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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 [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Student Advantage, 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)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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STUDENT ADVANTAGE, INC.
280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON MONDAY, MAY 21, 2001
To the Stockholders of Student Advantage, Inc.
The Annual Meeting of Stockholders of Student Advantage, Inc. (the
"Company") will be held at the offices of Hale and Dorr LLP, 26th Floor, 60
State Street, Boston, Massachusetts 02109, on Monday, May 21, 2001 at 10:00
a.m., Boston time, to consider and act upon the following matters:
1. To elect two Class II directors to serve for a three-year term.
2. To approve an amendment to the Company's 1998 Stock Incentive Plan (the
"1998 Plan") increasing the number of shares issuable under the 1998
Plan from 9,500,000 to 12,000,000.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 3, 2001 will be
entitled to notice of and to vote at the meeting or any adjournment thereof.
By order of the Board of Directors
LAURIE S. JAMIESON,
Secretary
Boston, Massachusetts
April 10, 2001
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. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
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STUDENT ADVANTAGE, INC.
280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 21, 2001
INTRODUCTION
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Student Advantage, Inc. (the "Company") for
use at the Annual Meeting of Stockholders to be held on May 21, 2001, and at any
adjournment of that meeting. All proxies will be voted in accordance with the
stockholders' instructions, and if no choice is specified, the proxies will be
voted in favor of the matters set forth in the accompanying Notice of Meeting.
Any proxy may be revoked by a stockholder at any time before its exercise by
delivery of written revocation or a subsequently dated proxy to the Secretary of
the Company, or by voting in person at the Annual Meeting.
The Company's Annual Report for the fiscal year ended December 31, 2000
("Fiscal 2000") was mailed to stockholders, along with these proxy materials, on
or about April 10, 2001.
QUORUM REQUIREMENT
At the close of business on April 3, 2001, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were outstanding and entitled to vote an aggregate of 39,674,915
shares of Common Stock of the Company, constituting all of the outstanding
voting stock of the Company. Holders of Common Stock are entitled to one vote
per share.
The holders of a majority of the shares of Common Stock outstanding and
entitled to vote at the Annual Meeting shall constitute a quorum for the
transaction of business at the Annual Meeting. Shares of Common Stock
represented in person or by proxy (including shares which abstain or otherwise
do not vote with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum is
present at the Annual Meeting.
VOTES REQUIRED
The affirmative vote of the holders of shares of Common Stock representing
a plurality of the votes cast by the holders of Common Stock is required for the
election of the directors. The affirmative vote of the holders of shares of
Common Stock representing a majority of the votes cast is required for the
approval of the proposed amendment to the Company's 1998 Stock Incentive Plan.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by a broker or nominee who indicates on a proxy that it does
not have discretionary authority to vote as to a particular matter, will not be
voted in favor of such matter, and also will not be counted as votes cast on
such matter. Accordingly, abstentions and "broker non-votes" will have no effect
on the voting on a matter that requires the affirmative vote of a plurality of
the votes cast on that matter (such as the election of the Class II directors)
or a majority of the votes cast on that matter (such as the approval of the
proposed amendment to the Company's 1998 Stock Incentive Plan).
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BENEFICIAL OWNERSHIP OF VOTING STOCK
The following table sets forth the beneficial ownership of the Company's
Common Stock as of January 31, 2001, (i) by each person who is known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) by each director, (iii) by each of the executive officers named in
the Summary Composition Table set forth under the caption "Executive
Compensation" below, and (iv) by all current directors and executive officers as
a group. Unless otherwise indicated, (i) each person or entity named in the
table has sole voting power and investment power (or shares such power with his
or her spouse) with respect to all shares of capital stock listed as
beneficially owned by such person or entity and (ii) the address of each
beneficial owner is c/o Student Advantage, Inc., 280 Summer Street, Boston,
Massachusetts 02210.
PERCENTAGE OF
SHARES COMMON
BENEFICIALLY STOCK
NAME OF BENEFICIAL OWNER OWNED OUTSTANDING
------------------------ ------------ -------------
5% STOCKHOLDERS
Raymond V. Sozzi, Jr.(1).................................... 7,236,683 18.2%
Greylock IX Limited Partnership(2).......................... 3,750,000 9.5
William S. Kaiser(2)........................................ 3,750,000 9.5
Marc J. Turtletaub.......................................... 3,750,000 9.5
Lord, Abbett & Co.(3)....................................... 2,625,327 6.6
Daniel G. Siegel(4)......................................... 1,998,512 5.0
G. Todd Eichler............................................. 1,994,912 5.0
OTHER DIRECTORS
John S. Katzman(5).......................................... 1,294,530 3.3
John M. Connolly(6)......................................... 5,000 *
Charles E. Young(7)......................................... 5,132 *
OTHER NAMED EXECUTIVES
Mason L. Myers(8)........................................... 509,463 1.3
Heather Lourie(9)........................................... 14,725 *
Jay P. Summerall(10)........................................ 83,000 *
Ronald J. Kos(11)........................................... 0 *
Christopher B. Andrews(12).................................. 178,632 *
All executive officers and directors as a group (11
persons)(13).............................................. 18,133,982 45%
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* Less than 1%.
(1) Includes 450,000 shares held in trust, of which Mr. Sozzi is the sole
trustee and, until 2005, the sole beneficiary.
(2) Consists of 3,750,000 shares held of record by Greylock IX Limited
Partnership. Mr. Kaiser is a general partner of Greylock IX GP Limited
Partnership, the general partner of Greylock IX Limited Partnership.
Greylock IX GP Limited Partnership has sole voting and investment power
with respect to these shares. Mr. Kaiser disclaims beneficial ownership of
such shares, except to the extent of his pecuniary interest therein. The
address for Greylock IX Limited Partnership and Greylock IX GP Limited
Partnership is One Federal Street, Boston, Massachusetts 02110.
(3) Information is based solely on a Schedule 13G filed with the Securities and
Exchange Commission on January 19, 2001 by Lord, Abbett & Co. Lord, Abbett
& Co.'s address is 90 Hudson Street, Jersey City, New Jersey 07302.
(4) Mr. Siegel's address is P.O. Box 862, Teton Village, Wyoming 83025.
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(5) Includes 5,205 shares held of record by Alicia Ernst, Mr. Katzman's wife,
9,957 shares held of record by Princeton Review Products LLC, and 785,000
shares held of record by Princeton Review Publishing LLC. Mr. Katzman is
the CEO of Princeton Review Publishing LLC which is the parent company of
Princeton Review Products. Mr. Katzman disclaims beneficial ownership of
such shares, except to the extent of his pecuniary interest therein. Mr.
Katzman's address is c/o Princeton Review Publishing LLC, 2315 Broadway,
New York, New York 10024.
(6) Consists of 5,000 shares subject to options held by Mr. Connolly that were
exercisable on or within 60 days of January 31, 2001.
(7) Consists of 5,132 shares subject to options held by Mr. Young that were
exercisable on or within 60 days of January 31, 2001.
(8) Includes 90,000 shares subject to options held by Mr. Myers, which are
immediately exercisable in full. Student Advantage has a right of
repurchase with respect to 15,000 of the shares acquired upon exercise of
such options and 15,000 of the shares held of record by Mr. Myers, which is
released over a four-year period from the date of grant. Mr. Myers ceased
service as an executive officer of the Company on January 5, 2001. Mr.
Myers' address is 12 Newell Terrace, Cambridge, Massachusetts 02140.
(9) Includes of 12,500 shares subject to options held by Ms. Lourie that were
exercisable on or within 60 days of January 31, 2001.
