SCHEDULE 14A
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 (S)240.14a-11(c) or (S)240.14a-12
CYBERIAN OUTPOST, INC.
(a/k/a OUTPOST.COM)
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(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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5) Total fee paid:
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[_] 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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[LOGO OF OUTPOST.COM]
June 28, 2000
Dear Stockholder,
It is my pleasure to invite you to the 2000 Annual Meeting of Stockholders
of Cyberian Outpost, Inc. (a/k/a Outpost.com).
We will hold the meeting at 10:30 a.m. on Wednesday, July 26, 2000 at the
Sheraton NY Hotel & Towers, 7th Avenue & 52nd Street, Riverside Suite 3rd
Floor, New York, NY. In addition to the formal items of business, I will
review the major developments of the past year and answer your questions.
This booklet includes our Notice of Annual Meeting and Proxy Statement. The
Proxy Statement describes the business that we will conduct at the meeting and
provides information about Outpost.com.
Your vote is important. Whether you plan to attend the meeting or not,
please complete, date, sign and return the enclosed proxy card promptly. If
you attend the meeting and prefer to vote in person, you may do so.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Robert A. Bowman
Robert A. Bowman
President and Chief Executive
Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
[LOGO OF OUTPOST.COM]
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
Date: July 26, 2000
Time: 10:30 a.m.
Place: Sheraton NY Hotel & Towers,
7th Avenue & 52nd Street,
Riverside Suite 3rd Floor,
New York, NY
Dear Stockholders:
At our Annual Meeting, we will ask you to:
. Elect three directors;
. Approve an amendment to increase the number of shares available
under our 1998 Employee, Director and Consultant Stock Plan;
. Ratify the selection of KPMG LLP as independent auditors for our
fiscal year ending February 28, 2001; and
. Transact any other business that may properly be presented at the
Annual Meeting.
If you were a stockholder of record at the close of business on May 31,
2000, you may vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Katherine N. Vick
Katherine N. Vick
Secretary
June 28, 2000
TABLE OF CONTENTS
Page
----
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING................... 1
Why Did You Send Me this Proxy Statement?............................... 1
How Many Votes Do I Have?............................................... 1
How Do I Vote by Proxy?................................................. 1
May I Revoke My Proxy?.................................................. 1
How Do I Vote in Person?................................................ 2
What Vote is Required to Approve Each Proposal?......................... 2
What is the Effect of Broker Non-Votes?................................. 2
Is Voting Confidential?................................................. 2
What Are the Costs of Soliciting these Proxies?......................... 2
How Do I Obtain an Annual Report on Form 10-K?.......................... 2
INFORMATION ABOUT OUTPOST.COM COMMON STOCK OWNERSHIP...................... 3
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS........................ 5
The Board of Directors.................................................. 5
Committees of the Board of Directors and Meetings....................... 7
Compensation of Directors............................................... 7
Executive Officers...................................................... 8
EXECUTIVE COMPENSATION.................................................... 10
Summary Compensation.................................................... 10
Option Grants........................................................... 10
Option Exercises and Year-End Option Values............................. 11
Employment Contracts and Change of Control Arrangements................. 11
Report of Compensation Committee on Executive Compensation.............. 13
RELATED PARTY TRANSACTIONS................................................ 15
PERFORMANCE GRAPH......................................................... 15
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD.......................... 16
Proposal 1: Elect Three Directors....................................... 16
Proposal 2: Approve Amendment to Our 1998 Employee, Director and
Consultant Stock Plan.................................................. 16
Proposal 3: Ratify Selection of Independent Auditors for the Fiscal Year
Ending February 28, 2001............................................... 19
OTHER MATTERS............................................................. 20
Section 16(a) Beneficial Ownership Reporting Compliance................. 20
Information About Stockholder Proposals................................. 20
PROXY STATEMENT FOR THE OUTPOST.COM
2000 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why Did You Send Me this Proxy Statement?
We sent you this Proxy Statement and the enclosed proxy card because
Outpost.com's Board of Directors is soliciting your proxy to vote at the 2000
Annual Meeting of Stockholders. This Proxy Statement summarizes the
information you need to know to vote at the Annual Meeting. You do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply
complete, sign and return the enclosed proxy card.
On June 28, 2000, we began sending this Proxy Statement, the attached Notice
of Annual Meeting and the enclosed proxy card to all stockholders entitled to
vote. Only stockholders who owned Outpost.com common stock at the close of
business on May 31, 2000 are entitled to vote at the Annual Meeting. On this
record date, there were 28,475,610 shares of Outpost.com common stock
outstanding. Outpost.com common stock is our only class of voting stock. We
are also sending along with this Proxy Statement our 2000 Annual Report, which
includes our financial statements.
How Many Votes Do I Have?
Each share of Outpost.com common stock that you own entitles you to one
vote.
How Do I Vote by Proxy?
Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in
the envelope provided. Returning the proxy card will not affect your right to
attend the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time to vote,
your "proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares as recommended by the Board
of Directors as follows:
. ""FOR'' the election of the three nominees for director;
. ""FOR'' the amendment to the 1998 Employee, Director and Consultant
Stock Plan; and
. ""FOR'' ratification of the selection of independent auditors for our
fiscal year ending February 28, 2001.
If any other matter is presented, your proxy will vote in accordance with
his or her best judgment. At the time this Proxy Statement went to press, we
knew of no matters that needed to be acted on at the Annual Meeting, other
than those discussed in this Proxy Statement.
May I Revoke My Proxy?
If you give us your proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of the three following ways:
. You may send in another proxy with a later date;
. You may notify Outpost.com's Secretary in writing before the Annual
Meeting that you have revoked your proxy; or
. You may vote in person at the Annual Meeting.
1
How Do I Vote in Person?
If you plan to attend the Annual Meeting and vote in person, we will give
you a ballot when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you were the beneficial owner of the
shares on May 31, 2000, the record date for voting.
What Vote is Required to Approve Each Proposal?
Proposal 1: Elect Three The three nominees for director who receive
Directors the most votes will be elected.
Proposal 2: Approve Amendment The affirmative vote of a majority of the
to Increase the Shares votes cast at the Annual Meeting is
Available under our 1998 required.
Employee, Director and
Consultant Stock Plan
Proposal 3: Ratify Selection The affirmative vote of a majority of the
of Auditors votes cast at the Annual Meeting is
required.
What is the Effect of Broker Non-Votes?
If your broker holds your shares in its name, the broker will be entitled to
vote your shares on both Proposal 1 and Proposal 3 even if it does not receive
instructions from you. Your broker is not entitled to vote on Proposal 2
unless it receives instructions from you. If your broker does not vote your
shares on Proposal 2, such "broker non-votes" and abstentions from voting will
not be counted for purposes of tabulating the votes cast.
Is Voting Confidential?
We will keep all the proxies, ballots and voting tabulations private. We
only let our Inspectors of Election (Automatic Data Processing Investor
Communications Services) examine these documents. We will not disclose your
vote to management unless it is necessary to meet legal requirements. We will,
however, forward to management any written comments you make, on the proxy
card or elsewhere.
What Are the Costs of Soliciting these Proxies?
We will pay all of the costs of soliciting these proxies. Our directors and
employees may solicit proxies in person or by telephone, fax or email. We will
pay these employees and directors no additional compensation for these
services. We will ask banks, brokers and other institutions, nominees and
fiduciaries to forward these proxy materials to their principals and to obtain
authority to execute proxies. We will then reimburse them for their expenses.
How Do I Obtain an Annual Report on Form 10-K?
If you would like a copy of our Annual Report on Form 10-K for the fiscal
year ended February 29, 2000, that we filed with the Securities and Exchange
Commission, we will send you one without charge. Please write to:
Investor Relations
Outpost.com
23 North Main Street, P.O. Box 636
Kent, Connecticut 06757
or contact us via email at investors@outpost.com.
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INFORMATION ABOUT OUTPOST.COM COMMON STOCK OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of May 31, 2000 for (a) the
executive officers named in the Summary Compensation Table on page 10 of this
Proxy Statement, (b) each of our directors, (c) all of our current directors
and executive officers as a group and (d) each stockholder known by us to own
beneficially more than 5% of our common stock. Beneficial ownership is
determined in accordance with the rules of the SEC and includes voting or
investment power with respect to the securities. The address for each director
and executive officer listed is: c/o Outpost.com., 23 North Main Street, P.O.
Box 636, Kent, Connecticut 06757. Shares of common stock that may be acquired
by an individual or group within 60 days of May 31, 2000, pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose
of computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table. Except as indicated in footnotes to
this table, we believe that the stockholders named in this table have sole
voting and investment power with respect to all shares of common stock shown
to be beneficially owned by them based on information provided to us by such
stockholders. Percentage of ownership is based on 28,475,610 shares of common
stock outstanding on May 31, 2000.
Shares
Beneficially
Owned
-----------------
Name of Beneficial Owner Number Percent
------------------------ --------- -------
Executive Officers, Directors and Director Nominees
Robert A. Bowman(1)......................................... 385,000 1.3%
Darryl Peck(2).............................................. 3,621,701 12.5%
Katherine N. Vick(3)........................................ 523,507 1.8%
Philip J. Rello(4).......................................... 122,500 *
Raymond A. Maccio(5)........................................ 37,500 *
Bruce C. Schellinkhout(6)................................... 108,333 *
Charles H. Jackson, IV(7)................................... 1,000,703 3.5%
Michael Murray(8)........................................... 44,000 *
William H. Lane III(9)...................................... 30,000 *
James E. Preston(10)........................................ 60,000 *
Donald Riegle, Jr.(11)...................................... 0 *
Leo J. Hindery, Jr.(11)..................................... 0 *
All current directors and executive officers as a group (13
persons)(12)............................................... 5,943,744 20.0%
Five Percent Stockholders
Winfield Capital Corp....................................... 1,454,855 5.1%
237 Mamaroneck Avenue
White Plains, New York 10605
- --------
* Less than 1%
(1) Includes 120,000 shares subject to options exercisable within 60 days of
May 31, 2000. Also includes purchases of 265,000 shares over the last
year.
(2) Includes 185,100 shares held by a limited partnership for the benefit of
Mr. Peck's children. Mr. Peck is the general partner of the limited
partnership and has sole voting and investment power with respect to
these shares. Also includes 480,480 shares subject to options
exercisable within 60 days of May 31, 2000.
(3) Includes 331,828 shares subject to options exercisable within 60 days of
May 31, 2000. Also includes 8,060 shares that were gifted by Ms. Vick to
her husband as custodian for her son and daughter under the Connecticut
Uniform Transfer to Minors Act. Ms. Vick disclaims beneficial ownership
of these shares.
(4) Includes 122,000 shares subject to options exercisable within 60 days of
May 31, 2000.
(5) Consists of 37,500 shares subject to options exercisable within 60 days
of May 31, 2000.
