink Sheets Electronic Quotation Service under the
symbol "ADLU.PK". On July 18, 2006, the average of high and low bids for our Common Stock as
reported by OTC Pink Sheets Electronic Quotation Service was $0.06. Stockholders are urged to obtain
the current market quotation for the shares of our Common Stock.
REQUIRED VOTES
The presence at the Special Meeting, in person or by duly authorized proxy, of the holders
of a majority of the outstanding shares of stock entitled to vote constitutes a quorum for the
transaction of business. Each share of the Company's Common Stock entitles the holder to one vote on
each matter presented for stockholder action. The affirmative vote of a plurality of the votes cast
in person or by proxy is necessary for the election of directors (Proposal One). The affirmative
vote of the stockholders holding a majority of the outstanding shares of Common Stock is required
for approval of (i) amending the Company's Articles of Incorporation to increase the number of
shares of the Company's authorized capital stock to 250 million shares, of which 245 million shares
will be Common Stock and five million shares will be Preferred Stock (Proposals Two and Three), and
(ii) amending the Company's Articles of Incorporation to change the Company's name to Brightec, Inc.
(Proposal Four). The affirmative vote of a majority of the votes cast is necessary for the approval
of the 2006 Stock Incentive Plan (Proposal Five).
An independent inspector of elections appointed by us will tabulate votes at the meeting.
Since the affirmative vote of the stockholders holding a majority of the outstanding shares of
Common Stock is required for the approval of (i) amending the Company's Articles of Incorporation to
increase the number of shares of the Company's authorized capital stock to 250 million shares, of
which 245 million shares will be Common Stock and five million shares will be Preferred Stock
(Proposals Two and Three), and (ii) amending the Company's Articles of Incorporation to change the
Company's name to Brightec, Inc. (Proposal Four), abstentions and "broker non-votes" will have the
same effect as a negative vote, on the outcome of the voting for Proposals Two, Three and Four.
Since the affirmative vote of a majority of the votes cast is necessary for the approval of the 2006
Stock Incentive Plan (Proposal Five), an abstention will have the same effect as a negative vote,
but "broker non-votes" will have no effect on the outcome of the voting for Proposal Five.
Brokers holding shares for beneficial owners must vote those shares according to the
specific instructions they receive from beneficial owners. If specific instructions are not
received, brokers may be precluded from exercising their discretion, depending on the type of
proposal involved. Shares as to which brokers have not exercised discretionary authority or received
instructions from beneficial owners are considered "broker non-votes," and will be counted for
purposes of determining whether there is a quorum.
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PROXY SOLICITATION
The Company will bear the costs of the solicitation of proxies for the meeting. Our
directors, officers and employees may solicit proxies from stockholders by mail, telephone,
telegram, e-mail, personal interview or otherwise. Such directors, officers and employees will not
receive additional compensation but may be reimbursed for out-of-pocket expenses in connection with
such solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to
forward soliciting material to the beneficial owners of our Common Stock held of record by them and
such parties will be reimbursed for their reasonable expenses.
IT IS DESIRABLE THAT AS LARGE A PROPORTION AS POSSIBLE OF THE STOCKHOLDERS' INTERESTS BE
REPRESENTED AT THE MEETING. THEREFORE, EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN
AND RETURN THE ENCLOSED PROXY CARD TO ENSURE THAT YOUR STOCK WILL BE REPRESENTED. IF YOU ARE PRESENT
AT THE MEETING AND DESIRE TO DO SO, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON BY GIVING WRITTEN
NOTICE TO THE COMPANY'S SECRETARY. PLEASE RETURN YOUR EXECUTED PROXY CARD PROMPTLY.
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK BY
DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS
The following table sets forth as of the Record Date the number of shares and percentage of
our Common Stock owned by (i) each person known to us to beneficially own five percent or more of
our Common Stock, (ii) each of our directors, (iii) each of our executive officers, and (iv) our
executive officers and directors as a group. Unless otherwise indicated, each of the stockholders
shown in the table below has sole voting and investment power with respect to the shares
beneficially owned. Unless otherwise indicated, the address of each person named in the table below
is c/o Advanced Lumitech, Inc. d/b/a Brightec, 8C Pleasant Street S., First Floor, South Natick, MA
01760.
Amount and
nature of
beneficial
Name ownership (1) Percentage (2)
- ---- ------------- --------------
Patrick Planche (3) 3,536,130 3.5%
President, Chief Executive Officer, Treasurer, Secretary and Director
David J. Geffen(4) 28,490,058 28.5%
Director
All directors, nominees for directors and executive officers as a group (two 32,026,188 32.0%
persons)
Additional 5% Stockholders
Jeffrey Stern Revocable Trust (5)
44 Eliot Hill Road 8,114,168 8.1%
Natick, MA
James J. Galvin and Peggy Galvin(6)
9 Blue Stone Path 8,857,144 8.8%
Natick, MA
Jose Canales la Rosa (7)
Oostrikkerdijk 21 A 7,473,500 7.5%
5595 SC Leende
The Netherlands * Less than 1%.
-3-
(1) As used in this table, a beneficial owner of a security includes any person who, directly
or indirectly, through contract, arrangement, understanding, relationship or otherwise has
or shares (a) the power to vote, or direct the voting of, such security or (b) investment
power which includes the power to dispose, or to direct the disposition of, such security.
In addition, a person is deemed to be the beneficial owner of a security if that person has
the right to acquire beneficial ownership of such security within 60 days.
(2) Percent is based on 100 million shares of Common Stock outstanding as of July 18, 2006.
2006.
(3) Excludes a ten-year qualified option to purchase 12,000,000 shares of Common Stock at an
exercise price of $0.12 per share, which the Company agreed to award in 2005, subject to
the Company increasing the number of shares of its authorized Common Stock to accommodate
such grant. Also excludes 77,620 shares of Common Stock previously owned by Mr. Planche
which he permitted the Company to redeem in order to allow the Company to fulfill its
commitments to issue shares in exchange for a commitment to issue to him a like number of
shares when available for issuance.
(4) Includes 3,000,000 shares of Common Stock owned of record by Geffen Construction Profit
Sharing Plan, of which David J. Geffen is the primary beneficiary. Also excludes 16,267,145
shares of Common Stock previously owned by Mr. Geffen which he permitted the Company to
redeem in order to allow the Company to fulfill its commitments to issue shares in exchange
for a commitment to issue to him a like number of shares when available for issuance.
(5) Includes (i) 3,404,166 shares of Common Stock issuable upon the exercise of a presently
exercisable warrant at an exercise price of $0.12 a share; and (ii) 2,000,000 shares of
Common Stock issuable upon the exercise of a warrant at an exercise price of $0.12 a share.
(6) Includes 6,536,000 shares of Common Stock owned by Holding Canales b.v. and 937,500 shares
of Common Stock owned by Luminescent Europe Technologies b.v.. Jose Canales la Rosa is the
majority stockholder of Holding Canales b.v. and is the director of Luminescent Europe
Technologies b.v.
We are not aware of any material proceedings to which any of our directors, executive
officers, affiliates of the foregoing persons or any security holder, including any owner of record
or beneficial owner of more than 5% of any class of our voting securities, is a party adverse to us
or has a material interest adverse to us.
-4-
EQUITY PLANS
The following table sets forth certain information regarding the Company's equity plans as
at the Record Date.
Plan Category (A) (B) (C)
Number of Weighted-average Number of securities remaining
securities to be exercise price of available for future issuance
issued upon outstanding under equity compensation plans
exercise of options, warrants (excluding securities reflected in
outstanding and rights column (A))
options, warrants
and rights
- ------------------------------ -------------------- ------------------ ------------------------------------
Equity compensation plans
approved by security holders 0 N/A N/A
Equity compensation plans not 30,167,077
approved by security holders (1)(2)(3)(4)(6)(7) $0.132 3,800,000 (8)
--------------------
Total 30,167,077 3,800,000
==================== ---------------------------
(1) Includes options issued under the 1999 Stock Option/Stock Issuance Plan (the "1999 Plan").
(2) Includes (i) 3,404,166 shares of Common Stock issuable upon the exercise of a presently
exercisable warrant at an exercise price of $0.12 a share and expiring on April 27, 2008; and
(ii) 2,000,000 shares of Common Stock issuable upon the exercise of a presently exercisable
warrant at an exercise price of $0.12 a share and expiring on January 26, 2009.
(3) Includes a 10-year non-qualified option to purchase 500,000 shares of Common Stock at an
exercise price of $0.001 per share, which the Company agreed to award to a former consultant of
the Company in 2004, subject to the Company increasing the number of shares of its authorized
Common Stock to accommodate such grant.
(4) Includes a three-year non-qualified option to purchase 4,462,911 shares of Common Stock at an
exercise price of $0.10 per share, which the Company agreed to award to a former consultant in
2004, subject to the Company increasing the number of shares of its authorized Common Stock to
accommodate such grant. This agreement was made in connection with the settlement of claims
made by the former consultant against the Company.
(5) Includes a ten-year qualified option to purchase 12,000,000 shares of Common Stock at an
exercise price of $0.12 per share, which the Company agreed to award in 2005 to Patrick
Planche, our President, Chief Executive Officer, Treasurer, Secretary and Director, subject to
the Company increasing the number of shares of its authorized Common Stock to accommodate such
grant.
(6) Includes two ten-year qualified options to purchase an aggregate of 6,000,000 shares of Common
Stock at an exercise price of $0.12 per share, which the Company agreed to award in 2005 to two
employees of the Company. The grant of such options is subject to the Company increasing the
number of shares of its authorized Common Stock to accommodate such grant.
(7) Includes a ten-year non-qualified option to purchase an aggregate of 2,000,000 shares of Common
Stock at an exercise price of $0.12 per share, awarded in 2005 to Francois Planche, a former
member of the Company's board of directors. The grant of such options is subject to the Company
increasing the number of shares of its authorized Common Stock to accommodate such grant.
(8) Consists of the shares of our Common Stock reserved for future issuance under the 1999 Plan; if
the 2006 Stock Incentive Plan is approved by our stockholders, these shares will not be issued
under the 1999 Plan. See "Proposal 5--Approval of 2005 Stock Incentive Plan--Effective Date."
-5-
PROPOSAL ONE
ELECTION OF DIRECTORS
Our Articles of Incorporation and Bylaws require that we have at least one person serving
on our Board of Directors. Under the Bylaws, the number of directors is established by resolution of
the Board of Directors. The Board has determined that effective at the time of the special meeting,
the number of directors of the Company shall be two.
Our directors are elected annually at the annual meeting of stockholders. Their respective
terms of office continue until the next annual meeting of stockholders and until their successors
have been elected and qualified in accordance with our Bylaws. The Company's last annual meeting of
stockholders took place on May 28, 1999. There are no family relationships among any of our
directors or executive officers.
Unless otherwise specified, each proxy received will be voted for the election of the two
nominees named below to serve until the next annual meeting of stockholders (or special meeting
called for, among other things, the election of directors) and until their successors shall have
been duly elected and qualified. Each of the nominees has consented to be named a nominee in this
Proxy Statement and to serve as a director if elected. Should any nominee become unable or unwilling
to accept a nomination or election, the persons named on the enclosed Proxy Card will vote for the
election of a nominee designated by the Board of Directors or will vote for such lesser number of
directors as may be prescribed by the Board of Directors in accordance with our Bylaws.
The following persons have been nominated by the Board of Directors to be elected by the
stockholders as the directors of the Company:
Patrick Planche, age 42, has served as President, Chief Executive Officer, and a Director
of the Company since August 1998. Mr. Planche is also the President, a Director and co-founder of
the Company's wholly owned subsidiary, Brightec SA, which was organized in 1992. Brightec SA is the
legal owner of the patents and trademarks used by the Company in connection with its business.
David J. Geffen, age 51, has served as a Director of the Company since April 28, 2005.
During the last five years, Mr. Geffen has been the president and owner of Geffen Construction,
Inc., a residential construction contracting company.
The Board of Directors has not appointed a nominating committee at the present time, as the
Board consists of only two directors. See "Governance of the Company - Corporate Governance," below.
The affirmative vote of a plurality of the votes cast in person or by proxy at the special
meeting of stockholders is necessary for the election of directors (assuming a quorum of a majority
of the outstanding shares of Common Stock is present).
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THE ABOVE-NAMED DIRECTOR NOMINEES.
GOVERNANCE OF THE COMPANY
CORPORATE GOVERNANCE
Currently, due to the Company's small size and limited operations, we do not have an Audit,
Nominating or Compensation Committee of our Board of Directors, and the entire Board of Directors
acts and performs the equivalent functions of these committees.
The Company has not yet adopted codes of ethics and conduct, corporate governance
guidelines, committee charters, complaint procedures for accounting and auditing matters and an
Audit Committee pre-approval policy, a code of ethics applicable to its principal executive officer,
principal financial officer, principal accounting officer or controller. The Company expects to
examine its corporate governance and other policies and procedures that will relate to a larger
enterprise at such time as it is able to attract additional qualified members to its Board of
Directors. Following such examination, the Company expects to adopt such codes, policies and
guidelines.
-6-
BOARD OF DIRECTORS
Our Board of Directors is currently comprised of the following two members: Patrick Planche
and David J. Geffen. During fiscal 2005, the Board of Directors held three meetings, and all of the
directors then in office attended at least 75% of the total number of meetings of the Board of
Directors. The Company's last annual meeting of stockholders took place on May 28, 1999.
DIRECTOR INDEPENDENCE
The Company is not a listed issuer (as defined by Rule 10A-3 of Securities Exchange Act of
1934, as amended (the "Exchange Act")). However, none of the members of the Company's Board of
Directors meet the definitions of "independence" established by the revised listing requirements of
the NASDAQ National Stock Market or Section 10A(m)(3) of the Exchange Act.
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS
Stockholders may send communications to the Board of Directors or any other non-management
director by writing to the Board or any such director at Advanced Lumitech, Inc., c/o the Secretary
at 8C Pleasant Street, First Floor, South Natick, MA 01760. The Secretary will distribute all
stockholder communications to the intended recipients and/or distribute to the entire Board, as
appropriate.
COMPLAINT PROCEDURES
Complaints and concerns about accounting, internal accounting controls or auditing or
related matters pertaining to the Company may be submitted by writing to the attention of the Board
of Directors or any other non-management director by writing to the Board or any such director at
Advanced Lumitech, Inc., c/o the Secretary at 8C Pleasant Street, First Floor, South Natick, MA
01760. Complaints may be submitted on a confidential and anonymous basis by sending them in a sealed
envelope marked "Confidential."
COMPENSATION OF DIRECTORS
The Company does not currently pay cash or other compensation to David J. Geffen, its
non-employee director. Mr. Planche receives compensation as described hereinafter under "Executive
Compensation." See, also, Certain Relationships and Related Transactions."
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, executive officer, or person nominated to become a director or executive
officer has, within the last five years: (i) had a bankruptcy petition filed by or against, or a
receiver, fiscal agent or similar officer appointed by a court for, any property or any business of
such person or entity with respect to which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time; (ii) been convicted in
a criminal proceeding or is currently subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (iii) been subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities or practice; (iv) been found by a court of competent
jurisdiction (in a civil action), the Securities and Exchange Commission (the "Commission") or the
Commodity Futures Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been subsequently reversed, suspended or vacated.
