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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CORPAS INVESTMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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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CORPAS INVESTMENTS, INC.
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 2000
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To the Shareholders of Corpas Investments, Inc.
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders (the
"Special Meeting") of Corpas Investments, Inc. (the "Company") will be held at
1640 5th Street, Suite 218, Santa Monica, California 90405 on Friday, April 21,
2000 at 9:00 a.m. Pacific Standard Time, for the following purposes:
1. To approve the adoption of the Company's 2000 Stock Equity
Incentive Compensation Plan.
Only shareholders of record as of the close of business on March 8,
2000 will be entitled to vote at the Special Meeting or any adjournment or
postponement of the Special Meeting. Information relating to the matters to be
considered and voted at the Special Meeting is set forth in the proxy statement
accompanying this Notice.
By Order of the Board of Directors,
/s/ Lawrence R. Kuhnert
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Lawrence R. Kuhnert
Secretary
March 30, 2000
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE SPECIAL MEETING, PLEASE VOTE ON
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING BY COMPLETING THE ENCLOSED
PROXY AND MAILING IT PROMPTLY IN THE ENCLOSED ENVELOPE.
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CORPAS INVESTMENTS, INC.
PROXY STATEMENT
PROXY SOLICITATION INFORMATION
This Proxy Statement is first being sent to shareholders on or about
March 30, 2000 in connection with the solicitation of proxies by the Board of
Directors of Corpas Investments, Inc. (the "Company "), to be voted at the
Special Meeting of Shareholders to be held at 1640 5th Street, Suite 218, Santa
Monica, California 90405 at 9:00 a.m. on Friday, April 21, 2000, and at any
adjournment hereof (the "Meeting"). The close of business on March 8, 2000 has
been fixed as the record date for the determination of shareholders entitled to
notice of and to vote at the Meeting. At the close of business on the record
date, the Company had outstanding 10,954,579 shares of $0.001 par value common
stock, entitled to one vote per share.
Shares represented by duly executed proxies in the accompanying form
received by the Company prior to the Meeting will be voted at the Meeting. If a
shareholder specifies in the proxy a choice with respect to any matter to be
acted upon, the shares represented by such proxy will be voted as specified. If
a proxy card is signed and returned without specifying a vote or an abstention
on any proposal, the shares represented by such proxy will be voted according to
the recommendation of the Board of Directors on that proposal. The Board of
Directors recommends a vote FOR the proposal to approve the Company's 2000
Equity Incentive Compensation Plan. The Board of Directors knows of no other
matters that may be brought before the Meeting. However, if any other matters
are properly presented for action, it is the intention of the named proxies to
vote on them according to their best judgment.
Shareholders who hold their shares through an intermediary must
provide instructions on voting as requested by their bank or broker. A
shareholder who returns a proxy may revoke it at any time before it is voted by
taking one of the following three actions: (i) giving written notice of the
revocation to the Secretary of the Company; (ii) executing and delivering a
proxy with a later date; or (iii) voting in person at the Meeting. Votes cast
by proxy will be tabulated by the Company's transfer agent, Interwest Transfer
Company, Inc., and by one or more inspectors of election appointed at the
Meeting, who will also determine whether a quorum is present for the
transaction of business.
Abstentions will not be counted either in favor of or against the
election of the nominees for director or any other proposal. Brokers holding
stock for the accounts of their clients who have not been given specific voting
instructions as to a matter by their clients may vote their clients' proxies in
their own discretion.
Proxies may be solicited by officers, directors, and regular
supervisory and executive employees of the Company, none of whom will receive
any additional compensation for their services.
The corporate offices of the Company are located at 1640 5th Street,
Suite 218, Santa Monica, California 90405 (telephone number (310) 392-5640).
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 24, 2000, information as
to the Company's common stock beneficially owned by (i) each director of the
Company, (ii) each executive officer named in the Summary Compensation Table,
(iii) all directors and executive officers of the Company as a group, and (iv)
any person who is known by the Company to be the beneficial owner of more than
5% of the outstanding shares of the Company's common stock.
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Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent
- ------------------------ ----------------------- -------
Roy Meadows 3,300,000 23.44%
Interactive Medical
Communications, Inc. 2,400,000 17.05%
Ross Love 1,000,000 7.10%
Gene Fein 3,500,000 24.86%
Larry Kuhnert 948,000 6.73%
Marvin Scaff --- *
Dr. Lawrence Ribley --- *
All directors and executive officers
as a group (5 persons) 38.69%
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*Less than 1%
(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission (the "Commission") rules,
includes shares as to which a person has or shares voting power and/or
investment power. The Company has been informed that all shares shown are
held of record with sole voting and investment power, except as otherwise
indicated.
COMPENSATION OF DIRECTORS
No Director receives compensation for attending Board meetings.
EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the
Company's Chief Executive Officer and the four other highest paid executive
officers in 1999 (the "Named Executive Officers") for services rendered to the
Company for each of the
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three years in the period ended December 31, 1999.
SUMMARY COMPENSATION TABLE
Name and Annual Compensation All Other
Principal Compensation
Position Year Salary($) Bonus($) ($)
- -------- ---- --------- -------- ------------
Roy Meadows 1999 -- -- --
Chairman of the Board, President 1998 -- -- --
& Chief Executive Officer 1997 -- -- --
Ross A. Love 2000 120,000 20,000 --
Chairman of the Board, 1999 -- -- --
& Chief Executive Officer 1998 -- -- --
1997 -- -- --
Larry R. Kuhnert 1999 -0- -0- --
Chief Financial Officer, Director 1998 -- -- --
& Secretary 1997 -- -- --
Gene Fein 2000 120,000 -- --
President & Director 1999 -- -- --
1998 -- -- --
1997 -- -- --
- ----------
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OPTION GRANTS IN 1999
No stock options were granted to the Named Executive Officers in 1999.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
There were no long-term incentive awards in the last fiscal year.
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
Effective November 24, 1999, Ross A. Love entered into an Employment
Agreement with the Company. The agreement provides that Mr. Love will serve as
Chairman of the Board and Chief Executive Officer. The Employment Agreement
provides for a base salary of $120,000. Mr. Love will also be eligible for
annual bonuses under the terms of the Employment Agreement. The Employment
Agreement provides the Mr. Love may receive incentive compensation consisting of
stock options, restricted stock or any other type of compensation allowed under
an approved incentive compensation plan. The Employment Agreement is subject to
confidentiality provisions.
On January 25, 2000 Gene Fein entered into an employment agreement
with the Company. The Employment Agreement provides that Mr. Fein will serve as
President. The Employment Agreement provides for a base salary of $120,000. Mr.
Fein will also be eligible for annual bonuses under the terms of the Employment
Agreement. The Employment Agreement provides the Mr. Fein may receive
incentive compensation consisting of stock options, restricted stock or any
other type of compensation allowed under an approved incentive compensation
plan. The Employment Agreement is subject to confidentiality provisions.
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NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THE FOLLOWING BOARD REPORT ON EXECUTIVE COMPENSATION SHALL
NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
BOARD REPORT ON EXECUTIVE COMPENSATION
The Company's overall compensation philosophy is as follows:
- - Attract and retain high-quality people, which is crucial to both the
short-term and long-term success of the Company;
- - Reinforce strategic performance objectives through the use of
incentive compensation programs; and
- - Create a mutuality of interest between the executive officers and
shareholders through compensation structures that share the rewards
and risks of strategic decision-making.