(6) Consists of 108,333 shares subject to options exercisable within 60 days
of May 31, 2000.
(7) Consists of shares owned by a trust for the benefit of Mr. Jackson and
his wife. Mr. Jackson and his wife are co-trustees of the trust and
share voting and investment power with respect to these shares. Excludes
105,738 shares held by a trust for the benefit of Mr. Jackson's
children. Mr. Jackson disclaims beneficial ownership of the shares owned
by this trust. Also includes purchases of 161,000 shares over the last
year.
3
(8) Consists of 44,000 shares subject to options exercisable within 60 days
of May 31, 2000.
(9) Includes 25,000 shares subject to options exercisable within 60 days of
May 31, 2000. Also includes purchases of 5,000 shares over the last year.
(10) Includes 25,000 shares subject to options exercisable within 60 days of
May 31, 2000. Also includes purchases of 35,000 shares over the last
year.
(11) Nominated for election to our Board of Directors. Excludes 25,000 shares
of our common stock subject to an immediately exercisable option, which
will be automatically granted if elected to our Board of Directors at the
Annual Meeting.
(12) See footnotes 1 through 10 above. Also includes 3,000 shares subject to
options exercisable within 60 days of May 31, 2000 held by executive
officers not listed individually in this table.
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INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors
Our Certificate of Incorporation and By-Laws provide that our business is to
be managed by or under the direction of our Board of Directors. Our Board of
Directors is divided into three classes for purposes of election. One class is
elected at each annual meeting of stockholders to serve for a three-year term.
Our Board of Directors currently consists of seven members, classified into
three classes as follows: (1) Katherine N. Vick and Charles H. Jackson, IV
constitute a class with a term ending at the 2000 Annual Meeting; (2) Darryl
Peck and Michael Murray constitute a class with a term ending at the 2001
Annual Meeting; and (3) Robert A. Bowman, William H. Lane III and James E.
Preston constitute a class with a term which expires at the 2002 Annual
Meeting.
Mr. Jackson will not stand for reelection at the Annual Meeting.
Accordingly, on June 19, 2000, our Board of Directors voted to nominate
Katherine N. Vick and Donald Riegle, Jr. for election at the Annual Meeting
for a term of three years to serve until the 2003 Annual Meeting of
Stockholders and until their respective successors have been elected and
qualified. On June 27, 2000, our Board of Directors voted to increase the
number of directors to eight and nominated Leo J. Hindery, Jr. for election at
the Annual Meeting for a term of three years to serve until the 2003 Annual
Meeting of Stockholders and until his successor has been elected and
qualified.
The names of our current directors and our director nominees and certain
information about them are set forth below:
Name Age Position
---- --- --------
Robert A. Bowman........ 45 President, Chief Executive Officer and Director
Darryl Peck............. 41 Chairman of the Board
Katherine N. Vick....... 48 Executive Vice President for Business
Development, Chief Financial Officer
and Director
Charles H. Jackson, IV
(1).................... 51 Director
Michael Murray (2)...... 37 Director
William H. Lane III
(2).................... 61 Director
James E. Preston (1).... 67 Director
Donald Riegle, Jr. ..... 62 Director Nominee
Leo J. Hindery, Jr. .... 52 Director Nominee
- --------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
The following is a brief summary of the background of each of our current
directors and our director nominees:
Mr. Bowman has served as our President and Chief Executive Officer and as a
director since September 1999. Mr. Bowman has been an investor in more than a
dozen internet start-up companies and creator of mysportsguru.com and
icontact.com. Prior to his involvement in the Internet industry, Mr. Bowman
was President and Chief Operating Officer of ITT Corporation. Prior to that,
he held the position of Executive Vice President and CFO of ITT Corporation
and Executive Vice President and CFO of ITT Sheraton, a wholly-owned
subsidiary of ITT Corporation. During his tenure, Mr. Bowman and the senior
management team at ITT created more than $25 billion of value for the
company's shareholders. Before joining ITT, Mr. Bowman served as Treasurer for
the State of Michigan from 1983 to 1991. The youngest State Treasurer in the
nation at the time of his appointment, during his eight year term he grew the
State's pension system from $6 billion to $19 billion in asset value. Mr.
Bowman has also worked as an investment banker at Goldman Sachs & Company and
in the US Department of the Treasury as Special Assistant to the Assistant
Secretary for Domestic Finance. Mr. Bowman serves as Chairman of the Board for
icontact.com and sits on the Board of Directors of Grupo Elecktra S.A., a
leading Latin American specialty retailer. He is also a member of the Board of
Trustees of The Rockefeller Foundation and an Advisory Board member of The
Wharton School.
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Mr. Peck founded Outpost.com in March 1995 and has served as a member of the
Board of Directors since that time and as the Chairman of the Board since
September 1999. He served as our President from March 1995 until September
1999 and as our Chief Executive Officer from April 1998 to September 1999. In
1989, he formed Inline Software, a publisher of game and utility software
titles primarily for the Macintosh platform, and served as its President until
the company was sold to Focus Enhancements in May 1994. From 1989 to 1990, Mr.
Peck was President of the New York Mac User's group, which at the time was the
third largest Mac user group in the world.
Ms. Vick has served as our Executive Vice President for Business Development
since June 1999 and as our Chief Financial Officer since June 1997. She has
been a member of the Board of Directors since May 1997 and was named Executive
Vice President in May 1998. From January 1997 until June 1997, she served as a
consultant to Outpost.com. From 1986 to June 1997, Ms. Vick was President of
her own strategic and financial planning consulting firm, Katherine Vick, Ltd.
From 1978 to 1986, she held several positions, including Principal, with
Arthur Young (now Ernst & Young LLP) where she helped develop and lead the
Entrepreneurial Services Consulting Group in New York City. Ms. Vick is a
member of the Board of Directors of Connecticut Innovations, Inc., the State
of Connecticut's leading high technology investor. In addition, she serves as
advisor to Access Connecticut, a technology transfer venture fund.
Mr. Jackson has served as a member of our Board of Directors since August
1996. He is a computer industry entrepreneur and invests in start-up companies
at their earliest stages. In 1993, he co-founded FutureWave Software, a
software development company, which was acquired by MacroMedia, Inc., a
supplier of software tools and services to the media and publishing
industries, in 1996. In 1984, Mr. Jackson founded Silicon Beach Software, a
developer and publisher of Macintosh consumer titles which was sold to Aldus
Corporation in 1990.
Mr. Murray has served as a member of our Board of Directors since May 1997.
Since September 1998 he has served as General Partner with New Millennium
Partners, a venture capital investment firm. From July 1996 until September
1998, he was the Managing Director of the Online Venture Fund for Broderbund
Software, a software development company. From September 1997 until September
1998, he was also the General Manager of the Online Business Unit for
Broderbund. In addition to managing the business unit, Mr. Murray led
Broderbund's Internet strategy and implementation, and managed an external
Internet incubator facility for Internet startups. From 1984 to 1996, Mr.
Murray held various management positions with Pacific Bell.
Mr. Lane has served as a member of our Board of Directors since July 1999.
Mr. Lane serves as President of Canyon Vista, Inc., a management consulting
business. In July 1996, he retired from Intuit, Inc., a personal and small
business finance software publisher after having served as its Vice President,
Chief Financial Officer, Secretary and Treasurer since January 1994. Mr. Lane
served in a similar capacity at ChipSoft, Inc., a tax preparation software
company, from July 1991 until its acquisition by Intuit in December 1993. Mr.
Lane is currently a director of Aspect Technology, Inc., Expert Software,
Inc., International Microcomputer Software, Inc., MetaCreations Corporation
and a number of private companies.
Mr. Preston has served as a member of our Board of Directors since July
1999. Mr. Preston was Chairman of the Board of Avon Products, Inc., a
manufacturer and seller of beauty and beauty related products, from 1989 to
May 1999, and served as Chief Executive Officer of Avon from 1989 to June
1998. He is currently Chairman of the World Federation of Direct Selling
Association. He is also a director of ARAMARK Corporation, Venator Group, Inc.
and Reader's Digest Association, Inc., all publicly traded companies. In
addition, Mr. Preston is a director of Project Hope, and a member of the
Advisory Board of the Salvation Army of Greater New York, both of which are
private entities.
Senator Riegle has been nominated for election to our Board of Directors.
Senator Riegle was a member of the United States Congress for 28 years. During
that time, he served on the Senate Banking Committee (including six years as
its chairman), the Senate Budget Committee, the Finance Committee and the
Commerce, Science and Transportation Committee. While in the U.S. House of
Representatives, he served on the Appropriations and International Relations
Committees. Upon retiring from Congress in 1994, the Senator joined Shandwick
6
International, Americas in 1995. As Chairman, he is involved in global
business development and serves on the company's Executive Management and
Ethics Committees. Senator Riegle is a frequent television commentator and
authored the best-selling book, O Congress! In addition, he serves as an
adjunct professor of the Eli Broad School of Business at Michigan State
University and on the Visiting Committee of the Harvard Graduate School of
Education.
Mr. Hindery has been nominated for election to our Board of Directors. Mr.
Hindery is Chief Executive Officer of Global Crossing, Ltd., and he is
Chairman and Chief Executive Officer of GlobalCenter, Inc., the Internet
commerce services subsidiary of Global Crossing and the world's second largest
complex web-hosting company. Until November 1999, Mr. Hindery was President
and Chief Executive Officer of AT&T Broadband & Internet Services. In March
1997, he was elected President of TCI, the world's largest cable television
entity, which in March 1999 merged into AT&T. Prior to joining TCI, Mr.
Hindery served as Managing General Partner of InterMedia Partners and as Chief
Officer for Planning and Finance of The Chronicle Publishing Company of San
Francisco. Before joining The Chronicle, he was Chief Financial Officer and
Managing Director of Becker Paribas, Inc., an investment banking firm. His
career began in 1971 with Utah International, Inc. where he became the
company's senior financial officer. Mr. Hindery is Chairman of OneMediaPlace,
Inc. and a Director of GT Group Telecom, Tanning Technology Corp., TD
Waterhouse Group, Inc., VerticalNet, Inc., and zUniversity.com, Inc. He is
Vice Chairman of the Museum of Television and Radio and a Director of C-SPAN.
He is also a member of the Stanford Business School Advisory Council and of
the Board of Trustees of Hampton University and a Director of the Daniels
Fund.
Committees of the Board of Directors and Meetings
Meeting Attendance. During the fiscal year ended February 29, 2000, there
were four meetings of our Board of Directors. The Board also acted by
unanimous written consent on nine occasions pursuant to Delaware law during
this period. No director attended fewer than 75% of the total number of
meetings of the Board and of committees of the Board on which they served
during the fiscal year ended February 29, 2000.