AUDIT COMMITTEE
The Company does not presently have an Audit Committee. The Board of Directors selects the
Company's independent auditors, pre-approves all services to be performed by the independent
auditors, and analyzes the reports and recommendations of such auditors. The Board also monitors the
adequacy and effectiveness of our financial controls and reporting procedures and the performance of
the independent auditors. The Board met two times and acted two times by unanimous written consent
during fiscal 2005 with respect to the foregoing matters. The Board of Directors expects to adopt a
new charter for the Audit Committee and appoint an Audit committee before December 31, 2006.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Aggregate fees for professional services rendered for the Company by Carlin, Charron &
Rosen, LLP, for the fiscal years ended December 31, 2005 and 2004 were:
2005 2004
---- ----
Audit Fees $54,300 $32,500
Audit Related Fees 0 0
Tax Fees 0 0
All Other Fees 0 0
------- -------
Total $54,300 $32,500
-7-
AUDIT FEES
The Audit Fees for the years ended December 31, 2005 and 2004, respectively, were for
professional services rendered for the audit of our consolidated financial statements for the fiscal
years ended December 31, 2005 and 2004, as applicable, and for the review of our consolidated
financial statements included in our quarterly reports on Form 10-QSB for fiscal 2005 and 2004, as
applicable. In addition, the Audit Fees also includes fees for services rendered to us by Carlin,
Charron & Rosen, LLP, for statutory and subsidiary audits, consents, income tax provision procedures
and assistance with review of documents filed with the Commission.
PRE-APPROVAL POLICY AND PROCEDURES
In the last two fiscal years, and to date, the Company has not received any audit-related
services, tax services or other services from the firm that acts as the Company's independent
auditors. The Board of Directors has not formally adopted a pre-approval policy for all audit
services, audit related services, tax services and all other services to be rendered by the
Company's independent auditors to the Company. If the Company were to seek any such services from
the Company's independent auditors, the Board would evaluate the scope of such services and the fees
expected to be paid to the independent auditors and would consider whether the receipt of such
services from, and the payment of fees to, such firm would impair the independence of the auditors.
DISMISSAL OF FORMER PRINCIPAL ACCOUNTANTS
On June 19, 2006, the Company dismissed Carlin, Charron & Rosen, LLP of Westborough,
Massachusetts, as its independent registered public accounting firm. The report of Carlin, Charron &
Rosen, LLP on the Company's financial statements and financial statement schedule for the fiscal
years ended December 31, 2005 and 2004 contained no adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope or accounting principles, other than with
respect to the Company's ability to continue as a going concern. The Company's Board of Directors
recommended and approved the decision to change independent registered public accounting firms.
In connection with the audits of the Company's financial statements for each of the two
most recently completed fiscal years and through the date hereof, there have been no disagreements
with Carlin, Charron & Rosen, LLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Carlin, Charron & Rosen, LLP, would have caused it to make reference to the subject
matter of such disagreements in connection with its audit report. There were no reportable events as
defined in Item 304(a)(1)(iv) of Regulation S-B, except that Carlin, Charron & Rosen, LLP has
advised the Company of material weaknesses in internal control over financial reporting relating to
(1) accurately recording day-to-day transactions, (2) the lack of segregation of duties, (3) the
approval of significant transactions in a timely manner by the Company's board of directors and (4)
the preparation of its financial statements in an accurate and timely fashion. If the Company is
unable to raise additional capital, it will not have sufficient resources to implement an adequate
system of internal management and financial controls and will be unable to hire employees with
adequate financial and accounting experience. The Company has given permission to Carlin, Charron &
Rosen, LLP to respond fully to the inquiries of the successor auditor, including concerning the
subject matter of this reportable event. The Company has requested that Carlin, Charron & Rosen, LLP
furnish the Company with a letter addressed to the SEC stating whether it agrees with the above
statements.
We are not asking stockholders to ratify the appointment of an independent accountant to
audit our financial statements for fiscal year 2006. Ratification of the independent accountant is
not required by our Bylaws or applicable law. Representatives of Carlin, Charron & Rosen, LLP, who
acted as independent accountant for the years ended December 31, 2005 and 2004, are not expected to
be present at the special meeting.
EXECUTIVE OFFICER
Our only executive officer is Mr. Patrick Planche, 42, who is our Chief Executive Officer,
President and Treasurer. The executive officer is appointed by and serves at the discretion of the
Board of Directors of the Company. See the table of nominees for election as directors for
biographical data with respect to Mr. Planche.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth information concerning the annual and
long-term compensation earned for the periods presented below by Patrick Planche, our chief
executive officer, president and treasurer (the "Named Executive Officer"). During Fiscal 2005 there
were no executive officers or significant employees of the Company whose annual salary and bonus
exceeded $100,000.
-8-
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ ------------------------
Name and Principal Position Year Salary Bonus Securities
Underlying All other
Options Compensation
---- -------- ------- ------------ ------------
Patrick Planche 2005 $4,000 $0 12,000,000(1) $0
CEO, President and Treasurer 2004 $156,000 0 0 0
2003 $85,000 0 0 0
(1) Does not include the award of an option to purchase 2,000,000 shares of the Company's
common stock to Mr. Francois Planche, who is a brother of the Chief Executive Officer. See
the second paragraph under "Option Grants" below for more information about these options.
As of December 31, 2005, 2004 and 2003, a loan with a principal balance of $250,000 was due
to the Company from Patrick Planche. This loan is due no later than December 31, 2011, bears
interest at a fixed rate of 5.05% and is full-recourse. Interest on the loan is due annually. No
interest payments on such loan have been made by Mr. Planche to the Company to date and,
accordingly, net accrued interest was receivable from Mr. Planche of $50,331, $38,750, $25,123 as of
December 31, 2005, 2004 and 2003, respectively.
OPTION GRANTS
The Company's 1999 stock option/stock issuance plan (the "1999 Plan") provides for the
grant by the Company of options, awards or rights to purchase up to 5,000,000 shares of the
Company's Common Stock. As of December 31, 2005, options to purchase an aggregate of 2,800,000 of
the Company's Common Stock had been granted under the 1999 Plan, of which options to purchase
1,600,000 shares of the Company's Common Stock had been cancelled, options to purchase 200,000
shares of the Company's Common Stock had been exercised and options to purchase 1,000,000 shares of
the Company's Common Stock remained outstanding and are exercisable at an exercise price of $0.50
per share. At December 31, 2005, 3,800,000 shares of the Company's Common Stock remain available for
grant under the 1999 Plan. No options or other rights have been granted under the 1999 Plan since
1999. In addition to the 1999 Plan, in 2004, the Company granted a non-qualified option to purchase
4,462,911 shares of the Company's Common Stock at an exercise price of $0.10 per share to a former
consultant in settlement of claims made by the former consultant against the Company. The option is
fully vested and is exercisable for a period of three years.
In 2005, the Company also granted, subject to shareholder approval, non-qualified options
at an exercise price of $0.12 per share to purchase 12,000,000 shares of Common Stock to Patrick
Planche, the Company's President and Chief Executive Officer, together with two additional
non-qualified options to two Company employees to purchase an aggregate of 6,000,000 shares of the
Company's Common Stock, each at an exercise price of $0.12 per share. The Company also granted a
non-qualified option to purchase 2,000,000 shares of the Company's Common Stock at an exercise price
of $0.12 per share to Francois Planche, a former director of the Company. Also in 2005, the Company
granted a non-qualified option to a former consultant to purchase 500,000 shares of the Company's
Common Stock at an exercise price of $.001 per share for a period of ten years, but vesting only
upon a change of control of the Company.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information concerning stock option grants, approved by the
Board of Directors, to the Named Executive Officer for the 2005 fiscal year. The Company granted no
stock appreciation rights ("SARs") to the Named Executive Officer during 2005.
OPTIONS GRANTED IN FISCAL 2005
We granted the following options to our Named Executive Officer during fiscal 2005.
Individual Grants
- -------------------------------------------------------------------------------------
Name Percent of
Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration
Granted Year ($/Share) Date
- ---------------------- ------------- ------------ ----------- -------------
Patrick Planche 12,000,000 (1) 66.67% 0.12 4/27/2015
- -------------------------------------------------------------------------------------
1. Due to the limitations imposed by the number of shares authorized by the Company's charter,
the option to purchase 12,000,000 shares of the Company's Common Stock granted to Mr.
Planche cannot be exercised until the Company obtains the approval of its stockholders to
amend the Company's Articles of Incorporation to increase the number of shares of the
Company's authorized Common Stock, sufficient to enable exercise of the option. Subject to
the foregoing limitation, the option is fully vested.
-9-
2. The exercise price per share of options granted represented at least the fair market value
of the underlying shares of Common Stock on the date the option was granted as determined
by the Board based on the average of the high and low selling price of the Company's Common
Stock on the date of the grant as reported on the Over the Counter Bulletin Board "Pink
Sheets." The exercise price may be paid in cash or in shares of Common Stock valued at fair
market value on the exercise date or may be paid with the proceeds from a same-day sale of
the purchased shares.
AGGREGATE OPTION EXERCISES IN FISCAL 2005 AND FISCAL YEAR END OPTION VALUES
The Named Executive Officer did not exercise any options in the year ended December 31,
2005, and the option he held was not "in-the-money" as of the year-end.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE
The Board of Directors of the Company has not constituted a Compensation Committee from its
members and, accordingly, the following is the report of the entire Board of Directors. The Board of
Directors is responsible for reviewing the compensation of the executive officers of the Company.
COMPENSATION PHILOSOPHY. The Company has not developed a formal plan for the compensation
of the Company's management, as its primary focus, and application of working capital, has been the
development of its products and markets. In structuring any compensation program for management,
however, the Board of Directors will seek to establish compensation policies that provide management
with a performance incentive, and that align the interests of senior management with stockholder
interests. Such program will include salary and annual incentives as its basic components and, in
establishing the total amount and mix of these components of compensation, the Board of Directors
expects to consider the past performance and anticipated future contribution of each executive
officer.
COMPENSATION OF EXECUTIVE OFFICERS. The Board of Directors reviews the salaries of the
executive officers of the Company annually. The Board has not considered compensation levels for
comparable positions at similar companies in determining compensation levels for management.
Instead, compensation levels for executive officers have been based on the Board's assessment of the
Company's liquidity and corresponding ability to compensate its executive officers at any level.
There are no employment contracts or agreements in effect for any officer of the Company.
ANNUAL INCENTIVES. The Board historically has never approved or, thus far, even considered
an executive incentive plan which would provide executive officers of the Company with the
opportunity to earn specified percentages of their base salary based upon targeted financial goals
or the achievement of individual objectives and a subjective assessment of the executive's
performance. There were no incentive awards or bonuses paid in the fiscal year ended December 31,
2005.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. Mr. Patrick Planche's salary for fiscal year
ended December 31, 2005 was determined by the Board based upon the Company's working capital
limitations, and was not intended to reflect the Board's view of his value to the Company.
Submitted by the Board of Directors:
Patrick Planche
David J. Geffen
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Directors and officers, 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 Securities and Exchange Commission. Officers,
Directors and greater-than-10% stockholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they file.
Solely based on the Company's review of the copies of the forms received by it during the
fiscal year ended December 31, 2005 and written representations that no other reports were required,
the Company believes that, except for the failure of David Geffen to timely file two Form 4s, each
person who, at any time during such fiscal year, was a Director, officer or beneficial owner of more
than 10% of the Company's Common Stock complied with all Section 16(a) filing requirements during
such fiscal year.
EMPLOYMENT AGREEMENTS
We have not entered into an employment agreement with our Name Executive Officer.
-10-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 2004, $20,000 was owed to LET b.v., whose principal shareholder, Jose
Canales La Rosa ("Canales") is a shareholder of the Company. This debt is related to the repurchase
of certain licenses granted by the Company to LET b.v. for the use and exploitation of the Company's
Luminescent Products. In April 2005, the Company and LET b.v. agreed to settle this obligation by
issuing 100,000 shares of the Company's Common Stock, valued at $20,000, or $0.20 per share.
As of December 31, 2005 and 2004, a loan with a principal balance of $250,000 was due from
Patrick Planche to the Company. This loan is due no later than December 31, 2011, bears interest at
a fixed rate of 5.05% and is full-recourse. Interest on the loan is due annually. No interest
payments on such loan have been made by Mr. Planche to the Company to date. As of December 31, 2005
and 2004, net accrued interest was receivable from Mr. Planche of $50,331 and $38,750, respectively.
At December 31, 2005 and 2004, the Company owed Patrick Planche $114,472 and $55,196,
respectively, in connection with advances made by Mr. Planche to the Company during such years. All
such loans bore interest at the Internal Revenue Service short term "Applicable Federal Rate."
During fiscal 2005 and 2004, the Company recognized net interest income of $10,867 and $13,627,
respectively, on the above note receivable and advances.
During the year ended December 31 2004, Geffen Construction, Inc., a company owed by David
Geffen, the Company's principal stockholder, received compensation in the amount of $37,500 for
consulting services provided by Mr. Geffen to the Company. In fiscal years 2005 and 2004, David
Geffen also earned additional compensation in the amount of $56,667 and $52,500, respectively, for
consulting services provided to the Company.
In December 2002, the Company borrowed $50,000 from David Geffen, the Company's principal
stockholder, under a convertible demand promissory note, which bore interest at 8% and was payable
in full on demand within one year. The principal, if not paid within thirty days of when due, bore
interest at the rate of 10%. The note was convertible into that number of shares of the Company's
Common Stock determined by dividing the unpaid principal amount, together with all accrued but
unpaid interest on the note at the conversion date, by $0.10, subject to certain adjustments. At
December 31, 2004, $50,000 was outstanding under this note and accrued interest of $3,575 was due by
the Company. In February 2005, the Company repaid the $50,000 principal of this note in full and all
accrued interest on this note was paid in full to Mr. Geffen in March 2005.
In early 2003, the Company issued a second convertible demand promissory note to David
Geffen, to borrow up to an additional $55,000 with the same terms as provided in the December 2002
note with Mr. Geffen, except that the interest rate on the second note is fixed at 8%. At December
31, 2004, $50,000 was outstanding under this note and accrued interest of $2,997 was due. In April
2005, the Company repaid this note together with all accrued interest in full.
In December 2004, Mr. Geffen advanced the Company $9,000, on a non-interest bearing basis
which was repaid by the Company in January 2005.
On December 22, 2004, the Company entered into an agreement with Patrick Planche, the
Company's President, pursuant to which the Company redeemed 77,620 shares of Common Stock owned of
record by Mr. Planche, in order to allow the Company to issue shares of Common Stock to investors
that held subscriptions for shares of Common Stock which could not be issued because the Company had
issued the maximum number of shares of Common Stock authorized under its Articles of Incorporation.
Under the agreement, Mr. Planche received no consideration for the redemption of his securities.
Upon the amendment of the Company's Articles of Incorporation increasing its authorized but unissued
shares of Common Stock, the Company has agreed to issue 77,620 shares of Common Stock to Mr. Planche
for no additional consideration.