BASE COMPENSATION. Salary levels for officers other than the Chief
Executive Officer are determined by the Chief Executive Officer each year
during the first quarter based upon the qualitative performance of each officer
during the previous year.
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LONG-TERM COMPENSATION. The Board may also grant shares of stock or
stock options to officers and other key employees based upon performance
evaluations. No grants of stock options were made in 1999. See "Executive
Compensation -- Long-Term Incentive Plans -- Awards in Last Fiscal Year."
CEO COMPENSATION. With respect to the salary and bonus of Ross A.
Love, the Chairman and Chief Executive Officer of the Company, the Board
annually sets these amounts by reference to the general operating performance
of the Company.
PROPOSAL 1 - APPROVE AND RATIFY ADOPTION OF THE COMPANY'S 2000 EQUITY INCENTIVE
COMPENSATION PLAN
BACKGROUND AND PURPOSE. In November 1999, in connection with the ICE merger,
the Board of Directors passed a resolution approving the establishment of an
incentive compensation plan allowing for the issuance of up to 3,000,000
shares. In December 1999, the Board of Directors, in recognition of the needed
growth of the Company increased the number of shares approved for issuance
under an incentive compensation plan up to 4,000,000 shares. In March 2000, the
Board of Directors adopted the 2000 Equity Incentive Compensation Plan (the
"2000 Plan") and recommended that it be submitted to the Company's shareholders
for their approval at a Special Meeting. The terms of the 2000 Plan provide for
grants of stock options, stock appreciation rights ("SARs"), restricted stock,
deferred stock, other stock-related awards and performance or annual incentive
awards that may be settled in cash, stock or other property (collectively,
"Awards"). The effective date of the 2000 Plan is January 1, 2000 (the
"Effective Date"). No Awards have been made under the 2000 Plan as of the date
of this Proxy Statement, and no Awards will be granted under the 2000 Plan
unless the 2000 Plan is approved by the Company's shareholders at the Special
Meeting.
Shareholder approval of the Plan is required (i) for purposes of compliance
with certain exclusions from the limitations of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), which are further described
below, (ii) in order for the 2000 Plan to be eligible under the "plan lender"
exemption from the margin requirements of Regulation G promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (iii) by
the rules of the Nasdaq National Market.
The following is a summary of certain principal features of the 2000 Plan. This
summary is qualified in its entirety by reference to the complete text of the
2000 Plan, which is attached to this Proxy Statement as Exhibit A. Shareholders
are urged to read the actual text of the 2000 Plan in its entirety.
SHARES AVAILABLE FOR AWARDS; ANNUAL PER-PERSON LIMITATIONS. Under the 2000
Plan, the total number of shares of Common Stock that may be issued pursuant to
the granting of Awards under the 2000 Plan at any time during the term of the
Plan shall be equal to 4,000,000 shares, and the number of shares that are
surrendered in payment of any Awards or any tax withholding requirements.
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The 2000 Plan limits the number of shares which may be issued pursuant to
incentive stock options ("ISO's) to 3,500,000 shares.
In addition, the 2000 Plan imposes individual limitations on the amount of
certain Awards in part to comply with Code Section 162(m). Under these
limitations, during any fiscal year the number of options, SARs, restricted
shares of Common Stock, deferred shares of Common Stock, shares as a bonus or in
lieu of other Company obligations, and other stock-based Awards granted to any
one participant may not exceed 2,000,000 for each type of such Award, subject to
adjustment in certain circumstances. The maximum amount that may be paid out as
an annual incentive Award or other cash Award in any fiscal year to any one
participant is $100,000, and the maximum amount that may be earned as a
performance Award or other cash Award in respect of a performance period by any
one participant is $100,000.
The Committee (defined below) is authorized to adjust the limitations described
in the two preceding paragraphs and is authorized to adjust outstanding Awards
(including adjustments to exercise prices of options and other affected terms
of Awards) in the event that a dividend or other distribution (whether in cash,
shares of Common Stock or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange or other similar corporate transaction or event
affects the Common Stock so that an adjustment is appropriate in order to
prevent dilution or enlargement of the rights of participants. The Committee is
also authorized to adjust performance conditions and other terms of Awards in
response to these kinds of events or in response to changes in applicable laws,
regulations or accounting principles.
ELIGIBILITY. The persons eligible to receive Awards under the 2000 Plan are the
officers, directors, employees, consultants and independent contractors of the
Company and its subsidiaries. No independent contractor will be eligible to
receive any Awards other than stock options. An employee on leave of absence
may be considered as still in the employ of the Company or a subsidiary for
purposes of eligibility for participation in the 2000 Plan. As of March 15,
2000, approximately 20 persons were eligible to participate in the 2000
Plan.
ADMINISTRATION. The 2000 Plan is to be administered by a committee designated by
the Board of Directors consisting of not less than two directors (the
"Committee"), each member of which must be a "non-employee director" as defined
under Rule 16b-3 under the Exchange Act and an "outside director" for purposes
of Section 162(m) of the Code. However, except as otherwise required to comply
with Rule 16b-3 of the Exchange Act, or Section 162(m) of the Code, the Board
may exercise any power or authority granted to the Committee.
Subject to the terms of the 2000 Plan, the Committee or the Board is authorized
to select eligible persons to receive Awards, determine the type and number of
Awards to be granted and the number of shares of Common Stock to which Awards
will relate, specify times at which Awards will be exercisable or settleable
(including performance conditions that may be required as a condition thereof),
set other terms and conditions of Awards, prescribe forms of Award agreements,
interpret and specify rules and regulations relating to the 2000 Plan, and make
all other determinations that may be necessary or advisable for the
administration of the 2000 Plan.
The Plan provides that members of the Committee have a right to indemnification
with respect to claims arising against them individually as a result of their
administration of the Plan, except in the case of gross negligence, bad faith
or intentional misconduct. No director may participate in any decision relating
exclusively to an option granted to that director.
STOCK OPTIONS AND SARS. The Committee or the Board is authorized to grant stock
options, including both ISO's, which can result in potentially favorable tax
treatment to the participant, and non-qualified stock options, and SARs
entitling the participant to receive the amount by which the fair market value
of a share of Common Stock on the date of exercise (or defined "change in
control price" following a change in control) exceeds the grant price of the
SAR. The exercise price per share subject to an option and the grant price of
an SAR are determined by the Committee, but in the case of an ISO must not be
less than the fair market value of a share of Common Stock on the date of
grant. For purposes of the 2000 Plan, the term "fair market value" means the
fair market value of Common Stock, Awards or other property as determined by
the Committee or the Board or under procedures established by the Committee or
the Board. Unless otherwise determined by the Committee or the Board, the fair
market value of Common Stock as of any given date
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shall be the closing sales price per share of Common Stock as reported on the
principal stock exchange or market on which Common Stock is traded on the date
as of which such value is being determined or, if there is no sale on that
date, then on the last previous day on which a sale was reported. The maximum
term of each option or SAR, the times at which each option or SAR will be
exercisable, and provisions requiring forfeiture of unexercised options or SARs
at or following termination of employment generally are fixed by the Committee
or the Board, except that no option or SAR may have a term exceeding ten years.
