SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material under Rule 14a-12
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Universe2U Inc.
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)
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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: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[_] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
UNIVERSE2U INC.
30 West Beaver Creek Road, Suite 109
Richmond Hill, ON, Canada L4B 3K1
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 2001
Notice is hereby given that Universe2U Inc., a Nevada corporation, will hold its
Annual Meeting of Shareholders on Thursday, May 24, 2001, at 3:00 p.m., to be
held at The Board of Trade, First Canadian Place, Toronto, Ontario, Canada, for
the following purposes:
1. To elect the Board of Directors to serve until the 2002 Annual Meeting
of Shareholders and until their respective successors have been
elected and qualified;
2. To approve and adopt amendments to the Company's Articles of
Incorporation to increase the number of shares of authorized capital
stock from 100,000,000 shares to 110,000,000 shares, of which
100,000,000 shares will continue to be designated as common stock,
$.00001 par value per share (the "Common Stock") and 10,000,000 shares
will be designated as preferred stock, par value $.00001 per share
(the "Preferred Stock") which may be issued by the Company in one or
more series, in accordance with the terms and conditions of the
amendment attached hereto as Exhibit A;
3. To ratify and approve the Universe2U Inc. 2000 Equity Incentive Plan
(the "Equity Incentive Plan") in the form attached hereto as Exhibit
B;
4. To ratify the appointment of Moore Stephens Cooper Molyneux LLP as the
independent auditors for Universe2U Inc. for the fiscal year ending
December 31, 2001;
5. To transact any other business that may properly come before the
Annual Meeting of Shareholders;
Only shareholders who own shares of Universe2U Inc. as of the close of business
on April 9, 2001, are entitled to notice of, and to vote such shares by proxy or
in person at the Annual Meeting of Shareholders.
Toronto, Ontario
April ___, 2001
By Order of the Board of Directors
______________________________
Paul Pathak
Secretary
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IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ENSURE REPRESENTATION OF YOUR SHARES AND ENSURE THE PRESENCE OF A QUORUM. NO
POSTAGE IS NECESSARY IF YOU MAIL WITHIN THE UNITED STATES.
MAILING YOUR PROXY WILL NOT PREVENT YOU FROM VOTING AT THE ANNUAL MEETING IF YOU
DECIDE TO ATTEND IN PERSON, AS YOUR PROXY IS REVOCABLE AT YOUR OPTION.
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PRELIMINARY PROXY
UNIVERSE2U INC.
30 West Beaver Creek Road, Suite 109
Richmond Hill, Ontario, Canada L4B 3K1
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2001
The enclosed Proxy is solicited on behalf of the Board of Directors of
Universe2U Inc., (the "Company", "we" or "us") to be voted at the Annual Meeting
of Shareholders (the "Annual Meeting"), to be held on Thursday, May 24, 2001, at
3:00 p.m., at The Board of Trade, First Canadian Place, Toronto, Ontario,
Canada, or at any time, place and date called by reason of adjournment or
postponement, for the purposes set forth herein and in the accompanying Notice
of Annual Shareholders Meeting.
The definitive proxy statement and the accompanying proxy are being sent on or
about April 26, 2001 to shareholders of record as of the close of business on
April 9, 2001, who are entitled to vote at the Annual Meeting. The Company's
principal offices are located at 30 West Beaver Creek Road, Suite 109, Richmond
Hill, Ontario, Canada L4B 3K1. Our telephone number is (905) 881-3284.
All amounts disclosed in this Proxy Statement are set forth in U.S. dollars
unless indicated otherwise.
VOTING RIGHTS AND SOLICITATION OF PROXIES
PURPOSE OF THE ANNUAL MEETING
The specific proposals to be considered and acted upon at the Annual Meeting are
summarized in the accompanying Notice of Annual Meeting. Each proposal is
described in more detail in this proxy statement.
RECORD DATE AND SHARES OUTSTANDING
Shareholders of record at the close of business on April 9, 2001 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting. At the
Record Date, ______________ shares of common stock were issued and outstanding.
The closing price of our common stock on the over-the-counter Market on the
Record Date was $__________ per share.
REVOCABILITY AND VOTING OF PROXIES
Any person signing a proxy in the form accompanying this proxy statement has the
power to revoke it prior to the Annual Meeting or at the Annual Meeting prior to
the vote pursuant to the proxy. A proxy may be revoked by any of the following
methods:
. by writing a letter delivered to Paul Pathak,
Secretary of the Company, stating that the proxy is revoked;
. by submitting another proxy with a later date; or
. by attending the Annual Meeting and voting in person.
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Please note, however, that if a shareholder's shares are held of record by a
broker, bank or other nominee and that shareholder wishes to vote at the Annual
Meeting, the shareholder must bring to the Annual Meeting a letter from the
broker, bank or other nominee confirming the shareholder's beneficial ownership
of the shares. Shares of common stock represented by properly executed proxies
will be voted at the Annual Meeting in accordance with the instructions
indicated on the proxies, unless the proxies have been revoked.
Unless we receive specific instructions to the contrary, properly executed
proxies will be voted: (1) to elect the nominees set forth herein to the Board
of Directors to serve until the 2002 Annual Meeting of Shareholders and until
their respective successors have been elected and qualified; (2) to approve and
adopt amendments to the Company's Articles of Incorporation to increase the
number of shares of authorized capital stock from 100,000,000 shares to
110,000,000 shares, of which 100,000,000 shares will continue to be designated
as common stock, $.00001 par value per share (the "Common Stock") and 10,000,000
shares will be designated as preferred stock, $.00001 per share (the "Preferred
Stock") which may be issued by the Company in one or more series; (3) to ratify
the Equity Incentive Plan; (4) to ratify the appointment of Moore Stephens
Cooper Molyneux LLP as the independent auditor for Universe2U Inc. and (5) upon
any and all other business that may properly come before the Annual Meeting.
LIST OF SHAREHOLDERS
A list of shareholders entitled to vote at the Annual Meeting will be available
at the Annual Meeting and for ten days prior to the Annual Meeting during
regular business hours at our offices at Universe2U Inc., 30 West Beaver Creek
Road, Suite 109, Richmond Hill, Toronto, Ontario, Canada L4B 3K1, by contacting
Paul Pathak, Secretary of the Company.
VOTING AT THE ANNUAL MEETING
Each share of common stock outstanding on the Record Date will be entitled to
one (1) vote on each matter submitted to a vote of the shareholders, including
the election of directors and approval of the Equity Incentive Plan. Cumulative
voting by shareholders is not permitted.
The presence, in person or by proxy, of shareholders of record of Universe2U
Inc. common stock, constituting a majority of the aggregate number of votes to
which all outstanding shares of the common stock are entitled to vote, is
necessary to constitute a quorum. All matters coming before any meeting of the
shareholders shall be decided by the holders of a majority of the number of
votes represented and entitled to be cast, in person or by proxy, a quorum being
present.
Directors shall be elected by the shareholders at the Annual Meeting each year
by the affirmative vote of a plurality of the votes cast either in person or
represented by proxy and entitled to vote on the election of Directors.
The affirmative vote of a majority of the outstanding shares of the Company,
represented either in person or by proxy, and entitled to vote at the Annual
Meeting is required to ratify and approve the amendment to the Company's Equity
Incentive Plan and to ratify the appointment of Moore Stephens Cooper Molyneux
LLP as the independent auditors of Universe2U Inc.
SOLICITATION
The Company will pay the costs relating to this proxy statement, the proxy and
the Annual Meeting. We may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to beneficial owners. Directors, officers and regular
employees may also solicit proxies; however, they will not receive any
additional compensation for such solicitation. We estimate that the amount
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spent in printing costs and legal fees in preparing this solicitation will be
approximately $3000.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
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NOMINEES FOR DIRECTORS
The Board of Directors proposes the following nominees for election as directors
at the Annual Meeting. The directors will hold office from election until the
next Annual Meeting, or until there successors are elected and qualified.
DIRECTOR
NAME AGE POSITION SINCE
-------------------- --- -------- ------------
Angelo Boujos 38 Chairman May 17, 2000
Kim Allen 45 Director May 17, 2000
Paul Pathak 32 Director May 17, 2000
Connie Colangelo 44 Director May 17, 2000
Barry Herman 59 Director May 17, 2000
Anthony Palumbo 45 Director May 17, 2000
Stephen Marano 45 Director March 30, 2001
Frederick Kasravi 63 Director March 30, 2001
Angelo Boujos, Chairman. Mr. Boujos is the founder and Chairman of the Company.
Mr. Boujos entered the telecommunications industry by establishing Canadian
Cable Consultants in April 1998. Mr. Boujos worked for 7 years with Toronto
Dominion Bank and 2 years with American Express. Between 1987 and 1995, Mr.
Boujos served as President of Winter Valley Springs Inc. He also served as
senior advisor to the President/CEO for Algonqua Springs Inc. and Culligan Inc.
from 1995 until 1998.
Kim Allen, Director and CEO. Mr. Allen is the Chief Executive Officer of the
Company. He joined the Company in December 1999. Mr. Allen has served as a
Director of the Company since May 17, 2000. Prior to joining the Company, Mr.
Allen served as the founding President of DTE/Probyn Energy Solutions from its
inception in June 1998, a joint venture between DTE Energy Solutions (Detroit
Edison) and Probyn & Company. Mr. Allen also served as CEO of Scarborough Public
Utilities Commission, a $400 million water and electric utility, from 1992 to
1998, and as its Director of Engineering & Operation from 1990 to 1992. Prior to
those positions, in a 12-year career with Ontario Hydro, Mr. Allen held a number
of management positions that included retail, engineering, operations and
information systems functions. Mr. Allen obtained a Master of Business
Administration from the University of Toronto (1987) and a Bachelor of Applied
Science in Electrical Engineering from the University of Ottawa (1978).
Paul Pathak, Director and Secretary. Mr. Pathak has served as a Director of the
Company since May 17, 2000. Mr. Pathak has been a lawyer practicing corporate
and securities law in Toronto, Ontario since 1994. He is currently a partner at
the firm of Chitiz Pundit Pathak & Sokoloff. Mr. Pathak has also has served as a
director of several public companies and is currently a director of Fareport
Capital Inc., a Toronto based publicly traded company. Mr. Pathak's law firm
provides legal services to the Company with respect to compliance with the laws
of Canada and its provinces.
Connie Colangelo, Director. Ms. Colangelo has served as a Director of the
Company since May 17, 2000. Ms. Colangelo is a Senior Human Resources advisor
with a major Canadian financial institution and has served as part of the senior
management team of their global securities services
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business since 1998. She has more than 20 years experience in financial
services, and combines extensive knowledge of retail banking, trust, and custody
with business, sales, client service and human resources management. Prior to
Human Resources, she held various management positions within the organization
(1986-1998). She holds an Honours Bachelor of Science Degree from the University
of Toronto and has completed the various securities courses including the
Canadian Securities Course. In addition, she has obtained her Personal Financial
Planning designation through the Institute of Canadian Bankers. Ms. Colangelo is
the sister-in-law of Mr. Boujos.
Barry Herman has served as Director of the Company since May 17, 2000. Mr.
Herman is President of Dominion Fixed Income Plus Fund Limited. He served as
President of Citco Fund Services (Bahamas) Limited from September 1996 to
January 1998. Prior to that, he was founder and former President and Managing
Director of Mees Pierson Fund Services (Bahamas) Limited (formerly Fund Service
International Limited) a position which he held from April 1988 to July 1996.
Mr. Herman has been involved in the investment funds industry continuously since
1964 and in the offshore investment funds industry since 1968.
Anthony Palumbo, Director. Mr. Palumbo has served as a Director of the Company
since May 17, 2000. Mr. Palumbo has more than 20 years of consulting and
financial experience, working with such companies as Clarkson Gordon (1978-
1983), Lehndorff Group (1983-1987), Royal LePage (1987-1995), and his own
company, Chartered Accountancy (1995-1999). In 1999, Mr. Palumbo became the
Vice-President, Chief Financial Officer and Director for PsiGate. In 1978 Mr.