(10) Consists of 75,000 shares subject to options held by Mr. Summerall that
were exercisable on or within 60 days of January 31, 2001 and 8,000 shares
held by Mr. Summerall's minor children.
(11) Mr. Kos resigned from his position as an executive officer of the Company
on August 4, 2000 and his option to purchase 162,500 shares expired 90 days
thereafter.
(12) Consists of 82,500 shares subject to options held by Mr. Andrews that were
exercisable on or within 60 days of January 31, 2001. Student Advantage has
a right of repurchase with respect to all shares acquired upon exercise of
such options and 18,750 of such shares held of record by Mr. Andrews, which
is released over a four-year period. Mr. Andrews ceased service as an
executive officer of the Company on December 31, 2000.
(13) Includes 97,632 shares subject to options held by the executive officers
and directors that were exercisable on or within 60 days of January 31,
2001.
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, with
members of each class holding office for staggered three-year terms. Currently
there are two Class II directors, whose terms expire at this Annual Meeting of
Stockholders, two Class III directors, whose terms expire at the Annual Meeting
of Stockholders (the "2002 Annual Meeting") following the fiscal year ending
December 31, 2001 ("Fiscal 2001"), and two Class I directors, whose terms expire
at the Annual Meeting of Stockholders following the fiscal year ending December
31, 2002 ("Fiscal 2002") (in all cases subject to the election and qualification
of their successors or to their earlier death, resignation or removal).
The persons named in the enclosed proxy will vote to elect John M. Connolly
and Raymond V. Sozzi, Jr. as Class II directors, unless authority to vote for
the election of the nominees is withheld by marking the proxy to that effect.
Mr. Connolly and Mr. Sozzi are currently Class II directors of the Company. They
have indicated their willingness to serve, if elected, but if they should be
unable or unwilling to stand for election, proxies may be voted for substitute
nominees designated by the Board of Directors.
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DIRECTORS OF THE COMPANY
Set forth below are the names and certain information with respect to each
director of the Company, including the nominees for Class II directors.
NOMINEES FOR CLASS II DIRECTORS (HOLDING OFFICE FOR TERM EXPIRING AT THIS
ANNUAL MEETING; NOMINATED FOR THE TERM EXPIRING AT THE ANNUAL MEETING FOLLOWING
THE FISCAL YEAR ENDING DECEMBER 31, 2003):
John M. Connolly, age 48, has served as a Director of Student Advantage
since May 1999. Mr. Connolly founded Mainspring, Inc., an internet e-strategy
service firm, and has served as its Chairman of the Board, President and Chief
Executive Officer since June 1996. In July 1989, Mr. Connolly founded Course
Technology, Inc., a publishing company focused on the higher education market,
and served as its President and Chief Executive Officer from July 1989 to April
1996. From August 1994 to April 1996, Mr. Connolly was also employed by the
International Thomson Publishing Company, a publishing company, as Chief
Executive Officer of its Media Group.
Raymond V. Sozzi, Jr., age 32, founded Student Advantage in 1992 and has
served as Chairman of the Board of Directors, President and Chief Executive
Officer of Student Advantage since its inception.
CLASS III DIRECTORS (HOLDING OFFICE FOR TERM EXPIRING AT THE ANNUAL MEETING
FOLLOWING FISCAL 2001):
William S. Kaiser, age 45, has served as a Director of Student Advantage
since October 1998. Since 1986, Mr. Kaiser has been an employee of Greylock
Management Corporation, a venture capital company, and he is a general partner
of several venture capital funds affiliated with Greylock. Mr. Kaiser currently
serves as a Director of Clarus Corporation, Open Market, Inc. and Red Hat, Inc.
Marc J. Turtletaub, age 55, has served as a Director of Student Advantage
since October 1998. Mr. Turtletaub has served as Manager of Deep River Ventures
L.L.C., an entity which invests in growth companies, since December 1999. Mr.
Turtletaub served as Chief Executive Officer of The Money Store, Inc., a
financial services company, from 1979 through 1999.
CLASS I DIRECTORS (HOLDING OFFICE FOR TERM EXPIRING AT THE ANNUAL MEETING
FOLLOWING FISCAL 2002):
John S. Katzman, age 41, has served as a Director of Student Advantage
since March 1996. Mr. Katzman founded The Princeton Review, a provider of test
preparation and admission services, and has served as its Chief Executive
Officer since 1981.
Charles E. Young, age 69, has served as a Director of Student Advantage
since September 1999. Dr. Young has served as President of the University of
Florida since November 1999. Dr. Young served as Chancellor of the University of
California Los Angeles (UCLA) from September 1968 to June 1997, and served as
Chancellor Emeritus of UCLA from July 1997 to October 1999. Dr. Young currently
serves as a Director of Intel Corporation.
There are no family relationships among any of the executive officer or
directors of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 15, 2000, the Company entered into an Affiliate and E-Commerce
Agreement with The Princeton Review, Inc.'s subsidiaries, Princeton Review
Publishing, LLC and The Princeton Review Management, LLC ("TPR"). Mr. Katzman is
the Chief Executive Officer of The Princeton Review, Inc. and Princeton Review
Publishing, LLC is a stockholder of Student Advantage. Under the agreement, TPR
will pay the Company a fee to participate in the Student Advantage network by
placing the Student Advantage logo and content on The Princeton Review's
review.com web site. In addition, under the agreement, TPR will provide
discounts as part of the Student Advantage Membership Program and market the
discount to high
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school, college and university students. Additionally, under the agreement, the
Company will pay TPR a fee in exchange for exclusive advertising sales
responsibilities for the review.com web site. The agreement expires on June 15,
2002. During Fiscal 2000, the Company recorded revenue of $571,000 and expense
of $653,000 related to this agreement.
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors, which
meets with the Company's auditors to review and evaluate the Company's audit
procedures and to recommend and implement any desired changes to the Company's
audit procedures. The members of the Audit Committee are Messrs. Kaiser,
Connolly and Young. The Audit Committee met six (6) times during Fiscal 2000.
The Company has a standing Compensation Committee of the Board of
Directors, which establishes the compensation of each of the Company's executive
officers, compensation policies applicable to the Company's executive officers
and the basis for the compensation of the Company's Chief Executive Officer. For
the year ended December 31, 2000, the members of the Compensation Committee were
Messrs. Kaiser, Katzman and Turtletaub. On March 31, 2001, Mr. Katzman resigned
from the Compensation Committee and the Board of Directors appointed Mr.
Connolly to the Compensation Committee. The Compensation Committee met five (5)
times during Fiscal 2000.
The Company has a standing Stock Option Committee of the Board of
Directors, which grants stock options and makes other awards under the Company's
1998 Stock Incentive Plan to employees who are not executive officers in
accordance with the guidelines established by the Board of Directors. The sole
member of the Stock Option Committee is Raymond V. Sozzi, Jr. The Stock Option
Committee acted solely by written consent during Fiscal 2000.
The Company does not have a standing Nominating Committee of the Board of
Directors.
The Board of Directors met thirteen (13) times during Fiscal 2000. Each
incumbent director, except Messrs. Connolly and Turtletaub, attended at least
75% of the aggregate number of meetings of the Board and of the committees on
which he then served. Messrs. Connolly and Turtletaub attended 58% and 56%,
respectively, of the aggregate number of meetings of the Board and of the
committees on which he then served.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Company's Board of Directors is composed of
three members, Messrs. Kaiser, Connolly and Young, and acts under a written
charter first adopted and approved in June 2000. A copy of this charter is
attached to this proxy statement as Appendix A. The members of the Audit
Committee are independent directors, as defined by its charter and the rules of
the Nasdaq Stock Market.