Options may be exercised by payment of the exercise price in cash, shares that
have been held for at least 6 months, outstanding Awards or other property
having a fair market value equal to the exercise price, as the Committee or the
Board may determine from time to time. Methods of exercise and settlement and
other terms of the SARs are determined by the Committee or the Board. SARs
granted under the 2000 Plan may include "limited SARs" exercisable for a stated
period of time following a change in control of the Company, as discussed
below.
RESTRICTED AND DEFERRED STOCK. The Committee or the Board is authorized to
grant restricted stock and deferred stock. Restricted stock is a grant of
shares of Common Stock which may not be sold or disposed of, and which may be
forfeited in the event of certain terminations of employment, prior to the end
of a restricted period specified by the Committee or the Board. A participant
granted restricted stock generally has all of the rights of a stockholder of
the Company, unless otherwise determined by the Committee or the Board. An
Award of deferred stock confers upon a participant the right to receive shares
of Common Stock at the end of a specified deferral period, subject to possible
forfeiture of the Award in the event of certain terminations of employment
prior to the end of a specified restricted period. Prior to settlement, an
Award of deferred stock carries no voting or dividend rights or other rights
associated with share ownership, although dividend equivalents may be granted,
as discussed below.
DIVIDEND EQUIVALENTS. The Committee or the Board is authorized to grant
dividend equivalents conferring on participants the right to receive, currently
or on a deferred basis, cash, shares of Common Stock, other Awards or other
property equal in value to dividends paid on a specific number of shares of
Common Stock or other periodic payments. Dividend equivalents may be granted
alone or in connection with another Award, may be paid currently or on a
deferred basis and, if deferred, may be deemed to have been reinvested in
additional shares of Common Stock, Awards or otherwise as specified by the
Committee or the Board.
BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee or the Board
is authorized to grant shares of Common Stock as a bonus free of restrictions,
or to grant shares of Common Stock or other Awards in lieu of Company
obligations to pay cash under the 2000 Plan or other plans or compensatory
arrangements, subject to such terms as the Committee or the Board may specify.
OTHER STOCK-BASED AWARDS. The Committee or the Board is authorized to grant
Awards that are denominated or payable in, valued by reference to, or otherwise
based on or related to shares of Common Stock. Such Awards might include
convertible or exchangeable debt securities, other rights convertible or
exchangeable into shares of Common Stock, purchase rights for shares of Common
Stock, Awards with value and payment contingent upon performance of the Company
or any other factors designated by the Committee or the Board, and Awards
valued by reference to the book value of shares of Common Stock or the value of
securities of or the performance of specified subsidiaries or business units.
The Committee or the Board determines the terms and conditions of such Awards.
PERFORMANCE AWARDS, INCLUDING ANNUAL INCENTIVE AWARDS. The right of a
participant to exercise or receive a grant or settlement of an Award, and the
timing thereof, may be subject to such performance conditions (including
subjective individual goals) as may be specified by the Committee or the Board.
In addition, the 2000 Plan authorizes specific annual incentive Awards, which
represent a conditional right to receive cash, shares of Common Stock or other
Awards upon achievement of certain preestablished performance goals and
subjective individual goals during a specified fiscal year. Performance Awards
and annual incentive Awards granted to persons whom the Committee
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expects will, for the year in which a deduction arises, be "covered employees"
(as defined below) will, if and to the extent intended by the Committee, be
subject to provisions that should qualify such Awards as "performance-based
compensation" not subject to the limitation on tax deductibility by the Company
under Code Section 162(m). For purposes of Section 162(m), the term "covered
employee" means the Company's chief executive officer and each other person
whose compensation is required to be disclosed in the Company's filings with
the SEC by reason of that person being among the four highest compensated
officers of the Company as of the end of a taxable year. If and to the extent
required under Section 162(m) of the Code, any power or authority relating to a
performance Award or annual incentive Award intended to qualify under Section
162(m) of the Code is to be exercised by the Committee and not the Board.
Subject to the requirements of the 2000 Plan, the Committee or the Board will
determine performance Award and annual incentive Award terms, including the
required levels of performance with respect to specified business criteria, the
corresponding amounts payable upon achievement of such levels of performance,
termination and forfeiture provisions and the form of settlement. In granting
annual incentive or performance Awards, the Committee or the Board may
establish unfunded award "pools," the amounts of which will be based upon the
achievement of a performance goal or goals based on one or more of certain
business criteria described in the 2000 Plan (including, for example, total
stockholder return, net income, pretax earnings, EBITDA, earnings per share,
and return on investment). During the first 90 days of a fiscal year or
performance period, the Committee or the Board will determine who will
potentially receive annual incentive or performance Awards for that fiscal year
or performance period, either out of the pool or otherwise.
After the end of each fiscal year or performance period, the Committee or the
Board will determine (i) the amount of any pools and the maximum amount of
potential annual incentive or performance Awards payable to each participant in
the pools and (ii) the amount of any other potential annual incentive or
performance Awards payable to participants in the 2000 Plan. The Committee or
the Board may, in its discretion, determine that the amount payable as an
annual incentive or performance Award will be reduced from the amount of any
potential Award.
OTHER TERMS OF AWARDS. Awards may be settled in the form of cash, shares of
Common Stock, other Awards or other property, in the discretion of the
Committee or the Board. The Committee or the Board may require or permit
participants to defer the settlement of all or part of an Award in accordance
with such terms and conditions as the Committee or the Board may establish,
including payment or crediting of interest or dividend equivalents on deferred
amounts, and the crediting of earnings, gains and losses based on deemed
investment of deferred amounts in specified investment vehicles. The Committee
or the Board is authorized to place cash, shares of Common Stock or other
property in trusts or make other arrangements to provide for payment of the
Company's obligations under the 2000 Plan. The Committee or the Board may
condition any payment relating to an Award on the withholding of taxes and may
provide that a portion of any shares of Common Stock or other property to be
distributed will be withheld (or previously acquired shares of Common Stock or
other property be surrendered by the participant) to satisfy withholding and
other tax obligations. Awards granted under the 2000 Plan generally may not be
pledged or otherwise encumbered and are not transferable except by will or by
the laws of descent and distribution, or to a designated beneficiary upon the
participant's death, except that the Committee or the Board may, in its
discretion, permit transfers for estate planning or other purposes subject to
any applicable restrictions under Rule 16b-3. Awards under the 2000 Plan are
generally granted without a requirement that the participant pay consideration
in the form of cash or property for the grant (as distinguished from the
exercise), except to the extent required by law. The Committee or the Board
may, however, grant Awards in exchange for other Awards under the 2000 Plan,
awards under other Company plans, or other rights to payment from the Company,
and may grant Awards in addition to and in tandem with such other Awards,
rights or other awards.