Palumbo obtained his Bachelor of Commerce from the University of Toronto and in
1981 obtained his chartered accountant designation while at a predecessor of
Ernst & Young. Mr. Palumbo later formed his own chartered accountancy practice
and provided strategic planning services as well as financial, tax and capital
services.
Stephen Marano, Director. Mr. Marano has served as Director of the Company since
March 30, 2001. Mr. Marano has over twelve years experience in bringing to
market innovative new services in the Internet, telecommunications, on-line
services and network-based interactive industries. He has held senior management
positions at AT&T and in other Fortune 100 corporations, new venture start-up
and general consulting organizations. From 1998 through November 2000, Mr.
Marano was a Managing Partner of the Verticom Group, a corporate business
development and consulting company that provides technical strategic planning,
financial and interim management assistance to a number of vertical market
start-ups in the Internet and telecommunications sectors. From 1997-1998, Mr.
Marano was a Senior Vice-President of Marketing and Business Development with
Network Two Corporation, where he was part of the core management team that
successfully lead the spin-out of and transformation of this former ADP data
communications division into a national provider of value-added Internet and
private IP network services. From 1995-1997, Mr. Marano was Director of Business
Development, Internet Services for AT&T WorldNet (SM) Services. Since November
2000, Mr. Marano has been a principal of DirecTemps LLC, a company involved in
the deployment of integrated Internet and wireless messaging technology and
services for human resources organizations. Mr. Marano holds an MBA from the
Wharton School of Business.
Frederick Kasravi, Director. Mr. Kasravi has served as Director since March 30,
2001. Mr. Kasravi has more than 35 years of managerial experience with such
companies as Sun Life (1967-1987), North American Life (1988-1993), Imperial
Life and Desjardin (1993-1995), Omni Commerce, Paris, (1974-1999), ITT Hartford
(1995-1999), Lehndorff Group (1997-1999) and the Ontabia Business Development
Corporation (1980-2001). Mr. Kasravi
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holds a Master's Degree from the University of Tehran in Mechanical Engineering.
DIRECTOR COMPENSATION AND DIRECTOR OPTION GRANTS
Directors who are employees receive no cash compensation for their services as
directors. Effective as of November 2000, non-employee directors receive cash
compensation of $500 for attendance at each meeting of the Board and meeting of
Board committees. Non-employee directors are eligible to participate in the
Company's Equity Incentive Plan at the discretion of the full board of
directors. On May 16, 2000, non-employee directors of the Company serving at
such date each received options exercisable for 20,000 shares of the Company
common stock at a purchase price of $5.00 per share.
EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation paid to our
Chief Executive Officer and the other most highly compensated executive officers
whose aggregate compensation exceeded $100,000 in the year ended December 31,
2000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term Compensation
------------------- ----------------------
Name and Restricted Stock and/or Securities
Principal Position Year Salary Bonus Securities Underlying Options
- ------------------ ---- ------ ----- ----------------------------------
Kim Allen, CEO 2000 $ 90,000 0 500,000 (1)
1999 $ 7,000 0 400,000 (2)
Angelo Boujos, 2000 $112,000 0 0
Chairman (3) 1999 0 0 0
1998 0 0 0
Hugh Grenfal(4) 1999 0 0 2,500,000 (4)
(1) Includes options granted on May 5, 2000, exercisable for an aggregate
of 500,000 shares of common stock at a purchase price of $.01 per
share, all of which vest June 9, 2001. Mr. Allen has executed an
agreement with the Company that he shall not sell any of his shares
purchased pursuant to any exercise of the foregoing options until
November 26, 2001, except in the event of a change of control in which
case all of such options shall vest and become immediately
exercisable.
(2) Includes options granted on November 26, 1999, exercisable for an
aggregate of 400,000 shares of common stock at a purchase price of
$.01 per share, that vest as follows: 50,000 as of the date of grant;
50,000 on each of May 26, 2000, November 26, 2000 and May 26, 2001,
and 200,000 on November 26, 2001. Notwithstanding the foregoing, Mr.
Allen has executed an option agreement that provides that he may not
sell any of his shares purchased pursuant to any exercise of the
foregoing options until June 1, 2001 except in the event of a change
of control in which case all of such options shall vest and become
immediately exercisable.
(3) Mr. Boujos served as acting Chief Executive Officer of the Company
until the appointment of Mr. Allen in December 1999. In such capacity,
Mr. Boujos did not receive any salary or other
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compensation. As of January 3, 2000, Mr. Boujos receives a salary in
his capacity as Chairman of the Board of Directors.
(4) In June 1999, the Company's predecessor, Paxton Mining Corporation,
issued to Hugh Grenfal, then serving as CEO of the Company, a total of
2,500,000 shares of restricted common stock. Mr. Grenfal served as the
acting CEO of Paxton Mining Corporation from inception on June 9, 1999
until Mr. Grenfal sold all of such 2,500,000 shares of common stock of
the Company in a third party private transaction on May 11, 2000. Mr.
Grenfal resigned from the Board and from Company management effective
May 11, 2000. To the knowledge of current management, Mr. Grenfal did
not receive any salary or other compensation from Paxton Mining
Corporation during such period.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information related to stock options granted to
our named executive officers during the year ended December 31, 2000.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
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Number of Percent Of Total
Securities Options/SAR's
Underlying Granted To Exercise of
Options/SARs Employees Base Price Expiration
Name Granted (#) In Fiscal Per Share Date
Year
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Kim Allen(1) 500,000 45.50% $0.01 May 5, 2005
(1) The market price of the underlying shares granted to Mr. Allen on May 5,
2000, the date of grant, was $1.00 per share, giving effect to the Company's
19:1 stock dividend.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number of shares covered by both exercisable
and unexercisable options as of December 31, 2000 and the year-end value of
exercisable and unexercisable options as of December 31, 2000 for the named
executive officers. The Company did not grant any SARs during the fiscal year
ended December 31, 2000 and has no intention to do so during the foreseeable
future. For purposes of calculating the value of the following options the
Company has applied a value of $5.09 per share, which was the closing price of
the Company's common stock at December 31, 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEARS OPTION/SAR VALUES
Number Of Value Of
Unexercised Unexercised
Securities In-The-Money
No. Shares Underlying Options/SAR's
Acquired Value Options/SAR's At FY-End
Name On Exercise Realized At FY End Exercisable/
Exercisable/ Unexercisable
Unexercisable
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Kim Allen, CEO 0 0 100,000 Exercisable(1) $ 508,000
800,000 Unexercisable $4,064,000
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(1) Of such options, Mr. Allen has executed an agreement that provides he will
not sell any shares purchased pursuant to the exercise of any such options until
November 26, 2001.
INDEMNIFICATION MATTERS
In accordance with Section 78.037 of the Nevada Revised Statutes ("NRS"),
Article IX of our by-laws provides that no director or officer of Universe2U be
personally liable to Universe2U or its shareholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (1) acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law; or (2) the payment of distributions in violation of NRS Section 78.300,
which provides that (a) the directors of a corporation shall not make
distributions to shareholders except as provided by this chapter; and (b) in
case of any willful or grossly negligent violation of the provisions of this
section, the directors under whose administration the violation occurred,
excepting dissenters to those acts, are jointly and severally liable, at any
time within three (3) years after each violation, to the corporation, and, in
the event of its dissolution or insolvency, to its creditors at the time of the
violation, or any of them, to the lesser of the full amount of the distribution
made or of any loss sustained by the corporation by reason of the distribution
to shareholders. In addition, our amended and restated articles of incorporation
provides that if the Nevada Revised Statutes are amended to authorize the
further elimination or limitation of the liability of directors and officers,
then the liability of a director and/or officer of the corporation shall be
eliminated or limited to the fullest extent permitted by the Nevada Revised
Statutes, as so amended.
Article IX of our amended and restated by-laws provides for indemnification by
Universe2U of its officers and certain non-officer employees under certain
circumstances against expenses, including attorneys fees, judgments, fines and
amounts paid in settlement, reasonably incurred in connection with the defense
or settlement of any threatened, pending or completed legal proceeding in which
any such person is involved by reason of the fact that such person is or was an
officer or employee of Universe2U if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of Universe2U, and, with respect to criminal actions or proceedings,
if such person had no reasonable cause to believe his or her conduct was
unlawful.
We have also entered into indemnification agreements with each of our directors
and certain of our executive officers. These agreements provide that we
indemnify each of our directors and such officers to the fullest extent
permitted under law and our by-laws, and provide for the advancement of expenses
to each director and each such officer. We have also obtained directors and
officers insurance against certain liabilities.
At the present time, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Company in which
indemnification would be required or permitted, and we are not aware of any
threatened litigation or other proceeding which may result in a claim for
indemnification by us.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AS
DIRECTORS OF THE COMPANY
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We will vote your shares as you specify on the enclosed proxy card. If you do
not specify how you want your shares voted, we will vote them FOR the election
of all the nominees listed above. If unforeseen circumstances (such as death or
disability) make it necessary for the Board of Directors to substitute another
person for any of the nominees, we will vote your shares FOR that other person.
The Board of Directors does not anticipate that any nominee will be unable to
serve. Shareholders shall elect nominees for election to the Board of Directors
by a plurality of the votes cast at the Annual Meeting.
[Balance of Page Intentionally Blank]
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PROPOSAL NO. 2
TO AMEND THE ARTICLES OF INCORPORATION
TO PROVIDE FOR AUTHORIZATION OF 10,000,000
SHARES OF PREFERRED STOCK
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The Board believes that the additional shares of Preferred Stock resulting from
the amendment of the Articles of Incorporation should be available for issuance
from time to time as may be required for various purposes, including the
issuance of Preferred Stock in connection with financing or acquisition
transactions. The Company anticipates that in the future it will consider a
number of possible financing and acquisition transactions that may involve the
issuance of additional equity, debt or convertible securities. If the proposed
increase in authorized capital is approved, the Board would be able to authorize
the issuance of shares for these purposes without the necessity, and related
costs and delays, of either calling a special shareholders' meeting or of
waiting for the regularly scheduled annual meeting of shareholders in order to
increase the authorized capital. If in a particular instance shareholder
approval were required by law or otherwise deemed advisable by the Board, then
the matter would be referred to the shareholders for their approval regardless
of whether a sufficient number of shares previously had been authorized.
The Board of Directors of the Company recommends shareholders vote for approval
of an amendment to the Company's Articles of Incorporation increasing the number
of shares of authorized capital stock from 100,000,000 shares to 110,000,000
shares, of which 100,000,000 shares will continue to be designated as Common
Stock, par value $.00001 per share and 10,000,000 shares will be designated as
Preferred Stock, par value $.00001 per share, which may be issued in one or more
series in accordance with the terms, conditions and attributes as set forth in
the proposed amendment, described in detail below and attached hereto as Exhibit
A (the "Amendment").
The proposed Amendment provides authority to the Board of Directors to provide
by resolution for the issuance of shares of Preferred Stock from time to time in
one or more series not exceeding the aggregate number of shares of Preferred
Stock authorized by the Articles of Incorporation. The proposed Amendment
provides authority to the Board of Directors to determine with respect to each
such series the voting powers, if any (which voting powers if granted may be
full or limited), designations, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions appertaining thereto. Without limiting the generality of the
foregoing, the voting rights appertaining to shares of Preferred Stock of any
series (which may be one or more votes per share or a fraction of a vote per
share, and which may be applicable generally or only upon the happening and
continuance of stated events or conditions), the rate of dividend to which
holders of Preferred Stock of any series may be entitled (which may be
cumulative or noncumulative), the rights of holders of Preferred Stock of any
series in the event of liquidation, dissolution or winding up of the affairs of
the corporation, and the rights (if any) of holders of Preferred Stock of any
series to convert or exchange such shares of Preferred Stock of such series for
shares of any other class of capital stock (including the determination of the
price or prices or the rate or rates applicable to such rights to convert or
exchange and the adjustment thereof, the time or times during which the right to
convert or exchange shall be applicable and the time or times during which a
particular price or rate shall be applicable).