On April 6, 2005 and on December 20, 2005, the Company entered into an agreement with David
Geffen, a director of the Company and its principal shareholder, pursuant to which the Company
redeemed 15,767,145 shares and 500,000 shares respectively, of Common Stock owned of record by Mr.
Geffen, in order to allow the Company to issue shares of Common Stock to investors that held
subscriptions for shares of Common Stock which could not be issued because the Company had issued
the maximum number of shares of Common Stock authorized under its Articles of Incorporation. Under
the agreement, Mr. Geffen received no consideration for the redemption of his securities. Upon the
amendment of the Company's Articles of Incorporation increasing its authorized but unissued shares
of Common Stock, the Company has agreed to issue 15,767,145 shares and 500,000 shares of Common
Stock to Mr. Geffen for no additional consideration.
-11-
As of December 31, 2004, $166,491 was outstanding in connection with an agreement entered
into in 2002 with Clairelyse Marini, the mother-in-law of the Company's President pursuant to which
Mrs. Marini paid the Company's obligations to Credit Suisse in the amount of $121,914. This
agreement provided for the repayment of 2,000 Swiss francs of principal each January 1 and July 1,
together with accrued interest on the unpaid balance payable quarterly at the rate of 4.25% per
annum. The Company recorded interest expense with respect to this obligation for 2005 and 2004 of
$4,596 and $7,562, respectively. This obligation was denominated in Swiss francs and at each balance
sheet date the outstanding debt was translated to U.S. dollars and any required adjustment is
recorded in the cumulative translation adjustment account within the equity section of the balance
sheet. During the year ended December 31, 2005, the Company's President assumed personal liability
for the repayment of this debt in exchange for the Company's agreement to pay the same amount to the
Company's President and the agreement of the President's mother-in-law to release the Company from
any requirement to repay this obligation, and, accordingly, the balance of the debt, translated into
U.S. dollars at December 31, 2005, $149,880 has been included in the amount of "Advances from
related parties" on the balance sheet of $114,472 at December 31, 2005.
On October 3, 2003, the Company sold 1,785,715 shares of Common Stock and a warrant to
purchase 3,571,430 shares of Common Stock, at an exercise price of $0.07 per share, to James and
Peggy Galvin for an aggregate purchase price of $125,000. On November 5, 2003 and November 24, 2003,
James and Peggy Galvin exercised warrants to purchase an aggregate of 3,571,430 shares of the
Company's Common Stock for an aggregate exercise price of $250,000. On November 5, 2003, in exchange
for the exercise of the warrants, the Company granted James and Peggy Galvin an additional warrant
to purchase 3,500,000 shares of Common Stock at an exercise price of $0.10 per share that were
exercised on January 24, 2004.
In December 2005, Mr. Jeffrey Stern advanced the Company $8,500, on a non-interest bearing
basis.
PROPOSAL TWO
AMENDMENT TO ARTICLES OF INCORPORATION TO
INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF ALL CLASSES OF STOCK THAT THE COMPANY IS
AUTHORIZED TO ISSUE, FROM 100 MILLION SHARES TO 250 MILLION SHARES, AND TO INCREASE THE TOTAL
NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 100 MILLION SHARES TO 245 MILLION SHARES
GENERAL
The Company is currently validly authorized to issue 100 million shares having a par value
of $.001 per share, of which 100 million shares is designated as "Class A Common Stock". The Board
of Directors has unanimously approved, and recommended to the stockholders, an amendment to the
Company's Articles of Incorporation to increase the number of shares of the Company's authorized
capital stock to 250 million shares, and to increase the total number of authorized shares of Common
Stock to 245 million shares. The Board of Directors has determined that this amendment is advisable
and should be adopted by the stockholders. Because, as described elsewhere in this Proxy Statement,
additional changes to the Articles of Incorporation have been proposed, in addition to the amendment
proposed hereby, stockholders should review the proposed amendments as set forth in the Certificate
of Amendment to our Articles of Incorporation attached hereto as Appendix A.
OTHER AMENDMENT TO ARTICLES OF INCORPORATION
If this amendment is approved, our Articles of Incorporation would be amended to provide
that the total number of authorized shares of all classes of stock which the Company is authorized
to issue is 250 million shares, of which 245 million shares will be Common Stock. Also, as more
fully described in Proposal Three, in connection with the increase in the total number of authorized
shares, the Company is asking the stockholders to approve an amendment to our Articles of
Incorporation to create five million shares of Preferred Stock.
Please note that Proposal Three is contingent on the passage of Proposal Two. In the event
this Proposal Two does not receive approval of a majority of the outstanding shares of Common Stock,
Proposal Three will not be eligible for approval and will be withdrawn.
The Board of Directors believes that these proposed amendments to our Articles of
Incorporation will provide several long-term advantages to the Company and its stockholders. The
passage of these amendments might enable us to pursue acquisitions or enter into transactions which
the Board of Directors believes provide the potential for growth and profit. If additional
authorized shares are available, transactions dependent upon the issuance of additional shares will
be less likely to be undermined by delays and uncertainties occasioned by the need to obtain
stockholder authorization to provide for the shares necessary to consummate such transactions. The
ability to issue shares, as the Board of Directors determines from time to time to be in the
Company's best interests, will also permit the Company to avoid the extra expenses which would be
incurred in holding special stockholders meetings solely to approve an increase in the number of
shares which the Company has the authority to issue.
If the proposed amendments to our Articles of Incorporation as outlined in Proposals One
and Two are approved by the stockholders, the Board of Directors will cause a Certificate of
Amendment to our Articles of Incorporation reflecting the amendment(s) adopted to be filed with the
Secretary of State of Nevada, and such Certificate of Amendment will be effective upon its filing.
VOTE REQUIRED
Under applicable Nevada law, the affirmative vote of the stockholders holding a majority of
the outstanding shares of Common Stock is required for approval of the proposed amendment to the
Company's Articles of Incorporation to increase the total number of authorized shares of all classes
of stock that the Company is authorized to issue, from 100 million shares to 250 million shares, and
to increase the total number of authorized shares of Common Stock to 245 million shares.
Consequently, abstentions from voting on the proposal and broker non-votes will have the same effect
as a negative vote on this proposal.
-12-
PURPOSES AND EFFECTS OF THE PROPOSAL
If approved, the proposed amendment would increase the total number of authorized shares of
all classes of stock that the Company is authorized to issue, from 100 million shares to 250 million
shares, and to increase the total number of authorized shares of Common Stock from 100 million
shares to 245 million shares. On July 18, 2006, 100 million shares of the Company's Common Stock
were issued and outstanding and held of record by 707 registered stockholders.
The proposed increase in the Common Stock the Company is authorized to issue has been
recommended by the Board of Directors to assure that an adequate supply of authorized, unissued
shares of Common Stock is available for general corporate needs and to provide the Board of
Directors with the necessary flexibility to issue Common Stock in connection with acquisitions,
merger transactions or financings without the expense and delay incidental to obtaining stockholder
approval of an amendment to the Articles of Incorporation at the time of such action, except as may
be required for a particular issuance by applicable law or by the rules of any stock exchange on
which our securities may then be listed. The additional authorized shares of Common Stock may be
used for such purposes as raising additional capital, the financing of an acquisition or business
combination, stock splits and stock dividends, and employee, executive and director benefits plans.
Such shares would, however, be available for issuance without further action by the stockholders,
unless required by applicable law.
As of July 18, 2006, we have commitments with respect to the issuance of 23,432,267
additional shares of Common Stock. 16,267,145 of such shares of Common Stock are issuable to our
director David J. Geffen, and 77,620 of such shares of Common Stock are issuable to our President,
Chief Executive Officer, Treasurer, Secretary and Director Patrick Planche and represent shares of
Common Stock previously owned by them which they permitted the Company to redeem. This was done in
order to permit the Company to fulfill its commitments to issue shares to various investors and
consultants when the Company otherwise had no authorized shares of Common Stock remaining for
issuance. In consideration of Mr. Geffen and Mr. Planche agreeing to the redemption of such shares
of Common Stock, we have agreed to reissue such redeemed shares upon an increase in the number of
authorized shares of Common Stock that we may issue to accommodate such issuance.
Additionally, as disclosed above in the table under the heading "Equity Plans", as of ____,
2006, we have agreed to award options to purchase an aggregate of 19,562,911 shares of Common Stock,
the grant of which is subject to the Company increasing the number of shares of its authorized
Common Stock pursuant to the adoption of the amendment to our Articles of Incorporation. We have
agreed to award to Patrick Planche 12,000,000 shares of our Common Stock issuable upon exercise of
such options.
The additional shares of Common Stock for which authorization is sought would become part
of the existing class of Common Stock and would be identical to the shares of the Common Stock of
the Company now authorized, issued and outstanding. Holders of our Common Stock do not have
preemptive rights to subscribe for additional securities which may be issued by us. The issuance of
additional shares of our Common Stock may, among other things, have a dilutive effect on the
earnings per share and on the equity and voting power of existing holders of our Common Stock and
may adversely affect the market price of our Common Stock. Our Articles of Incorporation does not
require further approval of stockholders prior to the issuance of any additional shares of Common
Stock.
The Board of Directors also believes it is desirable to increase the number the total
number of shares of all classes of stock the Company is authorized to issue, to permit the Company
to create five million shares of Preferred Stock, as more discussed below in Proposal Three.
Although the Board of Directors has no present intention of issuing additional shares for
such purposes, the proposed increase in the number of authorized shares of Common Stock could enable
the Board of Directors to render more difficult or discourage an attempt by another person or entity
to obtain control of the Company. Such additional shares could be issued by the Board of Directors
in a public or private sale, merger or similar transaction, increasing the number of outstanding
shares and thereby diluting the equity interest and voting power of a party attempting to obtain
control of the Company. The increase in the authorized shares of Common Stock has not, however, been
proposed for an anti-takeover-related purpose and we have no knowledge of any current efforts to
obtain control of the Company or to effect large accumulations of our Common Stock. Certain
provisions of the Bylaws of the Company relating to the calling of special stockholders meetings
could also have the effect of deterring takeover attempts because of the procedural provisions
contained therein.
-13-
This Proposal Two is not part of any plan by the Company to adopt a series of amendments to
its Articles of Incorporation or Bylaws so as to render the takeover of the Company more difficult.
Moreover, we are not submitting this Proposal to enable us to frustrate any efforts by another party
to acquire a controlling interest or to seek representation on the Board of Directors.
The Board of Directors believes that the proposed amendment to Articles of Incorporation
will provide several long-term advantages to the Company and its stockholders. The passage of this
Proposal might enable us to pursue acquisitions or enter into transactions which the Board of
Directors believes provide the potential for growth and profit. If additional authorized shares are
available, transactions dependent upon the issuance of additional shares will be less likely to be
undermined by delays and uncertainties occasioned by the need to obtain stockholder authorization to
provide for the shares necessary to consummate such transactions. The ability to issue shares, as
the Board of Directors determines from time to time to be in the Company's best interests, will also
permit the Company to avoid the extra expenses which would be incurred in holding special
stockholders meetings solely to approve an increase in the number of shares which the Company has
the authority to issue.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT TO OUR ARTICLES OF
INCORPORATION TO INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF ALL CLASSES OF STOCK THAT THE
COMPANY IS AUTHORIZED TO ISSUE, FROM 100 MILLION SHARES TO 250 MILLION SHARES, AND TO INCREASE THE
TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 100 MILLION SHARES TO 245 MILLION SHARES.
PROPOSAL THREE
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CREATE FIVE MILLION SHARES OF
PREFERRED STOCK.
CONTINGENCY
This Proposal Three is contingent on the passage of Proposal Two. In the event Proposal Two
does not receive approval of a majority of the outstanding shares of Common Stock, Proposal Three
will not be eligible for approval and will be withdrawn.
GENERAL
The Board of Directors has unanimously approved, and recommended to the stockholders, an
amendment to the Company's Articles of Incorporation to create five million shares of Preferred
Stock. The Board of Directors has determined that this amendment is advisable and should be adopted
by the stockholders. Because, as described elsewhere in this Proxy Statement, additional changes to
the Articles of Incorporation have been proposed, in addition to the amendment proposed hereby,
stockholders should review the proposed amendments as set forth in the Certificate of Amendment to
our Articles of Incorporation attached hereto as Appendix A.
VOTE REQUIRED
Under applicable Nevada law, the affirmative vote of the stockholders holding a majority of
the outstanding shares of Common Stock is required for approval of the proposed amendment to the
Company's Articles of Incorporation to create five million shares of Preferred Stock. Consequently,
abstentions from voting on the proposal and broker non-votes will have the same effect as a negative
vote on this proposal.
-14-
PURPOSES AND EFFECTS OF THE PROPOSAL
The term "blank check" refers to preferred stock, the creation and issuance of which is
authorized in advance by the stockholders and the terms, rights and features of which are determined
by the board of directors of the Company upon issuance. The authorization of such "blank check"
Preferred Stock would permit the Board of Directors to authorize and issue Preferred Stock from time
to time in one or more series. Subject to the provisions of the Company's Certificate of Amendment
to the Articles of Incorporation and the limitations prescribed by law, the Board of Directors would
be expressly authorized, at its discretion, to adopt resolutions to issue shares, to fix the number
of shares and to change the number of shares constituting any series and to provide for or change
the voting powers, designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend rights (including
whether the dividends are cumulative), dividend rates, terms of redemption (including sinking fund
provisions), redemption prices, conversion rights and liquidation preferences of the shares
constituting any series of the preferred stock, in each case without any further action or vote by
the stockholders. The Board of Directors would be required to make any determination to issue shares
of Preferred Stock based on its judgment as to the best interests of the Company and its
stockholders.
This amendment to the Company's Articles of Incorporation would give the Board of Directors
flexibility, without further stockholder action, to issue Preferred Stock on such terms and
conditions as the Board of Directors deems to be in the best interests of the Company and its
stockholders. This amendment would provide the Company with increased financial flexibility in
meeting future capital requirements by providing another type of security in addition to its Common
Stock, as it will allow Preferred Stock to be available for issuance from time to time and with such
features as determined by the Board of Directors for any proper corporate purpose. It is anticipated
that such purposes may include exchanging Preferred Stock for Common Stock and, without limitation,
may include the issuance for cash as a means of obtaining capital for use by the Company, or
issuance as part or all of the consideration required to be paid by the Company for acquisitions of
other businesses or assets.
Any issuance of Preferred Stock with voting rights could, under certain circumstances, have
the effect of delaying or preventing a change in control of the Company by increasing the number of
outstanding shares entitled to vote and by increasing the number of votes required to approve a
change in control of the Company. Shares of voting or convertible preferred stock could be issued,
or rights to purchase such shares could be issued, to render more difficult or discourage an attempt
to obtain control of the Company by means of a tender offer, proxy contest, merger or otherwise. The
ability of the Board of Directors to issue such additional shares of Preferred Stock, with the
rights and preferences it deems advisable, could discourage an attempt by a party to acquire control
of the Company by tender offer or other means. Such issuances could therefore deprive stockholders
of benefits that could result from such an attempt, such as the realization of a premium over the
market price that such an attempt could cause. Moreover, the issuance of such additional shares of
Preferred Stock to persons friendly to the Board of Directors could make it more difficult to remove
incumbent managers and directors from office even if such change were to be favorable to
stockholders generally.