ACCELERATION OF VESTING; CHANGE IN CONTROL. The Committee or the Board
may, in its discretion, accelerate the exercisability, the lapsing of
restrictions or the expiration of deferral or vesting periods of any Award, and
such accelerated exercisability, lapse, expiration and if so provided in the
Award agreement, vesting
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shall occur automatically in the case of a "change in control" of the Company,
as defined in the 2000 Plan (including the cash settlement of SARs and "limited
SARs" which may be exercisable in the event of a change in control). In
addition, the Committee or the Board may provide in an Award agreement that the
performance goals relating to any performance based Award will be deemed to
have been met upon the occurrence of any "change in control." Upon the
occurrence of a change in control, if so provided in the Award agreement, stock
options and limited SARs (and other SARs which so provide) may be cashed out
based on a defined "change in control price," which will be the higher of (i)
the cash and fair market value of property that is the highest price per share
paid (including extraordinary dividends) in any reorganization, merger,
consolidation, liquidation, dissolution or sale of substantially all assets of
the Company, or (ii) the highest fair market value per share (generally based
on market prices) at any time during the 60 days before and 60 days after a
change in control. For purposes of the 2000 Plan, the term "change in control"
generally means (a) approval by shareholders of any reorganization, merger or
consolidation or other transaction or series of transactions if persons who
were shareholders immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more
than [50]% of the combined voting power of the reorganized, merged or
consolidated company's then outstanding, voting securities, or a liquidation or
dissolution of the Company or the sale of all or substantially all of the
assets of the Company (unless the reorganization, merger, consolidation or
other corporate transaction, liquidation, dissolution or sale is subsequently
abandoned), or (b) a change in the composition of the Board such that the
persons constituting the Board on the date the Award is granted (the "Incumbent
Board"), and subsequent directors approved by the Incumbent Board (or approved
by such subsequent directors), cease to constitute at least a majority of the
Board, or (c) the acquisition by any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of more than 50%
of either the then outstanding shares of the Company's Common Stock or the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors (hereinafter referred
to as the ownership of a "Controlling Interest") excluding, for this purpose,
any acquisitions by (1) the Company or its Subsidiaries, (2) any person, entity
or "group" that as of the date on which the Award is granted owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of a Controlling Interest or (3) any employee benefit plan of the Company or
its Subsidiaries.
AMENDMENT AND TERMINATION. The Board of Directors may amend, alter, suspend,
discontinue or terminate the 2000 Plan or the Committee's authority to grant
Awards without further stockholder approval, except stockholder approval must be
obtained for any amendment or alteration if such approval is required by law or
regulation or under the rules of any stock exchange or quotation system on which
shares of Common Stock are then listed or quoted. Thus, stockholder approval may
not necessarily be required for every amendment to the 2000 Plan which might
increase the cost of the 2000 Plan or alter the eligibility of persons to
receive Awards. Stockholder approval will not be deemed to be required under
laws or regulations, such as those relating to ISOs, that condition favorable
treatment of participants on such approval, although the Board may, in its
discretion, seek stockholder approval in any circumstance in which it deems such
approval advisable. Unless earlier terminated by the Board, the 2000 Plan will
terminate at such time as no shares of Common Stock remain available for
issuance under the 2000 Plan and the Company has no further rights or
obligations with respect to outstanding Awards under the 2000 Plan.
SECURITIES ACT REGISTRATION. The Company intends to register the shares of
Common Stock available for Awards under the 2000 Plan pursuant to a Registration
Statement on Form S-8 filed with the Commission.
TAX CONSEQUENCES
The federal income tax consequences of a director's participation in the Plan
are complex and subject to change. The following discussion is only a summary of
the general rules applicable to the Plan.
Options granted under the Plan may be either incentive stock options or
non-qualified stock options. Options that are designated as incentive stock
options are intended to qualify as such under Section 422 of the Code. With
respect to incentive stock options, neither the grant Nor the exercise of the
option will subject the employee to taxable income, other than under the
Alternative Minimum Tax (Section 56(b)(3) of the Code), which is not discussed
in detail in this summary. There is no required tax withholding in connection
with the exercise of incentive stock options. Upon the ultimate disposition of
the stock obtained on an exercise of an incentive stock option, the employee's
entire gain will be taxed at the rates applicable to long-term capital gains,
provided the employee has satisfied the prescribed holding periods relating to
incentive stock options and the underlying stock. This treatment will apply to
the entire amount of gain recognized on the sale of the stock, including the
portion of gain that reflects the spread on the date of exercise between the
fair market value of the stock at the time of grant and the fair market value of
the stock at the time of exercise.
The Company does not receive a compensation deduction for tax purposes with
respect to incentive stock options. However, if the employee disposes of the
stock purchased on exercise of the incentive stock option prior to the
applicable holding periods required by Section 422 of the Code, the Company will
be entitled to a deduction equal to the employee's realization of ordinary
income by virtue of the employee's disqualifying disposition.
Non-qualified stock options granted under the Plan will not qualify for any
special tax benefits to the option holder. An option holder generally will not
recognize any taxable income at the time he or she is granted a non-qualified
option. However, upon its exercise, the option holder will recognize ordinary
income for federal tax purposes measured by the excess of the fair market value
of the shares at the time of exercise over the exercise price. The income
realized by the option holder will be subject to income and other employee
withholding taxes.
In general, there will be no federal income tax deduction allowed to the Company
upon the grant or termination of a non-qualified stock option or a sale or
disposition of the shares acquired upon the exercise of a non-qualified stock
option. However, upon the exercise of a non-qualified stock option by a holder,
the Company will be entitled to a deduction for federal income tax purposes
equal to the amount of ordinary income that an option holder is required to
recognize as a result of the exercise, provided that the deduction is not
otherwise disallowed under the Code.
The option holder's basis for determination of gain or loss upon the subsequent
disposition of shares acquired upon the exercise of a non-qualified stock option
will be the amount paid for such shares plus any ordinary income recognized as a
result of the exercise of such option. Upon disposition of any shares acquired
pursuant to the exercise of a non-qualified stock option, the difference between
the sale price and the option holder's basis in the shares will be treated as a
capital gain or loss and generally will be characterized as long-term capital
gain or loss if the shares have been held for more than one year at the time of
their disposition.
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ISO, the participant must generally recognize ordinary income equal to the
difference between the exercise price and the fair market value of the freely
transferable and non-forfeitable shares of Common Stock acquired on the date of
exercise. Upon a disposition of shares of Common Stock acquired upon exercise
of an ISO before the end of the applicable ISO holding periods, the participant
must generally recognize ordinary income equal to the lesser of (i) the fair
market value of the shares of Common Stock at the date of exercise of the ISO
minus the exercise price, or (ii) the amount realized upon the disposition of
the ISO shares of Common Stock minus the exercise price. Otherwise, a
participant's disposition of shares of Common Stock acquired upon the exercise
of an option (including an ISO for which the ISO holding periods are met)
generally will result in short-term or long-term capital gain or loss measured
by the difference between the sale price and the participant's tax basis in
such shares of Common Stock (the tax basis generally being the exercise price
plus any amount previously recognized as ordinary income in connection with the
exercise of the option).
The Company generally will be entitled to a tax deduction equal to the amount
recognized as ordinary income by the participant in connection with an option.