Audit Committee. Our Audit Committee met twice during the fiscal year ended
February 29, 2000. This committee currently has two members, Michael Murray
and William H. Lane III. Our Audit Committee reviews the results and scope of
audits and other services provided by our independent public accountants.
Compensation Committee. Our Compensation Committee met twice during the
fiscal year ended February 29, 2000. This committee currently has two members,
Charles H. Jackson, IV and James E. Preston. Our Compensation Committee makes
recommendations concerning salaries and incentive compensation for our
employees and consultants, establishes and approves salaries and incentive
compensation for our executive officers and administers our incentive stock
plans.
Nominating Committee. We do not have a standing nominating committee.
Compensation Committee Interlocks and Insider Participation. Mr. Jackson and
Mr. Preston constitute our Compensation Committee. Neither Mr. Jackson nor Mr.
Preston are, or have ever been, employees of Outpost.com. None of our
executive officers serve as a member of the board of directors or compensation
committee of any entity that has any executive officer serving as a member of
our Board of Directors or Compensation Committee.
Compensation of Directors
Pursuant to the Outpost.com Director Retainer and Stock Option Policy, which
was adopted by Outpost.com on June 15, 1999, non-employee directors receive an
annual retainer of $10,000 to serve on our Board and receive $1,500 for each
meeting attended in person and $500 for each meeting attended by telephone. In
addition, under this policy, upon initial election or subsequent re-election
to our Board of Directors, individuals who are not salaried employees of
Outpost.com receive automatic grants of non-qualified stock options to
purchase
7
25,000 shares of our common stock pursuant to our 1998 Employee, Director and
Consultant Stock Option Plan. Each option granted pursuant to this policy:
. has a term of ten years;
. has an exercise price equal to the fair market value of our common stock
on the date of grant; and
. is exercisable immediately.
Under this policy, Mr. Lane and Mr. Preston, who were elected to our Board
of Directors at the 1999 Annual Meeting, each received an automatic grant of
an immediately exercisable option to purchase 25,000 shares of our common
stock at an exercise price of $11.44 per share. In addition, in connection
with the adoption of this policy, on June 15, 1999, Michael Murray was granted
an immediately exercisable option to purchase 10,000 shares of our common
stock at an exercise price of $9.50 per share in consideration for past
services rendered as a director to Outpost.com. If Senator Riegle and Mr.
Hindery are elected at the Annual Meeting, they will each receive an automatic
grant of an immediately exercisable option to purchase 25,000 shares of our
common stock.
Furthermore, pursuant to a previous director stock option policy, on
February 11, 1999, Michael Murray was granted an option to purchase 15,000
shares of our common stock at an exercise price of $18.31 per share. This
option is exercisable in three equal annual installments beginning on February
11, 2000. On February 11, 1999, Mr. Murray was also granted an immediately
exercisable option to purchase 10,000 shares of our common stock at an
exercise price of $18.31 per share in consideration for past services rendered
as a director to Outpost.com. In addition, on March 24, 1999, Mr. Murray was
granted an immediately exercisable option to purchase 14,000 shares of our
common stock at an exercise price of $19.0625 per share, and on June 15, 1999,
he was granted an immediately exercisable option to purchase 10,000 shares of
our common stock at an exercise price of $9.50 per share.
Executive Officers
The following table sets forth certain information regarding our executive
officers who are not also directors. We have employment agreements with our
President and Chief Executive Officer, our Executive Vice President for
Business Development and Chief Financial Officer, our Chief Sales Officer, our
Chief Purchasing and General Merchandise Manager, and our Chief Fulfillment
and Facilities Officer. All other executive officers are at-will employees.
Name Age Position
---- --- --------
Philip J. Rello......... 40 Chief Sales Officer
Raymond A. Maccio....... 33 Chief Purchasing Officer and General Merchandise Manager
Bruce C. Schellinkhout.. 42 Chief Fulfillment and Facilities Officer
James P. Gallagher...... 51 Chief Communications Officer
Derek C. Holding........ 45 Chief Design Officer
Raymond Karrenbauer..... 30 Chief Technology Officer
Mr. Rello has served as our Vice President of Sales and Customer Service
(now Chief Sales Officer) since September 1998 and served as our Vice
President of Sales from July 1997 to September 1998. From August 1990 until
July 1997, he worked at Micro Warehouse, Inc., a catalog retailer and direct
marketer of computer hardware, software and accessories, where he last served
as Director of Education Sales.
Mr. Maccio has served as our General Merchandise Manager since May 1999 and
as our Vice President of Purchasing (now Chief Purchasing Officer and General
Merchandise Manager) since November 1998. From April 1997 to November 1998, he
was our Director of Purchasing. From September of 1996 until joining
Outpost.com, Mr. Maccio served as Director of Purchasing for Global Computer
Supplies, a leading catalog retailer of computer supply products. From
February of 1991 to September of 1996, Mr. Maccio worked for Micro Warehouse,
Inc. where he held various positions in the purchasing department, including
Purchasing Manager.
8
Mr. Schellinkhout joined Outpost.com as our Vice President of Operations
(now Chief Fulfillment & Facilities Officer) in July 1998. From January 1993
until joining Outpost.com, he was the Vice President of Distribution for Micro
Warehouse, Inc.
Mr. Gallagher has served as our Chief Communications Officer since January
2000. Mr. Gallagher joined Outpost.com following a 21 year career with ITT
Corporation and its acquirer Starwood Hotels and Resorts, Worldwide, Inc where
he last served as Senior Vice President of Public Relations and as the
company's spokesperson. Mr. Gallagher joined ITT in 1979 as manager of news
services. He was promoted to director of public relations in 1981 and vice
president in 1986. Prior to joining ITT he served as director of
communications for Ingersoll Rand, Gulf & Western Industries and The Singer
Company.
Mr. Holding joined Outpost.com as Executive Director of Customer Experience
in June 1999. He became the Chief Design Officer in March 2000. He has held
consulting and senior positions at Prodigy Services, Art Technology Group and
Meca Software. Mr. Holding specializes in creating online consumer solutions
that unite both technology and design.
Mr. Karrenbauer joined Outpost.com in April 2000 as our Chief Technology
Officer. He previously served as Vice President of Meta Group, an
international information technology research and analysis firm. Other
positions have included Vice President of Professional Services at Infomask,
Inc (an internetworking security solutions based engineering firm) and Chief
Information Officer and Vice President of Information Systems at GEN
International, Inc. He also held senior level information technology and
engineering positions at several engineering services firms.
9
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth the total compensation paid or accrued during
the fiscal years ended February 29, 2000 and February 28, 1999 and 1998 to (1)
our Chief Executive Officer, (2) our former Chief Executive Officer and (3)
our four next most highly compensated executive officers who earned more than
$100,000 during the fiscal year ended February 29, 2000. Information is
provided for each fiscal year in which an individual served as our Chief
Executive Officer and for each other executive officer listed only for the
fiscal years in which they earned more than $100,000.
Summary Compensation Table
Long-term
Compensation
------------
Annual Compensation Awards
-------------------- ------------
Shares
Name and Principal Fiscal Underlying All Other
Position Year Salary ($) Bonus ($) Options (#) Compensation ($)
------------------ ------ ---------- --------- ------------ ----------------
Robert A. Bowman....... 2000 $ 73,076 $ -- 1,200,000 $11,855
President and Chief
Executive Officer
Darryl Peck............ 2000 179,850 -- -- 22,489
Former President and 1999 170,577 25,000 1,200,000 3,740
Chief Executive
Officer 1998 139,385 11,100 -- --
Katherine N. Vick...... 2000 164,250 56,000 100,000 18,627
Executive Vice 1999 143,269 20,000 300,000 --
President for Business
Development and Chief
Financial Officer
Philip J. Rello........ 2000 129,782 22,000 40,000 13,777
Chief Sales Officer 1999 123,885 15,000 140,000 --
Raymond A. Maccio...... 2000 119,254 22,000 65,000 12,088
Chief Purchasing
Officer and General
Merchandise Manager
Bruce C. 2000 132,426 17,000 10,000 12,021
Schellinkhout.........
Chief Fulfillment and
Facilities Officer
Mr. Bowman joined us as our President and Chief Executive Officer in
September 1999. All other Compensation for the fiscal year ended February 29,
2000 includes life insurance premiums and other perquisites, such as health
benefits, auto allowances and tax planning, paid on behalf of our executive
officers.
Option Grants
The following table sets forth grants of stock options granted during the
fiscal year ended February 29, 2000 to each of the executive officers named in
the Summary Compensation Table. In accordance with the rules of the SEC, also
shown below is the potential realizable value over the term of the option (the
period from the grant date to the expiration date). This is calculated
assuming that the fair market value of common stock on the date of grant
appreciates at the indicated annual rate, 5% and 10% compounded annually, for
the entire term of the option and that the option is exercised and sold on the
last day of its term for the appreciated stock price. These amounts are based
on certain assumed rates of appreciation and do not represent our estimate of
future stock price. Actual gains, if any, on stock option exercises will be
dependent on the future performance of our common stock.
10
Option Grants in Last Fiscal Year
Individual Grants
---------------------------------------------
Value at Assumed
Number of Percent of Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted To Exercise for Option Terms
Options Employees in Price Expiration ------------------------
Granted Fiscal Year ($/Share) Date 5% 10%
---------- ------------- --------- ---------- ----------- ------------
Robert A. Bowman........ 1,200,000 42.6% $8.06 9/29/09 $ 6,082,664 $ 15,414,674
Darryl Peck............. -- -- -- -- -- --
Katherine N. Vick....... 100,000 3.6% 8.88 6/16/09 558,458 1,415,243
Philip J. Rello......... 40,000 1.4% 11.38 11/11/09 286,273 725,471
Raymond A. Maccio....... 40,000 1.4% 12.88 5/11/09 324,006 821,096
25,000 0.9% 11.38 11/11/09 178,920 453,419
Bruce C. Schellinkhout.. 10,000 0.4% 11.38 11/11/09 71,568 181,367
Option Exercises and Year-End Option Values
The following table sets forth certain information with respect to exercises
of options to purchase our common stock by each executive officer named in the
Summary Compensation Table during the fiscal year ended February 29, 2000 and
with respect to the aggregate value of options held by each executive officer
named in the Summary Compensation Table as of February 29, 2000. The value of
the unexercised in-the-money options at fiscal year end is based on a value of
$8.813 per share, the closing price of our stock on the Nasdaq National Market
on February 29, 2000 (the last trading day prior to the fiscal year end), less
the per share exercise price.