Before the Company shall issue any shares of Preferred Stock of any series, a
certificate setting forth a copy of the resolution or resolutions of the Board
of Directors, fixing the voting powers, designations, preferences, the relative,
participating, optional or other rights, if any, and the
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qualifications, limitations and restrictions, if any, appertaining to the shares
of Preferred Stock of such series, and the number of shares of Preferred Stock
of such series authorized by the Board of Directors to be issued shall be made
under seal of the Company and signed by the president or vice president and by
the secretary or an assistant secretary of the Company and acknowledged by such
president or vice president as provided by the laws of the State of Nevada and
shall be filed and a copy thereof recorded in the manner prescribed by the laws
of the State of Nevada.
The various powers, preferences and the relative, participating, optional and
other rights, and the qualifications, limitations and restrictions thereof of
any or all series of Preferred Stock of the Company which may be designated and
issued from time to time by the Board of Directors may individually or in the
aggregate have an affect that would duly defer or prevent a change in control of
the Company. The terms of the securities to be authorized, including dividend or
interest rates, conversion powers, voting rights, redemption powers, maturity
dates, and similar matters are to be determined by the Board of Directors.
As of the date of this Proxy Statement the Company does not intend to issue
shares of Preferred Stock for any immediate financing or transactional matters,
however the Company may do so in the future if the authorization of the
Preferred Stock is approved by the shareholders.
The financial and other information required under the Rules and Regulations of
the Securities and Exchange Commission to be included herein are incorporated by
reference to the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2000, a copy of which is being delivered to each shareholder
together with this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL TO AMEND THE COMPANY'S
ARTICLES OF INCORPORATION TO PROVIDE FOR THE INCREASE IN AUTHORIZED CAPITAL
STOCK TO 110,000,000 SHARES, OF WHICH 100,000,000 SHARES WILL CONTINUE TO BE
DESIGNATED AS COMMON STOCK, PAR VALUE $.00001 PER SHARE AND 10,000,000 SHARES
WILL BE DESIGNATED AS PREFERRED STOCK, PAR VALUE $.00001 PER SHARE, SPECIFICALLY
FOR THE PURPOSE OF AUTHORIZING THE ISSUANCE OF PREFERRED STOCK.
We will vote your shares as you specify on the enclosed proxy card. If you do
not specify how you want your shares voted, we will vote them FOR approval to
amend the Company's Articles of Incorporation.
[Balance of Page Intentionally Blank]
13
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PROPOSAL NO. 3
RATIFICATION OF THE UNIVERSE2U INC.
2000 EQUITY INCENTIVE PLAN
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The Board of Directors has previously established the Universe2U Inc. 2000
Equity Incentive Plan (the "Equity Incentive Plan"). With the rapid growth of
our personnel and the increased competition to attract and retain talented
personnel, the Directors adopted resolutions to seek ratification of the Equity
Incentive Plan. Accordingly, the Board of Directors proposes that the Company's
shareholders approve the Company's Equity Incentive Plan as discussed in detail
below.
GENERAL DESCRIPTION AND NUMBER OF AVAILABLE SHARES
The following summary of the Equity Incentive Plan is qualified, in its
entirety, by the specific language of the Equity Incentive Plan, a copy of which
is attached to this proxy statement as Exhibit B.
The Equity Incentive Plan was adopted by the Board of Directors on June 9, 2000,
amended on March 16, 2001 and is subject to shareholder ratification, as
amended. The Company initially reserved 1,500,000 shares of common stock for
issuance under the Equity Incentive Plan. The Equity Incentive Plan limits the
number of shares of common stock subject to options granted under the Equity
Incentive Plan to any one employee during any one calendar year to 100,000.
Subject to changes in capitalization, the maximum aggregate number of shares
which may be initially issued pursuant to all awards (including Incentive Stock
Options) is 1,500,000 shares, plus an annual increase to be added on the first
day of the Company's fiscal year beginning in 2001 of up to ten percent (10%) of
the number of shares outstanding as of such date or a lesser number of shares
determined by the Board of Directors or a committee of the Board of Directors
appointed for the purposes of administrating the Plan (the "Plan
Administrator"). The shares to be issued pursuant to Awards may be authorized,
but unissued, or reacquired Common Stock. As of the Record Date, there were no
options or awards of restricted stock outstanding under the Equity Incentive
Plan, nor has the Board of Directors acted to increase the number of shares
available during 2001 for issuance under the Plan.
DESCRIPTION OF THE EQUITY INCENTIVE PLAN
Purpose. The Board of Directors believes that our long-term success is dependent
upon our ability to attract and retain highly qualified individuals who, by
virtue of their ability and qualifications, make important contributions to the
Company. The Equity Incentive Plan is intended to strengthen us by providing an
incentive to our employees, officers, consultants and directors and thereby
encourage them to devote their abilities to the success of our business
enterprise. We believe that grants of stock options and restricted stock
motivate high levels of performance and provide an effective means of
recognizing contributions to the success of the Company. Most newly hired full-
time employees and consultants expect to be granted options. We believe that
meeting this expectation will provide heightened value in recruiting and
retaining highly qualified technical and other key personnel who are in demand
in the industry. The Board believes that the ability to grant options and
restricted stock will be important to our future success by allowing us to
remain competitive in attracting and retaining key personnel.
Administration. The Equity Incentive Plan is administered by a committee of the
Board of Directors subject to the provisions of the Plan. The Plan
14
Administrator has the authority to determine which eligible persons shall
receive grants, the time of grant, the type of grant and the number of shares
underlying the options, the term of the options, the vesting schedule and other
option terms.
Eligibility. Any of our current or future employees, officers, consultants,
advisors or directors are eligible to participate in the Equity Incentive Plan.
Incentive stock options ("ISO's"), qualified under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), may be granted only to employees,
including officers of the Company. Nonqualified stock options ("NSO's"), not so
qualified, and shares of restricted stock may be granted to our employees,
directors, consultants or other independent advisors.
The exercise price for options granted under the Equity Incentive Plan is to be
determined by the Plan Administrator. However, the exercise price of all ISO's
must be at least equal to the fair market value of the underlying shares on the
date of grant. With respect to any optionee who owns capital stock possessing
more than 10% of the voting power of all classes of stock, the exercise price of
any ISO must be not less than 110% of the fair market value of the underlying
shares on the date of grant. The Plan Administrator establishes the term of each
option granted pursuant to the Equity Incentive Plan. The maximum term, however,
for ISO's is five years. Options are subject to earlier termination as provided
in the Equity Incentive Plan.
Options are exercisable at such times and in such installments as the Plan
Administrator provides in the terms of the individual option agreement. Subject
to the terms of the Equity Incentive Plan, an optionee shall not have the rights
of a shareholder until the date of issuance of a stock certificate to the
optionee for the shares underlying the exercised option.
Except as provided in the individual option agreement, any optionee whose
relationship with us has terminated for any reason other than death or
disability may exercise his or her options (if otherwise exercisable) not later
than thirty (30) days after the termination date.
The Equity Incentive Plan also provides that in the event of the death or
disability of an optionee, such optionee (or the optionee's representative) is
entitled, under the appropriate circumstances, to exercise their options (if
otherwise exercisable) for up to one year from the date of death or termination
due to disability.
In the event of a stock dividend, recapitalization, certain mergers, split-up,
combination or exchange of shares or similar corporate event which results in a
change in the number or kind of our shares of common stock, the aggregate number
and kind of shares subject to options under the Equity Incentive Plan and the
related exercise price shall be adjusted accordingly. In the event of "corporate
transactions" or a "change in control" (as defined in the Equity Incentive
Plan), or upon our dissolution, the optionee's vesting rights under the Equity
Incentive Plan are accelerated.
The Equity Incentive Plan may be terminated or amended by the Board of Directors
generally without shareholder approval. However, shareholder approval is
required for certain types of amendments as provided in the Equity Incentive
Plan. No termination or amendment of the Equity Incentive Plan may be made that
adversely affects the rights of an existing option holder, without such person's
consent. Options granted under the Equity Incentive Plan may not be transferred
other than by will or pursuant to the laws of descent and distribution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE COMPANY'S EQUITY
INCENTIVE PLAN.
We will vote your shares as you specify on the enclosed proxy card. If you do
not specify how you want your shares voted, we will vote them FOR approval of
the Equity Incentive Plan.
15
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of our
common stock as of March 1, 2001. The percentage of beneficial ownership is
based on 36,978,225 shares of our common stock issued and outstanding as of such
date, giving effect to the exchange of all outstanding securities issued by our
Ontario, Canada subsidiary that are exchangeable for shares of the Company's
common stock. The table sets forth such information with respect to:
. each shareholder who is known by us to beneficially own 5% or more of the
common stock;
. each of our directors;
. each of the executive officers named in the "Summary Compensation Table";
and
. all of our executive officers and directors as a group.
Unless otherwise indicated, each of the shareholders has sole voting and power
of disposition with respect to the shares of common stock beneficially owned by
such shareholder. Except as otherwise noted in the footnotes below, the address
of record for each of the principal shareholders is c/o Universe2U Inc., 30 West
Beaver Creek Road, Suite 109, Richmond Hill, Ontario L4B 3K1 Canada.
The number of shares beneficially owned by each shareholder is determined under
rules issued by the Securities and Exchange Commission. The information is not
necessarily indicative of beneficial ownership for any other purpose. Under
these rules, beneficial ownership includes any shares as to which the individual
or entity has, directly or indirectly, sole or shared voting power or investment
power and any shares as to which the individual or entity has the right to
acquire beneficial ownership within 60 days after March 1, 2001 through the
exercise of any stock option or other similar right.
Shares Percent
Beneficially Beneficially
Name of Beneficial Owner Owned Owned
------------------------ ------------ -----
Angelo Boujos (1) 12,612,400 34.1%
Josie Boujos (2) 12,612,400 34.1%
Josie Boujos in Trust (3) 812,400 2.2%
Kim Allen (4) 150,000 *
Jeff Rosenthal (5) 0 *
Paul Pathak (6) 0 *
Connie Colangelo (7) 240,000 *
Barry W. Herman (8) 0 *
Anthony Palumbo (9) 0 *
Andrew Eyres (10) 700,000 1.9%
William McGill (11) 700,000 1.9%
Bernard Tanunagara (12) 200,000 *
Stephen Marano (13) 0 *
Frederick Kasravi (14) 0 *
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All Directors and Officers as a Group (15) 14,602,400 39.50%
* Represents less than 1% of the outstanding shares of common stock.
(1) Mr. Boujos is Chairman of the Company. Includes 4,600,000 shares of common
stock held of record by Mr. Boujos and 2,500,000 shares of common stock
issuable upon exercise of securities exchangeable for
16
shares of common stock of the Company which were issued by an Ontario
subsidiary of the Company (the "Chairman's Shares"). Includes 3,950,000
shares of common stock held by the spouse of Mr. Boujos and 750,000 shares
of common stock issuable upon exchange of securities exchangeable for
shares of common stock of the Company which were issued by an Ontario
subsidiary of the Company (collectively the "Spouse Shares"). Includes
312,400 shares of common stock held in a trust over which Mr. Boujos has
voting control, and 500,000 shares of common stock issuable upon exchange
of securities exchangeable for shares of common stock of the Company which
were issued by an Ontario subsidiary of the Company (collectively, the
"Trust Shares"). Mr. Boujos disclaims beneficial ownership of the Spouse
Shares and the Trust Shares.
(2) Ms. Boujos is the spouse of Mr. Boujos. Includes the Spouse Shares.
Includes the Chairman's Shares. Includes the Trust Shares, as to which Ms.
Boujos is the beneficiary. Ms. Boujos disclaims beneficial ownership of the
Chairman's Shares.