The Company generally is not entitled to a tax deduction relating to amounts
that represent a capital gain to a participant. Accordingly, the Company will
not be entitled to any tax deduction with respect to an ISO if the participant
holds the shares of Common Stock for the ISO holding periods prior to
disposition of the shares.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the Code,
which generally disallows a public company's tax deduction for compensation to
covered employees in excess of $1 million in any tax year beginning on or after
January 1, 1994. Compensation that qualifies as "performance-based
compensation" is excluded from the $1 million deductibility cap, and therefore
remains fully deductible by the company that pays it. As discussed above, the
Company intends that options and certain other Awards granted to employees whom
the Committee expects to be covered employees at the time a deduction arises in
connection with such Awards, qualify as such "performance-based compensation,"
so that such Awards will not be subject to the Section 162(m) deductibility cap
of $1 million. Future changes in Section 162(m) or the regulations thereunder
may adversely affect the ability of the Company to ensure that options or other
Awards under the 2000 Plan will qualify as "performance-based compensation"
that is fully deductible by the Company under Section 162(m). The foregoing
discussion, which is general in nature and is not intended to be a complete
description of the federal income tax consequences of the 2000 Plan, is
intended for the information of stockholders considering how to vote at the
Annual Meeting and not as tax guidance to participants in the 2000 Plan. This
discussion does not address the effects of other federal taxes or taxes imposed
under state, local or foreign tax laws. Participants in the 2000 Plan should
consult a tax advisor as to the tax consequences of participation.
NEW PLAN BENEFITS. No Awards have been granted under the 2000 Plan through the
date of this Proxy Statement.
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The Company believes that Awards granted under the 2000 Plan will be granted
primarily to those persons who possess a capacity to contribute significantly
to the successful performance of the Company. Because persons to whom Awards
may be made are to be determined from time to time by the Committee in its
discretion, it is impossible at this time to indicate the precise number, name
or positions of persons who will hereafter receive Awards or the nature and
terms of such Awards.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL TO
APPROVE AND RATIFY THE 2000 EQUITY INCENTIVE COMPENSATION PLAN.
At the Meeting, the shareholders will be requested to approve the Plan. The
Board recommends approval of the Plan to allow the Company to continue to
attract and retain the best available employees and provide an incentive for
such persons to use their best efforts on the Company's behalf. For these
reasons, the Board of Directors has unanimously adopted resolutions approving
the Plan and recommending its approval to the shareholders. A copy of the Plan
may be obtained upon written request to the Company's Corporate Secretary at the
address listed under the caption "Other Matters" on page 13 of this Proxy
Statement.
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VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the Plan requires more votes in favor of adoption of the
Plan than those against adoption. The Board of Directors recommends a vote FOR
the adoption of the Plan.
INFORMATION CONCERNING INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Representatives of Meeks Dorman and Co., the Company's independent
public auditors, are expected to be present at the Meeting with the opportunity
to make a statement if they desire to do so and to respond to appropriate
questions posed by shareholders.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company no later than September
1, 2000 to be included in the Company's proxy statement and form of proxy
related to that meeting. Shareholders who intend to present a proposal at the
2000 Annual Meeting without inclusion of such proposal in the Company's proxy
materials are required to provide notice of such proposal to the Company no
later than October 31, 2000. The Company reserves the right to reject, rule
out of order, or take other appropriate action with respect to any proposal
that does not comply with these and other applicable requirements.
OTHER MATTERS
THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, UPON THE WRITTEN REQUEST
OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, INCLUDING
THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FOR ITS FISCAL YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934. ANY SUCH REQUEST SHOULD
BE DIRECTED TO CORPAS INVESTMENTS, INC., 1640 5TH STREET, SUITE 218, SANTA
MONICA, CALIFORNIA, 90405, ATTENTION: CORPORATE SECRETARY. NO CHARGE WILL BE
MADE FOR COPIES OF SUCH ANNUAL REPORT; HOWEVER, A REASONABLE CHARGE WILL BE MADE
FOR COPIES OF THE EXHIBITS.
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APPENDIX "A"
17
CORPAS INVESTMENTS, INC.
2000 EQUITY INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of this 2000 EQUITY INCENTIVE COMPENSATION PLAN
(the "Plan") is to assist CORPAS INVESTMENTS, INC., a Florida corporation (the
"Company") and its subsidiaries in attracting, motivating, retaining and
rewarding high-quality executives and other employees, officers, directors and
independent contractors by enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. In the event that the
Company is or becomes a Publicly Held Corporation (as hereinafter defined), the
Plan is intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as hereafter defined) to the
extent deemed appropriate by the Committee (or any successor committee) of the
Board of Directors of the Company.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest, granted to a
Participant under the Plan.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(e) "Board" means the Company's Board of Directors.
(f) "Cause" shall, with respect to any Participant, have the
equivalent meaning (or the same meaning as "cause" or "for cause") set forth in
any employment agreement between the Participant and the Company or Parent
Corporation or Subsidiary or, in the absence of any such agreement, such term
shall mean (i) the failure by the Participant to perform his or her duties as
assigned by the Company (or Parent Corporation or Subsidiary) in a reasonable
manner, (ii) any violation or breach by the Participant of his or her employment
agreement with the Company (or Parent Corporation or Subsidiary), if any, (iii)
any violation or breach by the Participant of his or her non-competition and/or
non-disclosure agreement with the Company (or Parent Corporation or Subsidiary),
if any, (iv) any act by the Participant of dishonesty or bad faith with respect
to the Company (or Parent Corporation or Subsidiary), (v) chronic addition to
alcohol, drugs or other similar substances affecting the Participant's work
performance, or (vi) the commission by the Participant of any act, misdemeanor,
or crime reflecting unfavorably upon the Participant or the Company. The good
faith determination by the Committee of whether the Participant's employment was
terminated by the Company for "Cause" shall be final and binding for all
purposes hereunder.
(g) "Change in Control" means a Change in Control as defined with
related terms in Section 9 of the Plan.
(h) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
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(j) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist of at
least two directors, and, in the event the Company is or becomes a Publicly Held
Corporation (as hereinafter defined), each member of which shall be (i) a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act,
unless administration of the Plan by "non-employee directors" is not then
required in order for exemptions under Rule 16b-3 to apply to transactions under
the Plan, and (ii) an "outside director" within the meaning of Section 162(m) of
the Code, unless administration of the Plan by "outside directors" is not then
required in order to qualify for tax deductibility under Section 162(m) of the
Code.
(k) "Corporate Transaction" means a Corporate Transaction as defined
in Section 9(b)(i) of the Plan.
(l) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(m) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(n) "Director" means a member of the Board.
(o) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(p) "Dividend Equivalent" means a right, granted to a Participant
under Section 6(g) hereof, to receive cash, Stock, other Awards or other
property equal in value to dividends paid with respect to a specified number of
shares of Stock, or other periodic payments.
(q) "Effective Date" means the effective date of the Plan, which
shall be January 1, 2000.
(r) "Eligible Person" means each Executive Officer of the Company
(as defined under the Exchange Act) and other officers, Directors and employees
of the Company or of any Subsidiary, and independent contractors with the
Company or any Subsidiary. The foregoing notwithstanding, only employees of the
Company or any Subsidiary shall be Eligible Persons for purposes of receiving
any Incentive Stock Options. An employee on leave of absence may be considered
as still in the employ of the Company or a Subsidiary for purposes of
eligibility for participation in the Plan.
(s) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(t) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(u) "Fair Market Value" means the fair market value of Stock, Awards
or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or market on
which Stock is traded on the date as of which such value is being determined or,
if there is no sale on that date, then on the last previous day on which a sale
was reported.