While this amendment may have anti-takeover ramifications, the Board of Directors believes
that the financial flexibility offered by the amendment outweighs any disadvantages. To the extent
that the amendment may have anti-takeover effects, the amendment may encourage persons seeking to
acquire the Company to negotiate directly with the board of directors enabling the board of
directors to consider the proposed transaction in a manner that best serves the stockholders'
interests. The Company has no present plans, arrangements, commitments or understandings for the
issuance of shares of Preferred Stock.
This Proposal Three is not part of any plan by the Company to adopt a series of amendments
to its Articles of Incorporation or Bylaws so as to render the takeover of the Company more
difficult. Moreover, we are not submitting this Proposal to enable us to frustrate any efforts by
another party to acquire a controlling interest or to seek representation on the Board of Directors.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE AMENDMENT TO OUR ARTICLES OF
INCORPORATION TO CREATE FIVE MILLION SHARES OF PREFERRED STOCK.
-15-
PROPOSAL FOUR
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE COMPANY'S NAME FROM
ADVANCED LUMITECH, INC. TO "BRIGHTEC, INC."
GENERAL
The Board of Directors has unanimously approved, and recommended to the stockholders, an
amendment to the Company's Articles of Incorporation to change the Company's name from Advanced
Lumitech, Inc. to "Brightec, Inc."
VOTE REQUIRED
Under applicable Nevada law, the affirmative vote of the stockholders holding a majority of
the outstanding shares of Common Stock is required for approval of the proposed amendment to the
Company's Articles of Incorporation to change the Company's name from Advanced Lumitech, Inc. to
"Brightec, Inc." Consequently, abstentions from voting on the proposal and broker non-votes will
have the same effect as a negative vote on this proposal.
PURPOSES AND EFFECTS OF THE PROPOSAL
The Company has determined that it is in the best interests of the Company to change its
name to "Brightec, Inc.," the name the Company has been doing business as since 2003.
The Company believes that the name "Brightec, Inc." better identifies the Company with its
products which incorporate luminescent or phosphorescent pigments that enable prints to be of
photographic quality by day and luminescent under low light or night conditions. In addition, as one
of the Company's subsidiaries is the registered owner of a trademark for "Brightec" in more than 20
countries worldwide, the Company desires to utilize a name that is entitled to the benefits provided
by federal and worldwide intellectual property rights.
The change of the Company's name will not affect, in any way, the validity or
transferability of currently outstanding stock certificates, nor will the Company's stockholders be
required to surrender or exchange any stock certificates that they currently hold as a result of the
name change. If the Company's name change is approved at the meeting, the Company expects to
thereafter change its trading symbol on the OTC Pink Sheets Electronic Quotation Service. The
Company's new OTCBB trading symbol will be determined at the time the name change becomes effective.
If this Proposal Four is approved by the stockholders, the Board of Directors will cause a
Certificate of Amendment to our Articles of Incorporation reflecting this amendment adopted to be
filed with the Secretary of State of Nevada, and such Certificate of Amendment will be effective
upon its filing.
The Board of Directors recommends that stockholders vote FOR the amendment to our Articles
of Incorporation to change the company's name from Advanced Lumitech, Inc. to "Brightec, Inc."
PROPOSAL FIVE
APPROVAL AND ADOPTION OF THE 2006 STOCK INCENTIVE PLAN
The Board of Directors believes that the adoption and approval of a new long-term stock
incentive plan will facilitate the continued use of long-term equity-based incentives and rewards
for the foreseeable future and is in the best interests of the Company. The Company expects
equity-based incentives to comprise an important part of the compensation packages needed to attract
qualified executives, key employees, directors and consultants to the Company and in providing
long-term incentives and rewards to those individuals responsible for the success of the Company.
Accordingly, the Board of Directors approved, subject to the approval of the Company's stockholders,
the 2006 Stock Incentive Plan (the "2006 Stock Incentive Plan"). Stockholder approval of the 2006
Stock Incentive Plan is expected to ensure that the Company will have a sufficient number of
long-term equity-based incentives and rewards to issue to its future employees as well as to help
ensure, to the extent possible, the tax deductibility by the Company of awards under the 2006 Stock
Incentive Plan for purposes of Section 162(m) of the Internal Revenue Code (the "IRC").
-16-
The material features of the 2006 Stock Incentive Plan are summarized below. The summary is
qualified in its entirety by reference to the specific provisions of the 2006 Stock Incentive Plan,
the full text of which is set forth as Appendix B to this Proxy Statement. On July 18, 2006, the
market price per share of the Company's Common Stock was $0.06 based on the average of high and low
bids for our common stock as reported by the OTC Pink Sheets Electronic Quotation Service on such
date.
ADMINISTRATION
The 2006 Stock Incentive Plan is administered by the Board of Directors of the Company
which can appoint a committee to administer such plan. The Board of Directors has the authority to
determine, within the limits of the express provisions of the 2006 Stock Incentive Plan, the
individuals to whom awards will be granted, the nature, amount and terms of such awards and the
objectives and conditions for earning such awards. With respect to employees who are not subject to
Section 16 of the Exchange Act, the Board of Directors may delegate its authority under the 2006
Stock Incentive Plan to one or more officers or employees of the Company. To the extent not
otherwise provided for under the Company's Articles of Incorporation and By-laws, members of the
Board of Directors are entitled to be indemnified by the Company with respect to claims relating to
their actions in the administration of the 2006 Stock Incentive Plan, except in the case of willful
misconduct.
TYPES OF AWARDS
Awards under the 2006 Stock Incentive Plan may include non-qualified stock options,
incentive stock options, stock appreciation rights ("SARs"), restricted shares of Common Stock,
restricted units and performance awards.
STOCK OPTIONS. The Board of Directors may grant to a participant incentive stock options,
options that do not qualify as incentive stock options ("non-qualified stock options") or a
combination thereof. The terms and conditions of stock option grants, including the quantity, price,
vesting periods, and other conditions on exercise will be determined by the Board of Directors.
Incentive stock option grants shall be made in accordance with Section 422 of the IRC.
The exercise price for stock options will be determined by the Board of Directors in its
discretion, provided that with respect to incentive stock options, the exercise price per share
shall be at least equal to 100% of the fair market value of one share of the Company's Common Stock
on the date when the stock option is granted. Additionally, in the case of incentive stock options
granted to a holder of more than 10% of the total combined voting power of all classes of stock of
the Company on the date of grant, the exercise price may not be less than 110% of the fair market
value of one share of Common Stock on the date the stock option is granted.
Stock options must be exercised within a period fixed by the Board of Directors that may
not exceed ten years from the date of grant, except that in the case of incentive stock options
granted to a holder of more than 10% of the total combined voting power of all classes of stock of
the Company on the date of grant, the exercise period may not exceed five years. The 2006 Stock
Incentive Plan provides for earlier termination of stock options upon the participant's termination
of employment, unless extended by the Board of Directors, but in no event may the options be
exercised after the scheduled expiration date of the options.
At the Board of Directors' discretion, payment for shares of Common Stock on the exercise
of stock options may be made in cash, shares of the Company's Common Stock held by the participant
for at least six months (or such other shares of Common Stock as the Board of Directors may permit),
a combination of cash and shares of stock or in any other form of consideration acceptable to the
Board of Directors (including one or more "cashless" exercise forms).
STOCK APPRECIATION RIGHTS. SARs may be granted by the Board of Directors to a participant
either separate from or in tandem with non-qualified stock options or incentive stock options. SARs
may be granted at the time of the stock option grant or, with respect to non-qualified stock
options, at any time prior to the exercise of the stock option. An SAR entitles the participant to
receive, upon its exercise, a payment equal to (i) the excess of the fair market value of a share of
Common Stock on the exercise date over the SAR exercise price, times (ii) the number of shares of
Common Stock with respect to which the SAR is exercised.
-17-
The exercise price of an SAR is determined by the Board of Directors, but in the case of
SARs granted in tandem with stock options, may not be less than the exercise price of the related
stock option. Upon exercise of a SAR, payment will be made in cash or shares of Common Stock, or a
combination thereof, as determined by the Board of Directors.
RESTRICTED SHARES AND RESTRICTED UNITS. The Board of Directors may award to a participant
shares of Common Stock subject to specified restrictions ("restricted shares"). Restricted shares
are subject to forfeiture if the participant does not meet certain conditions such as continued
employment over a specified forfeiture period and/or the attainment of specified performance targets
over the forfeiture period.
The Board of Directors also may award to a participant units representing the right to
receive shares of Common Stock in the future subject to the achievement of one or more goals
relating to the completion of service by the participant and/or the achievement of performance or
other objectives ("restricted units"). The terms and conditions of restricted shares and restricted
unit awards are determined by the Board of Directors.
For participants who are subject to Section 162(m) of the IRC, the performance targets
described in the preceding two paragraphs may be established by the Board of Directors, in its
discretion, based on one or more of the following measures: revenue; net revenue; revenue growth;
net revenue growth; earnings before interest, taxes, depreciation and amortization ("EBITDA"); funds
from operations; funds from operations per share; operating income (loss); operating income growth;
operating cash flow; adjusted operating cash flow return on income; net income; net income growth;
pre- or after-tax income (loss); cash available for distribution; cash available for distribution
per share; cash and/or cash equivalents available for operations; net earnings (loss); earnings
(loss) per share; earnings per share growth; return on equity; return on assets; share price
performance (based on historical performance or in relation to selected organizations or indices);
total shareholder return; total shareholder return growth; economic value added; improvement in
cash-flow (before or after tax) or EBITDA; successful capital raises; and confidential business unit
objectives (the "Performance Goals").
The above terms shall have the same meaning as in the Company' financial statements, or if
the terms are not used in the Company's financial statements, as applied pursuant to generally
accepted accounting principles, or as used in the industry, as applicable.
PERFORMANCE AWARDS. The Board of Directors may grant performance awards to participants
under such terms and conditions as the Board of Directors deems appropriate. A performance award
entitles a participant to receive a payment from the Company, the amount of which is based upon the
attainment of predetermined performance targets over a specified award period. Performance awards
may be paid in cash, shares of Common Stock or a combination thereof, as determined by the Board of
Directors.
Award periods will be established at the discretion of the Board of Directors. The
performance targets will also be determined by the Board of Directors. With respect to participants
subject to Section 162(m) of the IRC, the applicable performance targets shall be established, in
the Board of Directors' discretion, based on one or more of the Performance Goals described under
the section titled "Restricted Shares and Restricted Units." To the extent that a participant is not
subject to Section 162(m) of the IRC, when circumstances occur that cause predetermined performance
targets to be an inappropriate measure of achievement, the Board of Directors, at its discretion,
may adjust the performance targets.
ELIGIBILITY AND LIMITATION ON AWARDS
The Board of Directors may grant awards to any officer, key employee, director, consultant,
independent contractor or advisor of the Company or its affiliates. It is presently contemplated
that approximately five employees will be eligible to receive awards, however, we expect such number
will increase in the event we consummate an asset redeployment transaction. In any calendar year, no
participant may receive awards for more than 500,000 shares of the Company's Common Stock and
$2,500,000 in cash.
-18-
AWARDS GRANTED UNDER THE 2006 STOCK INCENTIVE PLAN
As disclosed above in the table under the heading "Equity Plans", as of _, 2006, we have
agreed to award options to purchase an aggregate of 19,562,911 shares of Common Stock, the grant of
which is subject to the Company increasing the number of shares of its authorized Common Stock
pursuant to the adoption of the amendment to our Articles of Incorporation. We have not determined
whether or not any of such options will be awarded under the 2006 Incentive Plan.
Except as set forth above, as of the date hereof, no specific awards have been granted or
are contemplated under the 2006 Incentive Plan and the exact types and amounts of any future awards
to be made to any eligible participants pursuant to the 2006 Incentive Plan are not presently
determinable. As a result of the discretionary nature of the 2006 Incentive Plan, except as set
forth above, it is not possible to state who the participants in the 2006 Incentive Plan will be in
the future or the number of options or other awards to be received by a person or group.
SHARES SUBJECT TO THE 2006 STOCK INCENTIVE PLAN
An aggregate of 50 million shares of Common Stock is reserved for issuance and available
for awards under the 2006 Stock Incentive Plan. No more than 30 million of the total shares of
Common Stock available for issuance under the 2006 Incentive Plan may be granted in the form of
restricted shares, restricted units or performance awards. Shares of Common Stock not actually
issued (as a result, for example, of the lapse of an option) are available for additional grants.
Shares surrendered to or withheld by the Company in payment or satisfaction of the exercise price of
a stock option or tax withholding obligations with respect to an award may be the subject of a new
award under the 2006 Stock Incentive Plan. Shares to be issued or purchased under the 2006 Stock
Incentive Plan may be either authorized but unissued Common Stock or treasury shares. Shares issued
with respect to awards assumed by the Company in connection with acquisitions do not count against
the total number of shares available under the 2006 Stock Incentive Plan.
ANTI-DILUTION PROTECTION
In the event of any changes in the capital structure of the Company, including a change
resulting from a stock dividend or stock split, or combination or reclassification of shares, the
Board of Directors is empowered to make such equitable adjustments with respect to awards or any
provisions of the 2006 Stock Incentive Plan as it deems necessary and appropriate, including, if
necessary, any adjustments in the maximum number of shares of Common Stock subject to the 2006 Stock
Incentive Plan, the number of shares of Common Stock subject to and the exercise price of an
outstanding award, or the maximum number of shares that may be subject to one or more awards granted
to any one recipient during a calendar year.
AMENDMENT AND TERMINATION
The Board of Directors may at any time amend or terminate the 2006 Stock Incentive Plan,
provided that no such action may be taken that adversely affects any rights or obligations with
respect to any awards theretofore made under the 2006 Stock Incentive Plan without the consent of
the recipient. No awards may be made under the 2006 Stock Incentive Plan after the tenth anniversary
of its effective date. Certain provisions of the 2006 Stock Incentive Plan relating to
performance-based awards under Section 162(m) of the IRC will expire on the fifth anniversary of the
effective date.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of the issuance and/or exercise of awards under the
2006 Stock Incentive Plan are as described below. The following information is only a summary of the
tax consequences of the awards, and recipients should consult with their own tax advisors with
respect to the tax consequences inherent in the ownership and/or exercise of the awards, and the
ownership and disposition of any underlying securities.
-19-
INCENTIVE STOCK OPTIONS. The 2006 Stock Incentive Plan qualifies as an incentive stock
option plan within the meaning of Section 422 of the IRC. A recipient who is granted an incentive
stock option will not recognize any taxable income for federal income tax purposes either on the
grant or exercise of the incentive stock option. If the recipient disposes of the shares purchased
pursuant to the incentive stock option more than two years after the date of grant and more than one
year after the transfer of the shares to the recipient (the required statutory "holding period"),
(a) the recipient will recognize long-term capital gain or loss, as the case may be, equal to the
difference between the selling price and the option price; and (b) the Company will not be entitled
to a deduction with respect to the shares of stock so issued. If the holding period requirements are
not met, any gain realized upon disposition will be taxed as ordinary income to the extent of the
excess of the lesser of (i) the excess of the fair market value of the shares at the time of
exercise over the option price, and (ii) the gain on the sale. The Company will be entitled to a
deduction in the year of disposition in an amount equal to the ordinary income recognized by the
recipient. Any additional gain will be taxed as short-term or long-term capital gain depending upon
the holding period for the stock. A sale for less than the option price results in a capital loss.