(3) Includes the Trust Shares, over which Mr. Boujos exercises voting control
and power of disposition, but as to which Mr. Boujos disclaims beneficial
ownership. Ms. Boujos is the beneficiary of such trust.
(4) Mr. Allen is CEO and a director of the Company. Includes vested options for
the purchase of 150,000 shares of common stock at $.01 per share, but as to
which options Mr. Allen has executed an agreement with the Company that he
shall not sell any of his shares purchased pursuant to any exercise of the
foregoing option until November 26, 2001, except in the event of a change
of control in which case all of such options shall vest and become
immediately exercisable. Excludes options granted on November 26, 1999, and
exercisable for an aggregate purchase of 250,000 shares of common stock at
a purchase price of $.01 per share, that vest as follows: 50,000 on the
18th month anniversary of the date of grant and 200,000 on the 24th month
anniversary, but as to which options Mr. Allen has executed an agreement
with the Company that he shall not sell any of his shares purchased
pursuant to any exercise of the foregoing options until November 26, 2001,
except in the event of a change of control in which case all of such
options shall vest and become immediately exercisable. Also excludes a
subsequent grant of options on May 5, 2000, exercisable for 500,000 shares
of common stock, at a purchase price of $.01 per share, which options do
not vest or become exercisable until June 9, 2001.
(5) Mr. Rosenthal is President of the Company. Excludes an option for the
purchase of 5,000 shares of Common Stock at a price of $0.01 per share that
does not vest and become exercisable until April 19, 2002.
(6) Paul Pathak is Secretary and a Director of the Company. Excludes an option
for the purchase of 50,000 shares of common stock that vests and becomes
exercisable on June 9, 2001 at a purchase price of $.01 per share.
(7) Connie Colangelo is a Director of the Company. Excludes an option for the
purchase of 20,000 shares of common stock that vests and becomes
exercisable on June 9, 2001 at a purchase price of $5.00 per share. Ms.
Colangelo is the sister-in-law of Mr. Boujos.
(8) Barry W. Herman is a Director of the Company. Excludes an option for the
purchase of 20,000 shares of common stock that vests and becomes
exercisable on June 9, 2001 at a purchase price of $5.00 per share.
(9) Anthony Palumbo is a Director of the Company. Excludes an option for the
purchase of 20,000 shares of common stock that vests and becomes
exercisable on June 9, 2001, at a purchase price of $5.00 per share.
(10) Mr. Eyres is the Executive Vice President Universe2U Inc. - Networks
17
Development. Includes 625,000 shares of common stock beneficially owned
through holdings of securities exchangeable for shares of common stock of
the Company which were issued by an Ontario subsidiary of the Company.
(11) Mr. McGill is Vice-President, Network Sales and Marketing, a division of
the Company. Includes 625,000 shares of common stock beneficially owned
upon exchange of securities exchangeable for shares of common stock of the
Company which were issued by an Ontario subsidiary of the Company.
(12) Mr. Tanunagara is President of CableTec. The share purchase agreement to
acquire CableTec was amended to grant Mr. Tanunagara an option to acquire
up to 200,000 common shares of the Company at an exercise price of $5.00
per share vested and exercisable until July 31, 2001.
(13) Appointed to the Board of Directors effective as of March 30, 2001.
(14) Appointed to the Board of Directors effective as of March 30, 2001.
(15) All directors and executive officers as a group including beneficial
ownership of common stock through the exercise of options or otherwise as
of March 1, 2000, or within 60 days thereafter. Includes the Spouse Shares
and the Trust Shares as to which shares Mr. Boujos disclaims beneficial
ownership.
LEGAL PROCEEDINGS
There are no material legal proceedings to which any director, officer or
affiliate of registrant, beneficial owner of more than 5% or any associate is a
party adverse to registrant or any of its subsidiaries.
BOARD OF DIRECTORS
The Board of Directors met two times during the last fiscal year, on June 9,
2000 and November 10, 2000 respectively. No director attended fewer than 100% of
the total number of meetings of the Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Bylaws provide that the Board of Directors may designate one or more board
committees. The Company currently has an audit committee and a compensation
committee.
COMPENSATION COMMITTEE
The Company's Compensation Committee was formed for the purpose of establishing
policies and approving employment arrangements and agreements related to
compensation of officers, employees and consultants of the Company, which may
arise from time to time. The current members of the Compensation Committee are
Connie Colangelo, Kim Allen and Paul Pathak.
AUDIT COMMITTEE
The Board of Directors adopted a written charter for the Universe2U Inc. Audit
Committee as of December 18, 2000, a copy of which is attached hereto as Exhibit
C. The Audit Committee discusses audit procedures and audit review policies with
the Board of Directors, reviews unaudited interim financial statements and
recommends to the Board of Directors the appointment of the Company's
independent auditors all as discussed in greater detail below.
As of March 30, 2001, the Audit Committee is comprised of directors Anthony
Palumbo, Stephen Marano and Frederick Kasravi. Messrs. Marano and Kasravi became
directors of the Company on March 30, 2001 and accepted appointment to the Audit
Committee as of the same date. From December 15, 2000 until March 29, 2001, Mr.
Palumbo served as the sole member of the Audit Committee. Director Barry Herman
served on the Audit Committee from May 17, 2000 through
18
December 15, 2000. Mr. Herman resigned from the Audit Committee because under
the terms of the Audit Committee Charter, he no longer qualified as independent.
Mr. Herman remained as an advisor to the Audit Committee and attended meetings
of the Audit Committee until March 30, 2001. Each of Messrs. Palumbo, Marano and
Kasravi are independent of Company management as required by the Company's
Audit Committee Charter.
AUDIT COMMITTEE REPORT
The Universe2U Inc. Audit Committee assists the Board of Directors in fulfilling
its statutory and fiduciary responsibilities relating to internal control,
accounting policies and auditing and reporting practices. The Universe2U Inc.
Audit Committee met independently with the Company's auditors on November 10,
2000. The Audit Committee reviewed the audited financial statements in the
Company's Annual Report with management and has discussed with management the
quality and acceptability of the Company's accounting principles, the
reasonableness of significant judgments and the clarity of disclosures made in
the Company's financial statements.
The Audit Committee has discussed with the Company's independent auditors, who
are responsible for expressing an opinion on the conformity of the audited
financial statements in accordance with generally accepted accounting
principles, the independent auditors' judgments as to the quality and the
acceptability of the Company's accounting principles and any matters required to
be discussed by Statement on Auditing Standards 61, as modified or supplemented.
In addition, as required by Independence Standards Board Standard No. 1, the
Audit Committee has: (i) received from the Company's independent auditors
written disclosure of all relationships, if any, between the Company's
independent auditors and its related entities and the Company and its related
entities that in the independent auditors' professional judgment may reasonably
be thought to bear on their independence, (ii) received a letter from the
Company's independent auditors confirming that in the independent auditors'
professional judgment, the auditors are independent of the Company, and (iii)
discussed with the Company's independent auditors their independence from
management and the Company.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls and the overall quality of the
Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board approved) that
the audited financial statements be included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 2000 which is filed with the
Securities and Exchange Commission. The Audit Committee and the Board of
Directors have also recommended, subject to shareholder approval, the selection
of Moore Stephens Cooper Molyneux LLP as the Company's independent auditors.
The Audit Committee members are independent as defined under Rule 4200(a)(15) of
the NASD listing standards.
This report has been respectfully submitted to the Company by the members of the
Audit Committee as of March 30, 2001. As noted above, Messrs. Marano and Kasravi
became directors of the Company on March 30, 2001 and accepted appointment to
the Audit Committee as of even date therewith. The Audit Committee reviews
undertaken with respect to the matters reported to the Company in the foregoing
report were made solely by Mr. Palumbo.
Anthony Palumbo
Stephen Marano
Frederick Kasravi
19
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PROPOSAL NO. 4
RATIFICATION OF THE UNIVERSE2U INC.
APPOINTMENT OF MOORE STEPHENS COOPER MOLYNEUX LLP
AS INDEPENDENT AUDITORS
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The Board of Directors of the Company has selected Moore Stephens Cooper
Molyneux LLP as independent auditors of the Company for the fiscal year ending
December 31, 2001.
A representative of Moore Stephens Cooper Molyneux LLP is expected to be present
at the Annual Meeting to make a statement if they desire to do so and to answer
any questions or comments from shareholders.
AUDIT FEES
The aggregate accounting fees billed to the Company by Moore Stephens Cooper
Molyneux LLP for their audit of the Company's annual financial statements and
reviews of the interim financial statements included in the Company's Forms 10-
QSB for the fiscal year ended December 31, 2000 was $110,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Moore Stephens Cooper Molyneux LLP to provide,
directly or indirectly, any professional services with respect to financial
information systems design and implementation for the fiscal year ended December
31, 2000.
ALL OTHER FEES
The aggregate fees billed to the Company by Moore Stephens Cooper Molyneux LLP
for all other services for the year ended December 31, 2000 were $112,000,
including audit related services of $84,000 and nonaudit services of $28,000.
Audit related services generally include fees for pension and statutory
audits, business acquisitions, accounting consultations, internal audit and SEC
registration statements. Nonaudit services include tax consulting and compliance
and advisory services on various Company business matters.
The Audit Committee of the Board of Directors has considered the independence of
Moore Stephens Cooper Molyneux LLP, as required by the Audit Committee
Disclosure Rules of the Securities and Exchange Commission (the "Disclosure
Rules"), in relation to the services provided to the Company by Moore Stephens
Cooper Molyneux LLP. The Audit Committee of the Board of Directors concludes
that Moore Stephens Cooper Molyneux LLP has maintained its independence as
required under the Disclosure Rules.
The percentage of hours attributed to work performed by persons other than full-
time permanent employees of Moore Stephens Cooper Molyneux LLP was not less than
50% of the total hours expended by Moore Stephens Cooper Molyneux LLP in the
audit of the Company's financial statements for the year ended December 31,
2000.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL OF THE
RATIFICATION OF MOORE STEPHENS COOPER MOLYNEUX LLP AS THE COMPANY'S AUDITORS.
We will vote your shares as you specify on the enclosed proxy card. If you do
not specify how you want your shares voted, we will vote then FOR approval of
the appointment of Moore Stephens Cooper Molyneux LLP as the Company's
independent auditors.
20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions Involving Directors, Executive Officers and Others.
On May 11, 2000, a change of control occurred with respect to the stock
ownership of the Company. The change of control occurred in connection with a
third party purchase of stock involving the transfer of an aggregate of
5,000,000 shares of the Company's outstanding common stock to a group of
investors led by First Union Asset Management Ltd. ("First Union"). The
controlling interest acquired by First Union was purchased in a private
transaction for aggregate consideration of $500,000 that was paid in cash to two
of the former controlling shareholders of the Company, Messrs. Hugh Grenfal and
Robert Jarva, in exchange for all of their respective shares of Company common
stock. The change of control was made in connection with the Company's
acquisition of Universe2U Inc., an Ontario corporation (the "Ontario Company").
Following the foregoing third party purchase of Company common stock and as a
condition of the Company's acquisition of the Ontario Company, an aggregate of
4,000,000 shares of common stock was tendered to the Company by First Union and
cancelled by the Company without payment and 250,000 shares of exchangeable
securities of a wholly owned Ontario subsidiary of the Company were issued to
the shareholders of the Ontario Company in exchange for all of the outstanding
stock of the Ontario Company (the "Acquisition").
After giving effect to the foregoing transactions, Angelo Boujos, Josie Boujos,
Andrew Eyres and William McGill (the "Principals") as a group held control of an
aggregate of 695,622 shares of Company common stock, at that date constituting
approximately 41% of all outstanding shares of Company common stock. Prior to
the change in control, Messrs. Grenfal and Jarva controlled approximately 91% of
the Company's outstanding common stock and served as the Company's sole
directors and officers. In connection with the change of control, Messrs.