The Audit Committee reviewed the Company's audited financial statements for
Fiscal 2000 and discussed these financial statements with the Company's
management. Management is responsible for the Company's internal controls and
the financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the Company's financial
statements in accordance with generally accepted accounting principles and to
issue a report on those financial statements. The Audit Committee is responsible
for monitoring and overseeing these processes. As appropriate, the Audit
Committee
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reviews and evaluates, and discusses with the Company's management, internal
accounting, financial and auditing personnel and the independent auditors, the
following:
- the plan for, and the independent auditors' report on, each audit of the
Company's financial statements;
- the Company's financial disclosure documents, including all financial
statements and reports filed with the Securities and Exchange Commission
or sent to shareholders;
- changes in the Company's accounting practices, principles, controls or
methodologies;
- significant developments or changes in accounting rules applicable to the
Company; and
- the adequacy of the Company's internal controls and accounting, financial
and auditing personnel.
Management represented to the Audit Committee that the Company's financial
statements had been prepared in accordance with generally accepted accounting
principles.
The Audit Committee also reviewed and discussed the audited financial
statements and the matters required by Statement on Auditing Standards 61
(Communication with Audit Committees) with PricewaterhouseCoopers LLP, the
Company's independent auditors. SAS 61 requires the Company's independent
auditors to discuss with the Company's Audit Committee, among other things, the
following:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
- disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The Company's independent auditors also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). Independence
Standards Board Standard No. 1 requires auditors annually to disclose in writing
all relationships that in the auditor's professional opinion may reasonably be
thought to bear on independence, confirm their perceived independence and engage
in a discussion of independence. In addition, the Audit Committee discussed with
the independent auditors their independence from the Company.
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.
By the Audit Committee of the Board of Directors of Student Advantage, Inc.
John M. Connolly
William S. Kaiser
Charles E. Young
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INDEPENDENT AUDITORS FEES AND OTHER MATTERS
Audit Fees
PricewaterhouseCoopers LLP billed the Company an aggregate of $121,000 in
fees for professional services rendered in connection with the audit of the
Company's financial statements for the most recent fiscal year and the reviews
of the financial statements included in each of the Company's Quarterly Reports
on Form 10-Q during Fiscal 2000.
Financial Information Systems Design and Implementation Fees
PricewaterhouseCoopers LLP did not bill the Company for any professional
services rendered to the Company and its affiliates for Fiscal 2000 in
connection with financial information systems design or implementation, the
operation of the Company's information system or the management of its local
area network.
All Other Fees
PricewaterhouseCoopers LLP billed the Company an aggregate of $272,000 in
fees for other services rendered to the Company and its affiliates for Fiscal
2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 2000, the Company's Compensation Committee was comprised of
Messrs. Kaiser, Katzman and Turtletaub, three of the Company's non-employee
directors. On March 31, 2001, Mr. Katzman resigned from the Compensation
Committee and the Board of Directors appointed Mr. Connolly to the Compensation
Committee. On May 15, 2000, the Company entered into an Affiliate and E-Commerce
Agreement with The Princeton Review, Inc.'s subsidiaries, Princeton Review
Publishing, LLC and The Princeton Review Management, LLC ("TPR"). Mr. Katzman is
the Chief Executive Officer of The Princeton Review, Inc. and Princeton Review
Publishing, LLC is a stockholder of Student Advantage. Under the agreement, TPR
will pay the Company a fee to participate in the Student Advantage network by
placing the Student Advantage logo and content on The Princeton Review's
review.com web site. In addition, under the agreement, TPR will provide
discounts as part of the Student Advantage Membership Program and market the
discount to high school, college and university students. Additionally, under
the agreement, the Company will pay TPR a fee in exchange for exclusive
advertising sales responsibilities for the review.com web site. The agreement
expires on June 15, 2002. During Fiscal 2000, the Company recorded revenue of
$571,000 and expense of $653,000 related to this agreement.
COMPENSATION OF DIRECTORS
Directors of the Company are reimbursed for expenses incurred in connection
with their attendance at Board and committee meetings. Directors receive no
other cash compensation for serving as directors.
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EXECUTIVE COMPENSATION
Summary Compensation
The following Summary Compensation Table sets forth certain information
concerning the compensation for each of the last three fiscal years of (i) the
Company's Chief Executive Officer; (ii) the four most highly compensated
executive officers who were serving as executive officers at the end of Fiscal
2000 and (iii) the two most highly compensated executive officers who were not
serving as executive officers at the end of Fiscal 2000 (collectively, the
"Named Executives").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS(2)
ANNUAL ------------
COMPENSATION(1) SECURITIES
NAME AND FISCAL ------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
------------------ ------ -------- -------- ------------ ------------
Raymond V. Sozzi, Jr..................... 2000 $156,000 $ 65,000(3) -- $24,343(4)
Chief Executive Officer 1999 153,462 100,000 -- 4,320(5)
and President 1998 93,798 150,000 -- 6,000(6)
Mason L. Myers(7)........................ 2000 153,364 32,500(3) 75,000 1,909(5)
Executive Vice President, Student and 1999 118,654 37,500 300,000 2,567(5)
University Services
G. Todd Eichler.......................... 2000 125,000 32,500(3) -- 3,750(5)
Executive Vice President, 1999 114,615 50,000 -- 1,646(5)
Business Services 1998 106,475 50,000 -- --
Heather L. Lourie........................ 2000 96,154 30,000(3) 45,000 531(5)
Vice President, Business Development
Jay P. Summerall(8)...................... 2000 87,231 0(3) 250,000 50,000(9)
Executive Vice President, Student
Services
Ronald J. Kos(10)........................ 2000 148,539 25,000 -- 3,150(5)
Former Chief Operating Officer 1999 95,192 33,333 650,001 1,846(11)
Christopher B. Andrews(12)............... 2000 134,616 20,000(3) -- 4,038(5)
Former Executive Vice President, 1999 130,000 30,000 -- 1,685(5)
Operations
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(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
have been omitted in those instances where such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of the
total of annual salary and bonus for the executive officer for the fiscal
year.
(2) The Company did not grant any stock appreciation rights or make any
long-term incentive plan payouts during the years ended December 31, 1998,
1999 and 2000 ("Fiscal 1998," "Fiscal 1999" and "Fiscal 2000",
respectively). As of December 31, 2000, Messrs. Andrews and Myers held
18,750 and 15,000 shares of common stock with a value of $73,500 and
$58,800 respectively based on the fair market value of the Company's common
stock on such date, all of which were subject to a right of repurchase in
favor of the Company. These shares were acquired upon the exercise of
unvested options and vest over a four year period from the date of grant.
Dividends will be paid on such shares to the extent dividends are declared
and paid on the Company's common stock.
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(3) Represents bonuses paid for the first half of Fiscal 2000. As of the filing
date of this proxy statement, the Company had neither determined the amount
of nor paid any bonuses for the second half of Fiscal 2000 to the Company's
executive officers.
(4) Represents $19,663 of legal expenses paid by the Company for Mr. Sozzi's
personal tax planning and $4,680 contributed to Mr. Sozzi's 401(K) account
under the Company's matching contributions plan.
(5) Represents contributions made through the Company's 401(K) match program to
the individual employees' 401(K) accounts.
(6) Represents an automobile allowance.
(7) Mr. Myers ceased service as an executive officer of the Company on January
5, 2001.
(8) Mr. Summerall commenced employment with the Company in May 2000. His annual
salary was $140,000.
(9) Represents relocation costs paid to Mr. Summerall.
(10) Mr. Kos commenced employment with the Company in May 1999 and departed the
Company in August 2000. His annual salary was $150,000.