The excess of the fair market value of the shares on the date of exercise over the option
price is, however, includable in the option holder's income for alternative minimum tax purposes.
NON-QUALIFIED STOCK OPTIONS. The recipient of a non-qualified stock option under the 2006
Stock Incentive Plan will not recognize any income for federal income tax purposes on the grant of
the option. Generally, on the exercise of the option, the recipient will recognize taxable ordinary
income equal to the excess of the fair market value of the shares on the exercise date over the
option price for the shares. The Company generally will be entitled to a deduction on the date of
exercise in an amount equal to the ordinary income recognized by the recipient. Upon disposition of
the shares purchased pursuant to the stock option, the recipient will recognize long-term or
short-term capital gain or loss, as the case may be, equal to the difference between the amount
realized on such disposition and the basis for such shares, which basis includes the amount
previously recognized by the recipient as ordinary income.
STOCK APPRECIATION RIGHTS. A recipient who is granted stock appreciation rights will not
recognize any taxable income on the receipt of the SARs. Upon the exercise of a SAR, (a) the
recipient will recognize ordinary income equal to the amount received (the increase in the fair
market value of one share of the Company' Common Stock from the date of grant of the SAR to the date
of exercise); and (b) the Company will be entitled to a deduction on the date of exercise in an
amount equal to the ordinary income recognized by the recipient.
RESTRICTED SHARES. A recipient will not be taxed at the date of an award of restricted
shares, but will be taxed at ordinary income rates on the fair market value of any restricted shares
as of the date that the restrictions lapse, unless the recipient, within 30 days after transfer of
such restricted shares to the recipient, elects under Section 83(b) of the IRC to include as income
the fair market value of the restricted shares as of the date of such transfer. The Company will be
entitled to a corresponding deduction. Any disposition of shares after restrictions lapse will be
subject to the regular rules governing long-term and short-term capital gains and losses, with the
basis for this purpose equal to the fair market value of the shares at the end of the restricted
period (or on the date of the transfer of the restricted shares, if the employee elects to be taxed
on the fair market value upon such transfer). Dividends received by a recipient during the
restricted period will be taxable to the recipient at ordinary income tax rates and will be
deductible by the Company unless the recipient has elected to be taxed on the fair market value of
the restricted shares upon transfer, in which case, they will thereafter be taxable to the employee
as dividends and will not be deductible by the Company.
RESTRICTED UNITS. A participant will normally not recognize taxable income upon an award of
restricted units, and the Company will not be entitled to a deduction until the lapse of the
applicable restrictions. Upon the lapse of the restrictions and the issuance of the earned shares,
the participant will recognize ordinary taxable income in an amount equal to the fair market value
of the Common Stock received and the Company will be entitled to a deduction in the same amount.
PERFORMANCE AWARDS. Normally, a participant will not recognize taxable income upon the
grant of performance awards. Subsequently, when the conditions and requirements for the grants have
been satisfied and the payment determined, any cash received and the fair market value of any Common
Stock received will constitute ordinary income to the participant. The Company also will then be
entitled to a deduction in the same amount.
-20-
EFFECTIVE DATE
The 2006 Stock Incentive Plan shall be effective immediately on the date of its approval by
the stockholders of the Company. If not approved by the stockholders, no awards will be made under
the 2006 Stock Incentive Plan. If and when the 2006 Incentive Plan becomes effective, the Company's
1999 Plan will be frozen such that no further awards will be made under the 1999 Plan, and any
shares of Common Stock then reserved for grant under the 1999 Plan will be released from reserve
under the 1999 Plan. However, shares of Common Stock subject to or reserved for outstanding awards
granted under the 1999 Plan prior to the effective date of the 2006 Incentive Plan will remain
available or reserved for issuance under the 1999 Plan, and the 1999 Plan will remain in effect
after the effective date of the 2006 Stock Incentive Plan to the extent necessary to administer such
previously granted awards.
VOTE REQUIRED
Approval of the 2006 Stock Incentive Plan will require the affirmative vote of at least a
majority in voting interest of the stockholders present in person or by proxy and voting at the
special meeting of stockholders, assuming the presence of a quorum. If the stockholders do not
approve the 2006 Stock Incentive Plan, it will not be implemented, but the Company reserves the
right to adopt such other compensation plans and programs as it deems appropriate and in the best
interests of the Company and its stockholders.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE 2006 STOCK
INCENTIVE PLAN.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not intend to present
any other matter for action at the meeting other than as set forth in the Notice of Special Meeting
and this Proxy Statement. If any other matters properly come before the meeting, it is intended that
the shares represented by the proxies will be voted, in the absence of contrary instructions, in the
discretion of the persons named in the proxy.
REQUIREMENTS FOR SUBMISSION OF
STOCKHOLDER PROPOSALS, NOMINATION OF DIRECTORS AND
OTHER BUSINESS OF STOCKHOLDERS
Under the rules of the Commission, if a stockholder wants to nominate persons for election
as Directors or wants us to include a proposal in our Proxy Statement and Proxy Card for
presentation at our 2006 Annual Meeting, persons to be nominated or the proposal must be received by
us at our principal executive offices at 8C Pleasant Street S., First Floor, South Natick, MA 01760,
within a reasonable time before we begin to print and mail our proxy materials for the meeting. The
nomination or proposal should be sent to the attention of the Secretary of the Company and must
include the information and representations that are set out in Exchange Act Rule 14a-8.
Candidates for the Board of Directors should possess fundamental qualities of intelligence,
honesty, perceptiveness, good judgment, maturity, high ethics and standards, integrity, fairness and
responsibility; have a genuine interest in the Company; have no conflict of interest or legal
impediment which would interfere with the duty of loyalty owed to the Company and its stockholders;
and have the ability and willingness to spend the time required to function effectively as a
director of the Company. The Board of Directors may engage third-party search firms from time to
time to assist it in identifying and evaluating nominees for director. The Board of Directors
evaluates nominees recommended by stockholders, by other individuals and by the search firms in the
same manner, as follows. The Board of Directors reviews biographical information furnished by or
about the potential nominees to determine whether they have the experience and qualities discussed
above. When a Board vacancy occurs or is anticipated, the Board of Directors determines which of the
qualified candidates to interview, based on the current needs of the Board and the Company, and
members of the Board of Directors meet with these individuals.
-21-
FOR THE BOARD OF DIRECTORS
Patrick Planche
SECRETARY
-22-
Appendix A
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
ADVANCED LUMITECH, INC.
The undersigned, being the President, Chief Executive Officer, Treasurer, and Secretary of
Advanced Lumitech, Inc. (the "Corporation"), a corporation existing under the laws of the State of
Nevada, do hereby certify under the seal of the said corporation as follows:
1. The Articles of Incorporation of the Corporation are hereby amended by replacing Article
I, in its entirety, with the following:
"The name of the corporation is Brightec, Inc."
2. The Articles of Incorporation of the Corporation are hereby amended by replacing Article
IV, in its entirety, with the following:
"The Corporation is authorized to issue two classes of stock. One class of stock shall be
Class "A" Common Stock, par value $0.001. The second class of stock shall be Preferred Stock, par
value $0.001. The Preferred Stock, or any series thereof, shall have such designations, preferences
and relative, participating, optional or other special rights and qualifications, limitations or
restrictions thereof as shall be expressed in the resolution or resolutions providing for the issue
of such stock adopted by the board of directors and may be made dependent upon facts ascertainable
outside such resolution or resolutions of the board of directors, provided that the matter in which
such facts shall operate upon such designations, preferences, rights and qualifications; limitations
or restrictions of such class or series of stock is clearly and expressly set forth in the
resolution or resolutions providing for the issuance of such stock by the board of directors.
The total number of shares of stock of each class which the Corporation shall have
authority to issue and the par value of each share of each class of stock are as follows:
- ------------------------------------- ----------------------------------- --------------------------
Class Par Value Authorized Shares
- ------------------------------------- ----------------------------------- --------------------------
Class "A" Common Stock $0.001 245,000,000
- ------------------------------------- ----------------------------------- --------------------------
Preferred Stock $0.001 5,000,000
- ------------------------------------- ----------------------------------- --------------------------
Totals: 250,000,000
- ------------------------------------- ----------------------------------- --------------------------
3. The amendment of the Articles of Incorporation herein certified has been duly adopted by
the unanimous written consent of the Corporation's Board of Directors and a majority of the
Corporation's stockholders in accordance with the provisions of Section 78.320 of the Nevada Revised
Statutes.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be hereunto affixed
and this Certificate of Amendment of the Corporation's Articles of Incorporation as amended, to be
signed by Patrick Planche, its President, Chief Executive Officer, Treasurer, and Secretary, this 18
day of July, 2006.
A-1
ADVANCED LUMITECH, INC.
By:/s/ Patrick Planche
----------------------------------------
Name: Patrick Planche
Title:President, Chief Executive
Officer, Treasurer, and Secretary
A-2
Appendix B
ADVANCED LUMITECH, INC.
2006 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the Advanced Lumitech, Inc. 2006 Stock Incentive Plan (the
"Plan") is to provide a means through which the Company and its Subsidiaries may attract able
persons to enter and remain in the employ of the Company and its Subsidiaries and to provide a means
whereby eligible persons can acquire and maintain Common Stock ownership, or be paid incentive
compensation measured by reference to the value of Common Stock, thereby strengthening their
commitment to the welfare of the Company and its Subsidiaries and promoting an identity of interest
between stockholders and these eligible persons.
So that the appropriate incentive can be provided, the Plan provides for granting Incentive
Stock Options, Non-qualified Stock Options, Restricted Stock Awards Restricted Stock Unit Awards and
Performance Awards and other Stock-Based Awards, or any combination of the foregoing. Capitalized
terms not defined in the text are defined in Section 24.
2. SHARES SUBJECT TO THE PLAN. Subject to Section 18, the total number of Shares reserved
and available for grant and issuance pursuant to this Plan will be 50,000,000 Shares. Of the total
number of Shares reserved for issuance under the Plan, no more than 30,000,000 shares of Common
Stock may be issued under the Plan as Awards under Sections 6 and 7 of the Plan. Shares that have
been (a) reserved for issuance under options which have expired or otherwise terminated without
issuance of the underlying Shares, (b) reserved for issuance or issued under an Award granted
hereunder but are forfeited or are repurchased by the Company at the original issue price, or (c)
reserved for issuance or issued under an Award that otherwise terminates without Shares being
issued, shall be available for issuance. In the event of the exercise of SARs, whether or not
granted in tandem with options, only the number of shares of Common Stock actually issued in payment
of such SARs shall be charged against the number of shares of Common Stock available for the grant
of Awards hereunder, and any Common Stock subject to tandem options, or portions thereof, which have
been surrendered in connection with any such exercise of SARs shall not be charged against the
number of shares of Common Stock available for the grant of Awards hereunder. At all times the
Company shall reserve and keep available a sufficient number of Shares as shall be required to
satisfy the requirements of all outstanding options granted under this Plan and all other
outstanding but unvested Awards granted under this Plan. The Shares to be offered under the Plan
shall be authorized and unissued Common Stock, or issued Common Stock that shall have been
reacquired by the Company. Subject to adjustment in accordance with Section 18.4, in any calendar
year, no Participant shall be granted Awards in respect of more than 500,000 shares of Common Stock
(whether through grants of options or SARs or other Awards of Common Stock or rights with respect
thereto) or cash-based Awards for more than $2,500,000.
3. ELIGIBILITY. ISO's (as defined in Section 5 below) may be granted only to employees
(including officers and directors who are also employees) of the Company or of a Subsidiary of the
Company. All other Awards may be granted to employees, officers, directors, consultants, independent
contractors and advisors of the Company or Subsidiary of the Company.
4. ADMINISTRATION.
4.1 COMMITTEE AUTHORITY. This Plan will be administered by the Committee. Any
power, authority or discretion granted to the Committee may also be taken by the Board. Subject to
the general purposes, terms and conditions of this Plan, and at the direction of the Board, the
Committee will have full power to implement and carry out this Plan. Without limitation, the
Committee will have the authority to:
(a) select persons to receive Awards;
(b) determine the nature, extent, form and terms of Awards and the number of
Shares or other consideration subject to Awards;
B-1
(c) determine the vesting, exerciseability and payment of Awards;
(d) correct any defect, supply any omission or reconcile any inconsistency in
this Plan, any Award or any Award Agreement;
(e) determine whether Awards will be granted singly, in combination with, in
tandem with, in replacement of, or as alternatives to, other Awards under
this Plan or any other incentive or compensation plan of the Company or any
Subsidiary of the Company;
(f) prescribe, amend and rescind rules and regulations relating to this Plan or
any Award;
(g) make all factual determinations with respect to, and otherwise construe and
interpret, this Plan, any Award Agreement and any other agreement or
document executed pursuant to this Plan;
(h) grant waivers of Plan or Award conditions;
(i) determine whether an Award has been earned;
(j) accelerate the vesting of any Award; and
(k) make all other determinations necessary or advisable for the administration
of this Plan.
The Committee's interpretation of the Plan or any documents evidencing Awards granted
pursuant thereto and all decisions and determinations by the Committee with respect to the Plan
shall be final, binding, and conclusive on all parties unless otherwise determined by the Board.
4.2 COMMITTEE DISCRETION. Any determination made by the Committee with respect
to any Award will be made in its sole discretion at the time of grant of the Award or, unless in
contravention of any express term of this Plan or Award, at any later time, and such determination
will be final and binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate such of its powers and authority under the Plan as it deems
appropriate to designated officers or employees of the Company. In addition, the full Board may
exercise any of the powers and authority of the Committee under the Plan. In the event of such
delegation of authority or exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer, as appropriate, to the delegate of the Committee or the Board.
Actions taken by the Committee and any delegation by the Committee to designated officers or
employees shall comply with Section 16(b) of the Exchange Act, the performance-based provisions of
Section 162(m) of the Code, and the regulations promulgated under each of such statutory provisions,
or the respective successors to such statutory provisions or regulations, as in effect from time to
time, to the extent applicable. Notwithstanding any other provision of the Plan, if the Committee
deems it to be in the best interest of the Company, the Committee retains the discretion to make
such Awards under the Plan that may not comply with the requirements of Section 16(b) of the
Exchange Act, Section 162(m) of the Code, or any other relevant statute or regulation.
5. STOCK OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such options will be intended to be "Incentive Stock Options" within the meaning
of Section 422 of the Code or any successor section thereof ("ISO's") or non-qualified stock options
(options not intended to qualify as incentive stock options) ("NQSO's"), the number of Shares
subject to the Option, the Exercise Price of the Option, the period during which the Option may be
exercised, and all other terms and conditions of the Option, subject to the following:
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5.1 FORM OF OPTION GRANT. Each Option granted under this Plan will be evidenced
by an Award Agreement ("Stock Option Agreement"), which will expressly identify the Option as an ISO
or NQSO, and will be in such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 EXERCISE PERIOD. Options may be exercisable to the extent vested within the
times or upon the events determined by the Committee as set forth in the Stock Option Agreement
governing such Option; provided, however, that no Option will be exercisable after the expiration of
ten (10) years from the date the Option is granted; and provided further that no ISO granted to a
person who directly or by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Subsidiary of the Company ("Ten Percent
Stockholder") will be exercisable after the expiration of five (5) years from the date the ISO is
granted. The Committee also may provide for options to become exercisable at one time or from time
to time, periodically or otherwise, in such number of Shares or percentage of Shares as the
Committee determines.