Aggregate Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-The-Money Options
Shares Year-End (#) at Fiscal Year-End ($)
Acquired on Value ------------------------- -------------------------
Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------------ ------------ ----------- ------------- ----------- -------------
Robert A. Bowman........ -- -- 120,000 1,080,000 90,000 810,000
Darryl Peck............. -- -- 440,000 60,000 -- --
Katherine N. Vick....... 114,190 827,332 229,278 407,532 977,437 1,475,550
Philip J. Rello......... -- -- 98,000 217,000 399,342 597,123
Raymond A. Maccio....... -- -- 17,500 83,000 57,053 136,494
Bruce C. Schellinkhout.. -- -- 58,334 126,666 525 1,050
Employment Contracts and Change of Control Arrangements
On September 29, 1999, we entered into an executive employment agreement
with Robert A. Bowman, our President and Chief Executive Officer. This
agreement is for an initial two year term but automatically renews for
successive two-year periods unless notice of non-renewal is given by either
Mr. Bowman or us within 30 days of the end of any two-year period. Under this
agreement Mr. Bowman receives an initial base salary of $200,000, which may be
increased by the Board of Directors or the Compensation Committee. In
addition, Mr. Bowman is eligible to participate in any bonus and employee
benefit plans provided by us for senior executives. Under this agreement, Mr.
Bowman was also granted an option to purchase 1,200,000 shares of our common
stock at an exercise price of $8.06 per share. 120,000 of these shares were
exercisable immediately upon grant, 360,000 shares become exercisable on
September 29, 2000 and the remaining shares vest in 18 equal monthly
installments of 40,000 shares beginning on October 30, 2000. If we terminate
Mr. Bowman without cause, constructively terminate him or do not renew his
agreement at the end of any
11
two-year term, he will receive a lump-sum payment equal to (1) the greater of
the amount that would have been paid to him for the remainder of the two-year
term or one year base salary, plus (2) any earned but unpaid bonus for the
prior fiscal year. If, following a change of control of Outpost.com, Mr.
Bowman is terminated under the circumstances described above, he will receive
a lump sum payment equal to three years' base salary plus any earned but
unpaid bonus for the prior fiscal year. In addition, the option for 1,200,000
shares will become fully exercisable upon a change of control. Mr. Bowman is
also entitled to the continuation of certain benefits upon termination under
these circumstances. This agreement contains a one-year post-termination non-
compete and non-solicitation provision.
On June 16, 1999 we entered into an executive employment agreement with
Katherine N. Vick, our Executive Vice President for Business Development and
Chief Financial Officer. This agreement continues until January 31, 2001 and
automatically renews for two year periods on each of February 1, 2001 and
February 1, 2003 unless notice of non-renewal is given by either Ms. Vick or
us. Under this agreement Ms. Vick received an initial base salary of $160,000,
which has been increased by the Compensation Committee. In addition, Ms. Vick
is eligible to participate in any bonus and employee benefit plans provided by
us for senior executives and is provided a $500,000 term life insurance policy
and a long-term disability policy for up to 60% of her salary. In the event we
do not renew Ms. Vick's agreement at the end of the period ending January 31,
2001, Ms. Vick will continue to receive her base salary until July 31, 2001
and will be paid any earned but unpaid bonus for the prior fiscal year. If,
following a change of control of Outpost.com, Ms. Vick's agreement is not
renewed at any time, she will receive a lump sum payment equal to three years'
base salary plus any earned but unpaid bonus for the prior fiscal year. This
agreement contains a six month post-termination non-compete and non-
solicitation provision.
On August 10, 1999, we entered into a Letter Agreement with Philip J. Rello,
our Chief Sales Officer. This agreement is for two years and provides Mr.
Rello an initial base salary of $140,000, subject to increase by the
Compensation Committee. In addition, Mr. Rello is eligible to receive a bonus,
stock options and is eligible to participate in any employee benefit plans
provided by us for senior executives. This agreement is terminable by Mr.
Rello for any reason with 60 days notice and by us for cause. If we terminate
Mr. Rello without cause, he is entitled to receive severance pay for the
greater of (i) the unexpired portion of the term of the agreement or (ii) 12
months. This agreement contains a one-year post-termination non-compete and
non-solicitation provision.
On August 5, 1999, we entered into a Letter Agreement with Raymond A.
Maccio, our Chief Purchasing Officer and General Merchandising Manager. This
agreement is for two years and provides Mr. Maccio an initial base salary of
$125,000, subject to increase by the Compensation Committee. In addition, Mr.
Maccio is eligible to receive a bonus, stock options and is eligible to
participate in any employee benefit plans provided by us for senior
executives. This agreement is terminable by Mr. Maccio for any reason with 60
days notice and by us for cause. If we terminate Mr. Maccio without cause, he
is entitled to receive severance pay for the greater of (i) the unexpired
portion of the term of the agreement or (ii) 12 months. This agreement
contains a one-year post-termination non-compete and non-solicitation
provision.
On July 27, 1999, we entered into a Letter Agreement with Bruce C.
Schellinkhout, our Chief Fulfillment and Facilities Officer. This agreement is
for two years and provides Mr. Schellinkhout an initial base salary of
$140,000, subject to increase by the Compensation Committee. In addition, Mr.
Schellinkhout is eligible to receive a bonus, stock options and is eligible to
participate in any employee benefit plans provided by us for senior
executives. This agreement is terminable by Mr. Schellinkhout for any reason
with 60 days notice and by us for cause. If we terminate Mr. Schellinkhout
without cause, he is entitled to receive severance pay for the greater of (i)
the unexpired portion of the term of the agreement or (ii) 12 months. This
agreement contains a one-year post-termination non-compete and non-
solicitation provision.
12
Report of Compensation Committee on Executive Compensation
This report is submitted by the Compensation Committee, which is responsible
for establishing and administering Outpost.com's compensation policies and its
stock option plans. The committee is currently composed of Messrs. Jackson and
Preston, neither of whom is an employee of Outpost.com. This report addresses
the compensation policies for fiscal year 2000 as they affected Mr. Bowman,
Outpost.com's President and Chief Executive Officer, and the other executive
officers of Outpost.com.
General Compensation Policy. Outpost.com's compensation policy for executive
officers is designed to achieve the following objects: (i) to enhance the
company's profitability and increase stockholder values; (ii) to reward
executives consistent with Outpost.com's annual and long-term performance
goals; (iii) to recognize individual initiative, leadership and achievement;
and (iv) to provide competitive compensation that will attract and retain
qualified executives.
Executive Officer Compensation Program. The committee performs annual
reviews of executive compensation to confirm the competitiveness of the
overall executive compensation packages as compared with companies who compete
with Outpost.com for prospective employees.
The compensation program for executive officers consists of three elements:
(1) base salary, which is set on an annual basis; (2) annual incentive
compensation, in the form of cash bonuses, which is based on achievement of
predetermined financial objectives of Outpost.com and individual objectives;
and (3) long-term incentive compensation, in the form of stock options,
granted when the executive officer joins Outpost.com and on occasion
thereafter with the objective of aligning the executive officers' long-term
interests with those of the stockholders and encouraging the achievement of
superior results over an extended period.
To assist the committee in setting this policy in fiscal 2000, Outpost.com
had an independent party perform an executive compensation and benefits review
of the company and its peers in the e-commerce field. This report was
submitted to the committee in January 1999.
Base Salary. Base salaries for executive officers are targeted at
competitive market levels for their respective positions, levels of
responsibility and experience. In addition to external market data, the
committee also reviews Outpost.com's financial performance and individual
performance when adjusting base salary annually.
Bonus Compensation. Bonus compensation is based on the company's achievement
of predetermined financial, operational and strategic objectives. Giving
greatest weight to attainment of financial targets, the committee also awards
bonuses based on various operational and strategic objectives, such as
management efficiency, and the ability to motivate others and build a strong
management team, develop and maintain the skills necessary to work in a high-
growth company, recognize and pursue new business opportunities and initiate
programs to enhance Outpost.com's growth and successes. Bonuses are awarded on
an annual basis.
Long Term Incentive Compensation. Long-term incentive compensation, in the
form of stock options, allows the executive officers to share in any
appreciation in the value of Outpost.com's common stock. The committee
believes that stock option participation aligns executive officers' interests
with those of the stockholders. In addition, the committee believes that
equity ownership by executive officers helps to balance the short term focus
of annual incentive compensation with a longer term view and may help to
retain key executive officers.
When establishing stock option grant levels, the committee considers general
corporate performance, the Chief Executive Officer's recommendations, level of
seniority and experience, existing levels of stock ownership, previous grants
of stock options, vesting schedules of outstanding options and the current
stock price.
13
It is the standard policy of Outpost.com to grant an initial stock option
grant to all executive officers at the time they commence employment
consistent with the number of options granted to executive officers in the
e-commerce industry at similar levels of seniority. In addition, the committee
may also make performance-based grants throughout the year. In making such
performance-based grants, the committee considers individual contributions to
the company's financial, operational and strategic objectives.
Chief Executive Officer Compensation. Robert A. Bowman joined Outpost.com as
President and Chief Executive Officer in September 1999 pursuant to an
employment agreement that provided him an initial base salary of $200,000,
which may be increased by the Board of Directors or the committee from time to
time. In addition, under this agreement Mr. Bowman is eligible to participate
in Outpost.com's executive bonus plan and was eligible to earn up to 40% of
his pro-rated base salary for fiscal year 2000. Mr. Bowman was also granted an
option to purchase 1,200,000 shares of Outpost.com's common stock at an
exercise price of $8.06 per share. 120,000 of these shares were exercisable
immediately upon grant, 360,000 shares become exercisable on September 29,
2000, and the remaining shares vest in 18 equal monthly installments of 40,000
shares beginning on October 30, 2000. Mr. Bowman's salary and bonus structure
is consistent with that received by his counterparts in e-commerce companies
of comparable size and stage of development.
In fiscal year 2000, Mr. Bowman earned $73,076 of his $200,000 base salary.
Certain Tax Considerations. Outpost.com does not believe Section 162(m) of
the Internal Revenue Code, as amended, which generally disallows a tax
deduction for compensation in excess of $1 million to any of the executive
officers appearing in the Summary Compensation Table above will have an effect
on it. The committee has considered the requirements of Section 162(m) of the
Code and its related regulations. It is the committee's present intention
that, so long as it is consistent with its overall compensation objections,
substantially all executive compensation will be deductible for Federal income
tax purposes.
The Compensation Committee:
Charles H. Jackson, IV
James E. Preston
14
RELATED PARTY TRANSACTIONS
In the fiscal year ended February 29, 2000, Outpost.com was not a party to
any transaction or business relationship in which the amount exceeded $60,000
involving any of its officers, directors or five percent stockholders.