(11) Represents a parking allowance of $1,500 and $346 contributed to Mr. Kos'
401(k) account under the Company's matching contributions plan.
(12) Mr. Andrews ceased service as an executive officer of the Company on
December 31, 2000.
Option Grants
The following table sets forth certain information concerning grants of
stock options during Fiscal 2000 to each of the Named Executives.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
--------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR SHARE(1) DATE 5% 10%
---- ---------- ------------- --------- ---------- ------------ ------------
Raymond V. Sozzi, Jr....... -- -- -- -- -- --
Mason L. Myers............. 75,000 1.5% $ 5.625 4/14/10 $265,315 $ 672,360
G. Todd Eichler............ -- -- -- -- -- --
Heather Lourie............. 20,000 0.4% $ 5.625 4/14/10 $ 70,751 $ 179,296
25,000(3) 0.5% $3.0625 11/14/10 $ 48,150 $ 122,021
Jay P. Summerall........... 150,000(4) 3.0% $ 5.00 5/4/10 $471,671 $1,195,307
100,000 2.0% $3.5625 6/1/10 $224,044 $ 567,771
Ronald J. Kos.............. -- -- -- -- -- --
Christopher B. Andrews..... -- -- -- -- -- --
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(1) Unless otherwise noted, options are incentive stock options or non-statutory
stock options, become exercisable over a four-year period and generally
terminate three months following termination of the executive officer's
employment with the Company or the expiration date, whichever occurs
earlier. The exercise price of each option was determined to be equal to the
fair market value per share of the Common Stock on the date of grant.
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(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise price,
but do not include deductions for taxes or other expenses associated with
the exercise of the option or the sale of the underlying shares. The actual
gains, if any, on the exercises of stock options will depend on the future
performance of the Common Stock, the optionholder's continued employment
through the option period, and the date on which the options are exercised.
(3) Options become exercisable on the first anniversary of the grant date.
(4) Options become exercisable as to 50% of the shares on August 4, 2000 and
6.25% of the remaining shares at the end of each quarter after May 4, 2002.
Option Exercises and Holdings
The following table sets forth certain information concerning the aggregate
number of shares of Common Stock acquired upon option exercises by the Named
Executives during Fiscal 2000 and the value realized upon exercise as well as
the number and value of unexercised options held by each of the Named Executives
on December 31, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Raymond V. Sozzi, Jr......... -- -- -- -- -- --
Mason L. Myers............... 15,000 $197,550 90,000 225,000 $ 58,800 --
G. Todd Eichler.............. -- -- -- -- -- --
Heather L. Lourie............ -- -- 12,500 82,500 -- $29,688
Jay P. Summerall............. -- -- 75,000 175,000 -- $68,750
Ronald J. Kos................ -- -- -- -- -- --
Christopher B. Andrews....... -- -- 82,500 -- $323,400 --
- - ---------------
(1) Based on the market price of the Common Stock on the date of exercise less
the option exercise price.
(2) Based on a value of $4.25 per share, the fair market value of the Common
Stock on December 29, 2000, less the option exercise price.
EMPLOYMENT AGREEMENTS
In March 1996, Student Advantage entered into an employment agreement with
Mr. Sozzi, which was amended in October 1998. The employment agreement provides
for an initial term of employment expiring on January 1, 1999 and automatically
renews for successive one-year terms, unless terminated by either party prior to
such renewal. The employment agreement provides for a base salary of $150,000 in
2000, and a bonus at a target level of $75,000 to be determined in the
discretion of the Board of Directors. Pursuant to the employment agreement, if
the Company terminates Mr. Sozzi's employment without cause, Mr. Sozzi is
entitled to receive severance benefits, for a period of 18 months following his
termination, equal to (1) his base salary, (2) bonus payments at the fixed rate
of $75,000 per year for each year or portion thereof, (3) continued
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participation in all employee benefits, and (4) outplacement services. Mr. Sozzi
may terminate the employment agreement if within one year after a change in
control of the Company there is a material diminution in his position which is
not cured by the Company within ten days of receiving written notice. In
addition, Mr. Sozzi has agreed to certain confidentiality, noncompetition and
nonsolicitation provisions.
In May 1999, Student Advantage entered into a letter agreement with Ronald
J. Kos and agreed to employ him as its Chief Operating Officer. Student
Advantage agreed to pay Mr. Kos an annual base salary of $150,000 and an annual
performance bonus with a target of $75,000, based upon the achievement of
certain performance objectives. In April 2000, Student Advantage entered into a
letter agreement superceding the earlier letter agreement setting forth the
terms of Mr. Kos' continued employment which provided that Mr. Kos would receive
an annual base salary of $150,000 and an annual performance bonus with a target
of $75,000 based upon the achievement of certain performance objectives. The
letter agreement also modified Mr. Kos' stock option agreements dated May 19,
1999 and provided that in the event Mr. Kos' employment was terminated by him
for any reason or by Student Advantage without cause, then Student Advantage
would pay a lump sum payment of $2,000 to Mr. Kos within 15 days of the date of
termination and continue to pay Mr. Kos his base salary for 90 days after the
date of termination. Mr. Kos terminated his employment with the Company on
August 4, 2000.
Each of Messrs. Myers, Summerall, and Andrews and Ms. Lourie have been
granted options to purchase common stock under the Company's 1998 Stock
Incentive Plan. The option agreements for each of these options provide for the
acceleration of vesting in the event of a change in control of the Company with
respect to the number of shares of that would have vested on a monthly vesting
schedule through the date of the change of control and 50% of the remaining
unvested shares. If, following a change of control, the successor terminates the
employment of the executive officer without cause or the executive officer
terminates his employment for certain reasons, vesting of the shares will
accelerate in full.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was established on
April 5, 1999 by a vote of the Company's Board of Directors and was chartered to
establish the compensation (including salaries, bonuses and other types of
compensation) of each executive officer, to establish compensation policies
applicable to executive officers and to establish the basis for the compensation
of the Company's Chief Executive Officer ("CEO"). During Fiscal 2000, the
members of the Compensation Committee were Messrs. Kaiser, Katzman and
Turtletaub three of the Company's non-employee Directors. On March 31, 2001, Mr.
Katzman resigned from the Compensation Committee and the Board of Directors
appointed Mr. Connolly to the Compensation Committee. The executive compensation
program is designed to align the interests of the executive officers with those
of the Company's stockholders, to encourage and reward superior performance and
to attract, retain and reward executives who are critical for the continued
growth and success of the Company. In making decisions regarding executive
compensation, the Committee receives and considers input from Mr. Sozzi, the
Company's CEO. This report is submitted by the Compensation Committee and
describes the compensation policies of Student Advantage for Fiscal 2000 as they
pertain to the CEO and the Company's other executive officers.
The Committee's executive compensation philosophy is that executive
compensation should be tied to the Company's core values and business
objectives. In establishing base salaries for executive officers, the Committee
considers factors such as the executive's scope of responsibilities, the
executive's current and future contributions, impact and value to the
achievement of financial results, the executive's performance in the prior year,
competitiveness in the marketplace for similar skills and abilities, historical
salary actions and relative salary levels of similar positions within the
Company. Increases in base salary are generally based upon enhanced individual
performance targets, maintaining a competitive base salary with the external
marketplace
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and/or increases in an executive's scope of responsibilities. In awarding
performance bonuses to executive officers, the Committee evaluates overall
business performance against goals and the extent to which each executive meets
certain personal performance measurements which include the executive's ability
to manage change, achieve development plan goals, manage financial controls and
participate in peer development.