Grenfal and Jarva appointed new directors and thereafter resigned as directors
and officers of the Company. To the knowledge of the Company's current
management, Messrs. Grenfal and Jarva in their respective capacities as
directors and officers of the Company did not have any disagreements with the
Company on any matter relating to the Company's operations, policies or
practices.
On May 15, 2000, the Board of Directors of the Company authorized a dividend in
the form of shares of Company common stock, to be distributed to Company
shareholders of record as of the close of business on May 25, 2000 (the "Stock
Dividend"). After giving effect to the Stock Dividend, such shareholders of
record received 19 additional shares for each one share held at the record date
(equivalent to a ratio of 20 shares of common stock for each one share of common
stock held at the close of business on the record date).
On May 17, 2000, the Company consummated the Acquisition of the Ontario Company
and changed its name from Paxton Mining Corporation to Universe2U Inc. The
Company issued 250,000 shares (5,000,000 shares after giving effect to the 19-
for-1 stock dividend on May 25, 2000) of exchangeable securities of a wholly
owned Ontario acquisition subsidiary of the Company to the Principals in their
separate capacity as shareholders of the Ontario Company in exchange for all of
their respective outstanding stock of the Ontario Company (the "Acquisition
Issuance"). Messrs. Boujos, Eyres, and McGill are key employees of the Ontario
Company. Angelo and Josie Boujos are spouses. In conjunction with the change of
control and the Acquisition, Barry Herman, Anthony Palumbo, Kim Allen, Paul
Pathak and Connie Colangelo were elected directors of the Company and Mr. Angelo
Boujos was elected chairman of the Board. For accounting purposes, the
acquisition of the Ontario Company by Universe2U Inc. (formerly known as Paxton
Mining Corporation), has been treated as a recapitalization, with the Ontario
Company as the acquirer (a reverse acquisition). The exchangeable securities
issued in connection with the Acquisition are exchangeable at any time on a one-
for-one basis for shares of Company common stock.
21
Mr. Barry Herman, a director of the Company, is President of First Union, a
Bahamian corporation. First Union represented the investors who purchased the
controlling interests in the Company from Messrs. Grenfal and Jarva on May 11,
2000. Following the change in control, Mr. Herman was elected to the Board of
Directors. The Company and First Union entered into a Financial Consulting
Agreement dated as of May 17, 2000, and amended as of July 25, 2000 (as amended,
the "First Union Agreement"), that provided for First Union to act as an agent
on behalf of the Company with respect to a financing program undertaken pursuant
to Regulation S of the Securities Act of 1933, as amended (the "Securities
Act"). In connection with services rendered in connection with the First Union
Agreement, First Union received aggregate fees of $420,000 from the Company. The
First Union Agreement concluded in October 2000 and the Company has no further
plans to engage the services of First Union.
Mr. Angelo Boujos, Chairman of the Company, converted indebtedness of the
Company to him to common stock of the Company. Prior to the acquisition of the
Ontario Company, Mr. Boujos had advanced approximately $429,000 to the Ontario
Company. Mr. Boujos entered into an agreement dated as of June 9, 2000 to
convert all of such amount to 100,000 shares of common stock at a purchase price
of $4.29 per share. After giving effect to (i) the reduction in outstanding
shares due to the tender and cancellation of share ownership by First Union,
(ii) the Acquisition Issuance, (iii) the Stock Dividend, and (iv) the conversion
of pre-Acquisition loans by Mr. Boujos to the Ontario Company, the common stock
beneficially owned by Mr. Boujos constituted at such date a controlling interest
of the Company's outstanding common stock. See, "Security Ownership of Certain
Beneficial Owners and Management"
Effective as of May 31, 2000, the Company, through a wholly-owned subsidiary
incorporated pursuant to the laws of the Province of Ontario ("Subco"),
completed the acquisition of CableTec (formerly Bernie Tan Investments Inc.).
Subco had entered into a definitive share purchase agreement to acquire CableTec
on January 25, 2000 (the "Agreement"). Pursuant to the terms of the Agreement,
Subco agreed to acquire all of the outstanding shares of CableTec in
consideration for the payment of Cdn$1.5 million. The transaction was originally
intended to close in February 2000. The terms of the Agreement were amended in
March and in May 2000 to extend the closing date to May 31, 2000, amongst other
things. In addition, the Agreement was amended to grant Bernard Tanunagara,
currently President of the Company's CableTec subsidiary, an option to acquire
up to 200,000 common shares of the Company at an exercise price of $5.00 per
share vested and exercisable until July 31, 2001. Effective as of May 31, 2000,
the transaction was completed and the cash consideration of Cdn$1.5 million was
paid, and the Option was granted to Bernard Tanunagara.
The Board of Directors has granted nonqualified stock options outside of the
scope of the Equity Incentive Plan to certain of our personnel serving as
officers and directors of the Company at exercise prices below fair market
value. Among such persons are the following, whose options vest and become
exercisable as indicated below, except in the event of a change of control of
the Company in which case all of such options shall vest and become immediately
exercisable:
. Kim Allen, the Company's CEO and a director of the Company, was
granted options on November 26, 1999, exercisable for 400,000 shares
of common stock at a purchase price of $.01 per share, that vest as
follows: 50,000 as of the date of grant; 50,000 on each of May 26,
2000, November 26, 2000, and May 26, 2001, and 200,000 on November 26,
2001. Mr. Allen has executed an option agreement that provides that he
may not sell any of his shares purchased pursuant to any exercise of
the foregoing options until June 1, 2001, except in the event of a
change of control, in which case all of such options shall vest and
become immediately exercisable. Mr. Allen received a subsequent grant
of options on May 5, 2000, exercisable for 500,000 shares of common
stock, at a purchase price of $.01 per share, which options vest and
become exercisable on June 9, 2001.
22
. Michael Doll, Vice President of Business Development of Network Sales
and Marketing, a division of the Company's subsidiary, Canadian Cable
Consultants, was granted options on December 21, 1999, exercisable for
200,000 shares of common stock at a purchase price of $.01 per share,
which options vest and become exercisable on December 21, 2001.
. Jeffrey Rosenthal, President of the Company, was granted options on
April 19, 2000, exercisable for an aggregate of 5,000 shares of common
stock at a purchase price of $.01 per share, which options vest and
become exercisable on April 19, 2002.
. Vincent Ursini, Vice President, Finance, of Network Sales and
Marketing, a division of the Company the Company's subsidiary,
Canadian Cable Consultants, was granted options on February 28, 2000,
exercisable for 10,000 shares of common stock at a purchase price of
$.01 per share, which options vest and become exercisable on February
28, 2002.
. Paul Pathak, a director and secretary of the Company, was granted
options on May 5, 2000, for services rendered in his capacity as legal
counsel to the Company, which options are exercisable for 50,000
shares of common stock at a purchase price of $.01 per share, which
options vest and become exercisable on June 9, 2001.
. Bernard Tanunagara, president of the Company's subsidiary, CableTec
Communications Inc., was granted options on May 31, 2000, for the
purchase of 200,000 common shares of the Company at an exercise price
of $5.00 per share, which are vested and exercisable until July 31,
2001.
In June 1999, Paxton Mining Corporation issued a total of 5,000,000 shares of
restricted common stock to Hugh Grenfal and Robert Jarva, then serving as
officers and directors of the Company. This was accounted for as a compensation
expense of $273,356 and advances and reimbursement expenses of $1,644. Mr.
Grenfal and Mr. Jarva subsequently sold such shares of stock in a private
transaction and are no longer shareholders of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act of 1934 requires our officers and directors,
and persons who own more than ten percent (10%) of a registered class of our
equity securities, to file certain reports regarding ownership of, and
transactions in, our securities with the SEC and with The Nasdaq Stock Market,
Inc. Such officers, directors, and 10% shareholders are also required to
furnish the Company with copies of all Section 16(a) forms that they file.
Based solely on our review of copies of Forms 3 and 4 and any amendments
furnished to us pursuant to Rule 16a-3(e) and Forms 5 and any amendments
furnished to us with respect to the 2000 Fiscal year, and any written
representations referred to in Item 405(b)(2)(i) of Regulation S-B stating that
no Forms 5 were required, we believe that, during the 2000 fiscal year, our
officers and directors have complied with all Section 16(a) applicable filing
requirements.
ADDITIONAL INFORMATION
Moore Stephens Cooper Molyneux LLP, independent chartered accountants, audited
and reported on the basis of generally accepted auditing standards, the combined
balance sheets of Universe2U Inc. as at December 31, 2000 and 1999, and the
combined statements of operations and deficit and cash flows for the years then
ended. Such financial statements can be found in the Company's Form 10-KSB for
the year ended December 31, 2000 as filed with the Commission, and are
incorporated by reference in this Proxy Statement. A copy of such Form 10-KSB is
delivered to shareholders with this Proxy Statement.
23
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and definitive proxy or information statements filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Proxy Statement and prior to the date of the Annual Meeting
shall be deemed to be incorporated by reference into this Proxy Statement from
the dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated in this Proxy Statement shall be
deemed to be modified or superseded for purposes of this Proxy Statement to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference modifies or
supersedes such statement.
A copy of the documents incorporated herein by reference (excluding exhibits
unless such exhibits are specifically incorporated by reference into the
information incorporated herein) that are not presented with this document or
delivered herewith, will be provided without charge to each person, including
any beneficial owner, to whom a Proxy Statement is delivered, upon oral or
written request of any such person and by first-class mail or other equally
prompt means. Requests should be directed to the Corporate Secretary at the
address set forth below.
A copy of the Universe2U Inc. Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2000 as filed with the Securities and Exchange Commission has
been delivered to each Company shareholder with this Proxy Statement.
Shareholders may obtain additional copies of the Form 10-KSB and copies of the
exhibits by addressing a request to each shareholder of the Company as of the
Record Date to the Company. Requests should be addressed to: Universe2U Inc., 30
West Beaver Creek Road, Suite 109 Richmond Hill, Toronto, Ontario, Canada L4B
3K1, Attn: Paul Pathak, Secretary.
SHAREHOLDER PROPOSALS FOR THE
2002 ANNUAL MEETING
We welcome comments and suggestions from our shareholders. Here are the ways a
shareholder may present a proposal for consideration by the other shareholders
at our 2001 Annual Meeting:
In our Proxy Statement. If a shareholder desires to submit a proposal for
inclusion in our proxy statement and form of proxy under Rule 14a-8 under the
Securities Exchange Act of 1934 (the "Exchange Act") for the 2002 Annual Meeting
of Shareholders, we must receive the proposal in writing on or before 5 p.m.,
Eastern time, January 15, 2002.
Any action required by statute to be taken at any annual or special meeting of
shareholders of the Company, or any action which may be taken at any annual or
special meeting of such shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, are signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. To be effective a written consent must follow the
procedure laid out in our By-Laws.
All proposals should be made in writing and sent via registered, certified or
express mail, to our executive offices, Universe2U Inc. 30 West Beaver Creek
Road, Suite 109 Richmond Hill, Toronto, Ontario, Canada L4B 3K1 Attention:
Paul Pathak, Secretary.
WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational reporting requirements of the
Exchange Act and currently files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company may be inspected and
copied at the Commission's Public Reference Room located at room 1024, 450 Fifth
Street, N.W., Washington D.C. 20549. The Commission may
24
be reached at 1-800-SEC-0330 for further information on the Public Reference
Room. The Commission maintains an internet website at http://www.sec.gov that
------------------
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission, including the
Company.
OTHER MATTERS
The Board of Directors is not aware of any other matters to come before the
Annual Meeting. If any matter not mentioned in this proxy statement is properly
brought before the meeting, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies with respect to those matters in
accordance with their judgment.
By Order of the Board of Directors
Paul Pathak
Secretary
Toronto, Ontario
April ___, 2001
25
Exhibit A
Proposed Amendment to the Articles of Incorporation of Universe2U Inc.