PERFORMANCE GRAPH
The following graph compares the annual cumulative total stockholder return
(assuming reinvestment of dividends) from investing $100 on July 31, 1998 (the
date of our initial public offering), and plotted at the end of each fiscal
year thereafter, in each of (a) Outpost.com's common stock, (b) the Nasdaq
Stock Market, (c) the Media General Financial Services SIC Code Index 5734,
which consists of other companies in the computer hardware and software retail
industry and (d) our peer group, which consists of Egghead.com, Inc.,
Beyond.com Corporation and Value America, Inc. We have chosen this peer group
because we believe it more accurately reflects our competition in the online
computer and electronics retail industry than does SIC Code Index 5734. It
should be noted that we have not paid any dividends on our common stock, and
no dividends are included in the representation of our performance. The stock
price performance on the graph below is not necessarily indicative of future
price performance.
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURNS
OF ONE OR MORE COMPANIES, PEER GROUPS,
INDUSTRY INDEXES AND/OR BROAD MARKETS
[GRAPH]
Relative Dollar Values
7/31/98 2/28/99 2/29/00
------- ------- -------
Outpost.com............................................. $100.00 $ 83.23 $ 42.99
Peer Group.............................................. $100.00 $182.46 $ 34.15
SIC Code Index.......................................... $100.00 $ 67.86 $ 56.14
Nasdaq Market Index..................................... $100.00 $123.33 $239.58
15
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD
Proposal 1: Elect Three Directors
On June 19, 2000, the Board of Directors nominated Katherine N. Vick and
Donald Riegle, Jr. for election at the Annual Meeting. On June 27, 2000, the
Board of Directors voted to increase the number of directors to eight and
nominated Leo J. Hindery, Jr. for election at the Annual Meeting to fill this
vacancy. If the nominees are elected, they will serve on our Board of
Directors until the 2003 Annual Meeting of Stockholders and until their
respective successors have been elected and qualified.
Unless authority to vote for any of the nominees named below is withheld,
the shares represented by the enclosed proxy will be voted FOR the election as
directors of Ms. Vick, Senator Riegle and Mr. Hindery. In the event that any
nominee shall become unable or unwilling to serve, the shares represented by
the enclosed proxy will be voted for the election of such other person as the
Board of Directors may recommend in his or her place. We have no reason to
believe that any nominee will be unable or unwilling to serve as a director.
The affirmative vote of a plurality of the shares voted affirmatively or
negatively at the Annual Meeting is required to elect each nominee as a
director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF KATHERINE N. VICK, DONALD
RIEGLE, JR. AND LEO J. HINDERY, JR. AS DIRECTORS, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
Proposal 2: Approve Amendment to Our 1998 Employee, Director and Consultant
Stock Plan
We are asking you to approve an amendment to our 1998 Employee, Director and
Consultant Stock Plan in order increase the number of shares of our common
stock available under the Plan by 900,000 shares from 5,186,000 shares to
6,086,000 shares.
General Information About The Plan. Our 1998 Employee, Director and
Consultant Stock Plan Stock Purchase Plan was approved by our Board of
Directors and stockholders in 1998 and a total of 3,186,000 shares of common
stock was initially reserved for issuance under the Plan and in 1999 the Board
of Directors and stockholders voted to increase the number of shares issuable
under the Plan to 5,186,000. By its terms, the Plan may be amended by the
Board of Directors, provided that any amendment which the Board of Directors
determines requires stockholder approval is subject to such stockholder
approval. On June 7, 2000, the Board of Directors voted to approve an
amendment to the Plan to increase the aggregate number of shares of common
stock which may be offered under the Plan by 900,000 shares. This amendment is
being submitted for your approval at the Annual Meeting to ensure continued
qualification of the Plan under The Nasdaq Stock Market rules and Section 423
of the Internal Revenue Code. Our Board of Directors believes that the
increase is advisable to give us the flexibility needed to attract, retain and
motivate our employees. As of June 21, 2000, the closing price of our common
stock as reported on the Nasdaq Stock Market was $4.875.
Summary of Material Features of the Plan. The following is a summary of the
key provisions of the Plan.
Purpose: The purpose of the Plan is to encourage ownership of
our common stock by our employees, directors and
certain consultants in order to attract such people,
to induce them to work for our benefit and to provide
additional incentive for them to promote our success.
Administration: By its terms, the Plan is to be administered by our
Board of Directors, except to the extent that it
delegates its authority to a committee of the Board
of Directors. The Board of Directors has designated
its Compensation Committee as the administrator of
the Plan.
16
Awards:
The Plan authorizes the issuance of stock grants to
our employees, directors and consultants and the
grant of incentive stock options to our employees and
non-qualified options to our employees, directors and
consultants.
Options Exercise For non-qualified options, the exercise price per
Price: share is determined by the Compensation Committee,
subject to the one limitation that it at least equal
the par value per share of our common stock (i.e.
$.01 per share).
For incentive stock options, the exercise price per
share is determined by the Compensation Committee,
subject to the limitation that it at least equal 100%
of the fair market value per share of common stock on
the date of grant of the incentive stock option. If
the optionee owns more than 10% of the total combined
voting power of Outpost.com, the exercise price per
share must at least equal 110% of the fair market
value per share of common stock on the date of grant
of the incentive stock option.
Term of Options: The term of non-qualified options is determined by
the Compensation Committee. For incentive stock
options, the term of the Option, like the exercise
price, is dependent upon the ownership interest in
Outpost.com of the optionee. Generally, the term of
an incentive stock option is ten years. If the
optionee owns more than 10% of the total combined
voting power of Outpost.com, the term of the
incentive stock option will be no more than five
years. An option is subject to early termination upon
the termination of employment or other relationship
of the optionee with us, whether such termination is
at the option of us, the optionee, or as a result of
the death or disability of the optionee.
Vesting; Exercise of
Options: An option may be exercised by giving written notice
to us together with provision for payment of the full
exercise price for the number of shares as to which
the option is being exercised. The ability of an
optionee to exercise an option, however, is subject
to the vesting of the option. At the time the option
is granted, a vesting period is established, which
generally extends over a period of a few years. As
the option vests, an optionee will be able to
exercise the option with respect to the vested
portion of the shares and ultimately with respect to
all of the vested shares, until such time as the
option expires or terminates.
Term of Stock Grant: The date prior to which an offer of a stock grant
must be accepted by a grantee and the stock grant
purchase price, if any, shall be determined by the
Compensation Committee. A stock grant may be subject
to repurchase by us upon termination of employment of
the grantee with Outpost.com, under certain
circumstances.
Federal Income Tax Consequences. The following is a brief summary of the
applicable federal income tax laws relating to stock options and stock grants
under the Plan:
Incentive Stock Incentive stock options are intended to qualify for
Options: treatment under Section 422 of the Code. An incentive
stock option does not result in taxable income to the
optionee or deduction to Outpost.com at the time it
is granted or
17
exercised, provided that no disposition is made by
the optionee of the shares acquired pursuant to the
option within two years after the date of grant of
the option nor within one year after the date of
issuance of shares to him (the "ISO holding period").
However, the difference between the fair market value
of the shares on the date of exercise and the option
price will be an item of tax preference includible in
"alternative minimum taxable income." Upon
disposition of the shares after the expiration of the
ISO holding period, the optionee will generally
recognize long term capital gain or loss based on the
difference between the disposition proceeds and the
option price paid for the shares. If the shares are
disposed of prior to the expiration of the ISO
holding period, the optionee generally will recognize
taxable compensation, and Outpost.com will have a
corresponding deduction, in the year of the
disposition, equal to the excess of the fair market
value of the shares on the date of exercise of the
option over the option price. Any additional gain
realized on the disposition will normally constitute
capital gain. If the amount realized upon such a
disqualifying disposition is less than fair market
value of the shares on the date of exercise, the
amount of compensation income will be limited to the
excess of the amount realized over the optionee's
adjusted basis in the shares.
Non-Qualified Options otherwise qualifying as incentive stock
Options: options, to the extent the aggregate fair market
value of shares with respect to which such options
are first exercisable by an individual in any
calendar year exceeds $100,000, and options
designated as non-qualified options will be treated
as options that are not incentive stock options.
A non-qualified option ordinarily will not result in
income to the optionee or deduction to Outpost.com at
the time of grant. The optionee will recognize
compensation income at the time of exercise of such
non-qualified option in an amount equal to the excess
of the then value of the shares over the option price
per share. Such compensation income of optionees may
be subject to withholding taxes, and a deduction may
then be allowable to Outpost.com in an amount equal
to the optionee's compensation income.
An optionee's initial basis in shares so acquired
will be the amount paid on exercise of the non-
qualified option plus the amount of any corresponding
compensation income. Any gain or loss as a result of
a subsequent disposition of the shares so acquired
will be capital gain or loss.
Stock Grants:
With respect to stock grants under the Plan that
result in the issuance of shares that are either not
restricted as to transferability or not subject to a
substantial risk of forfeiture, the grantee must
generally recognize ordinary income equal to the fair
market value of shares received. Thus, deferral of
the time of issuance will generally result in the
deferral of the time the grantee will be liable for
income taxes with respect to such issuance.
Outpost.com generally will be entitled to a deduction
in an amount equal to the ordinary income recognized
by the grantee.
With respect to stock grants involving the issuance
of shares that are restricted as to transferability
and subject to a substantial risk of forfeiture, the
grantee must generally recognize ordinary income
equal to the fair market value of the shares received
at the first time the shares become transferable
18
or are not subject to a substantial risk of
forfeiture, whichever occurs earlier. A grantee may
elect to be taxed at the time of receipt of shares
rather than upon lapse of restrictions on
transferability or substantial risk of forfeiture,
but if the grantee subsequently forfeits such shares,
the grantee would not be entitled to any tax
deduction, including as a capital loss, for the value
of the shares on which he previously paid tax. The
grantee must file such election with the Internal
Revenue Service within 30 days of the receipt of the
shares. Outpost.com generally will be entitled to a
deduction in an amount equal to the ordinary income
recognized by the grantee.
Option Information. Pursuant to our director stock option policy, if Senator
Riegle and Mr. Hindery are elected to our Board of Directors at the Annual
Meeting, they will each receive an automatic grant of an option to purchase
25,000 shares of our common stock. This option will have an exercise price
equal to the fair market value of our common stock as of the grant date and
will be exercisable immediately.
The amount, if any, of stock options to be awarded to any of our other
executives or directors is not presently determinable. The following table
sets forth as of May 31, 2000, certain information with respect to all options
granted under the Plan since it was adopted in July 1998 to (1) the executive
officers named in the Summary Compensation Table on page 10, (2) all of our
current executive officers as a group, (3) all of our current directors who
are not executive officers as a group and (4) all employees, including all
current officers who are not executive officers, as a group:
Number of Shares Weighted Average
Covered by Exercise Price
Name Options Granted Per Share
- ---- ---------------- ----------------
Robert A. Bowman............................ 1,200,000 $ 8.06
Darryl Peck................................. 500,000 $18.00
Katherine N. Vick........................... 550,000 $12.56
Philip J. Rello............................. 186,000 $15.13
Raymond A. Maccio........................... 84,000 $11.00
Bruce C. Schellinkhout...................... 191,000 $16.01
All current executive officers as a group... 3,245,000 $11.18
All current directors who are not executive
officers as a group........................ 99,000 $14.06
All employees, including all current
officers who are not executive officers, as
a group.................................... 1,530,765 $10.24
The affirmative vote of a majority of shares present, in person or
represented by proxy, and entitled to vote on this proposal is required for
approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO OUR
1998 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN TO INCREASE BY 900,000
SHARES THE AGGREGATE NUMBER OF SHARES RESERVED FOR ISSUANCE, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
Proposal 3: Ratify Selection of Independent Auditors for the Fiscal Year
Ending February 28, 2001.