The Company's 1998 Stock Incentive Plan (the "1998 Plan") authorizes the
Committee to grant incentive or non-statutory stock options to employees of the
Company. The Committee is authorized to determine the price and terms at which
such options are granted. The Committee believes options provide an incentive to
executives to maximize stockholder value and they compensate executives only to
the extent that the Company's stockholders receive a return on their investment.
Moreover, because options granted to executive officers generally become
exercisable over a four-year period and terminate with the termination of the
executive's employment with the Company, stock options serve as a means of
retaining these executives. However, in light of the Company's volatile stock
price and the fact that a number of key executives and employees held options at
exercise prices well in excess of the Company's current trading price, the
Committee granted options with a one-year vesting period to such key personnel.
In determining the total number of shares of Common Stock to be covered by
option grants to executive officers in a given year, the Committee takes into
account the number of outstanding shares of Common Stock, the number of shares
reserved for issuance under the Company's 1998 Plan and the Company's projected
hiring needs for the coming year. In making individual stock option grants to
executives, the Committee considers the same factors considered in the
determination of base salary levels, as well as the stock and option holdings of
each executive and the remaining vesting schedule of such executive's options.
Mr. Sozzi, Student Advantage's CEO, is eligible to participate in the
executive compensation program available to other Student Advantage executives,
and the employment agreement he entered into with the Company in March 1996, as
amended in October 1998, sets his annual salary at $150,000 and establishes a
target level of $75,000 for his bonus as determined in the discretion of the
Board of Directors. Mr. Sozzi's annual salary for Fiscal 2000 was $156,000 and
his target performance bonus was $75,000. Under the bonus plan, Mr. Sozzi was
paid a bonus of $65,000 for the first half of Fiscal 2000, based on Mr. Sozzi's
success in continuing to build a management team and achieving the Company's
revenue and cost control objectives. The Company has neither determined the
amount of nor paid a bonus to Mr. Sozzi for the second half of Fiscal 2000.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for certain
compensation in excess of $1 million paid to the Company's Chief Executive
Officer and four other most highly compensated executive officers. Certain
compensation, including qualified performance-based compensation, will not be
subject to the deduction limit if certain requirements are met. The Compensation
Committee reviews the potential effect of Section 162(m) periodically and
generally seeks to structure the compensation granted to the Company's executive
officers through option issuances under the 1998 Plan in a manner that is
intended to avoid disallowance of deductions under Section 162(m). Nevertheless,
the Compensation Committee reserves the right to use its judgment to authorize
compensation payments that do not comply with the requirements of Section 162(m)
when the Committee believes such payments are appropriate and in the best
interests of its stockholders, after taking into consideration changing business
conditions and the performance of its employees. In any event, there can be no
assurance that compensation attributable to stock options granted under the 1998
Plan will qualify as performance-based compensation exempt from Section 162(m).
Compensation Committee
William S. Kaiser
John S. Katzman
Marc J. Turtletaub
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from June 18, 1999 (the date the Common Stock of the
Company commenced public trading) through December 31, 2000 (the end of Fiscal
2000) with the cumulative total return during this period of (i) the Nasdaq
Composite Index and (ii) the J.P. Morgan H&Q Internet Index. This graph assumes
the investment of $100 on June 18, 1999 in the Company's Common Stock, the
Nasdaq Composite Index and J.P. Morgan H&Q Internet Index, and assumes dividends
are reinvested.
[Performance Chart]
STUDENT ADVANTAGE NASDAQ JP MORGAN H&Q INDEX
----------------- ------ -------------------
18-June-99 100.00 100.00 100.00
31-Dec-99 277.35 156.63 223.23
31-Dec-00 53.13 95.09 85.89
APPROVAL OF AMENDMENT TO THE 1998 STOCK INCENTIVE PLAN
The Board of Directors believes that a critical factor in the Company's
growth and profitability is its ability to attract, retain and motivate its
workforce and align the interest of employees with the stockholders through a
competitive compensation program including the issuance of stock options. To do
so, the Board of Directors believes it is necessary for the Company to have
stock options available for issuance to current and future employees. On March
5, 2001, the Board of Directors adopted, subject to stockholder approval, an
amendment to the Company's 1998 Stock Incentive Plan (the "1998 Plan")
increasing the aggregate number of shares of Common Stock authorized for
issuance pursuant to the 1998 Plan from 9,500,000 to 12,000,000. The amendment
was adopted to ensure that the Company is in a position to be able to grant
additional options to current and future employees and the shares currently
available under the 1998 Plan may not be sufficient to achieve this goal.
The Board of Directors believes that awards under the 1998 Plan, including
stock options, have been and will continue to be, an important compensation
element in retaining current employees and attracting new employees who are
expected to contribute to the Company's growth and success. Accordingly, the
Board of
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Directors believes that the approval of the amendment to the 1998 Plan is in the
best interests of the Company and its stockholders and recommends a vote in
favor of this proposal.
SUMMARY OF THE 1998 PLAN
The Company's 1998 Plan took effect on December 10, 1998. The 1998 Plan
enables the Company to grant options (including options intended to qualify as
incentive stock options under Section 422 of the Code and non-statutory stock
options), to make awards of restricted stock, and to issue certain other
equity-related securities of the Company to employees and directors of and
consultants to the Company. Under present law, however, incentive stock options
may only be granted to employees. Stock options entitle the optionee to purchase
Common Stock from the Company for a specified exercise price during a period
specified in the applicable option agreement. Restricted stock awards entitle
the recipient to purchase Common Stock from the Company under terms which
provide for vesting over a period of time and a right of repurchase in favor of
the Company of the unvested portion of the Common Stock subject to the award
upon the termination of the recipient's employment or other relationship with
the Company. The 1998 Plan is administered by the Compensation Committee of the
Board of Directors, which is empowered to select the persons to whom stock
options and restricted stock awards are granted, to determine the number of
shares of Common Stock covered by the option or award, its exercise price or
purchase price, its vesting schedule and (in the case of stock options) its
expiration date. The Compensation Committee has delegated certain of its
authority to the Company's standing Stock Option Committee of the Board of
Directors, enabling the Stock Option Committee to grant stock options and makes
other awards under the Company's 1998 Stock Incentive Plan to employees who are
not executive officers in accordance with the guidelines established by the
Board of Directors. Stock options granted under the 1998 Plan are generally
nontransferable, and they generally become exercisable over a four-year period
and expire ten years after the date of grant (subject to earlier termination in
the event of the termination of the optionee's employment with the Company).
During Fiscal 2000, the Company granted approximately 293,000 options under the
1998 Plan with a one-year vesting period.
As option grants and the grants of other equity-related securities under
the 1998 Plan are discretionary, the Company cannot now determine the number of
any such securities to be granted to any particular executive officer, executive
officers as a group, non-employee directors or non-executive officers and
employees as a group. However, under the terms of the 1998 Plan, no employee may
be granted awards or options with respect to more than 3,000,000 shares during
any calendar year.
Options may be granted at an exercise price which may be less than, equal
to or greater than the fair market value of the Common Stock on the date of
grant. Under present law, however, incentive stock options and options intended
to qualify as performance-based compensation under Section 162(m) of the Code
may not be granted at an exercise price less than the fair market value of the
Common Stock on the date of grant (or less than 110% of the fair market value in
the case of incentive stock options granted to optionees holding more than 10%
of the total combined voting power of all classes of stock of the Company or of
its parent or subsidiary corporations). The 1998 Plan permits the Board to
determine the manner of payment of the exercise price of options, including
through payment by cash, check or in connection with a "cashless exercise"
through a broker, by surrender to the Company of shares of Common Stock, by
delivery to the Company of a promissory note, or by other lawful means.