----------------------------------------------------------------------
WHEREAS, Article Fourth of the Corporation's Articles of Incorporation
currently provide for authorized capital of $1,000 consisting of authorized
capital stock of up to One Hundred Million (100,000,000) shares of Common Stock,
par value $.00001 per share;
WHEREAS, the Board of Directors has resolved that it is in the best
interests of the Corporation to increase the authorized capital of the
Corporation and to authorize a class of preferred stock to provide for
reasonable and customary corporate financing structures;
NOW, THEREFORE, BE IT RESOLVED, that the stockholders of the Corporation
adopt and approve the authorization of preferred stock in the amended and
restated Article Fourth to the Corporation's Articles of Incorporation as
follows:
FOURTH: (a) Authorized Capital and Shares. The amount of total authorized
- ------ -----------------------------
capital stock of the Corporation is One Thousand One Hundred Dollars ($1,100.00)
consisting of One Hundred Ten Million (110,000,000) shares divided into two
classes, of which Ten Million (10,000,000) shares, $.00001 par value per share,
shall be designated Preferred Stock and One Hundred Million (100,000,000)
shares, $.00001 par value per share, shall be designated Common Stock.
(b) Preferred Stock. (I) Shares of Preferred Stock may be issued in
---------------
one or more series, from time to time, with each such series to consist of such
number of shares and to have such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or restrictions
thereof, as shall be stated in the resolution or resolutions providing for the
issuance of such series adopted by the Board of Directors of the Corporation,
and the Board of Directors is hereby expressly vested with authority, to the
full extent now or hereafter provided by law, to adopt any such resolution or
resolutions. The authority of the Board of Directors with respect to each series
of Preferred Stock shall include, but not be limited to, determination of the
following:
(i) The number of shares constituting that series and the distinctive
designation of that series;
(ii) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that
series;
(iii) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(iv) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors
shall determine;
(v) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or
date upon or after which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
26
(vi) Whether that series shall have a sinking fund for the redemption or
purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
(vii) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment with respect to shares
of that series; and
(viii) Any other relative rights, preferences and limitations of that
series.
(II) Voting Rights. Each holder of Common Stock, as such, shall be
-------------
entitled to one vote for each share of Common Stock held of record by such
holder on all matters on which stockholders generally are entitled to vote;
provided, however, that, except as otherwise required by law, holders of Common
Stock, as such, shall not be entitled to vote on any amendment to this Amended
and Restated Articles of Incorporation (including any Certificate of
Designations relating to any series of Preferred Stock) that relates solely to
the terms of one or more outstanding series of Preferred Stock if the holders of
such affected series are entitled, either separately or together with the
holders of one or more other such series, to vote thereon pursuant to this
Amended and Restated Articles of Incorporation (including any Certificate of
Designations relating to any series of Preferred Stock) or pursuant to Section
78.350 of the Nevada Revised Statutes ("NRS").
(c) No Class Vote On Changes in Authorized Number of Shares of
----------------------------------------------------------
Preferred Stock. Subject to the rights of the holders of any series of
- ---------------
Preferred Stock pursuant to the terms of the Amended and Restated Articles of
Incorporation or any resolution or resolutions providing for the issuance of
such series of stock adopted by the Board of Directors, the number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to vote generally
in the election of directors irrespective of the provisions of Section 78.330 of
the NRS.
(d) No Preemptive Rights. No holder of stock of the Corporation of
--------------------
any class, now or hereafter authorized, shall have any preferential or
preemptive right to subscribe for, purchase or receive any stock of the
Corporation of any class, now or hereafter authorized, or any options or
warrants for such stock, or any rights to subscribe for or purchase such stock,
or any securities convertible into or exchangeable for such stock, which may at
any time be issued, sold or offered for sale by the Corporation.
(e) Liquidation, Dissolution, or Winding Up. In the event of any
---------------------------------------
voluntary or involuntary liquidation, dissolution, or winding up of the affairs
of the Corporation, after payment or provision for payment of the debts and
other liabilities of the Corporation and of the preferential amounts, if any, to
which the holders of Preferred Stock shall be entitled, the holders of all
outstanding shares of Common Stock shall be entitled to share ratably in the
remaining net assets of the Corporation.
(f) Dividends. Subject to the preferential rights, if any, of the
---------
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when and if declared by the Board of Directors, out of the assets of
the Corporation which are by law available therefor, dividends payable either in
cash, in property, or in shares of Common Stock.
# # #
27
Exhibit B
UNIVERSE2U INC.
2000 EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Equity Incentive Plan are to
attract and retain the best available personnel, to provide additional incentive
to Employees, Directors and Consultants and to promote the success of the
Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees appointed to
administer the Plan.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) "Applicable Laws" means the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.
(d) "Award" means the grant of an Option, Dividend Equivalent Right,
Restricted Stock, Performance Unit, Performance Share, or other right or benefit
under the Plan.
(e) "Award Agreement" means the written agreement evidencing the grant of an
Award executed by the Company and the Grantee, including any amendments thereto.
(f) "Board" means the Board of Directors of the Company.
(g) "Cause" means, with respect to the termination by the Company or a Related
Entity of the Grantee's Continuous Service, that such termination is for "Cause"
as such term is expressly defined in a then-effective written agreement between
the Grantee and the Company or such Related Entity, or in the absence of such
then-effective written agreement and definition, is based on, in the
determination of the Administrator, the Grantee's: (i) refusal or failure to act
in accordance with any specific, lawful direction or order of the Company or a
Related Entity; (ii) unfitness or unavailability for service or unsatisfactory
performance (other than as a result of Disability); (iii) performance of any act
or failure to perform any act in bad faith and to the detriment of the Company
or a Related Entity; (iv) dishonesty, intentional misconduct or material breach
of any agreement with the Company or a Related Entity; or (v) commission of a
crime involving dishonesty, breach of trust, or physical or emotional harm to
any person. At least 30 days prior to the termination of the Grantee's
Continuous Service pursuant to (i) or (ii) above, the Administrator shall
provide the Grantee with notice of the Company's or such Related Entity's intent
to terminate, the reason therefor, and an opportunity for the Grantee to cure
such defects in his or her service to the Company's or such Related Entity's
satisfaction. During this 30 day (or longer) period, no Award issued to the
Grantee under the Plan may be exercised or purchased.
(h) "Change in Control" means a change in ownership or control of the Company
effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or related group of
persons (other than an acquisition from or by the Company or by a Company-
sponsored employee benefit plan or by a person that directly or indirectly
controls, is controlled by, or is under common control with, the
28
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a period of thirty-six
(36) months or less such that a majority of the Board members (rounded up to the
next whole number) ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who are Continuing Directors.
(i) "Code" means the Internal Revenue Code of 1986, as amended.
(j) "Committee" means any committee appointed by the Board to administer the
Plan.
(k) "Common Stock" means the common stock of the Company.
(l) "Company" means Universe2U, Inc., a Nevada corporation.
(m) "Consultant" means any person (other than an Employee or a Director,
solely with respect to rendering services in such person's capacity as a
Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(n) "Continuing Directors" means members of the Board who either (i) have been
Board members continuously for a period of at least thirty-six (36) months or
(ii) have been Board members for less than thirty-six (36) months and were
elected or nominated for election as Board members by at least a majority of the
Board members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.
(o) "Continuous Service" means that the provision of services to the Company
or a Related Entity in any capacity of Employee, Director or Consultant, is not
interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entity, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any
capacity of Employee, Director or Consultant (except as otherwise provided in
the Award Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal leave. For purposes of
Incentive Stock Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
(p) "Corporate Transaction" means any of the following transactions:
(i) a merger or consolidation in which the Company is not the surviving
entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or substantially all of
the assets of the Company (including the capital stock of the Company's
subsidiary corporations) in connection with the complete liquidation or
dissolution of the Company;
(iii) any reverse merger in which the Company is the surviving entity but
in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such
securities immediately prior to such merger; or
(iv) acquisition by any person or related group of persons (other than the
Company or by a Company-sponsored employee benefit plan) of
29
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities (whether or
not in a transaction also constituting a Change in Control), but excluding
any such transaction that the Administrator determines shall not be a
Corporate Transaction.
(q) "Covered Employee" means an Employee who is a "covered employee" under
Section 162(m)(3) of the Code.
(r) "Director" means a member of the Board or the board of directors of any
Related Entity.
(s) "Disability" means that a Grantee would qualify for benefit payments under
the long-term disability policy of the Company or the Related Entity to which
the Grantee provides services regardless of whether the Grantee is covered by
such policy.
(t) "Dividend Equivalent Right" means a right entitling the Grantee to
compensation measured by dividends paid with respect to Common Stock.
(u) "Employee" means any person, including an Officer or Director, who is an
employee of the Company or any Related Entity. The payment of a director's fee
by the Company or a Related Entity shall not be sufficient to constitute
"employment" by the Company.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(w) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) Where there exists a public market for the Common Stock, the Fair
Market Value shall be (A) the closing price for a Share for the last market
trading day prior to the time of the determination (or, if no closing price
was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the Administrator
to be the primary market for the Common Stock or the Nasdaq National
Market, whichever is applicable or (B) if the Common Stock is not traded on
any such exchange or national market system, the average of the closing bid
and asked prices of a Share on the Nasdaq Small Cap Market for the day
prior to the time of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
(ii) In the absence of an established market for the Common Stock of the
type described in (i), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith.
(x) "Grantee" means an Employee, Director or Consultant who receives an Award
pursuant to an Award Agreement under the Plan.
(y) "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-
in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or sister-
in-law, including adoptive relationships, any person sharing the Grantee's
household (other than a tenant or employee), a trust in which these persons have
more than fifty percent (50%) of the beneficial interest, a foundation in which
these persons (or the Grantee) control the management of assets, and any other
entity in which these persons (or the Grantee) own more than fifty percent (50%)
of the voting interests.
(z) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
30
(aa) "Non-Qualified Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(bb) "Officer" means a person who is an officer of the Company or a Related
Entity within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(cc) "Option" means an option to purchase Shares pursuant to an Award
Agreement granted under the Plan.
(dd) "Parent" means a "parent corporation," whether now or hereafter existing,
as defined in Section 424(e) of the Code.
(ee) "Performance--Based Compensation" means compensation qualifying as
"performance-based compensation" under Section 162(m) of the Code.
(ff) "Performance Shares" means Shares or an Award denominated in Shares which
may be earned in whole or in part upon attainment of performance criteria
established by the Administrator.
(gg) "Performance Units" means an Award which may be earned in whole or in
part upon attainment of performance criteria established by the Administrator
and which may be settled for cash, Shares or other securities or a combination
of cash, Shares or other securities as established by the Administrator.
(hh) "Plan" means this Equity Incentive Plan.
(ii) "Related Entity" means any Parent, Subsidiary and any business,
corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly.
(jj) "Related Entity Disposition" means the sale, distribution or other
disposition by the Company, a Parent or a Subsidiary of all or substantially all
of the interests of the Company, a Parent or a Subsidiary in any Related Entity
effected by a sale, merger or consolidation or other transaction involving that
Related Entity or the sale of all or substantially all of the assets of that
Related Entity, other than any Related Entity Disposition to the Company, a
Parent or a Subsidiary.
(kk) "Restricted Stock" means Shares issued under the Plan to the Grantee for
such consideration, if any, and subject to such restrictions on transfer, rights
of first refusal, repurchase provisions, forfeiture provisions, and other terms
and conditions as established by the Administrator.
(ll) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor thereto.
(mm) "Share" means a share of the Common Stock.
(nn) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10, below, the maximum aggregate
number of Shares which may be issued pursuant to all Awards (including Incentive
Stock Options) is 1,500,000 Shares, plus an annual increase, that may be
added after the first day of the Company's fiscal year beginning in 2001, of
up to ten percent (10%) of the number of Shares outstanding as of such date or a
lesser number of Shares determined by the Administrator. The Shares to be issued
pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is forfeited
or canceled, expires or is settled in cash, shall be deemed not to
31
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan. If any unissued Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated). Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers. With respect to
grants of Awards to Directors or Employees who are also Officers or
Directors of the Company, the Plan shall be administered by (A) the Board
or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to
permit such grants and related transactions under the Plan to be exempt
from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board.