We are asking you to ratify the Board of Director's selection of KPMG LLP,
certified public accountants, as independent auditors for the fiscal year
ending February 28, 2001. KPMG audited our financial statements for the fiscal
year ended February 29, 2000 and has served as the independent auditors of
Outpost.com since 1996.
A representative of KPMG will be available at the Annual Meeting to answer
your questions.
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We are submitting this proposal to you because we believe that such action
follows sound corporate practice. If you do not ratify the selection of KPMG
as independent auditors, the Board of Directors will consider selecting other
auditors. However, even if you ratify the selection, the Board of Directors
may still appoint new independent auditors at any time during the next fiscal
year if it believes that such a change will be in the best interests of
Outpost.com and our stockholders.
The affirmative vote of a majority of the shares voted affirmatively or
negatively at the Annual Meeting is required to ratify the appointment of the
independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED
OTHERWISE ON THE PROXY.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon review of our records all reports required to be filed pursuant
to Section 16(a) of the Exchange Act were filed on a timely basis except that
(i) an Initial Statement of Beneficial Ownership on Form 3 was filed late by
James P. Gallagher, and (ii) Annual Statements of Changes in Beneficial
Ownership were filed late by Philip J. Rello, Raymond A. Maccio, and Bruce C.
Schellinkhout.
Information About Stockholder Proposals
To be considered for inclusion in our proxy statement relating to the 2001
Annual Meeting of Stockholders, stockholder proposals must be received no
later than February 28, 2001. To be considered for presentation at such
meeting, although not included in our proxy statement, proposals must comply
with our By-laws and must be received no later than May 27, 2001, and no
earlier than April 27, 2001. All stockholder proposals should be marked for
the attention of Secretary, Outpost.com, 23 North Main Street, P.O. Box 636,
Kent, Connecticut, 06757.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By order of the Board of Directors:
/s/ Katherine N. Vick
_____________________________________
Katherine N. Vick
Secretary
June 28, 2000
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APPENDIX A
OUTPOST.COM
AMENDED AND RESTATED
1998 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
1. Definitions.
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Cyberian Outpost 1998 Employee, Director and
Consultant Stock Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated power
to act on its behalf to the Committee, in which case the Administrator
means the Committee.
Affiliate means a corporation which, for purposes of Section 424 of the
Code, is a parent or subsidiary of the Company, direct or indirect.
Board of Directors means the Board of Directors of the Company.
Code means the United States Internal Revenue Code of 1986, as amended.
Committee means the committee of the Board of Directors to which the
Board of Directors has delegated power to act under or pursuant to the
provisions of the Plan.
Common Stock means shares of the Company's common stock, no par value per
share.
Company means Cyberian Outpost Inc., a Delaware corporation.
Disability or Disabled means permanent and total disability as defined in
Section 22(e)(3) of the Code.
Fair Market Value of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities exchange
or traded in the over-the-counter market and sales prices are regularly
reported for the Common Stock, the closing or last price of the Common
Stock on the Composite Tape or other comparable reporting system for
the trading day immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if sales prices
are not regularly reported for the Common Stock for the trading day
referred to in clause (1), and if bid and asked prices for the Common
Stock are regularly reported, the mean between the bid and the asked
price for the Common Stock at the close of trading in the over-the-
counter market for the trading day on which Common Stock was traded
immediately preceding the applicable date; and
(3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.
ISO means an option meant to qualify as an incentive stock option under
Section 422 of the Code.
Key Employee means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by the
Administrator to be eligible to be granted one or more Stock Rights under
the Plan.
Non-Qualified Option means an option which is not intended to qualify as
an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Option Agreement means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall
approve.
Participant means a Key Employee, director or consultant to whom one or
more Stock Rights are granted under the Plan. As used herein, "Participant"
shall include "Participant's Survivors" where the context requires.
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Plan means this Amended and Restated Outpost.com 1998 Employee, Director
and Consultant Stock Plan.
Shares means shares of the Common Stock as to which Stock Rights have
been or may be granted under the Plan or any shares of capital stock into
which the Shares are changed or for which they are exchanged within the
provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may
be authorized and unissued shares or shares held by the Company in its
treasury, or both.
Stock Grant means a grant by the Company of Shares under the Plan.
Stock Grant Agreement means an agreement between the Company and a
Participant delivered pursuant to the Plan, in such form as the
Administrator shall approve.
Stock Right means a right to Shares of the Company granted pursuant to
the Plan--an ISO, a Non-Qualified Option or a Stock Grant.
Survivors means a deceased Participant's legal representatives and/or any
person or persons who acquired the Participant's rights to a Stock Right by
will or by the laws of descent and distribution.
2. Purposes of the Plan.
The Plan is intended to encourage ownership of Shares by Key Employees and
directors of and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an
Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options and Stock Grants.
3. Shares Subject to the Plan.
The number of Shares which may be issued from time to time pursuant to this
Plan shall be 6,086,000 shares of Common Stock or the equivalent of such number
of Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction in accordance with Paragraph 23 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, or if the
Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares
which were subject to such Option and any Shares so reacquired by the Company
shall be available for the granting of other Stock Rights under the Plan. Any
Option shall be treated as "outstanding" until such Option is exercised in
full, or terminates or expires under the provisions of the Plan, or by
agreement of the parties to the pertinent Option Agreement.
4. Administration of the Plan.
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to the Committee, in
which case the Committee shall be the Administrator. Subject to the provisions
of the Plan, the Administrator is authorized to:
a. Interpret the provisions of the Plan or of any Option or Stock Grant
and to make all rules and determinations which it deems necessary or
advisable for the administration of the Plan;
b. Determine which employees of the Company or of an Affiliate shall be
designated as Key Employees and which of the Key Employees, directors and
consultants shall be granted Stock Rights;
c. Determine the number of Shares for which a Stock Right or Stock Rights
shall be granted, provided, however, that in no event shall Stock Rights
with respect to more than 3,000,000 shares be granted to any Participant in
any fiscal year; and
d. Specify the terms and conditions upon which a Stock Right or Stock
Rights may be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the
tax status under Section 422 of the Code of those Options which are
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designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any Stock
Right granted under it shall be final, unless otherwise determined by the Board
of Directors, if the Administrator is the Committee.
5. Eligibility for Participation.
The Administrator will, in its sole discretion, name the Participants in the
Plan, provided, however, that each Participant must be a Key Employee, director
or consultant of the Company or of an Affiliate at the time a Stock Right is
granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of a Stock Right to a person not then an employee, director or consultant
of the Company or of an Affiliate; provided, however, that the actual grant of
such Stock Right shall be conditioned upon such person becoming eligible to
become a Participant at or prior to the time of the delivery of the Agreement
evidencing such Stock Right. ISOs may be granted only to Key Employees. Non-
Qualified Options and Stock Grants may be granted to any Key Employee, director
or consultant of the Company or an Affiliate. The granting of any Stock Right
to any individual shall neither entitle that individual to, nor disqualify him
or her from, participation in any other grant of Stock Rights.
6. Terms and Conditions of Options.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such terms and conditions, consistent with the terms and
conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the
shareholders of the Company of this Plan or any amendments thereto.
A. Non-Qualified Options: Each Option intended to be a Non-Qualified Option
shall be subject to the terms and conditions which the Administrator determines
to be appropriate and in the best interest of the Company, subject to the
following minimum standards for any such Non-Qualified Option:
a. Option Price: Each Option Agreement shall state the option price (per
share) of the Shares covered by each Option, which option price shall be
determined by the Administrator but shall not be less than the par value
per share of Common Stock.
b. Each Option Agreement shall state the number of Shares to which it
pertains;
c. Each Option Agreement shall state the date or dates on which it first
is exercisable and the date after which it may no longer be exercised, and
may provide that the Option rights accrue or become exercisable in
installments over a period of months or years, or upon the occurrence of
certain conditions or the attainment of stated goals or events; and
d. Exercise of any Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form satisfactory to the
Administrator providing for certain protections for the Company and its
other shareholders, including requirements that:
i. The Participant's or the Participant's Survivors' right to sell or
transfer the Shares may be restricted; and
ii. The Participant or the Participant's Survivors may be required to
execute letters of investment intent and must also acknowledge that the
Shares will bear legends noting any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only to a Key
Employee and be subject to at least the following terms and conditions, with
such additional restrictions or changes as the Administrator determines are
appropriate but not in conflict with Section 422 of the Code and relevant
regulations and rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum standards required
of Non-Qualified Options, as described in Paragraph 6(A) above, except
clause (a) thereunder.
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b. Option Price: Immediately before the Option is granted, if the
Participant owns, directly or by reason of the applicable attribution rules
in Section 424(d) of the Code:
i. Ten percent (10%) or less of the total combined voting power of
all classes of stock of the Company or an Affiliate, the Option price
per share of the Shares covered by each Option shall not be less than
one hundred percent (100%) of the Fair Market Value per share of the
Shares on the date of the grant of the Option.
ii. More than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or an Affiliate, the Option price
per share of the Shares covered by each Option shall not be less than
one hundred ten percent (110%) of the said Fair Market Value on the
date of grant.
c. Term of Option: For Participants who own
i. Ten percent (10%) or less of the total combined voting power of
all classes of stock of the Company or an Affiliate, each Option shall
terminate not more than ten (10) years from the date of the grant or at
such earlier time as the Option Agreement may provide.
ii. More than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or an Affiliate, each Option shall
terminate not more than five (5) years from the date of the grant or at
such earlier time as the Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements shall restrict
the amount of Options which may be exercisable in any calendar year (under
this or any other ISO plan of the Company or an Affiliate) so that the
aggregate Fair Market Value (determined at the time each ISO is granted) of
the stock with respect to which ISOs are exercisable for the first time by
the Participant in any calendar year does not exceed one hundred thousand
dollars ($100,000), provided that this subparagraph (d) shall have no force
or effect if its inclusion in the Plan is not necessary for Options issued
as ISOs to qualify as ISOs pursuant to Section 422(d) of the Code.