As of December 31, 2000, the Company had granted options under the 1998
Plan to purchase an aggregate of 7,840,738 shares of Common Stock, net of
cancellations of as a result of employee terminations. Of these options 805,000
were granted to the current executive officers of the Company and 20,000 were
granted to non-employee directors of the Company. As of December 31, 2000, the
Company had not granted any restricted stock, stock appreciation rights,
performance shares, or unrestricted stock under the 1998 Plan. As of December
31, 2000, there were 451 employees and directors of the Company who were
eligible to
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receive awards under the 1998 Plan. As of December 31, 2000, 1,659,262 shares
remained available for future issuance under the 1998 Plan.
The 1998 Plan will remain in effect until December 9, 2008 (except that it
will continue in effect as to equity-related securities outstanding on that
date), unless terminated earlier by the Board of Directors. The Board of
Directors may amend, suspend or terminate the 1998 Plan or any portion thereof
at any time, provided that no amendment shall be made without stockholder
approval if such approval is necessary to comply with any applicable tax or
regulatory requirement.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to stock option and
restricted stock awards granted under the 1998 Plan and with respect to the sale
of Common Stock acquired under the 1998 Plan. This summary is based on the
federal tax laws in effect on the date of this proxy statement. Changes to these
laws could alter the tax consequences described below.
Incentive Stock Options. In general, a participant will not recognize
taxable income upon the grant or exercise of an incentive stock option. Instead,
a participant will recognize taxable income with respect to an incentive stock
option only upon the sale of Common Stock acquired through the exercise of the
option ("ISO Stock"). The exercise of an incentive stock option, however, may
subject the participant to the alternative minimum tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the participant has owned the ISO Stock at the time it is
sold. If the participant sells ISO Stock after having owned it for at least two
years from the date the option was granted (the "Grant Date") and one year from
the date the option was exercised (the "Exercise Date"), then the participant
will recognize long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the participant sells ISO Stock for more than the exercise price prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the participant will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. This capital gain will be a
long-term capital gain if the participant has held the ISO Stock for more than
one year prior to the date of sale.
If a participant sells ISO Stock for less than the exercise price, then the
participant will recognize capital loss in an amount equal to the excess of the
exercise price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the participant has held the ISO Stock for more than
one year prior to the date of sale.
Non-statutory Stock Options. As in the case of an incentive stock option, a
participant will not recognize taxable income upon the grant of a non-statutory
stock option. Unlike the case of an incentive stock option, however, a
participant who exercises a non-statutory stock option generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the option ("NSO
Stock") on the Exercise Date over the exercise price.
With respect to any NSO Stock, a participant will have a tax basis equal to
the exercise price plus any income recognized upon the exercise of the option.
Upon selling NSO Stock, a participant generally will recognize capital gain or
loss in an amount equal to the difference between the sale price of the NSO
Stock and the participant's tax basis in the NSO Stock. This capital gain or
loss will be a long-term capital gain or loss if the participant has held the
NSO Stock for more than one year prior to the date of the sale.
Restricted Stock. A participant will not recognize taxable income upon the
grant of a restricted stock award, unless the participant makes an election
under Section 83(b) of the Code (a "Section 83(b) Election"). If the participant
makes a valid Section 83(b) Election within 30 days of the date of the grant,
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then the participant will recognize ordinary compensation income, for the year
in which the award is granted, in an amount equal to the difference between the
fair market value of the Common Stock at the time the award is granted and the
purchase price paid for the Common Stock. If a valid Section 83(b) Election is
not made, then the participant will recognize ordinary compensation income, at
the time that the forfeiture provisions or restrictions on transfer lapse, in an
amount equal to the difference between the fair market value of the Common Stock
at the time of such lapse and the original purchase price paid for the Common
Stock. The participant will have a tax basis in the Common Stock acquired equal
to the sum of the price paid and the amount of ordinary compensation income
recognized.
Upon the disposition of the Common Stock acquired pursuant to a restricted
stock award, the participant will recognize a capital gain or loss in an amount
equal to the difference between the sale price of the Common Stock and the
participant's tax basis in the Common Stock. This capital gain or loss will be a
long-term capital gain or loss if the shares are held for more than one year
Tax Consequences to the Company. The grant of an award under the 1998 Plan
will have no tax consequences to the Company. Moreover, in general, neither the
exercise of an incentive stock option nor the sale of any Common Stock acquired
under the 1998 Plan will have any tax consequences to the Company. The Company
generally will be entitled to a business-expense deduction, however, with
respect to any ordinary compensation income recognized by a participant under
the 1998 Plan, including in connection with a restricted stock award or as a
result of the exercise of a non-statutory stock option or a Disqualifying
Disposition. Any such deduction will be subject to the limitations of Section
162(m) of the Code.
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of reports filed by "reporting persons" of the
Company under Section 16 (a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), the Company believes that during Fiscal 2000 all filings
required to be made by reporting persons were timely made in accordance with the
requirements of Section 16(a).
MATTERS TO BE CONSIDERED AT THE MEETING
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters.
SOLICITATION OF PROXIES
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's Directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, facsimile, email and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
out-of-pocket expenses in this connection.
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any proposal that a shareholder wishes to be considered for inclusion in
the Company's proxy statement and proxy card for the 2002 Annual Meeting must be
received by Student Advantage's Secretary at the Company's principal executive
offices no later than December 21, 2001.
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ADVANCE NOTICE PROCEDURES
The Company's by-laws require that the Company be given advance written
notice of stockholder nominations for election to the Company's Board of
Directors and of other matters which stockholders wish to present for action at
an annual meeting of stockholders (other than matters included in the Company's
proxy which are discussed above). The required notice must be given within the
prescribed time frame, which is generally calculated by reference to the date of
the most recent annual meeting. Assuming that Student Advantage's 2002 Annual
Meeting is held on or after May 12, 2002 and on or before July 30, 2002 (as we
currently anticipate), the bylaws would require notice to be provided to Student
Advantage's Secretary at the Company's principal offices no earlier than
February 20, 2002 and no later than March 12, 2002. The Company's by-laws also
specify requirements relating to the content of the notice which stockholders
must provide to the Secretary of the Company for any matter, including a
stockholder nomination for director, to be properly presented at a stockholder
meeting.
By Order of the Board of Directors,
LAURIE S. JAMIESON
Secretary
APRIL 10, 2001
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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APPENDIX A
STUDENT ADVANTAGE, INC.
AUDIT COMMITTEE CHARTER
I. Membership
A. Number. The Audit Committee shall consist of at least three
independent, financially literate members of the board of directors
meeting the requirements set forth in Sections I.B and I.C below.
B. Independence. A director is independent if he or she is not an officer
or employee of the Company or its subsidiaries, if he or she has no
relationship which, in the opinion of the Company's board of directors,
would interfere with his or her exercise of independent judgment in
carrying out the responsibilities of a director, and if he or she:
1. Has not been an employee of the Company or any affiliate of the
Company in the current year or in any of the past three years;
2. Has no immediate family member who has been employed by the Company
or an affiliate of the Company in any of the past three years (an
immediate family member includes 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 a person's home);
3. Is not employed as an executive of an entity other than the Company
having a compensation committee which includes any of the Company's
executives;
4. Did not within the last fiscal year receive from the Company or any
affiliate of the Company compensation -- other than benefits under a
tax qualified retirement plan, compensation for director service or
nondiscretionary compensation -- greater than $60,000; and
5. Has not in any of the past three years been a partner in, or
controlling shareholder or executive of, a for profit business
organization to which the Company made or from which the Company
received payment (other than payment arising solely from investments
in the Company's securities) that exceeds the greater of: (i)
$200,000; or (ii) more than 5% of the Company's or business
organization's consolidated gross revenues.