5.3 EXERCISE PRICE. The Exercise Price of an Option will be determined by the
Committee when the Option is granted and may be greater, less than, or equal to the Fair Market
Value of the Shares on the date of grant; provided that: (i) the Exercise Price of an ISO will be
not less than 100% of the Fair Market Value of the Shares on the date of grant; and (ii) the
Exercise Price of any ISO granted to a Ten Percent Stockholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant. In addition, the Exercise Price may (i) be
subject to a limit on the economic value that may be realized by a Participant from an Option or
SAR, or otherwise (ii) vary from the original purchase price, provided that such variable purchase
price can never be less than the Fair Market Value of the shares of Common Stock subject to such
option or SAR, determined as of the date of grant.
5.4 DATE OF GRANT. The date of grant of an Option will be the date on which the
Committee makes the determination to grant such option, unless otherwise specified by the Committee.
The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a
reasonable time after the granting of the Option.
5.5 METHOD OF EXERCISE. Options may be exercised by delivery to the Company of a
written stock option exercise agreement (the "Exercise Agreement") in a form approved from time to
time by the Committee (which need not be the same for each Participant), stating the number of
Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise
Agreement, if any, and such representations and agreements regarding Participant's investment intent
and access to information and other matters, if any, as may be required or desirable by the Company
to comply with applicable securities laws, together with payment in full of the Exercise Price for
the number of Shares being purchased. Payment for the Shares purchased may be made in accordance
with Section 8 of this Plan.
5.6 TERMINATION. Unless otherwise expressly provided in an Award Agreement or
otherwise determined by the Committee, exercise of an Option will always be subject to the
following:
a. If the Participant is Terminated for any reason (including voluntary
Termination) other than death or Disability, then the Participant may
exercise such Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later than three
(3) months after the Termination Date (or such shorter or longer time
period not exceeding five (5) years as may be determined by the Committee,
with any exercise beyond three (3) months after the Termination Date deemed
to be a NQSO), but in any event, no later than the expiration date of the
Options.
b. If the Participant is Terminated because of Participant's death or
Disability (or the Participant dies within three (3) months after a
Termination other than for Cause or because of Participant's Disability),
then Participant's Options may be exercised only to the extent that such
Options would have been exercisable by Participant on the Termination Date
and must be exercised by Participant (or Participant's legal representative
or authorized assignee) no later than twelve (12) months after the
Termination Date (or such shorter or longer time period not exceeding five
(5) years as may be determined by the Committee, with any such exercise
beyond twelve (12) months after the Termination Date when the Termination
is for Participant's death or Disability, deemed to be a NQSO), but in any
event no later than the expiration date of the Options.
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c. Notwithstanding the provisions in paragraph 5.6(a) above, if a Participant
is terminated for Cause, neither the Participant, the Participant's estate
nor such other person who may then hold the Option shall be entitled to
exercise any option with respect to any Shares whatsoever, after
termination of service, whether or not after termination of service the
Participant may receive payment from the Company or Subsidiary for vacation
pay, for services rendered prior to termination, for services rendered for
the day on which termination occurs, for salary in lieu of notice, or for
any other benefits. In making such determination, the Committee shall give
the Participant an opportunity to present to the Committee evidence on his
behalf. For the purpose of this paragraph, termination of service shall be
deemed to occur on the date when the Company dispatches notice or advice to
the Participant that his or her service is terminated.
d. If the Participant is not an employee or a director, the Award Agreement
shall specify treatment of the Award upon Termination.
5.7 LIMITATIONS ON ISO. The aggregate Fair Market Value (determined as of the
date of grant) of Shares with respect to which ISO's are exercisable for the first time by a
Participant during any calendar year (under this Plan or under any other incentive stock option plan
of the Company or Subsidiary of the Company) will not exceed $100,000 or such other amount as may be
required by the Code. If the Fair Market Value of Shares on the date of grant with respect to which
ISO's are exercisable for the first time by a Participant during any calendar year exceeds $100,000,
then the Options for the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISO's and the Options for the amount in excess of $100,000 that become exercisable in that
calendar year will be NQSO's. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of this Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISO's, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective date of such
amendment.
5.8 MODIFICATION, EXTENSION OR RENEWAL. The Committee may modify, extend or renew
outstanding Options and authorize the grant of new Options in substitution therefor, provided that,
except as expressly provided for in the Plan or an Award Agreement, any such action may not, without
the written consent of a Participant, impair any of such Participant's rights under any Option
previously granted and (ii) except as provided for in Section 18 of the Plan, Options issued
hereunder will not be repriced, replaced or regranted through cancellation or by lowering the
Exercise Price of a previously granted Award without prior approval of the Company's stockholders.
Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in
accordance with Section 424(h) of the Code.
5.9 LIMITATIONS ON EXERCISE. The Committee may specify a reasonable minimum
number of Shares that may be purchased on any exercise of an Option, provided that such minimum
number will not prevent Participant from exercising the Option for the full number of Shares for
which it is then exercisable.
5.10 NO DISQUALIFICATION. Notwithstanding any other provision in this Plan, no
term of this Plan relating to ISO's will be interpreted, amended or altered, nor will any discretion
or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422
of the Code or, without the consent of the Participant affected, to disqualify any ISO under Section
422 of the Code.
5.11 LAPSED GRANTS. Notwithstanding anything in the Plan to the contrary, the
Company may, in its sole discretion, allow the exercise of a lapsed grant if the Company determines
that: (i) the lapse was solely the result of the Company's inability to timely execute the exercise
of an option award prior to its lapse, and (ii) the Participant made valid and reasonable efforts to
exercise the Award. In the event the Company makes such a determination, the Company shall allow the
exercise to occur as promptly as possible following its receipt of exercise instructions subsequent
to such determination.
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5.12 STOCK APPRECIATION RIGHTS (SARS). In addition to the grant of options, as
set forth above, the Committee may also grant SARs to any person eligible to be a Participant, which
grant shall consist of a right that is the economic equivalent, and in all other regards is
identical to a stock option that is permitted to be granted under the Plan, except that on the
exercise of such SAR, the Participant shall receive shares of Common Stock having a Fair Market
Value that is equal to the Fair Market Value of the shares of Common Stock that would be subject to
such an option, reduced by the amount that would be required to be paid by the Participant as the
purchase price on exercise of such option. A grant of a SAR shall be documented by means of an Award
Agreement (a "SAR Agreement") containing the relevant terms and conditions of such grant. For
purposes of the limitation on the number of shares of Common Stock that may be subject to Stock
Options granted to any employee during any one calendar year, and for purposes of the aggregate
limitation on the number of shares of Common Stock that may be subject to grants under the Plan,
SARs shall be treated in the same manner as options would be treated.
6. RESTRICTED STOCK.
6.1. RESTRICTED STOCK AWARDS. The Committee may grant to any Participant an Award
of Common Stock in such number of shares, and on such terms, conditions and restrictions, whether
based on performance standards, periods of service, retention by the Participant of ownership of
purchased or designated shares of Common Stock or other criteria, as the Committee shall establish.
If the Committee determines to make performance-based Awards of restricted Shares under this Section
6 to "covered employees" (as defined in Section 162(m) of the Code), performance targets will be
limited to specified levels of one or more of the Performance Factors specified in the definition
set forth in Section 24. The terms of any Restricted Stock Award granted under this Plan shall be
set forth in an Award Agreement which shall contain provisions determined by the Committee and not
inconsistent with this Plan.
6.2 ISSUANCE OF RESTRICTED SHARES. As soon as practicable after the Date of Grant
of a Restricted Stock Award by the Committee, the Company shall cause to be transferred on the books
of the Company, or its agent, Common Stock, registered on behalf of the Participant, evidencing the
restricted Shares covered by the Award, but subject to forfeiture to the Company as of the Date of
Grant if an Award Agreement with respect to the Restricted Shares covered by the Award is not duly
executed by the Participant and timely returned to the Company. All Common Stock covered by Awards
under this Section 6 shall be subject to the restrictions, terms and conditions contained in the
Plan and the Award Agreement entered into by the Participant. Until the lapse or release of all
restrictions applicable to an Award of restricted Shares, the share certificates representing such
restricted Shares may be held in custody by the Company, its designee, or, if the certificates bear
a restrictive legend, by the Participant. Upon the lapse or release of all restrictions with respect
to an Award as described in Section 6.5, one or more share certificates, registered in the name of
the Participant, for an appropriate number of shares as provided in Section 6.5, free of any
restrictions set forth in the Plan and the Award Agreement shall be delivered to the Participant.
6.3 SHAREHOLDER RIGHTS. Beginning on the Date of Grant of the Restricted Stock
Award and subject to execution of the Award Agreement as provided in Section 6.2, the Participant
shall become a shareholder of the Company with respect to all shares subject to the Award Agreement
and shall have all of the rights of a shareholder, including, but not limited to, the right to vote
such shares and the right to receive dividends; provided, however, that any Common Stock distributed
as a dividend or otherwise with respect to any restricted Shares as to which the restrictions have
not yet lapsed, shall be subject to the same restrictions as such restricted Shares and held or
restricted as provided in Section 6.2.
6.4 RESTRICTION ON TRANSFERABILITY. None of the restricted Shares may be assigned
or transferred (other than by will or the laws of descent and distribution, or to an inter vivos
trust with respect to which the Participant is treated as the owner under Sections 671 through 677
of the Code, except to the extent that Section 16 of the Exchange Act limits a Participant's right
to make such transfers), pledged or sold prior to lapse of the restrictions applicable thereto.
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6.5 DELIVERY OF SHARES UPON VESTING. Upon expiration or earlier termination of
the forfeiture period without a forfeiture and the satisfaction of or release from any other
conditions prescribed by the Committee, or at such earlier time as provided under the provisions of
Section 6.7, the restrictions applicable to the restricted Shares shall lapse. As promptly as
administratively feasible thereafter, the Company shall deliver to the Participant or, in case of
the Participant's death, to the Participant's Beneficiary, one or more share certificates for the
appropriate number of shares of Common Stock, free of all such restrictions, except for any
restrictions that may be imposed by law.
6.6 FORFEITURE OF RESTRICTED SHARES. Subject to Section 6.7, all restricted
Shares shall be forfeited and returned to the Company and all rights of the Participant with respect
to such restricted Shares shall terminate unless the Participant continues in the service of the
Company or a Subsidiary as an employee until the expiration of the forfeiture period for such
restricted Shares and satisfies any and all other conditions set forth in the Award Agreement. The
Committee shall determine the forfeiture period (which may, but need not, lapse in installments) and
any other terms and conditions applicable with respect to any Restricted Stock Award.
6.7 WAIVER OF FORFEITURE PERIOD. Notwithstanding anything contained in this
Section 6 to the contrary, the Committee may, in its sole discretion, waive the forfeiture period
and any other conditions set forth in any Award Agreement under appropriate circumstances (including
the death, Disability or retirement of the Participant or a material change in circumstances arising
after the date of an Award) and subject to such terms and conditions (including forfeiture of a
proportionate number of the restricted Shares) as the Committee shall deem appropriate.
6.8 RESTRICTED STOCK UNIT AWARDS. Without limiting the generality of the
foregoing provisions of this Section 6, and subject to such terms, limitations and restrictions as
the Committee may impose, Participants designated by the Committee may receive Awards of Restricted
Stock Units representing the right to receive shares of Common Stock in the future subject to the
achievement of one or more goals relating to the completion of service by the Participant and/or the
achievement of performance or other objectives. If the Committee determines to make
performance-based Awards of Restricted Stock Units under this Section 6.8 to "covered employees" (as
defined in Section 162(m) of the Code), performance targets will be limited to specified levels of
one or more of the Performance Factors specified in the definition set forth in Section 24.
Restricted Stock Unit Awards shall be subject to the restrictions, terms and conditions contained in
the Plan and the applicable Award Agreements entered into by the appropriate Participants. Until the
lapse or release of all restrictions applicable to an Award of Restricted Stock Units, no shares of
Common Stock shall be issued in respect of such Awards and no Participant shall have any rights as a
stockholder of the Company with respect to the shares of Common Stock covered by such Restricted
Stock Unit Award. Upon the lapse or release of all restrictions with respect to a Restricted Stock
Unit Award or at a later date if distribution has been deferred, one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares, free of any
restrictions set forth in the Plan and the related Award Agreement shall be delivered to the
Participant. A Participant's Restricted Stock Unit Award shall not be contingent on any payment by
or consideration from the Participant other than the rendering of services. Notwithstanding anything
contained in this Section 6.8 to the contrary, the Committee may, in its sole discretion, waive the
forfeiture period and any other conditions set forth in any Award Agreement under appropriate
circumstances (including the death, Disability or retirement of the Participant) and subject to such
terms and conditions (including forfeiture of a proportionate number of the Restricted Stock Units)
as the Committee shall deem appropriate.
7. PERFORMANCE AND OTHER STOCK-BASED AWARDS.
7.1 PERFORMANCE AWARDS.
(a) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE AMOUNTS. The
Committee may grant Performance Awards to Participants. A Performance Award
shall consist of the right to receive a payment (measured by the Fair Market
Value of a specified number of shares of Common Stock, increases in such Fair
Market Value during the Award Period and/or a fixed cash amount) contingent
upon the extent to which certain predetermined performance targets have been
met during an Award Period. The Award Period shall be two or more fiscal or
calendar years as determined by the Committee. The Committee, in its discretion
and under such terms as it deems appropriate, may permit newly eligible
Participants, such as those who are promoted or newly hired, to receive
Performance Awards after an Award Period has commenced.
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(b) Performance Targets. The performance targets may include such goals related
to the performance of the Company or, where relevant, any one or more of its
Subsidiaries or divisions and/or the performance of a Participant as may be
established by the Committee in its discretion. In the case of Performance
Awards to "covered employees" (as defined in Section 162(m) of the Code), the
targets will be limited to specified levels of one or more of the Performance
Factors specified in the definition set forth in Section 24. The performance
targets established by the Committee may vary for different Award Periods and
need not be the same for each Participant receiving a Performance Award in an
Award Period. Except to the extent inconsistent with the performance-based
compensation exception under Section 162(m) of the Code, in the case of
Performance Awards granted to employees to whom such section is applicable, the
Committee, in its discretion, but only under extraordinary circumstances as
determined by the Committee, may change any prior determination of performance
targets for any Award Period at any time prior to the final determination of
the Award when events or transactions occur to cause the performance targets to
be an inappropriate measure of achievement.
(c) Earning Performance Awards. The Committee, at or as soon as practicable
after the Date of Grant, shall prescribe a formula to determine the percentage
of the Performance Award to be earned based upon the degree of attainment of
the applicable performance targets.