(v) "Incentive Stock Option" or "ISO" means any Option intended to
be designated as an incentive stock option within the meaning of Section 422 of
the Code or any successor provision thereto.
(w) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.
(x) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.
(y) "Option" means a right granted to a Participant under Section
6(b) hereof, to purchase Stock or other Awards at a specified price during
specified time periods.
(z) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(aa) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
(bb) "Participant" means a person who has been granted an Award
under the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
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(cc) "Performance Award" means a right, granted to an Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.
(dd) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.
(ee) "Publicly Held Corporation" shall mean a publicly held
corporation as that term is used under Section 162(m)(2) of the Code.
(ff) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(gg) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.
(hh) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(ii) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
(jj) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by
the Committee; provided, however, that except as otherwise expressly provided in
this Plan or, during the period that the Company is a Publicly Held Corporation,
in order to comply with Code Section 162(m) or Rule 16b-3 under the Exchange
Act, the Board may exercise any power or authority granted to the Committee
under this Plan. The Committee or the Board shall have full and final authority,
in each case subject to and consistent with the provisions of the Plan, to
select Eligible Persons to become Participants, grant Awards, determine the
type, number and other terms and conditions of, and all other matters relating
to, Awards, prescribe Award agreements (which need not be identical for each
Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. In the event that the
Company is or becomes a Publicly Held Corporation, the Committee, and not the
Board, shall exercise sole and exclusive discretion on any matter relating to a
Participant then subject to Section 16 of the Exchange Act with respect to the
Company to the extent necessary in order that transactions by such Participant
shall be exempt under Rule 16b-3 under the Exchange Act. Any action of the
Committee or the Board shall be final, conclusive and binding on all persons,
including the Company, its subsidiaries, Participants, Beneficiaries,
transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power
to the Committee or the Board, and the taking of any action by the Committee or
the Board, shall not be construed as limiting any power or authority of the
Committee or the Board. The Committee or the Board may delegate to officers or
managers of the Company or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee or the Board shall determine, (i) to
perform administrative functions, (ii) with respect to Participants not subject
to Section 16 of the Exchange Act, to perform such other functions as the
Committee or the Board may determine, and (iii) with respect to Participants
subject to Section 16, to perform such other functions of the Committee or the
Board as the Committee or the Board may determine to the extent performance of
such functions will not result in the loss of an exemption under Rule 16b-3
otherwise available for transactions by such persons, in each case to the extent
permitted under applicable
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law and subject to the requirements set forth in Section 8(d). The Committee or
the Board may appoint agents to assist it in administering the Plan.
(c) Limitation of Liability. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any executive officer, other
officer or employee of the Company or a Subsidiary, the Company's independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee or
the Board, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
4. Stock Subject to Plan.
(a) Limitation on Overall Number of Shares Subject to Awards.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 4,000,000, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with
regard thereto. Any shares of Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury shares. Subject
to adjustment as provided in Section 10(c) hereof, in no event shall the
aggregate number of shares of Stock which may be issued pursuant to ISOs exceed
3,500,000 shares.
(b) Application of Limitations. The limitation contained in Section
4(a) shall apply not only to Awards that are settleable by the delivery of
shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 2,000,000 shares of Stock, subject to adjustment as
provided in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f),
6(g), 6(h), 8(b) and 8(c). In addition, the maximum amount that may be earned as
an Annual Incentive Award or other cash Award in any fiscal year by any one
Participant shall be $100,000, and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by
any one Participant shall be $100,000.
6. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee or the Board may impose on
any Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee or the Board shall retain
full power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan. Except in cases
in which the Committee or the Board is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration must
be paid to satisfy the requirements of Washington law, no consideration other
than services may be required for the grant (but not the exercise) of any Award.
(b) Options. The Committee and the Board each is authorized to grant
Options to Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee or the
Board, provided that such exercise price shall not, in the case of
Incentive Stock Options, be less than 100% of the Fair Market Value of
the Stock on the date of grant of the Option and shall not, in any
event, be less than the par value of a share of Stock on the date of
grant of such Option. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all
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classes of stock of the Company or any Parent Corporation or Subsidiary
and an Incentive Stock Option is granted to such employee, the option
price of such Incentive Stock Option (to the extent required by the
Code at the time of grant) shall be no less than 110% of the Fair
Market Value of the Stock on the date such Incentive Stock Option is
granted.
(ii) Time and Method of Exercise. The Committee or the Board
shall determine the time or times at which or the circumstances under
which an Option may be exercised in whole or in part (including based
on achievement of performance goals and/or future service
requirements), the time or times at which Options shall cease to be or
become exercisable following termination of employment or upon other
conditions, the methods by which such exercise price may be paid or
deemed to be paid (including in the discretion of the Committee or the
Board a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, other Awards or awards
granted under other plans of the Company or any subsidiary, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis), and the methods by
or forms in which Stock will be delivered or deemed to be delivered to
Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to ISOs (including any SAR in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless the Participant
has first requested the change that will result in such
disqualification. Thus, if and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than ten
years after the date such Incentive Stock Option is granted;
provided, however, that if a Participant owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Parent Corporation and
the Incentive Stock Option is granted to such Participant, the
term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more
than five years from the date of grant; and
(B) The aggregate Fair Market Value (determined as of
the date the Incentive Stock Option is granted) of the shares
of stock with respect to which Incentive Stock Options granted
under the Plan and all other option plans of the Company or
its Parent Corporation during any calendar year exercisable
for the first time by the Participant during any calendar year
shall not (to the extent required by the Code at the time of
the grant) exceed $100,000.
(iv) Repurchase Rights. The Committee and the Board shall
have the discretion to grant Options which are exercisable for unvested
shares of Common Stock. Should the Optionee cease to be employed with
or perform services to the Company (or a Parent Corporation or
Subsidiary) while holding such unvested shares, the Company shall have
the right to repurchase, at the exercise price paid per share, any or
all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Committee or the Board and set forth in the
document evidencing such repurchase right.
(c) Stock Appreciation Rights. The Committee and the Board each is
authorized to grant SAR's to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant
to whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of stock on the date
of exercise (or, in the case of a "Limited SAR" that may be exercised
only in the event of a Change in Control, the Fair Market Value
determined by reference to the Change in Control Price, as defined
under Section 9(c) hereof), over (B) the grant price of the SAR as
determined by the Committee or the Board. The grant
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price of an SAR shall not be less than the Fair Market Value of a share
of Stock on the date of grant except as provided under Section 7(a)
hereof.
(ii) Other Terms. The Committee or the Board shall determine
at the date of grant or thereafter, the time or times at which and the
circumstances under which a SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future
service requirements), the time or times at which SARs shall cease to
be or become exercisable following termination of employment or upon
other conditions, the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Stock
will be delivered or deemed to be delivered to Participants, whether or
not a SAR shall be in tandem or in combination with any other Award,
and any other terms and conditions of any SAR. Limited SARs that may
only be exercised in connection with a Change in Control or other event
as specified by the Committee or the Board, may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee or the
Board may determine. SARs and Limited SARs may be either freestanding
or in tandem with other Awards.