Under exceptional and limited circumstances, one director who has a
relationship making him or her not independent, and who is not a Company
employee or an immediate family member of a Company employee, may serve
on the Audit Committee if the board of directors determines that the
director's membership on the Audit Committee is required by the best
interests of the Company and its shareholders, and discloses in the next
annual proxy statement after such determination the nature of the
relationship and the reasons for the determination.
C. Financial Literacy. Each member of the Audit Committee must be able to
read and understand fundamental financial statements, including the
Company's balance sheet, income statement, and cash flow statement, or
must become able to do so within a reasonable time after his or her
appointment to the Audit Committee. At least one member of the Audit
Committee must have past employment experience in finance or
accounting, professional certification in accounting, or other
comparable experience or background which result in the member having
financial sophistication (such as being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities).
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D. Chairman. Unless a Chairman is elected by the board of directors, the
Audit Committee shall elect a Chairman by majority vote.
II. Responsibilities of the Audit Committee
The Audit Committee shall assist the board of directors in fulfilling their
responsibilities to shareholders concerning the Company's accounting and
reporting practices, and shall facilitate open communication between the Audit
Committee, board of directors, outside auditors, and management. The Audit
Committee shall discharge its responsibilities, and shall assess the information
provided by the Company's management and the outside auditor, in accordance with
its business judgment. The responsibilities set forth herein do not reflect or
create any duty or obligation of the Audit Committee to plan, conduct, oversee
or determine the appropriate scope of any audit, or to determine that the
Company's financial statements are complete, accurate, fairly presented, or in
accordance with Generally Accepted Accounting Principles or applicable law. In
exercising its business judgment, the Audit Committee shall rely on the
information and advice provided by the Company's management and/or its outside
auditor.
A. The Audit Committee shall review and reassess the adequacy of this
charter at least annually.
B. The outside auditor shall be accountable to the Audit Committee and the
board of directors, which together shall have the ultimate authority
and responsibility to nominate the outside auditor to be proposed for
shareholder approval in any proxy statement, and to select, evaluate,
and (where appropriate) replace the outside auditor.
C. The Audit Committee shall ensure that they receive from the outside
auditor the written disclosures and letter from the outside auditor
required by Independence Standards Board Standard No. 1.
D. The Audit Committee shall discuss with the outside auditor its
independence, and shall actively engage in a dialogue with the outside
auditor regarding any disclosed relationships or services that might
impact the objectivity and independence of the auditor. The Audit
Committee shall take, or recommend that the full board of directors
take, appropriate action to oversee the independence of the outside
auditor.
E. The Audit Committee shall review and discuss with the Company's
management the Company's audited financial statements.
F. The Audit Committee shall discuss with the outside auditor the matters
about which Statement on Auditing Standards No. 61 requires discussion.
G. Based upon its discharge of its responsibilities pursuant to Sections
II.C through II.F and any other information, discussion or
communication that the Audit Committee in its business judgment deems
relevant, the Audit Committee shall consider whether they will
recommend to the board of directors that the Company's audited
financial statements be included in the Company's annual reports on
Forms 10-K.
H. The Audit Committee shall prepare for inclusion where necessary in a
proxy or information statement of the Company relating to an annual
meeting of security holders at which directors are to be elected (or
special meeting or written consents in lieu of such meeting), the
report described in Item 306 of Regulation S-K.
I. The Audit Committee shall annually inform the outside auditor, the
Chief Financial Officer, the Controller, and the most senior other
person, if any, responsible for the internal audit activities, that
they should promptly contact the Audit Committee or its Chairman about
any significant issue or disagreement concerning the Company's
accounting practices or financial statements that is not
A-2
22
resolved to their satisfaction. Where such communications are made to
the Chairman, he or she shall confer with the outside auditor
concerning any such communications, and shall notify the other members
of the Audit Committee of any communications which the outside auditor
or the Chairman in the exercise of his or her business judgment
believes should be considered by the Audit Committee prior to its next
scheduled meeting.
J. The Audit Committee shall direct the outside auditor to use its best
efforts to perform all reviews of interim financial information prior
to disclosure by the Company of such information, and to discuss
promptly with the Chairman of the Audit Committee and the Chief
Financial Officer any matters identified in connection with the
auditor's review of interim financial information which are required to
be discussed by Statement on Auditing Standards No. 61. The Chairman of
the Audit Committee shall discuss any such matters with the outside
auditor, and shall notify the other members of the Audit Committee of
any discussions which the outside auditor or the Chairman in the
exercise of his or her business judgment believes should be considered
by the Audit Committee prior to disclosure or filing of the interim
financial information, or the Audit Committee's next scheduled meeting.
K. The Audit Committee shall direct management to advise the Audit
Committee in the event that the Company proposes to disclose or file
interim financial information prior to completion of review by the
outside auditor.
L. The Audit Committee shall meet privately at least once per year with:
(i) the outside auditor; (ii) the Chief Financial Officer; (iii) the
Controller; and (iv) the most senior person (if any) responsible for
the internal audit activities of the Company.
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SADCM-PS-01
24
PROXY
STUDENT ADVANTAGE, INC.
280 SUMMER STREET
BOSTON, MASSACHUSETTS 02210
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
Those signing on the reverse side, revoking any prior proxies, hereby
appoint(s) Raymond V. Sozzi, Jr., and Laurie S. Jamieson, each with the full
power to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated on the reverse side, all shares of common stock of Student
Advantage, Inc. (the "Company") held of record by the undersigned on April 3,
2001 at the Annual Meeting of Stockholders to be held on May 21, 2001 and any
adjournments thereof. Attendance of the undersigned at the meeting or at any
adjourned session thereof will not be deemed to revoke this proxy unless the
undersigned shall affirmatively indicate thereat the intention of the
undersigned to vote said shares in person.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED FOR SUCH PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- - ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- - ----------- -----------
25
Dear Shareholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the operation of the Company that require
your immediate attention.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Student Advantage, Inc.
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
1. Election of Directors
NOMINEES: (01) John M. Connolly and FOR WITHHELD ABSTAIN
(02) Raymond V. Sozzi, Jr. 2. Approve the amendment to the 1998
Stock Incentive Plan [ ] [ ] [ ]
FOR WITHHELD
[ ] [ ] 3. In their discretion, the proxies are authorized to vote upon any
other business that may properly come before the meeting or any
adjournment thereof.
[ ] _______________________________________
For all nominees except as noted above MARK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name appears hereon. Joint owners
should each sign. Executors, administrators, trustees, guardians or
other fiduciaries should give full title as such. If signing for a
corporation, please sign in full corporate name by a duly authorized
officer.
Signature _______________________ Date:____________________ Signature:__________________________ Date:___________________
26
STUDENT ADVANTAGE, INC.
1998 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of this 1998 Stock Incentive Plan (the "Plan") of Student
Advantage, Inc., a Delaware corporation (the "Company"), is to advance the
interests of the Company's stockholders by enhancing the Company's ability to
attract, retain and motivate persons who make (or are expected to make)
important contributions to the Company by providing such persons with equity
ownership opportunities and performance-based incentives and thereby better
aligning the interests of such persons with those of the Company's stockholders.
Except where the context otherwise requires, the term "Company" shall include
any of the Company's present or future subsidiary corporations as defined in
Section 424(f) of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the "Code") and any other business venture
(including, without limitation, joint venture or limited liability company) in
which the Company has a significant interest, as determined by the Board of
Directors of the Company (the "Board").
2. ELIGIBILITY
All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".