(d) Payment of Earned Performance Awards. Payments of earned Performance Awards
shall be made in cash, Common Stock or Stock Units, or a combination of cash,
Common Stock and Stock Units, at the discretion of the Committee. The
Committee, in its sole discretion, may define, and set forth in the applicable
Award Agreement, such terms and conditions with respect to the payment of
earned Performance Awards as it may deem desirable.
(e) Termination of Service. In the event of a Participant's Termination during
an Award Period, the Participant's Performance Awards shall be forfeited except
as may otherwise be provided in the applicable Award Agreement.
7.2. GRANT OF OTHER STOCK-BASED AWARDS. Other stock-based awards, consisting of
stock purchase rights (with or without loans to Participants by the Company containing such terms as
the Committee shall determine), Awards of Common Stock, or Awards valued in whole or in part by
reference to, or otherwise based on, Common Stock, may be granted either alone or in addition to or
in conjunction with other Awards under the Plan. Subject to the provisions of the Plan, the
Committee shall have sole and complete authority to determine the persons to whom and the time or
times at which such Awards shall be made, the number of shares of Common Stock to be granted
pursuant to such Awards, and all other conditions of the Awards. Any such Award shall be confirmed
by an Award Agreement executed by the Committee and the Participant, which Award Agreement shall
contain such provisions as the Committee determines to be necessary or appropriate to carry out the
intent of this Plan with respect to such Award.
7.3. TERMS OF OTHER STOCK-BASED AWARDS. In addition to the terms and conditions
specified in the Award Agreement, Awards made pursuant to Section 7.2 shall be subject to the
following:
(a) Any Common Stock subject to Awards made under Section 7.2 may not be sold,
assigned, transferred, pledged or otherwise encumbered prior to the date on
which the shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses; and
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(b) If specified by the Committee in the Award Agreement, the recipient of an
Award under Section 7.2 shall be entitled to receive, currently or on a
deferred basis, interest or dividends or dividend equivalents with respect to
the Common Stock or other securities covered by the Award; and
(c) The Award Agreement with respect to any Award shall contain provisions
dealing with the disposition of such Award in the event of the Participant's
Termination prior to the exercise, realization or payment of such Award,
whether such termination occurs because of retirement, Disability, death or
other reason, with such provisions to take account of the specific nature and
purpose of the Award.
8. PAYMENT FOR SHARE PURCHASES.
8.1 PAYMENT. Payment for Shares purchased pursuant to this Plan may be made in
cash (by check) or, where expressly approved for the Participant by the Committee or where expressly
indicated in the Participant's Award Agreement and where permitted by law:
(a) by cancellation of indebtedness of the Company to the Participant;
(b) by surrender of shares that either: (1) have been owned by Participant for
more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such
shares were purchased from the Company by use of a promissory note, such note has been fully paid
with respect to such shares); or (2) were obtained by Participant in the public market;
(c) by tender of a promissory note having such terms as may be approved by the
Committee and bearing interest at a rate sufficient to avoid imputation of income under the Code;
(d) by waiver of compensation due or accrued to the Participant for services
rendered;
(e) with respect only to purchases upon exercise of an option, and provided
that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the Participant and a
broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby the Participant irrevocably elects to
exercise the option and to sell a portion of the Shares so purchased to pay
for the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the Exercise Price directly to the
Company; or
(2) through a "margin" commitment from the Participant and an NASD Dealer
whereby the Participant irrevocably elects to exercise the option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the Company; or
(f) by any combination of the foregoing or other method authorized by the
Committee.
At its discretion, the Committee may modify or suspend any method for the exercise of
stock options, including any of the methods specified in the previous sentence. Delivery of shares
for exercising an Option shall be made either through the physical delivery of shares or through an
appropriate certification or attestation of valid ownership.
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8.2 LOAN GUARANTEES. Except as prohibited by law or regulation, the Committee may
authorize a guarantee by the Company of a third-party loan to the Participant for the purpose of
purchasing Shares awarded under this Plan.
9. WITHHOLDING TAXES
9.1 WITHHOLDING GENERALLY. Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit to the Company an
amount sufficient to satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in
satisfaction of Awards are to be made in cash, such payment will be net of an amount sufficient to
satisfy federal, state, and local withholding tax requirements.
9.2 STOCK WITHHOLDING. When, under applicable law, a Participant incurs tax
liability in connection with the exercise or vesting of any Award that is subject to tax withholding
and the Participant is obligated to pay the Company the amount required to be withheld, the
Committee may in its sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued that number of
Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on
the date that the amount of tax to be withheld is to be determined. All elections by a Participant
to have Shares withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the Committee.
10. PRIVILEGES OF STOCK OWNERSHIP. No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the Participant. After Shares
are issued to the Participant, the Participant will be a stockholder and have all the rights of a
stockholder with respect to such Shares, including the right to vote and receive all dividends or,
other distributions made or paid with respect to such Shares; provided, that if such Shares are
Restricted Stock, then any new, additional or different securities the Participant may become
entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any
other change in the corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that are repurchased at
the Participant's Purchase Price or Exercise Price pursuant to Section 12.
11. TRANSFERABILITY.
11.1 NON-TRANSFERABILITY OF OPTIONS. No Option granted under the Plan shall be
transferable by the Participant other than by will or by the laws of descent and distribution, and
such option right shall be exercisable, during the Participant's lifetime, only by the Participant.
Notwithstanding the foregoing, the Committee may set forth in an Award Agreement at the time of
grant or thereafter, that the Options (other than Incentive Stock Options) may be transferred to
members of the Participant's immediate family, to trusts solely for the benefit of such immediate
family members and to partnerships or limited liability companies in which such family members
and/or trusts are the only partners or members, as the case may be. For this purpose, immediate
family means the Participant's spouse, parents, children, stepchildren, grandchildren and legal
dependants. Any transfer of options made under this provision will not be effective until notice of
such transfer is delivered to the Company.
11.2 RIGHTS OF TRANSFEREE. Notwithstanding anything to the contrary herein, if an
Option has been transferred in accordance with Section 11.1 above, the Option shall be exercisable
solely by the transferee. The Option shall remain subject to the provisions of the Plan, including
that it will be exercisable only to the extent that the Participant or Participant's estate would
have been entitled to exercise it if the Participant had not transferred the Option. In the event of
the death of the Participant prior to the expiration of the right to exercise the transferred
Option, the period during which the Option shall be exercisable will terminate on the date 12 months
following the date of the Participant's death. In no event will the Option be exercisable after the
expiration of the exercise period set forth in the Award Agreement. The Option shall be subject to
such other rules relating to transferees as the Committee shall determine.
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12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company may reserve
to itself and/or its assignee(s) in the Award Agreement a right to repurchase a portion of or all
Unvested Shares held by a Participant following such Participant's Termination at any time within
three (3) months after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money indebtedness, at
the Participant's Exercise Price or Purchase Price, as the case may be.
13. CERTIFICATES. All certificates for Shares or other securities delivered under this
Plan will be subject to such stock transfer orders, legends and other restrictions, consistent with
the terms of the Awards, as the Committee may deem necessary or advisable, including restrictions
under any applicable federal, state or foreign securities law, or any rules, regulations and other
requirements of the SEC or any stock exchange or automated quotation system upon which the Shares
may be listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant's Shares,
the Committee may require the Participant to deposit all certificates representing Shares, together
with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in escrow until such
restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing
such restrictions to be placed on the certificates. Any Participant who is permitted to execute a
promissory note as partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so purchased as collateral
to secure the payment of Participant's obligation to the Company under the promissory note;
provided, however, that the Committee may require or accept other or additional forms of collateral
to secure the payment of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of the Participant's
Shares or other collateral. In connection with any pledge of the Shares, Participant will be
required to execute and deliver a written pledge agreement in such form as the Committee will from
time to time approve. In the discretion of the Committee, the pledge agreement may provide that the
Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from time to time,
authorize the Company, with the consent of the respective Participants, to issue new Awards in
exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may at
any time buy from a Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as the Committee and
the Participant may agree.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be effective
unless such Award is in compliance with all applicable federal and state securities laws, rules and
regulations of any governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance. However, in the event
that an Award is not effective as discussed in the preceding sentence, the Company will use
reasonable efforts to modify, revise or renew such Award in a manner so as to make the Award
effective. Notwithstanding any other provision in this Plan, the Company will have no obligation to
issue or deliver certificates for Shares under this Plan prior to: (a) obtaining any approvals from
governmental agencies that the Company determines are necessary or advisable; and/or (b) completion
of any registration or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or advisable. The Company will
be under no obligation to register the Shares with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state securities laws, stock exchange or
automated quotation system, and the Company will have no liability for any inability or failure to
do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted under this Plan
will confer or be deemed to confer on any Participant any right to continue in the employ of, or to
continue any other relationship with, the Company or any Subsidiary of the Company or limit in any
way the right of the Company or any Subsidiary of the Company to terminate Participant's employment
or other relationship at any time, with or without cause.
B-10
18. CORPORATE TRANSACTIONS.
18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. If a Change-of-Control
Event occurs:
(i) the successor company in any Change-of-Control Event may, if approved in
writing by the Committee prior to any Change-of-Control Event:
(1) substitute equivalent options or Awards or provide substantially similar
consideration to Participants as was provided to stockholders (after taking
into account the existing provisions of the Awards), or
(2) issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or substantially similar other
securities or substantially similar other property subject to repurchase
restrictions no less favorable to the Participant.
(ii) Notwithstanding anything in this Plan to the contrary, the Committee may, in its
sole discretion, provide that the vesting of any or all options and Awards
granted pursuant to this Plan will accelerate immediately prior to the
consummation of a Change-of-Control Event. If the Committee exercises such
discretion with respect to Options, such options will become exercisable in full
prior to the consummation of such event at such time and on such conditions as
the Committee determines, and if such Options are not exercised prior to the
consummation of such event, they shall terminate at such time as determined by
the Committee.
18.2 OTHER TREATMENT OF AWARDS. Subject to any rights and limitations set forth
in Section 18.1, if a Change-of-Control Event occurs or has occurred, any outstanding Awards will be
treated as provided in the applicable agreement or plan of merger, consolidation, dissolution,
liquidation, or sale of assets constituting the Change-of-Control Event.
18.3 ASSUMPTION OF AWARDS BY THE COMPANY. The Company, from time to time, also
may substitute or assume outstanding awards granted by another company, whether in connection with
an acquisition of such other company or otherwise, by either (a) granting an Award under this Plan
in substitution of such other company's award, or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award granted under this
Plan. Such substitution or assumption will be permissible if the holder of the substituted or
assumed award would have been eligible to be granted an Award under this Plan if the other company
had applied the rules of this Plan to such grant. If the Company assumes an award granted by another
company, the terms and conditions of such award will remain unchanged (except that the exercise
price and the number and nature of Shares issuable upon exercise of any such option will be adjusted
appropriately pursuant to Section 424(a) of the Code). If the Company elects to grant a new Option
rather than assuming an existing option, such new Option may be granted with a similarly adjusted
Exercise Price.
18.4 ADJUSTMENT OF SHARES. In the event that the number of outstanding shares
is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision,
combination, reclassification or similar change in the capital structure of the Company without
consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise
Prices of and number of Shares subject to outstanding Options, and (c) the number of Shares subject
to other outstanding Awards will be proportionately adjusted, subject to any required action by the
Board or the stockholders of the Company and compliance with applicable securities laws; provided,
however, that fractions of a Share will not be issued but will either be replaced by a cash payment
equal to the Fair Market Value of such fraction of a Share or will be rounded up to the nearest
whole Share, as determined by the Committee.
B-11
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on the date that
this Plan is approved by the stockholders of the Company, consistent with applicable laws (the
"Effective Date").
20. TERM OF PLAN. Unless earlier terminated as provided herein, this Plan will
terminate ten (10) years from the date this Plan is adopted by the Board. The expiration of the
Plan, however, shall not affect the rights of Participants under Options theretofore granted to
them, and all unexpired options and Awards shall continue in force and operation after termination
of the Plan, except as they may lapse or be terminated by their own terms and conditions.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this
Plan in any respect, including without limitation, amendment of any form of Award Agreement or
instrument to be executed pursuant to this Plan; provided, however, that the Board will not, (i)
without the approval of the stockholders of the Company, amend this Plan in any manner that
applicable law or regulation requires such stockholder approval, or (ii) without the written consent
of the Participant substantially alter or impair any Option or Award previously granted under the
Plan. Notwithstanding the foregoing, if an option has been transferred in accordance with the terms
of this Plan, written consent of the transferee (and not the Participant) shall be necessary to
substantially alter or impair any option or Award previously granted under the Plan.
22. EFFECT OF SECTION 162(m) OF THE CODE. The Plan, and all Awards designated by the
Committee as "performance-based compensation" for purposes of Section 162(m) of the Code are
intended to be exempt from the application of Section 162(m) of the Code, which restricts under
certain circumstances the federal income tax deduction for compensation paid by a public company to
certain executives in excess of $1 million per year. The Committee may, without stockholder approval
(unless otherwise required to comply with Rule 16b-3 under the Exchange Act or in accordance with
applicable market or exchange requirements), amend the Plan retroactively and/or prospectively to
the extent it determines necessary in order to comply with any subsequent clarification of Section
162(m) of the Code required to preserve the Company's Federal income tax deduction for compensation
paid pursuant to the Plan. To the extent that the Committee determines as of the Date of Grant of an
Award that (i) the Award is intended to comply with Section 162(m) of the Code and (ii) the
exemption described above is no longer available with respect to such Award, such Award shall not be
effective until any stockholder approval required under Section 162(m) of the Code has been
obtained. Notwithstanding the foregoing, if the Committee deems it to be in the best interest of the
Company, the Committee retains the discretion to make such Awards under the Plan that may not comply
with the requirements of Section 162(m) of the Code.
23. GENERAL.
23.1 ADDITIONAL PROVISIONS OF AN AWARD. Awards under the Plan also may be
subject to such other provisions (whether or not applicable to the benefit awarded to any other
Participant) as the Committee determines appropriate including, without limitation, provisions to
assist the Participant in financing the purchase of Stock upon the exercise of options, provisions
for the forfeiture of or restrictions on resale or other disposition of shares of Stock acquired
under any Award, provisions giving the Company the right to repurchase shares of Stock acquired
under any Award in the event the Participant elects to dispose of such shares, provisions which
restrict a Participant's ability to sell Shares for a period of time under certain circumstances,
and provisions to comply with federal and state securities laws and federal and state tax
withholding requirements. Any such provisions shall be reflected in the applicable Award Agreement.
In addition, the Committee may, in its discretion, provide in an Award Agreement that, in the event
that the Participant engages, within a specified period after termination of employment, in certain
activity specified by the Committee that is deemed detrimental to the interests of the Company
(including, but not limited to, the breach of any non-solicitation and/or non-compete agreements
with the Company), the Participant will forfeit all rights under any Options that remain outstanding
as of the time of such act and will return to the Company an amount of shares with a Fair Market
Value (determined as of the date such shares are returned) equal to the amount of any gain realized
upon the exercise of any Option that occurred within a specified time period.