(ii) Administration With Respect to Consultants and Other Employees. With
respect to grants of Awards to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee
shall be constituted in such a manner as to satisfy the Applicable Laws.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. The Board may authorize one
or more Officers to grant such Awards and may limit such authority as the
Board determines from time to time.
(iii) Administration With Respect to Covered Employees. Notwithstanding
the foregoing, grants of Awards to any Covered Employee intended to qualify
as Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more
Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to
Covered Employees, references to the "Administrator" or to a "Committee"
shall be deemed to be references to such Committee or subcommittee.
(iv) Administration Errors. In the event an Award is granted in a manner
inconsistent with the provisions of this subsection (a), such Award shall
be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and the provisions
of the Plan (including any other powers given to the Administrator hereunder),
and except as otherwise provided by the Board, the Administrator shall have the
authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom Awards may
be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are granted hereunder;
(iii) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;
32
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions of any Award granted hereunder;
(vi) to amend the terms of any outstanding Award granted under the Plan,
provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent;
(vii) to construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan, including without limitation, any notice of Award or
Award Agreement, granted pursuant to the Plan;
(viii) to establish additional terms, conditions, rules or procedures to
accommodate the rules or laws of applicable foreign jurisdictions and to
afford Grantees favorable treatment under such laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with
the provisions of the Plan; and
(ix) to take such other action, not inconsistent with the terms of the
Plan, as the Administrator deems appropriate.
5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.
6. Terms and Conditions of Awards.
(a) Type of Awards. The Administrator is authorized under the Plan to award
any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option or similar right with a
fixed or variable price related to the Fair Market Value of the Shares and with
an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other conditions, or (iii) any other security with the value derived from the
value of the Shares. Such awards include, without limitation, Options, sales or
bonuses of Restricted Stock, Dividend Equivalent Rights, Performance Units or
Performance Shares, and an Award may consist of one such security or benefit, or
two (2) or more of them in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the Award
Agreement. In the case of an Option, the Option shall be designated as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of Shares
subject to Options designated as Incentive Stock Options which become
exercisable for the first time by a Grantee during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options, to the extent of the Shares covered thereby in excess of the foregoing
limitation, shall be treated as Non-Qualified Stock Options. For this purpose,
Incentive Stock Options shall be taken into account in the order in which they
were granted, and the Fair Market Value of the Shares shall be determined as of
the date the Option with respect to such Shares is granted.
(c) Conditions of Award. Subject to the terms of the Plan, the Administrator
shall determine the provisions, terms, and conditions of each Award including,
but not limited to, the Award vesting schedule, repurchase provisions, rights of
first refusal, forfeiture provisions, form of payment (cash, Shares, or other
consideration) upon settlement of the Award, payment
33
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may issue Awards
under the Plan in settlement, assumption or substitution for, outstanding awards
or obligations to grant future awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.
(e) Deferral of Award Payment. The Administrator may establish one or more
programs under the Plan to permit selected Grantees the opportunity to elect to
defer receipt of consideration upon exercise of an Award, satisfaction of
performance criteria, or other event that absent the election would entitle the
Grantee to payment or receipt of Shares or other consideration under an Award.
The Administrator may establish the election procedures, the timing of such
elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.
(f) Award Exchange Programs. The Administrator may establish one or more
programs under the Plan to permit selected Grantees to exchange an Award under
the Plan for one or more other types of Awards under the Plan on such terms and
conditions as determined by the Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or more separate
programs under the Plan for the purpose of issuing particular forms of Awards to
one or more classes of Grantees on such terms and conditions as determined by
the Administrator from time to time.
(h) Individual Option Limit. The maximum number of Shares with respect to
which Options may be granted to any Employee in any fiscal year of the Company
shall be 100,000 Shares, except in connection with any grant made with respect
to inception of employment as to which the maximum number of shares underlying
Options that may be granted to any Employee shall be 400,000 shares, provided,
however, that of all Options held by a Grantee that become exercisable in the
same calendar year, only the Options covering the first $100,000 worth of stock
qualify for Incentive Stock Option treatment. Any Options in excess of the limit
are treated as nonstatutory Options. The value of the stock is measured for this
purpose at the time of grant. (This means that the value is generally equal to
the exercise price.) All Incentive Stock Options that become exercisable in the
same year are counted, even if they were granted at different times. If the
limit is exceeded, the most recently granted Incentive Stock Options are
actually exercised; the $100,000 limit is applied in the year when the Incentive
Stock Options are disqualified first. Note that it is immaterial when the
Incentive Stock Options are actually exercised; the $100,000 limit is applied in
the year when the Incentive Stock Options first become exercisable As a result
of the $100,000 limit, an Option may be treated in part as an Incentive Stock
Option and in part as a nonstatutory option (or "NSO"). The foregoing
limitation shall be adjusted proportionately in connection with any change in
the Company's capitalization pursuant to Section 10, below. To the extent
required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitation with respect to an Employee, if any Option is
canceled, the canceled Option shall continue to count against the maximum number
of Shares with respect to which Options may be granted to the Employee. For this
purpose, the repricing of an Option shall be treated as the cancellation of the
existing Option and the grant of a new Option.
34
(i) Early Exercise. The Award Agreement may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director or
Consultant to exercise any part or all of the Award prior to full vesting of the
Award. Any unvested Shares received pursuant to such exercise may be subject to
a repurchase right in favor of the Company or a Related Entity or to any other
restriction the Administrator determines to be appropriate.
(j) Term of Award. The term of each Award shall be the term stated in the
Award Agreement, provided, however, that the term of an Incentive Stock Option
shall be no more than five (5) years from the date of grant thereof.
(k) Transferability of Awards. Incentive Stock Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Grantee, only by the Grantee; provided, however, that
the Grantee may designate a beneficiary of the Grantee's Incentive Stock Option
in the event of the Grantee's death on a beneficiary designation form provided
by the Administrator. Other Awards may be transferred by gift or through a
domestic relations order to members of the Grantee's Immediate Family to the
extent provided in the Award Agreement or in the manner and to the extent
determined by the Administrator.
(l) Time of Granting Awards. The date of grant of an Award shall for all
purposes be the date on which the Administrator makes the determination to grant
such Award, or such other date as is determined by the Administrator. Notice of
the grant determination shall be given to each Employee, Director or Consultant
to whom an Award is so granted within a reasonable time after the date of such
grant.
7. Award Exercise or Purchase Price, Consideration, Taxes and Reload Options.
(a) Exercise or Purchase Price. The exercise or purchase price, if any, for an
Award shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share
exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the
date of grant; or
(B) granted to any Employee other than an Employee described in
the preceding paragraph, the per Share exercise price shall
be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per Share exercise
price shall be not less than eighty-five percent (85%) of the Fair Market
Value per Share on the date of grant.
(iii) In the case of Awards intended to qualify as Performance-Based
Compensation, the exercise or purchase price, if any, shall be not less
than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(iv) In the case of other Awards, such price as is determined by the
Administrator.
(v) Notwithstanding the foregoing provisions of this Section 7(a), in
the case of an Award issued pursuant to Section 6(d), above, the exercise or
35
purchase price for the Award shall be determined in accordance with the
principles of Section 424(a) of the Code.
(b) Consideration. Subject to Applicable Law, the consideration to be paid
for the Shares to be issued upon exercise or purchase of an Award including the
method of payment, shall be determined by the Administrator (and, in the case of
an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following, provided that the portion of the consideration
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by Section 78.211 of the Nevada Revised Statutes:
(i) cash;
(ii) check;
(iii) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise
of the Award) which have a Fair Market Value on the date of surrender
or attestation equal to the aggregate exercise price of the Shares as
to which said Award shall be exercised (but only to the extent that
such exercise of the Award would not result in an accounting
compensation charge with respect to the Shares used to pay the
exercise price unless otherwise determined by the Administrator);
(iv) with respect to Options, payment through a broker-dealer sale
and remittance procedure pursuant to which the Grantee (A) shall
provide written instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and
remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete
the sale transaction; or
(v) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any Grantee or
other person until such Grantee or other person has made arrangements acceptable
to the Administrator for the satisfaction of any foreign, federal, state, or
local income and employment tax withholding obligations, including, without
limitation, obligations incident to the receipt of Shares or the disqualifying
disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of an Award, the Company shall withhold or collect from Grantee an
amount sufficient to satisfy such tax obligations.
8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Award granted hereunder shall be exercisable at such times
and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and
full payment for the Shares with respect to which the Award is
exercised, including, to the extent selected, use of the broker-dealer
sale and remittance procedure to pay the purchase price as provided in
Section 7(b)(v). Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares,
36
no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Company
shall issue (or cause to be issued) such stock certificate promptly
upon exercise of the Award. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Award Agreement
or Section 10, below.
(b) Exercise of Award Following Termination of Continuous Service.
(i) An Award may not be exercised after the termination date of such
Award set forth in the Award Agreement and may be exercised following
the termination of a Grantee's Continuous Service only to the extent
provided in the Award Agreement, not later than thirty (30) days.
(ii) Where the Award Agreement permits a Grantee to exercise an Award
following the termination of the Grantee's Continuous Service for a
specified period, the Award shall terminate to the extent not
exercised on the last day of the specified period or the last day of
the original term of the Award, whichever occurs first.
(iii) Any Award designated as an Incentive Stock Option to the extent
not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's
Continuous Service shall convert automatically to a Non-Qualified
Stock Option and thereafter shall be exercisable as such to the extent
exercisable by its terms for the period specified in the Award
Agreement.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an Award unless
the exercise of such Award and the issuance and delivery of such Shares pursuant
thereto shall comply with all Applicable Laws, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of an Award, the Company may require
the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, the maximum number of Shares with respect to which Options
may be granted to any Employee in any fiscal year of the Company, as well as any
other terms that the Administrator determines require adjustment shall be
proportionately adjusted for (i) any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or similar event affecting the
Shares, (ii) any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company, or (iii) as the
Administrator may determine in its discretion, any other transaction with
respect to Common Stock to which Section 424(a) of the Code applies or any
similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Administrator
and its determination shall be final, binding and conclusive. Except as the
Administrator determines, 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
37
hereof shall be made with respect to, the number or price of Shares subject to
an Award.
11. Corporate Transactions/Change in Control/Related Entity Dispositions.
Except as may be provided in an Award Agreement:
(a) In the event of a Corporate Transaction, each Award which is at the
time outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any restrictions on transfer (other than
transfer restrictions applicable to Incentive Stock Options) and repurchase or
forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by such
Award.
(b) In the event of a Change in Control (other than a Change in Control
which also is a Corporate Transaction), each Award which is at the time
outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any restrictions on transfer (other than
transfer restrictions applicable to Incentive Stock Options) and repurchase or
forfeiture rights, immediately prior to the specified effective date of such
Change in Control, for all of the Shares at the time represented by such Award.
(c) Effective upon the consummation of a Related Entity Disposition, for
purposes of the Plan and all Awards, the Continuous Service of each Grantee who
is at the time engaged primarily in service to the Related Entity involved in
such Related Entity Disposition shall be deemed to terminate and each Award of
such Grantee which is at the time outstanding under the Plan automatically shall
become fully vested and exercisable and be released from any restrictions on
transfer (other than transfer restrictions applicable to Incentive Stock
Options) and repurchase or forfeiture rights for all of the Shares at the time
represented by such Award and be exercisable in accordance with the terms of the
Award Agreement evidencing such Award. However, such Continuous Service shall
not be deemed to terminate if such Award is, in connection with the Related
Entity Disposition, assumed by the successor entity or its Parent.