7. Terms and Conditions of Stock Grants.
Each offer of a Stock Grant to a Participant shall state the date prior to
which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Stock Grant Agreement shall be in a form
approved by the Administrator and shall contain terms and conditions which the
Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards:
(a) Each Stock Grant Agreement shall state the purchase price (per
share), if any, of the Shares covered by each Stock Grant, which purchase
price shall be determined by the Administrator but shall not be less than
the minimum consideration required by the Delaware Law on the date of the
grant of the Stock Grant;
(b) Each Stock Grant Agreement shall state the number of Shares to which
the Stock Grant pertains; and
(c) Each Stock Grant Agreement shall include the terms of any right of
the Company to reacquire the Shares subject to the Stock Grant, including
the time and events upon which such rights shall accrue and the purchase
price therefor, if any.
8. Exercise of Options and Issue of Shares.
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal executive office address,
together with provision for payment of the full purchase price in accordance
with this Paragraph for the Shares as to which the Option is being exercised,
and upon compliance with any other condition(s) set forth in the Option
Agreement. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised and shall contain any representation required by the Plan or
the Option Agreement. Payment of the purchase price for the Shares as to which
such Option is being exercised shall be made (a) in United States dollars in
cash or by
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check, or (b) at the discretion of the Administrator, through delivery of
shares of Common Stock having a Fair Market Value equal as of the date of the
exercise to the cash exercise price of the Option, or (c) at the discretion of
the Administrator, by having the Company retain from the shares otherwise
issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or
(d) at the discretion of the Administrator, by delivery of the grantee's
personal recourse note bearing interest payable not less than annually at no
less than 100% of the applicable Federal rate, as defined in Section 1274(d) of
the Code, or (e) at the discretion of the Administrator, in accordance with a
cashless exercise program established with a securities brokerage firm, and
approved by the Administrator, or (f) at the discretion of the Administrator,
by any combination of (a), (b), (c), (d) and (e) above. Notwithstanding the
foregoing, the Administrator shall accept only such payment on exercise of an
ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or "blue sky" laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance. The Shares shall, upon delivery, be evidenced by an
appropriate certificate or certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise of
any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified
Option pursuant to Paragraph 26) if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code, as described in
Paragraph 6.B.d.
The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, or in the event of the death of the
Participant, the Participant's Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any ISO shall be made only after
the Administrator, after consulting the counsel for the Company, determines
whether such amendment would constitute a "modification" of any Option which is
an ISO (as that term is defined in Section 424(h) of the Code) or would cause
any adverse tax consequences for the holder of such ISO.
9. Acceptance of Stock Grant and Issue of Shares.
A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company at its
principal office address, together with provision for payment of the full
purchase price, if any, in accordance with this Paragraph for the Shares as to
which such Stock Grant is being accepted, and upon compliance with any other
conditions set forth in the Stock Grant Agreement. Payment of the purchase
price for the Shares as to which such Stock Grant is being accepted shall be
made (a) in United States dollars in cash or by check, or (b) at the discretion
of the Administrator, through delivery of shares of Common Stock having a fair
market value equal as of the date of acceptance of the Stock Grant to the
purchase price of the Stock Grant determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of
the grantee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the applicable Federal rate, as defined in
Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by
any combination of (a), (b) and (c) above.
The Company shall then reasonably promptly deliver the Shares as to which
such Stock Grant was accepted to the Participant (or to the Participant's
Survivors, as the case may be), subject to any escrow provision set forth in
the Stock Grant Agreement. In determining what constitutes "reasonably
promptly," it is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or "blue sky" laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance.
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The Administrator may, in its discretion, amend any term or condition of an
outstanding Stock Grant or Stock Grant Agreement provided (i) such term or
condition as amended is permitted by the Plan, and (ii) any such amendment
shall be made only with the consent of the Participant to whom the Stock Grant
was made, if the amendment is adverse to the Participant.
10. Rights as a Shareholder.
No Participant to whom a Stock Right has been granted shall have rights as a
shareholder with respect to any Shares covered by such Stock Right, except
after due exercise of the Option or acceptance of the Stock Grant and tender of
the full purchase price, if any, for the Shares being purchased pursuant to
such exercise or acceptance and registration of the Shares in the Company's
share register in the name of the Participant.
11. Assignability and Transferability of Stock Rights.
By its terms, a Stock Right granted to a Participant shall not be
transferable by the Participant other than (i) by will or by the laws of
descent and distribution, or (ii) as otherwise determined by the Administrator
and set forth in the applicable Option Agreement or Stock Grant Agreement. The
designation of a beneficiary of a Stock Right by a Participant shall not be
deemed a transfer prohibited by this Paragraph. Except as provided above, a
Stock Right shall only be exercisable or may only be accepted, during the
Participant's lifetime, by such Participant (or by his or her legal
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.
12. Effect on Options of Termination of Service Other Than for "Cause" or Death
or Disability.
Except as otherwise provided in the pertinent Option Agreement in the event
of a termination of service (whether as an employee, director or consultant)
with the Company or an Affiliate before the Participant has exercised an
Option, the following rules apply:
a. A Participant who ceases to be an employee, director or consultant of
the Company or of an Affiliate (for any reason other than termination for
"cause", Disability, or death for which events there are special rules in
Paragraphs 13, 14, and 15, respectively), may exercise any Option granted
to him or her to the extent that the Option is exercisable on the date of
such termination of service, but only within such term as the Administrator
has designated in the pertinent Option Agreement.
b. Except as provided in Subparagraph (c) below, or Paragraph 14 or 15,
in no event may an Option Agreement provide, if an Option is intended to be
an ISO, that the time for exercise be later than three (3) months after the
Participant's termination of employment.
c. The provisions of this Paragraph, and not the provisions of Paragraph
14 or 15, shall apply to a Participant who subsequently becomes Disabled or
dies after the termination of employment, director status or consultancy,
provided, however, in the case of a Participant's Disability or death
within three (3) months after the termination of employment, director
status or consultancy, the Participant or the Participant's Survivors may
exercise the Option within one (1) year after the date of the Participant's
termination of employment, but in no event after the date of expiration of
the term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent to a
Participant's termination of employment, termination of director status or
termination of consultancy, but prior to the exercise of an Option, the
Board of Directors determines that, either prior or subsequent to the
Participant's termination, the Participant engaged in conduct which would
constitute "cause", then such Participant shall forthwith cease to have any
right to exercise any Option.
e. A Participant to whom an Option has been granted under the Plan who is
absent from work with the Company or with an Affiliate because of temporary
disability (any disability other than a permanent and
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total Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence,
be deemed, by virtue of such absence alone, to have terminated such
Participant's employment, director status or consultancy with the Company
or with an Affiliate, except as the Administrator may otherwise expressly
provide.
f. Except as required by law or as set forth in the pertinent Option
Agreement, Options granted under the Plan shall not be affected by any
change of a Participant's status within or among the Company and any
Affiliates, so long as the Participant continues to be an employee,
director or consultant of the Company or any Affiliate.
13. Effect on Options of Termination of Service for "Cause".
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated for
"cause" prior to the time that all his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the time the Participant
is notified his or her service is terminated for "cause" will immediately
be forfeited.
b. For purposes of this Plan, "cause" shall include (and is not limited
to) dishonesty with respect to the Company or any Affiliate,
insubordination, substantial malfeasance or non-feasance of duty,
unauthorized disclosure of confidential information, and conduct
substantially prejudicial to the business of the Company or any Affiliate.
The determination of the Administrator as to the existence of "cause" will
be conclusive on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of
service but prior to the exercise of an Option, that either prior or
subsequent to the Participant's termination the Participant engaged in
conduct which would constitute "cause", then the right to exercise any
Option is forfeited.
d. Any definition in an agreement between the Participant and the Company
or an Affiliate, which contains a conflicting definition of "cause" for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to such Participant.
14. Effect on Options of Termination of Service for Disability.
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the
Company or of an Affiliate by reason of Disability may exercise any Option
granted to such Participant:
a. To the extent exercisable but not exercised on the date of Disability;
and
b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights as would have accrued
had the Participant not become Disabled prior to the end of the accrual
period which next ends following the date of Disability. The proration
shall be based upon the number of days of such accrual period prior to the
date of Disability.
A Disabled Participant may exercise such rights only within a period of not
more than one (1) year after the date of the Participant's termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become disabled
and had continued to be an employee, director or consultant or, if earlier,
within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company
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and such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
15. Effect on Options of Death While an Employee, Director or Consultant.
Except as otherwise provided in the pertinent Option Agreement, in the event
of the death of a Participant while the Participant is an employee, director or
consultant of the Company or of an Affiliate, such Option may be exercised by
the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of death; and
b. In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights which would have
accrued had the Participant not died prior to the end of the accrual period
which next ends following the date of death. The proration shall be based
upon the number of days of such accrual period prior to the Participant's
death.
If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date
of death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
16. Effect of Termination of Service on Stock Grants.
In the event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate for any reason before the
Participant has accepted a Stock Grant, such offer shall terminate.
For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to
whom a Stock Grant has been offered under the Plan who is absent from work with
the Company or with an Affiliate because of temporary disability (any
disability other than a permanent and total Disability as defined in Paragraph
1 hereof), or who is on leave of absence for any purpose, shall not, during the
period of any such absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or consultancy with
the Company or with an Affiliate, except as the Administrator may otherwise
expressly provide.
In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any
change of employment or other service within or among the Company and any
Affiliates shall not be treated as a termination of employment, director status
or consultancy so long as the Participant continues to be an employee, director
or consultant of the Company or any Affiliate.
17. Effect on Stock Grants of Termination of Service Other Than for "Cause" or
Death or Disability.
Except as otherwise provided in the pertinent Stock Grant Agreement, in the
event of a termination of service (whether as an employee, director or
consultant), other than termination for "cause," Disability, or death for which
events there are special rules in Paragraphs 18, 19, and 20, respectively,
before all Company rights of repurchase shall have lapsed, then the Company
shall have the right to repurchase that number of Shares subject to a Stock
Grant as to which the Company's repurchase rights have not lapsed.
18. Effect on Stock Grants of Termination of Service for "Cause".
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated for
"cause":
a. All Shares subject to any Stock Grant shall be immediately subject to
repurchase by the Company at the purchase price, if any, thereof.
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b. For purposes of this Plan, "cause" shall include (and is not limited
to) dishonesty with respect to the employer, insubordination, substantial
malfeasance or non-feasance of duty, unauthorized disclosure of
confidential information, and conduct substantially prejudicial to the
business of the Company or any Affiliate. The determination of the
Administrator as to the existence of "cause" will be conclusive on the
Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to a
Participant's termination of service, nor is it necessary that the
Administrator's finding of "cause" occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of
service, that either prior or subsequent to the Participant's termination
the Participant engaged in conduct which would constitute "cause," then the
Company's right to repurchase all of such Participant's Shares shall apply.
d. Any definition in an agreement between the Participant and the Company
or an Affiliate, which contains a conflicting definition of "cause" for
termination and which is in effect at the time of such termination, shall
supersede the definition in this Plan with respect to such Participant.