(d) Restricted Stock. The Committee and the Board each is authorized
to grant Restricted Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be
subject to such restrictions on transferability, risk of forfeiture and
other restrictions, if any, as the Committee or the Board may impose,
which restrictions may lapse separately or in combination at such
times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such
installments or otherwise, as the Committee or the Board may determine
at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award agreement relating to the
Restricted Stock, a Participant granted Restricted Stock shall have all
of the rights of a stockholder, including the right to vote the
Restricted Stock and the right to receive dividends thereon (subject to
any mandatory reinvestment or other requirement imposed by the
Committee or the Board). During the restricted period applicable to the
Restricted Stock, subject to Section 10(b) below, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the
Committee or the Board at the time of the Award, upon termination of a
Participant's employment during the applicable restriction period, the
Participant's Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided
that the Committee or the Board may provide, by rule or regulation or
in any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee or the Board may in
other cases waive in whole or in part the forfeiture of Restricted
Stock.
(iii) Certificates for Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee or the Board
shall determine. If certificates representing Restricted Stock are
registered in the name of the Participant, the Committee or the Board
may require that such certificates bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted
Stock, that the Company retain physical possession of the certificates,
and that the Participant deliver a stock power to the Company, endorsed
in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an
Award of Restricted Stock, the Committee or the Board may require that
any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise
determined by the Committee or the Board, Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.
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(e) Deferred Stock. The Committee and the Board each is authorized
to grant Deferred Stock to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of
Deferred Stock shall occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee or the Board (or, if
permitted by the Committee or the Board, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the Committee
or the Board may impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times
(including based on achievement of performance goals and/or future
service requirements), separately or in combination, in installments or
otherwise, as the Committee or the Board may determine. Deferred Stock
may be satisfied by delivery of Stock, cash equal to the Fair Market
Value of the specified number of shares of Stock covered by the
Deferred Stock, or a combination thereof, as determined by the
Committee or the Board at the date of grant or thereafter. Prior to
satisfaction of an Award of Deferred Stock, an Award of Deferred Stock
carries no voting or dividend or other rights associated with share
ownership.
(ii) Forfeiture. Except as otherwise determined by the
Committee or the Board, upon termination of a Participant's employment
during the applicable deferral period thereof to which forfeiture
conditions apply (as provided in the Award agreement evidencing the
Deferred Stock), the Participant's Deferred Stock that is at that time
subject to deferral (other than a deferral at the election of the
Participant) shall be forfeited; provided that the Committee or the
Board may provide, by rule or regulation or in any Award agreement, or
may determine in any individual case, that restrictions or forfeiture
conditions relating to Deferred Stock shall be waived in whole or in
part in the event of terminations resulting from specified causes, and
the Committee or the Board may in other cases waive in whole or in part
the forfeiture of Deferred Stock.
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee or the Board at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Deferred
Stock shall be either (A) paid with respect to such Deferred Stock at
the dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends, or
(B) deferred with respect to such Deferred Stock and the amount or
value thereof automatically deemed reinvested in additional Deferred
Stock, other Awards or other investment vehicles, as the Committee or
the Board shall determine or permit the Participant to elect.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee and
the Board each is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee or the Board.
(g) Dividend Equivalents. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.
(h) Other Stock-Based Awards. The Committee and the Board each is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable
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into Stock, purchase rights for Stock, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the Committee
or the Board, and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified subsidiaries or business
units. The Committee or the Board shall determine the terms and conditions of
such Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(h) shall be purchased for such consideration
(including without limitation loans from the Company or a Parent Corporation or
a Subsidiary), paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Stock, other Awards or other property, as
the Committee or the Board shall determine. The Committee and the Board shall
have the discretion to grant such other Awards which are exercisable for
unvested shares of Common Stock. Should the Optionee cease to be employed with
or perform services to the Company (or a Parent Corporation or Subsidiary) while
holding such unvested shares, the Company shall have the right to repurchase, at
the exercise price paid per share, any or all of those unvested shares. The
terms upon which such repurchase right shall be exercisable (including the
period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Committee or the Board and set
forth in the document evidencing such repurchase right. Cash awards, as an
element of or supplement to any other Award under the Plan, may also be granted
pursuant to this Section 6(h).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee or the Board shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any subsidiary, in which the value of Stock subject to the Award is equivalent
in value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying Stock minus the value of the cash compensation
surrendered (for example, Options granted with an exercise price "discounted" by
the amount of the cash compensation surrendered).
(b) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee or the Board; provided that in no event
shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under Section 422 of the
Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to
the terms of the Plan and any applicable Award agreement, payments to be made by
the Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the Board
shall determine, including, without limitation, cash, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or the Board or upon occurrence of one or more specified events
(in addition to a Change in Control). Installment or deferred payments may be
required by the Committee or the Board (subject to Section 10(e) of the Plan) or
permitted at the election of the Participant on terms and conditions established
by the Committee or the Board. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Exemptions from Section 16(b) Liability. If and to the extent
that the Company is or becomes a Publicly Held Corporation, it is the intent of
the Company that this Plan comply in all respects with applicable provisions of
Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither
the grant of any Awards to nor other transaction by a Participant who is subject
to Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
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25
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise
or receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee or
the Board. The Committee or the Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). At such times as
the Company is a Publicly Held Corporation, if and to the extent required under
Code Section 162(m), any power or authority relating to a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m), shall be
exercised by the Committee and not the Board.
(b) Performance Awards Granted to Designated Covered Employees. If
and to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) Performance Goals Generally. The performance goals for
such Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall otherwise
meet the requirements of Code Section 162(m) and regulations thereunder
including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance
goals being "substantially uncertain." The Committee may determine that
such Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise
and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or to
different Participants.
(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall be
used exclusively by the Committee in establishing performance goals for
such Performance Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable basis)
of a publicly available index such as, but not limited to, the Standard
& Poor's 500 Stock Index or the S&P Specialty Retailer Index; (3) net
income; (4) pretax earnings; (5) earnings before interest expense,
taxes, depreciation and amortization; (6) pretax operating earnings
after interest expense and before bonuses, service fees, and
extraordinary or special items; (7) operating margin; (8) earnings per
share; (9) return on equity; (10) return on capital; (11) return on
investment; (12) operating earnings; (13) working capital or inventory;
and (14) ratio of debt to stockholders' equity. One or more of the
foregoing business criteria shall also be exclusively used in
establishing performance goals for Annual Incentive Awards granted to a
Covered Employee under Section 8(c) hereof that are intended to qualify
as "performanced-based compensation under Code Section 162(m).
(iii) Performance Period; Timing For Establishing Performance
Goals. Achievement of performance goals in respect of such Performance
Awards shall be measured over a performance period of up to ten years,
as specified by the Committee. Performance goals shall be established
not later than 90 days after the beginning of any performance period
applicable to such Performance Awards, or at such other date as may
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be required or permitted for "performance-based compensation" under
Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes
of measuring Company performance in connection with Performance Awards.
The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship
to such business criteria.
(v) Settlement of Performance Awards; Other Terms.
Settlement of such Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The
Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance Awards. The
Committee shall specify the circumstances in which such Performance
Awards shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a performance period
or settlement of Performance Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees.