12. Effective Date and Term of Plan. The Plan shall become effective upon
the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the Plan. To the
extent necessary to comply with Applicable Laws, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) No Award may be granted during any suspension of the Plan or after
termination of the Plan.
(c) Any amendment, suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or terminated, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing
and signed by the Grantee and the Company.
14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
38
(b) The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
15. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.
16. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
17. Stockholder Approval. The grant of Incentive Stock Options under the
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.
# # #
39
Exhibit C
CHARTER
UNIVERSE2U INC. AUDIT COMMITTEE
I. CHARTER; PURPOSE AND FUNCTION OF COMMITTEE
This document shall be the official Charter of the Audit Committee (the
"Committee") of the Board of Directors (the "Board") of Universe2U Inc., a
Nevada corporation (the "Company"). The primary function of the Committee is to
assist the Board in fulfilling its oversight responsibilities by reviewing: (a)
the financial reports and other financial information provided by the Company to
any governmental body or the public, (b) the Company's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established, and (c) the Company's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Committee should encourage continuous improvement of, and should
foster adherence to, the Company's policies, procedures and practices at all
levels. The Committee shall be accountable and responsible to the full Board.
The Committee's primary duties and responsibilities are to:
(i) Serve as independent and objective party to monitor the Company's
financial reporting process and internal control systems;
(ii) Review and appraise the audit efforts of the Company's independent
accountants and internal auditing department; and
(iii) Provide open channels of communication among the Company's
independent accountants, financial and senior management, the
internal auditing department and the Board.
The Committee will primarily fulfill these responsibilities by carrying out the
activities enumerated in Section IV of this Charter.
II. COMPOSITION; QUALIFICATIONS OF COMMITTEE MEMBERS
A. Composition: The Committee shall be comprised of three (3) or
more Independent Directors (as defined below) which number shall be
determined by the Board from time to time in its discretion.
B. Qualifications: Each Independent Director serving on the
Committee shall have Financial Knowledge (each such term as defined
herein), and shall be free from any relationship that, in the
judgment of the Board, would interfere with the exercise of his or
her independent judgment as a member of the Committee. At least one
(1) member of the Committee shall have Financial Experience (as
defined herein).
III. ELECTION AND MEETINGS
A. Election. The initial members of the Committee shall be appointed
by the Board. Thereafter, the Board shall appoint the members of the
Committee annually, which shall otherwise serve until their
successors shall be duly elected and qualified. Unless a Chairman of
the Committee is appointed by the Board, the members of the Committee
may designate a Chairman by majority vote of the full Committee.
B. Meetings. The Committee shall meet at least three times annually,
or more frequently as circumstances require in the discretion of the
Committee and the Board. As an element of its duties to encourage and
facilitate open communication, the Committee should meet at least
annually with representatives from the Company's executive
management,
40
internal auditing department and its independent accountants in
separate sessions to discuss any matters that the Committee or any of
these groups believe should be discussed. In addition, the Committee
or at least its Chairman (if one exists) should meet with the
independent accountants and a representative(s) of the Company's
management at least quarterly to review the Company's financial
statements consistent with the provisions of Section IV -
Documents/Reports Review below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Committee shall:
A. With respect to Documents/Reports Review:
------------------------
1. Review, and if it deems necessary or appropriate, update
this Charter periodically, at least annually.
2. Review the Company's annual financial statements and any
reports or other financial information submitted to any governmental
body, or to the public, including any certification, report, opinion
or review rendered by the Company's independent accountants.
3. Review the regular internal reports to management prepared
by the Company's internal auditing/accounting department and
management's response to such reports.
4. Review with the Company's financial management and its
independent accountants, prior to filing with the Securities and
Exchange Commission, all 10-Q Quarterly Reports, 10-K Annual Reports,
8-K Current Reports and other reports that contain financial
information and other reports containing financial disclosures. The
Chairman of the Committee may represent the entire committee for
purposes of these reviews.
B. With respect to Independent Accountants:
-----------------------
5. Recommend to the Board the Committee's selection of an
independent accounting firm, considering independence and
effectiveness and other factors it deems appropriate and in the best
interests of the Company, and approve the fees and other compensation
to be paid to such independent accounting firm. On at least an annual
basis, the Committee should receive from the independent accounting
firm a formal written statement delineating and describing all
relationships between the Company and such firm, consistent with the
Independence Standards Board's Standard 1. The Committee should
review and discuss with the independent accounting firm all such
identified relationships or services to examine and determine the
independence and objectivity of the accounting firm. The Committee
shall take all appropriate action, or recommend to the Board such
appropriate actions, to oversee the independence of such accounting
auditors.
6. Review and evaluate the performance of the independent
accounting firm, and when appropriate, recommend to the Board or
implement a discharge and replacement of the accounting firm when
circumstances warrant.
7. Periodically consult with the independent accounting firm
out of the presence of the Company's management regarding internal
controls and the fullness and accuracy of the Company's financial
statements.
C. With respect to Financial Reporting Process:
---------------------------
8. In consultation with the independent accounting firm and the
Company's internal accounting personnel/auditors, review the
integrity
41
of the Company's financial reporting process, both internal and
external.
9. Consider the independent accounting firm's judgments about the
quality and appropriateness of the Company's accounting principles as
applied to its financial reporting.
10. Consider and approve, if appropriate, major changes to the
Company's auditing and accounting principles and practices as
suggested by the independent accounting firm, management of the
Company and/ or its internal accounting department.
D. With respect to Process and Organizational Improvements:
---------------------------------------
11. Establish regular and separate systems of reporting to the
Committee by each of management, the independent accounting firm, and
the Company's internal accounting department regarding any significant
judgments made in management's preparation of the financial statements
and the view of each as to the appropriateness of such judgments.
12. Following completion of the annual audit, review separately with
each of management, the independent accounting firm and the Company's
internal accounting department any significant difficulties
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information.
13. Review any significant disagreement among management and the
independent accounting firm or the Company's internal accounting
department in connection with the preparation of the financial
statements.
14. Review with the independent accounting firm, the Company's
internal accounting department and management the extent to which
changes or improvements in financial or accounting practices, as
approved by the Committee, have been implemented. This review should
be conducted at an appropriate time subsequent to implementation of
changes or improvements, as determined by the Committee.
15. Review the organizational structure of the Company's internal
auditing department and the qualifications of the managers of such
department, and recommend any appropriate changes to the Company's
management.
E. With respect to Legal Compliance; General:
-------------------------
16. Review, with the Company's outside legal counsel, legal
compliance matters, including corporate securities trading policies.
17. Review, with the Company's outside legal counsel, any legal
matter that could have a significant impact on the Company's financial
statements.
18. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Committee or the Board
deems necessary or appropriate.
V. DEFINITIONS
"Independent Director" means a person other than an officer or employee of the
Company or any of its subsidiaries or any other individual having a relationship
which, in the opinion of the Company's Board of Directors, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a
director. The following persons shall not be considered independent for these
purposes:
42
(a) a director who is employed by the Company or any of its affiliates for
the current year or any of the past three (3) years;
(b) a director who accepts any compensation from the Company or any of its
affiliates in excess of $60,000 during the previous fiscal year, other than
compensation for Board service, benefits under a tax-qualified retirement plan
or other non-discretionary compensation;
(c) a director who is a member of the immediate family of an individual
who is, or has been in any of the past three (3) years, employed by the Company
or any of its affiliates as an executive officer. Immediate family members
include a person's spouse, parents, children, siblings, mother-in-law, father-in
- -law, brother-in-law, sister-in-law, son-in-law, daughter-in-law and anyone who
resides in such person's home;
(d) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which the Company
made, or from which the Company received, payments (other than those arising
solely from investments in the Company's securities) that exceed 5% of the
Company's or business organization's consolidated gross revenues for that year,
or $200,000, whichever is more, in any of the past three (3) years;
(e) a director who is employed as an executive of another entity where any
of the Company's executives serve on that entity's compensation committee.
Pursuant to Nasdaq Rule 4310 one director who is not an Independent Director as
defined above and who is not a current employee or an immediate family member of
such employee, may be appointed to the Audit Committee if the full Board of
Directors, under exceptional and limited circumstances, determines that
membership on the Committee by the individual is required in the best interests
of the Company and its stockholders, and the Board of Directors discloses, in
the next annual proxy statement subsequent to such determination, the nature of
the relationship and the reasons for that determination.
"Financial Knowledge" means a working familiarity with basic finance and
accounting practices, including the ability to read and understand fundamental
financial statements, including balance sheets, income statements and cash flow
statements. Persons who will become so qualified within a reasonable period of
time after his or her appointment to the Audit Committee also comply with this
provision. Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by the Company or
an outside consultant.
"Financial Experience" means past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
# # #
43
[Form of Proxy]
Front
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
Universe2U Inc.
May 24, 2001
Please Detach and Mail Promptly in the Envelope Provided
- ---------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example using
dark ink only.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1), (2), (3) and (4)
LISTED BELOW, TO COME BEFORE THE ANNUAL MEETING.
1. Election of eight (8) directors, to serve until the 2002 Annual Meeting of
Shareholders and until their respective successors have been elected and
qualified.
Vote FOR all Nominees Vote AGAINST WITHHOLD Nominees:
---------
listed at right all Nominees Authority Angelo Boujos
(except as marked to the at right (Abstain from voting Kim Allen
contrary below) for all Nominees Paul Pathak
at right) Connie Colangelo
[_] [_] [_] Barry Herman
Anthony Palumbo
Stephen Marano
Frederick Kasravi
FOR, except withheld vote for the following nominee(s):
- ---------------------------------------------------------------------------
2. To approve and adopt amendments to the Company's Articles of Incorporation
to increase the number of shares of authorized capital stock to 110,000,000
shares, of which 100,000,000 shares will continue to be designated as
common stock, $.00001 par value per share (the "Common Stock") and
10,000,000 shares will be designated as preferred stock, $.00001 par value
per share, (the "Preferred Stock") which may be issued by the Company in
one or more series.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To ratify and approve the Universe2U Inc. 2000 Equity Incentive Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
44
4. To ratify the appointment of Moore Stephens Cooper Molyneux LLP as
independent auditor of Universe2U Inc. for the fiscal year ending December
31, 2001.
FOR AGAINST ABSTAIN
[_] [_] [_]
5. Upon any and all other business that may properly come before the Annual
Meeting.
This Proxy, which is solicited on behalf of the Board of Directors, will be
voted FOR the matters described in paragraphs (1), (2), (3) and (4) unless the
shareholder specifies otherwise, in which case it will be voted as specified.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
SIGNATURE ___________________________________________ DATED__________, 2001
SIGNATURE ___________________________________________ DATED__________, 2001
45
[Form of Proxy]
[Back]
NOTE: PLEASE SIGN EXACTLY AS NAME OR NAMES APPEAR HEREON. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PARTNER.
PROXY PROXY
UNIVERSE2U INC.
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock of Universe2U Inc., revoking all proxies
previously given, hereby constitutes and appoints Angelo Boujos, Kim Allen and
Paul Pathak and each of them Proxies, with full power of substitution and re-
substitution, on behalf and in the name of the signatories hereto, to vote all
of the undersigned's shares of the said stock, according to the number of votes
and with all the powers the undersigned would possess if personally present, at
the Annual Meeting of Shareholders of Universe2U Inc. to be held at The Board of
Trade, First Canadian Place, Toronto, Ontario, Canada on Thursday May 24, 2001,
at 3:00 p.m., Eastern time, and at any adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and Proxy
Statement relating to the meeting and hereby revokes any proxy or proxies
previously given.
Each properly executed Proxy will be voted in accordance with the specifications
made on the reverse side of this Proxy and in the discretion of the Proxies on
any other matter which may properly come before the meeting. Where no choice is
specified, this Proxy will be voted FOR all listed nominees to serve as
directors and FOR proposals (2), (3) and (4). In their discretion, the Proxies
are authorized to vote upon such other business as may properly come before the
meeting.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
46