19. Effect on Stock Grants of Termination of Service for Disability.
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply if a Participant ceases to be an employee, director or
consultant of the Company or of an Affiliate by reason of Disability: to the
extent the Company's rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that in the event
such rights of repurchase lapse periodically, such rights shall lapse to the
extent of a pro rata portion of the Shares subject to such Stock Grant as would
have lapsed had the Participant not become Disabled prior to the end of the
vesting period which next ends following the date of Disability. The proration
shall be based upon the number of days of such vesting period prior to the date
of Disability.
The Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
20. Effect on Stock Grants of Death While an Employee, Director or Consultant.
Except as otherwise provided in the pertinent Stock Grant Agreement, the
following rules apply in the event of the death of a Participant while the
Participant is an employee, director or consultant of the Company or of an
Affiliate: to the extent the Company's rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the
event such rights of repurchase lapse periodically, such rights shall lapse to
the extent of a pro rata portion of the Shares subject to such Stock Grant as
would have lapsed had the Participant not died prior to the end of the vesting
period which next ends following the date of death. The proration shall be
based upon the number of days of such vesting period prior to the Participant's
death.
21. Purchase for Investment.
Unless the offering and sale of the Shares to be issued upon the particular
exercise or acceptance of a Stock Right shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"1933 Act"), the Company shall be under no obligation to issue the Shares
covered by such exercise unless and until the following conditions have been
fulfilled:
a. The person(s) who exercise(s) or accept(s) such Stock Right shall
warrant to the Company, prior to the receipt of such Shares, that such
person(s) are acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection with, the
distribution of any such Shares, in which event the person(s) acquiring
such Shares shall be bound by the provisions of the following legend
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which shall be endorsed upon the certificate(s) evidencing their Shares
issued pursuant to such exercise or such grant:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there shall
have been compliance with all applicable state securities laws."
b. At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued upon such
particular exercise or acceptance in compliance with the 1933 Act without
registration thereunder.
22. Dissolution or Liquidation of the Company.
Upon the dissolution or liquidation of the Company, all Options granted under
this Plan which as of such date shall not have been exercised and all Stock
Grants which have not been accepted will terminate and become null and void;
provided, however, that if the rights of a Participant or a Participant's
Survivors have not otherwise terminated and expired, the Participant or the
Participant's Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date
immediately prior to such dissolution or liquidation.
23. Adjustments.
Upon the occurrence of any of the following events, a Participant's rights
with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
pertinent Option Agreement or Stock Grant Agreement:
A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non-cash assets are distributed
with respect to such shares of Common Stock, the number of shares of Common
Stock deliverable upon the exercise or acceptance of such Stock Right may be
appropriately increased or decreased proportionately, and appropriate
adjustments may be made in the purchase price per share to reflect such events.
The number of Shares subject to the limitation in Paragraph 4(c) shall also be
proportionately adjusted upon the occurrence of such events.
B. Consolidations or Mergers. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this Subparagraph) at the end of which period the Options shall
terminate; or (iii) terminate all Options in exchange for a cash payment equal
to the excess of the Fair Market Value of the Shares subject to such Options
(either to the extent then exercisable or, at the discretion of the
Administrator, all Options being made fully exercisable for purposes of this
Subparagraph) over the exercise price thereof.
With respect to outstanding Stock Grants, the Administrator or the Successor
Board, shall either (i) make appropriate provisions for the continuation of
such Stock Grants by substituting on an equitable basis for the
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Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Acquisition or securities of any successor or acquiring entity; or (ii) upon
written notice to the Participants, provide that all Stock Grants must be
accepted (to the extent then subject to acceptance) within a specified number
of days of the date of such notice, at the end of which period the offer of the
Stock Grants shall terminate; or (iii) terminate all Stock Grants in exchange
for a cash payment equal to the excess of the Fair Market Value of the Shares
subject to such Stock Grants over the purchase price thereof, if any. In
addition, in the event of an Acquisition, the Administrator may waive any or
all Company repurchase rights with respect to outstanding Stock Grants.
C. Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company (other than a transaction described in
Subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
a Participant upon exercising or accepting a Stock Right shall be entitled to
receive for the purchase price, if any, paid upon such exercise or acceptance
the securities which would have been received if such Stock Right had been
exercised or accepted prior to such recapitalization or reorganization.
D. Modification of ISOs. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
24. Issuances of Securities.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.
25. Fractional Shares.
No fractional shares shall be issued under the Plan and the person exercising
a Stock Right shall receive from the Company cash in lieu of such fractional
shares equal to the Fair Market Value thereof.
26. Conversion of ISOs into Non-Qualified Options; Termination of ISOs.
The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant's
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant's ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Administrator takes appropriate action. The Administrator, with the consent
of the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
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27. Withholding.
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be
withheld from the Participant's salary, wages or other remuneration in
connection with the exercise or acceptance of a Stock Right or in connection
with a Disqualifying Disposition (as defined in Paragraph 28) or upon the
lapsing of any right of repurchase, the Company may withhold from the
Participant's compensation, if any, or may require that the Participant advance
in cash to the Company, or to any Affiliate of the Company which employs or
employed the Participant, the amount of such withholdings unless a different
withholding arrangement, including the use of shares of Common Stock or a
promissory note, is authorized by the Administrator (and permitted by law). For
purposes hereof, the fair market value of the shares withheld for purposes of
payroll withholding shall be determined in the manner provided in Paragraph 1
above, as of the most recent practicable date prior to the date of exercise. If
the fair market value of the shares withheld is less than the amount of payroll
withholdings required, the Participant may be required to advance the
difference in cash to the Company or the Affiliate employer. The Administrator
in its discretion may condition the exercise of an Option for less than the
then Fair Market Value on the Participant's payment of such additional
withholding.
28. Notice to Company of Disqualifying Disposition.
Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
29. Termination of the Plan.
The Plan will terminate on 10 years after adoption, the date which is ten
(10) years from the earlier of the date of its adoption and the date of its
approval by the shareholders of the Company. The Plan may be terminated at an
earlier date by vote of the shareholders of the Company; provided, however,
that any such earlier termination shall not affect any Option Agreements or
Stock Grant Agreements executed prior to the effective date of such
termination.
30. Amendment of the Plan and Agreements.
The Plan may be amended by the shareholders of the Company. The Plan may also
be amended by the Administrator, including, without limitation, to the extent
necessary to qualify any or all outstanding Stock Rights granted under the Plan
or Stock Rights to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, and to the extent
necessary to qualify the shares issuable upon exercise or acceptance of any
outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan
for listing on any national securities exchange or quotation in any national
automated quotation system of securities dealers. Any amendment approved by the
Administrator which the Administrator determines is of a scope that requires
shareholder approval shall be subject to obtaining such shareholder approval.
Any modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under a Stock Right previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Option Agreements and Stock Grant
Agreements in a manner which may be adverse to the Participant but which is not
inconsistent with the Plan. In the discretion of the Administrator, outstanding
Option Agreements and Stock Grant Agreements may be amended by the
Administrator in a manner which is not adverse to the Participant.
A-12
31. Employment or Other Relationship.
Nothing in this Plan or any Option Agreement or Stock Grant Agreement shall
be deemed to prevent the Company or an Affiliate from terminating the
employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director
status or to give any Participant a right to be retained in employment or other
service by the Company or any Affiliate for any period of time.
32. Governing Law.
This Plan shall be construed and enforced in accordance with the law of the
State of Delaware.
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CYBERIAN OUTPOST, INC.
(a/k/a OUTPOST.COM)
THIS PROXY IS BEING SOLICITED BY OUTPOST.COM'S
BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement dated June 28, 2000, in
connection with the Annual Meeting to be held at 10:30 a.m. on Wednesday, July
26, 2000 at the Sheraton NY Hotel and Towers, 7th Avenue and 52nd Street,
Riverside Suite 3rd Floor, New York, New York and hereby appoints Robert A.
Bowman and Katherine N. Vick, and each of them (with full power to act alone),
the attorneys and proxies of the undersigned, with power of substitution to
each, to vote all shares of the common stock of Outpost.com registered in the
name provided herein which the undersigned is entitled to vote at the 2000
Annual Meeting of Stockholders, and at any adjournments thereof, with all the
powers the undersigned would have if personally present. Without limiting the
general authorization hereby given, said proxies are, and each of them is,
instructed to vote or act as follows on the proposals set forth in said Proxy.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of Directors and FOR
Proposals 2 and 3.
NOTE: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
-----------
(Continued and to be signed on reverse side) SEE REVERSE
SIDE
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[COMPANY LOGO APPEARS HERE] VOTE BY PHONE - 1-800-690-6803
CYBERIAN OUTPOST, INC. Use any touch-tone telephone to transmit your
P.O. BOX 9141 voting instructions. Have your proxy card in hand
FARMINGDALE, NY 11735 when you call. You will be prompted to enter your
12-digit Control Number which is located below
and then follow the simple instructions the Vote
Voice provides you.
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of
information. Have your proxy card in hand when you
access the web site. You will be prompted to enter
your 12-digit Control Number which is located
below to obtain your records and create an
electronic voting instruction form.
VOTE BY MAIL -
Mark, sign and date your proxy card and return it
in the postage-paid envelope we've provided or
return to Cyberian Outpost, Inc., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
OUTPOST.COM
July 26, 2000
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
CYBER1 KEEP THIS PORTION FOR YOUR RECORD
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DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
CYBERIAN OUTPOST, INC.
The Board of Directors recommends a vote FOR Proposals 1 through 3.
1. Election of directors (or if any nominee is not available for election, such
substitute as the Board of Directors may designate).
Nominees: 01) Katherine N. Vick FOR WITHHOLD FOR ALL
02) Donald Riegle, Jr. ALL ALL EXCEPT
03) Leo J. Hindery, Jr. [_] [_] [_]
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
-------------------------------------------------
VOTE ON PROPOSALS
2. Proposal to increase by 900,000 shares the FOR AGAINST ABSTAIN
aggregate number of shares reserved for [_] [_] [_]
issuance under Cyberian Outpost's 1998
Employee, Director and Consultant Stock Plan.
3. Proposal to Ratify the Appointment of KPMG FOR AGAINST ABSTAIN
LLP as Cyberian Outpost's independent [_] [_] [_]
auditors for the fiscal year ending
February 28, 2001.
In their discretion the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournments thereof.
If you wish to vote in accordance with the Board of Directors' recommendations,
just sign below. You need not mark any boxes.
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| ___________________________________________________ | ______________________|
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Signature [PLEASE SIGN WITHIN BOX] DATE
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| ___________________________________________________ | ______________________|
- -------------------------------------------------------------------------------
Signature [JOINT OWNERS] DATE