B-12
23.2. CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. Unless otherwise expressly agreed
in writing by the Company, no employee or other person shall have any claim or right to be granted
an Award under the Plan or, having been selected for the grant of an Award, to be selected for a
grant of any other Award. Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the Company, a
Subsidiary or an Affiliate.
23.3. DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant shall file with
the Committee a written designation of one or more persons as the beneficiary who shall be entitled
to receive the amounts payable with respect to an Award of Restricted Stock, if any, due under the
Plan upon his death. A Participant may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new designation with the
Committee. The last such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be effective unless received by
the Committee prior to the Participant's death, and in no event shall it be effective as of a date
prior to such receipt. If no beneficiary designation is filed by the Participant, the beneficiary
shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death,
his or her estate.
23.4. PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee shall find
that any person to whom any amount is payable under the Plan is unable to care for his or her
affairs because of illness or accident, or is a minor, or is otherwise legally incompetent or
incapacitated or has died, then any payment due to such person or such person's estate (unless a
prior claim therefor has been made by a duly appointed legal representative) may, if the Committee
so directs the Company, be paid to such person's spouse, child, relative, an institution maintaining
or having custody of such person, or any other person deemed by the Committee, in its absolute
discretion, to be a proper recipient on behalf of such person otherwise entitled to payment. Any
such payment shall be a complete discharge of the liability of the Committee and the Company
therefor.
23.5. NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by such Committee member or
on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Company shall indemnify and hold harmless each member of the
Committee and each other employee, officer or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or delegated, against
any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a
claim) arising out of any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or willful bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Articles of Incorporation or By-Laws, as a
matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
23.6. GOVERNING LAW. The Plan and all agreements hereunder shall be governed by
and construed in accordance with the internal laws of the State of Nevada without regard to the
principles of conflicts of law thereof.
23.7. FUNDING. No provision of the Plan shall require the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to segregate any assets, nor
shall the Company maintain separate bank accounts, books, records or other evidence of the existence
of a segregated or separately maintained or administered fund for such purposes. Participants shall
have no rights under the Plan other than as general unsecured creditors of the Company, except that
insofar as they may have become entitled to payment of additional compensation by performance of
services, they shall have the same rights as other employees under general law.
B-13
23.8. RELIANCE ON REPORTS. Each member of the Committee and each member of the
Board shall be fully justified in relying, acting or failing or refusing to act, and shall not be
liable for having so relied, acted or failed or refused to act in good faith, upon any report made
by the independent public accountant of the Company and its subsidiaries and Affiliates and upon any
other information furnished in connection with the Plan by any person or persons other than himself.
23.9. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken
into account in determining any benefits under any pension, retirement, profit sharing, group
insurance or other benefit plan of the Company or any Subsidiary except as otherwise specifically
provided in such other plan.
23.10. EXPENSES. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries and Affiliates.
23.11. PRONOUNS. Masculine pronouns and other words of masculine gender shall
refer to both men and women.
23.12. TITLES AND HEADINGS. The titles and headings of the sections in the Plan
are for convenience of reference only, and in the event of any conflict, the text of the Plan,
rather than such titles or headings shall control.
23.13. TERMINATION OF EMPLOYMENT. For all purposes herein, a person who
transfers from employment or service with the Company to employment or service with a Subsidiary or
Affiliate or vice versa shall not be deemed to have terminated employment or service with the
Company, a Subsidiary or Affiliate.
23.14 NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for approval, nor any
provision of this Plan will be construed as creating any limitations on the power of the Board to
adopt such incentive arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
23.15 EMPLOYEES BASED OUTSIDE OF THE UNITED STATES. Notwithstanding any
provision of the Plan to the contrary, in order to foster and promote achievement of the purposes of
the Plan or to comply with provisions of laws in other countries in which the Company, its
Affiliates, and its Subsidiaries operate or have employees, the Committee, in its sole discretion,
shall have the power and authority to (i) determine which employees employed outside the United
States are eligible to participate in the Plan, (ii) modify the terms and conditions of Awards
granted to employees who are employed outside the United States, and (iii) establish subplans
(through the addition of schedules to the Plan or otherwise), modify option exercise procedures and
other terms and procedures to the extent such actions may be necessary or advisable.
24. DEFINITIONS. As used in this Plan, the following terms will have the following
meanings:
"Affiliate" means any entity in which the Company has an ownership interest of at
least 20%.
"Award" means any award under this Plan, including any Option, Restricted Stock or
Stock Bonus.
"Award Agreement" means, with respect to each Award, the signed written agreement
between the Company and the Participant setting forth the terms and conditions of the
Award.
"Board" means the Board of Directors of the Company.
"Cause" means the Company, a Subsidiary or Affiliate having cause to terminate a
Participant's employment or service under any existing employment, consulting or any
other agreement between the Participant and the Company or a Subsidiary or Affiliate
or, in the absence of such an employment, consulting or other agreement, upon (i) the
determination by the Committee that the Participant has ceased to perform his duties
to the Company, a Subsidiary or Affiliate (other than as a result of his incapacity
due to physical or mental illness or injury), which failure amounts to an intentional
and extended neglect of his duties to such party, (ii) the Committee's determination
that the Participant has engaged or is about to engage in conduct materially injurious
to the company, a Subsidiary or Affiliate or (iii) the Participant having been
convicted of a felony or a misdemeanor carrying a jail sentence of six months or more.
"Change-of-Control Event" means the occurrence of any one or more of the following
events: (i) there shall have been a change in a majority of the Board of Directors of
the Company within a two (2) year period, unless the appointment of a director or the
nomination for election by the Company's stockholders of each new director was
approved by the vote of a majority of the directors then still in office who were in
office at the beginning of such two (2) year period, or (ii) the Company shall have
been sold by either (A) a sale of all or substantially all its assets, or (B) a merger
or consolidation, other than any merger or consolidation pursuant to which the Company
acquires another entity, or (C) a tender offer, whether solicited or unsolicited.
"Code" means the Internal Revenue Code of 1986, as amended. Reference in the Plan to
any section of the Code shall be deemed to include any amendments or successor
provisions to such section and any regulations under such section.
"Common Stock" means the outstanding Class A common stock, par value $0.001 per share,
of the Company, or any other class of securities into which substantially all the
Common Stock is converted or for which substantially all the Common Stock is
exchanged.
"Committee" means the Compensation Committee, the Stock Option Committee or such other
committee appointed by the Board consisting solely of two or more Outside Directors or
the Board or in lieu of any committees, the Board.
"Company" means the Advanced Lumitech, Inc. d/b/a Brightec, a Nevada corporation, or
any successor corporation.
"Disability" or "Disabled" means a disability, whether temporary or permanent, partial
or total, as determined in good faith by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which a holder of an Option may purchase the
Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a share of the Company's
Common Stock determined as follows:
a. if such Common Stock is publicly traded and is then listed on a national
securities exchange (i.e. The New York Stock Exchange), its closing price
on the date of determination on the principal national securities exchange
on which the Common Stock is listed or admitted to trading, and if there
were no trades on such date, on the day on which a trade occurred next
preceding such date;
b. if such Common Stork is publicly traded and is then quoted on the NASDAQ
National Market, its closing price on the NASDAQ National Market on the
date of determination as reported in The Wall Street Journal, and if there
were no trades on such date, on the day on which a trade occurred next
preceding such date;
c. if such Common Stock is publicly traded but is not quoted on the NASDAQ
National market nor listed or admitted to trading on a national securities
exchange, the average of the closing bid and asked prices on the date of
determination as reported in The Wall Street Journal or, if not reported in
The Wall Street Journal, as reported by any reputable publisher or
quotation service, as determined by the Committee in good faith, and if
there were no trades on such date, on the day on which a trade occurred
next preceding such date; or
B-15
d. if none of the foregoing is applicable, by the Committee in good faith
based upon factors available at the time of the determination, including,
but not limited to, capital raising activities of the Company.
"Insider" means an officer or director of the Company or any other person whose
transactions in the Company's Common Stock are subject to Section 16 of the Exchange
Act.
"NASD Dealer" has the meaning set forth in Section 8(e).
"NQSO's" has the meaning set forth in Section 5.
"Option" means an award of an option to purchase Shares pursuant to Section 5.
"Outside Director" means a person who is both (i) a "nonemployee director" within the
meaning of Rule 16b-3 under the Exchange Act, or any successor rule or regulation and
(ii) an "outside director" within the meaning of Section 162(m) of the Code.
"Participant" means a person who receives an Award under this Plan.
"Performance Award" means an Award of Shares, or cash in lieu of Shares, pursuant to
Section 7.
"Performance Factors" means the factors selected by the Committee from time to time,
including, but not limited to, the following measures to determine whether the
performance goals established by the Committee and applicable to Awards have been
satisfied: revenue; net revenue; revenue growth; net revenue growth; earnings before
interest, taxes, depreciation and amortization ("EBITDA"); adjusted EBITDA; EBITDA
growth and adjusted EBITDA growth; funds from operations; funds from operations per
share; operating income (loss); operating income growth; operating cash flow; adjusted
operating cash flow return on income; net income; net income growth; pre- or after-tax
income (loss); cash available for distribution; cash available for distribution per
share; cash and/or cash equivalents available for operations; net earnings (loss);
earnings (loss) per share; earnings per share growth; return on equity; return on
assets; share price performance (based on historical performance or in relation to
selected organizations or indices); total shareholder return; total shareholder return
growth; economic value added; improvement in cash-flow (before or after tax);
successful capital raises; and confidential business unit objectives.
"Performance Period" means the period of service determined by the Committee, not to
exceed five years, during which years of service or performance is to be measured for
Restricted Stock Awards or Performance Awards.
"Plan" means the Advanced Lumitech, Inc. 2006 Stock Incentive Plan, as amended from
time to time.
"Restricted Stock Award" means an award of Shares pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved for issuance under this
Plan, as adjusted pursuant to Section 18, and any successor security.
B-16
"Stock Unit" means an Award giving the right to receive Shares granted under either
Section 6.8 or Section 7 of the Plan.
"Subsidiary" means any corporation or other legal entity (other than the Company) in
an unbroken chain of corporations and/or other legal entities beginning with the
Company if each of the corporations and entities other than the last corporation or
entity in the unbroken chain owns stock, other equity securities or other equity
interests possessing 50% or more of the total combined voting power of all classes of
stock, other equity securities or other equity interests in one of the other
corporations or entities in such chain.
"Ten Percent Stockholder" has the meaning set forth in Section 5.2.
"Termination" or "Terminated" means, for purposes of this Plan with respect to a
Participant, that the Participant has for any reason ceased to provide services as an
employee, officer, director, consultant, independent contractor, or advisor to the
Company or Subsidiary of the Company. An employee will not be deemed to have ceased to
provide services in the case of (i) sick leave, (ii) military leave, or (iii) any
other leave of absence approved by the Committee, provided, that such leave is for a
period of not more than 90 days, unless re-employment upon the expiration of such
leave is guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and promulgated to
employees in writing. In the case of any employee on an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the Award while
on leave from the employ of the Company or a Subsidiary as it may deem appropriate,
except that in no event may an Option be exercised after the expiration of the term
set forth in the option agreement. The Committee will have sole discretion to
determine whether a Participant has ceased to provide services and the effective date
on which the Participant ceased to provide services (the "Termination Date").
"Unvested Shares" means "Unvested Shares" as defined in the Award Agreement.
"Vested Shares" means "Vested Shares" as defined in the Award Agreement.
B-17
Front Side of Proxy
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ADVANCED LUMITECH, INC.
SPECIAL MEETING
AUGUST 18, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PATRICK PLANCHE and DAVID J. GEFFEN, or either of them, each with
power to appoint his substitute, as proxies of the undersigned and authorizes them to represent and
vote, as designated below, all the shares of Common Stock of Advanced Lumitech, Inc. that the
undersigned would be entitled to vote if personally present, and to act for the undersigned at the
special meeting to be held on August 18, 2006, or any adjournment or postponement thereof.
This proxy will be voted in the manner directed herein and in accordance with the
accompanying Proxy Statement. Receipt of the Proxy Statement is hereby acknowledged. If no direction
is made, this proxy will be voted FOR election to the Board of Directors of the nominees named below
and FOR proposals 2, 3, 4 and 5 which are being proposed by the Board of Directors of Advanced
Lumitech, Inc.
The Board of Directors recommends that you vote FOR election to the Board of Directors of
the nominees named below and FOR the approval of proposals 2, 3, 4 and 5. (TO BE SIGNED ON THE
REVERSE SIDE)
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Back Side of Proxy
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PLEASE MARK, DATE AND SIGN THIS PROXY
FOR all nominees listed WITHHOLD AUTHORITY to vote
at right (except as for all nominees
marked to the contrary listed at right
below)
1. ELECTION OF DIRECTORS Nominees:
Patrick Planche
David J. Geffen
__________________________________________________________
(Instruction: To withhold authority to vote for any of the above listed nominees, write that
nominee's name on the line above or strike a line through that individual's name.)
2. To consider and vote upon a proposal to amend Advanced Lumitech, Inc.'s Articles of
Incorporation to increase the total number of authorized shares of all classes of stock that
Advanced Lumitech, Inc. is authorized to issue, from 100 million shares to 250 millionFOR
election to the Board of Directors of the nominees named below and shares, and to increase the
total number of authorized shares of Class A Common Stock from 100 million shares to 245
million shares
___ FOR ___ AGAINST ___ ABSTAIN
3. To consider and vote upon a proposal to amend Advanced Lumitech, Inc.'s Articles of
Incorporation to create five million shares of "Blank Check" Preferred Stock
___ FOR ___ AGAINST ___ ABSTAIN
4. To consider and vote upon a proposal to amend Advanced Lumitech, Inc.'s Articles of
Incorporation to change Advanced Lumitech, Inc.'s name to "Brightec, Inc."
___ FOR ___ AGAINST ___ ABSTAIN
5. To consider and vote upon a proposal to adopt a new long-term stock incentive plan pursuant to
which an aggregate of 50 million shares of the Advanced Lumitech, Inc.'s Common Stock will be
reserved for issuance and available under such plan
___ FOR ___ AGAINST ___ ABSTAIN
6. In accordance with their discretion, to consider and vote upon such other matters as may
properly come before the special meeting, including proposals to adjorn or postpone the special
meeting.
AUTHORITY IS: ___ GRANTED ___ WITHHELD
This proxy when properly executed will be voted in the manner directed herein by the undersigned
stockholder. The signature must be that of the stockholder himself, herself or itself. If shares are
held jointly, each stockholder named should sign. If the signer is a corporation, please sign the
full corporate name by duly authorized officer. If the signer is a partnership, please sign the full
partnership name by authorized person. Executors, administrators, trustees, guardians,
attorneys-in-fact, etc., should so indicate when signing.
Dated: , 2006 IMPORTANT: Please insert date.
-------------------------
INDIVIDUAL OR JOINT HOLDER:
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Signature
- ----------------------------------------------------------------------------------------------------
Print Name Here
- ----------------------------------------------------------------------------------------------------
Signature (if jointly held)
- ----------------------------------------------------------------------------------------------------
Print Name Here
CORPORATE OR PARTNERSHIP HOLDER:
- ----------------------------------------------------------------------------------------------------
Company Name
By:
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Its:
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