3. ADMINISTRATION, DELEGATION
a. ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered
by the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board's sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
b. DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers of the
Company the power to make Awards and exercise such other powers under the Plan
as the Board may determine, provided that the Board shall fix the maximum number
of shares subject to Awards and the maximum
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number of shares for any one Participant to be made by such executive officers.
c. APPOINTMENT OF COMMITTEES. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to one or
more committees or subcommittees of the Board (a "Committee"). All references in
the Plan to the "Board" shall mean the Board or a Committee of the Board or the
executive officer referred to in Section 3(b) to the extent that the Board's
powers or authority under the Plan have been delegated to such Committee or
executive officer.
4. STOCK AVAILABLE FOR AWARDS
a. NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may
be made under the Plan for up to 12,000,000 shares of common stock, $.01 par
value per share, of the Company (the "Common Stock"), minus such number of
shares of Common Stock subject to Awards (not to exceed 300,000) as may have
been granted and are then outstanding or, have been exercised and not
repurchased, under the Company's 1998 California Stock Incentive Plan. If any
Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited or repurchased in whole or in part or results in
any Common Stock being repurchased or not being issued, the unused Common Stock
covered by such Award shall again be available for the grant of Awards under the
Plan, subject, however, in the case of Incentive Stock Options (as hereinafter
defined), to any limitation required under the Code. Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.
b. PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, for
Awards granted after the Common Stock is registered under the Securities
Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of
Common Stock with respect to which an Award may be granted to any Participant
under the Plan shall be 3,000,000 per calendar year. The per-Participant limit
described in this Section 4(b) shall be construed and applied consistently with
Section 162(m) of the Code.
5. STOCK OPTIONS
a. GENERAL. The Board may grant options to purchase Common Stock (each,
an "Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".
b. INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.
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28
c. EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement.
d. DURATION OF OPTIONS. Each Option shall be exercisable at such times
and subject to such terms and conditions, including without limitation vesting
provisions, as the Board may specify in the applicable option agreement.
e. EXERCISE OF OPTION. Options may be exercised by delivery to the
Company of a written notice of exercise signed by the proper person or by any
other form of notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f) for the number of
shares for which the Option is exercised.
f. PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of
an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as the Board may, in its sole discretion, otherwise
provide in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price;
(3) when the Common Stock is registered under the Exchange Act, by
delivery of shares of Common Stock owned by the Participant valued at their fair
market value as determined by (or in a manner approved by) the Board in good
faith ("Fair Market Value"), which Common Stock was owned by the Participant at
least six months prior to such delivery;
(4) to the extent permitted by the Board, in its sole discretion by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (ii) payment of such other lawful consideration as
the Board may determine; or
(5) by any combination of the above permitted forms of payment.
6. RESTRICTED STOCK
a. GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").
b. TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be
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29
registered in the name of the Participant and, unless otherwise determined by
the Board, deposited by the Participant, together with a stock power endorsed in
blank, with the Company (or its designee). At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or if the
Participant has died, to the beneficiary designated, in a manner determined by
the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant's death (the "Designated
Beneficiary"). In the absence of an effective designation by a Participant,
Designated Beneficiary shall mean the Participant's estate.
7. OTHER STOCK-BASED AWARDS
The Board shall have the right to grant other Awards based upon the Common
Stock having such terms and conditions as the Board may determine, including the
grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights.
8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS
a. CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.
b. LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation
or dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised and/or unvested Options will (i)
become exercisable and vested in full as of a specified time at least 10
business days prior to the effective date of such liquidation or dissolution and
(ii) terminate effective upon such liquidation or dissolution, except to the
extent exercised before such effective date. The Board may specify the effect of
a liquidation or dissolution on any Restricted Stock Award or other Award
granted under the Plan at the time of the grant of such Award.
c. ACQUISITION EVENTS
(1) DEFINITION. An "Acquisition Event" shall mean: (a) any merger or
consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a statutory
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share exchange transaction.
(2) CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that all
outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed if,
following consummation of the Acquisition Event, the Option confers the right to
purchase, for each share of Common Stock subject to the Option immediately prior
to the consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of Common Stock for each share of Common Stock held immediately prior to
the consummation of the Acquisition Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Acquisition Event is not solely common
stock of the acquiring or succeeding corporation (or an affiliate thereof), the
Company may, with the consent of the acquiring or succeeding corporation,
provide for the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market value to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Acquisition Event.
Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, then the Board shall, upon written notice to the
Participants, provide that all then unexercised and/or unvested Options will
become exercisable and vested in full as of a specified time prior to the
Acquisition Event and will terminate immediately prior to the consummation of
such Acquisition Event, except to the extent exercised by the Participants
before the consummation of such Acquisition Event; provided, however, that in
the event of an Acquisition Event under the terms of which holders of Common
Stock will receive upon consummation thereof a cash payment for each share of
Common Stock surrendered pursuant to such Acquisition Event (the "Acquisition
Price"), then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Acquisition Event and that each Participant
shall receive, in exchange therefor, a cash payment equal to the amount (if any)
by which (A) the Acquisition Price multiplied by the number of shares of Common
Stock subject to such outstanding Options (whether or not then exercisable or
vested), exceeds (B) the aggregate exercise price of such Options.
(3) CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK AWARDS.
Upon the occurrence of an Acquisition Event, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award, including without
limitation, restricted stock issued upon the exercise of unvested Options, shall
inure to the benefit of the Company's successor and shall apply to the cash,
securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in the same manner and to the
same extent as they applied to the Common Stock subject to such Restricted Stock
Award.
(4) CONSEQUENCES OF AN ACQUISITION EVENT ON OTHER AWARDS. The Board
shall specify the effect of an Acquisition Event on any other Award granted
under the Plan at the time
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of the grant of such Award.
9. GENERAL PROVISIONS APPLICABLE TO AWARDS
a. TRANSFERABILITY OF AWARDS. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized transferees.
b. DOCUMENTATION. Each Award shall be evidenced by a written instrument
in such form as the Board shall determine. Each Award may contain terms and
conditions in addition to those set forth in the Plan, including without
limitation, provisions regarding the effect of a change in control of the
Company.
c. BOARD DISCRETION. Except as otherwise provided by the Plan, each
Award may be made alone or in addition or in relation to any other Award. The
terms of each Award need not be identical, and the Board need not treat
Participants uniformly.
d. TERMINATION OF STATUS. The Board shall determine the effect on an
Award of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.
e. WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may satisfy such tax obligations in whole or in part by delivery of
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their Fair Market Value. The Company may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to a Participant.
f. AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
g. CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or
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removed to the satisfaction of the Company, (ii) in the opinion of the Company's
counsel, all other legal matters in connection with the issuance and delivery of
such shares have been satisfied, including any applicable securities laws and
any applicable stock exchange or stock market rules and regulations, and (iii)
the Participant has executed and delivered to the Company such representations
or agreements as the Company may consider appropriate to satisfy the
requirements of any applicable laws, rules or regulations.
h. ACCELERATION. The Board may at any time provide that any Options
shall become immediately exercisable and/or vested in full or in part, that any
Restricted Stock Awards, including without limitation, restricted stock issued
upon the exercise of unvested Options, shall be free of restrictions in full or
in part or that any other Awards may become exercisable and/or vested in full or
in part or free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be.
10. MISCELLANEOUS
a. NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan or otherwise, except as expressly
provided in the applicable Award.
b. NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
c. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the date on which it is adopted by the Board. No Awards shall be granted under
the Plan after the completion of ten years from the earlier of (i) the date on
which the Plan was adopted by the Board or (ii) the date the Plan was approved
by the Company's stockholders, but Awards previously granted may extend beyond
that date.
d. AMENDMENT OF PLAN. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time.
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e. GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.
8