The Committee may, within its discretion, grant one or more Annual Incentive
Awards to any Eligible Person, subject to the terms and conditions set forth in
this Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish
an Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. In the case of Annual Incentive Awards intended to
qualify as "performance-based compensation" for purposes of Code
Section 162(m), the amount of such Annual Incentive Award pool shall be
based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section 8(b)(ii) hereof
during the given performance period, as specified by the Committee in
accordance with Section 8(b)(iii) hereof. The Committee may specify the
amount of the Annual Incentive Award pool as a percentage of any such
business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.
(ii) Potential Annual Incentive Awards. Not later than the
end of the 90th day of each fiscal year, or at such other date as may
be required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially
receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Section 8(c)(i) hereof or as
individual Annual Incentive Awards. In the case of individual Annual
Incentive Awards intended to qualify under Code Section 162(m), the
amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria
set forth in Section 8(b)(ii) hereof in the given performance year, as
specified by the Committee; in other cases, such amount shall be based
on such criteria as shall be established by the Committee. In all
cases, the maximum Annual Incentive Award of any Participant shall be
subject to the limitation set forth in Section 5 hereof.
(iii) Payout of Annual Incentive Awards. After the end of each
fiscal year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual
Incentive Award pool, or (B) the amount of potential Annual Incentive
Award otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as an
Annual Incentive Award shall be reduced from the amount of his or her
potential Annual Incentive Award, including a determination to make no
Award whatsoever. The Committee shall specify
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the circumstances in which an Annual Incentive Award shall be paid or
forfeited in the event of termination of employment by the Participant
prior to the end of a fiscal year or settlement of such Annual
Incentive Award.
(d) Written Determinations. All determinations by the Committee as
to the establishment of performance goals, the amount of any Performance Award
pool or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards if and to the
extent required to comply with Code Section 162(m).
(e) Status of Section 8(b) and Section 8(c) Awards Under Code
Section 162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.
9. Change in Control.
(a) Effect of "Change in Control." If and to the extent provided in
the Award, in the event of a "Change in Control," as defined in Section 9(b):
(i) The Committee may, within its discretion, accelerate the
vesting and exercisability of any Award carrying a right to exercise
that was not previously vested and exercisable as of the time of the
Change in Control, subject to applicable restrictions set forth in
Section 10(a) hereof;
(ii) The Committee may, within its discretion, accelerate the
exercisability of any limited SARs (and other SARs if so provided by
their terms) and provide for the settlement of such SARs for amounts,
in cash, determined by reference to the Change in Control Price;
(iii) The Committee may, within its discretion, lapse the
restrictions, deferral of settlement, and forfeiture conditions
applicable to any other Award granted under the Plan and such Awards
may be deemed fully vested as of the time of the Change in Control,
except to the extent of any waiver by the Participant and subject to
applicable restrictions set forth in Section 10(a) hereof; and
(iv) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan, the
Committee may, within its discretion, deem such performance goals and
other conditions as having been met as of the date of the Change in
Control.
(b) Definition of "Change in Control. A "Change in Control" shall be
deemed to have occurred upon:
(i) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the
Company or the sale of all or substantially all of the assets of the
Company (unless such reorganization,
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merger, consolidation or other corporate transaction, liquidation,
dissolution or sale (any such event being referred to as a "Corporate
Transaction") is subsequently abandoned);
(ii) Individuals who, as of the date on which the Award is
granted, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date on which the
Award was granted whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company, as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act) shall be, for purposes of this Agreement,
considered as though such person were a member of the Incumbent Board;
or
(iii) the acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of more than 50% of either the
then outstanding shares of the Company's Common Stock or the combined
voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors (hereinafter
referred to as the ownership of a "Controlling Interest") excluding,
for this purpose, any acquisitions by (1) the Company or its
Subsidiaries, (2) any person, entity or "group" that as of the date on
which the Award is granted owns beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of
a Controlling Interest or (3) any employee benefit plan of the Company
or its Subsidiaries.]
(c) Definition of "Change in Control Price." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.
10. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may,
to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.
(b) Limits on Transferability; Beneficiaries. No Award or other
right or interest of a Participant under the Plan, including any Award or right
which constitutes a derivative security as generally defined in Rule 16a-1(c)
under the Exchange Act, shall be pledged, hypothecated or otherwise encumbered
or subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than ISOs and SARs in tandem
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therewith) may be transferred to one or more Beneficiaries or other transferees
during the lifetime of the Participant, and may be exercised by such transferees
in accordance with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee or the Board pursuant to
the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the Board.
(c) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that a substitution or adjustment is determined by the Committee or the
Board to be appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee or the Board shall, in
such manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue or terminate the Plan, or the Committee's authority to
grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of
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such Participant under any previously granted and outstanding Award. The
Committee or the Board may waive any conditions or rights under, or amend,
alter, suspend, discontinue or terminate any Award theretofore granted and any
Award agreement relating thereto, except as otherwise provided in the Plan;
provided that, without the consent of an affected Participant, no such Committee
or the Board action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to the
contrary, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee or the Board
may modify or adjust the right so that pooling of interest accounting shall be
available, including the substitution of Stock having a Fair Market Value equal
to the cash otherwise payable hereunder for the right which caused the
transaction to be ineligible for pooling of interest accounting.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ of the Company or a Subsidiary; (ii) interfering in any way with the
right of the Company or a Subsidiary to terminate any Eligible Person's or
Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee or the Board, in the event of a forfeiture
of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the
Plan, any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Florida without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of
Plan. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable)
and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable OTC
Bulletin Board requirements, and other laws, regulations, and obligations of the
Company applicable to the Plan. Awards may be granted subject to stockholder
approval, but may not be exercised or otherwise settled in the event stockholder
approval is not obtained. The Plan shall terminate at such time as no shares of
Common Stock remain available for issuance under the Plan and the Company has no
further rights or obligations with respect to outstanding Awards under the Plan.
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IN WITNESS WHEREOF, the undersigned Secretary of the Corporation
certifies that the foregoing Corpas Investments, Inc. 2000 Equity Incentive
Compensation Plan duly approved by the Board on March 8, 2000.
/s/ Larry R. Kuhnert
_______________________________
Secretary
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By Order of the Board of Directors
/s/ Larry R. Kuhnert
Secretary
Los Angeles, California
March 30, 2000
CORPAS INVESTMENTS, INC.
SPECIAL MEETING OF SHAREHOLDERS, APRIL 21, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of Corpas Investments, Inc. (the "Company")
hereby appoints Ross A. Love and Gene Fein as Proxies, each with the power to
appoint a substitute, and hereby authorizes them to vote all such shares of the
Company as to which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company and at all adjournments thereof, to be held at 1640
5th Street, Suite 218, Santa Monica, California 90405 on Friday, April 21, 2000
at 9:00 a.m. Pacific Standard Time, in accordance with the following
instructions.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
FOLD AND DETACH HERE
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CORPAS INVESTMENTS, INC.
SPECIAL MEETING
APRIL 21, 2000
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
A vote FOR proposal 1 is recommended by the Board of Directors.
1. PROPOSAL TO ADOPT THE COMPANY'S 2000 EQUITY INCENTIVE COMPENSATION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- -------------------------------------------------------------------------------
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1. Please sign exactly as name appears on the Proxy. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
NO. OF SHARES
[ ]
Check appropriate box Dated: ______________________________, 2000
Indicate changes below:
Address Change? [ ] Signature: ________________________________
Name Change? [ ]
Signature: ________________________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.