Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities and 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 ss. 240.14a-11(c) or ss. 240.14a-12
EWRX INTERNET SYSTEMS INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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755 Burrard Street, Suite 440
Vancouver, British Columbia, Canada V6Z 1X6
(604) 669-6079
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 14, 2000
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May 8, 2000
TO THE SHAREHOLDERS OF EWRX INTERNET SYSTEMS INC.:
An Annual Meeting of Shareholders of EWRX Internet Systems Inc., a Nevada
corporation (the "Company"), will be held at the Westin Bay Shore, 1601 West
Georgia Street, Vancouver, British Columbia, Canada on June 14, 2000 at 2:00
p.m. to consider and take action on:
1. ELECTION OF DIRECTORS. The election of four (4) directors to serve
until the next Annual Meeting of Shareholders and until their
successors have been elected and qualified. (Each shareholder entitled
to vote at the meeting has the right to vote the number of shares held
by him for each of the four (4) director nominees. Election of the
director nominees requires the affirmative vote of a majority of the
votes cast at the Annual Meeting.)
2. RATIFICATION OF THE COMPANY'S AMENDED STOCK OPTION PLAN AND APPROVAL
OF FURTHER AMENDMENTS. Ratification of the Board's approval of the
Company's amended Stock Option Plan and approval of a further
amendment to the Stock Option Plan to increase the authorized stock
issuable under the Stock Option Plan to 3,200,000 shares. (Passage of
this proposal requires the affirmative vote of a majority of the
voting shares represented at the meeting.)
3. OTHER BUSINESS. Such other business as may properly come before the
meeting, or any adjournment or adjournments thereof.
The discussion of the proposals of the Board of Directors set forth above
is intended only as a summary, and is qualified in its entirety by the
information relating to the proposals set forth in the accompanying Proxy
Statement.
Only shareholders of record at the close of business on May 1, 2000, will
be entitled to notice of and to vote at this annual meeting, or any adjournment
or adjournments thereof.
Date: May 8, 2000 By Order of the Board of Directors:
Ronald C. Davis, President, Chief Executive
Officer and Director
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING.
YOUR VOTE IS IMPORTANT
EWRX INTERNET SYSTEMS, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 14, 2000
May 8, 2000
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH A SOLI CITATION OF
PROXIES (IN THE FORM ENCLOSED) BY THE BOARD OF DIRECTORS OF EWRX INTERNET
SYSTEMS INC. (THE "COMPANY") TO BE USED AT THE ANNUAL MEETING OF SHAREHOLDERS AT
2:00 P.M., ON JUNE 14, 2000 AT THE WESTIN BAY SHORE, 1601 WEST GEORGIA STREET,
VANCOUVER, BRITISH COLUMBIA, CANADA Y6G 3V4. THE PROXY AND PROXY STATEMENT ARE
BEING MAILED TO SHAREHOLDERS ON OR ABOUT MAY 9, 2000.
REVOCABILITY OF PROXY
If the enclosed Proxy is executed and returned, it will be voted on the
proposal as indicated by the shareholder. The Proxy may be revoked by the
shareholder at any time prior to its use by notice in writing to the Secretary
of the Company, by executing a later dated proxy and delivering it to the
Company prior to the meeting or by voting in person at the meeting.
SOLICITATION
The cost of preparing, assembling and mailing the Notice of Meeting, Proxy
Statement and Proxy (the "Proxy Materials"), miscellaneous costs with respect to
the Proxy Materials and solici tation of the Proxies will be paid by the
Company. The Company also may use the services of its directors, officers and
employees to solicit Proxies, personally, by telephone or otherwise, but at no
additional salary or compensation. The Company intends to request banks,
brokerage houses and other custodians, nominees and fiduciaries to forward
copies of the Proxy Materials to those persons for whom they hold such shares
and request authority for the execution of the Proxies. The Company will
reimburse them for the reasonable out-of-pocket expenses incurred by them in so
doing.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS THEREOF
Shareholders of record at the close of business on May 1, 2000 will be
entitled to vote on all matters. On the record date the Company had 14,829,500
shares of Common Stock, $0.001 par value per share (the "Common Stock"),
outstanding. The holders of the Common Stock are entitled to one vote per share.
The Company has no class of voting securities outstanding other than its Common
Stock. A majority of the issued and outstanding shares of the Company's Common
Stock entitled to vote, represented in person or by proxy, constitutes a quorum
at any shareholders' meeting. Broker non-votes and abstentions will be counted
for purposes of determining a quorum; however, they will not be counted as votes
cast. Therefore, such votes will not affect the outcome of the voting on
Proposals One or Two.
The following table sets forth certain information as of April 30, 2000
regarding the ownership of the Company's Common Stock by (i) each person known
by the Company to be the beneficial owner of more than five percent (5%) of the
Company's Common Stock, (ii) each director and executive officer of the Company,
and (iii) all directors and executive officers of the Company as a group:
Name and Address of Amount and Nature of Percent
Beneficial Owner Title Beneficial Ownership(1) of Class(2)
- ---------------- ----- ----------------------- -----------
Ronald C. Davis President, Chief Executive 2,107,832 (3) 13.6%
755 Burrard Street, Suite 440 Officer, President and
Vancouver, British Director
Columbia, Canada V6Z 1X6
Richard P. Ott Treasurer and Director 350,000 (4) 2.3%
#401 1501 Howe Street
Vancouver, British Columbia
Canada V6Z 2P8
William R. Wilson Secretary and Director 250,000 (5) 1.7%
1776 Lincoln Street, Suite 900
Denver, CO 80203
Dan Jondron Director and President of 855,822 (6) 5.6%
1200 Harris Avenue Classic Car Source, Inc. and
Suite 104 North Fork Webrx, Inc.
Bellingham, WA 98225
Peter Shepherd None 1,459,000 (7) 9.8%
2236 134th Street
Surrey, British Columbia
Canada V4A 9T9
All Directors and Executive 3,563,654 21.7%
Officers as a group (4 persons)
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(1) Calculated pursuant to Rule 13d-3(d) of the Securities Exchange Act of
1934. Unless otherwise stated below, each such person has sole voting and
investment power with respect to all such shares. Under Rule 13d-3(d),
shares not outstanding which are subject to options, warrants, rights or
conversion privileges exercisable within 60 days are deemed outstanding for
the purpose of calculating the number and percentage owned by such person,
but are not deemed outstanding for the purpose of calculating the
percentage owned by each other person listed.
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(2) In addition to 14,829,580 shares of common stock outstanding as of April
30, 2000, the percentages noted in this section assume that 2,130,000
shares of Common Stock underlying various options granted to existing
officers and directors may be issued in whole or in part within 60 days of
the date of this Proxy Statement.
(3) Includes (i) 825,166 shares held by Mr. Davis' spouse, and (ii) options to
purchase 680,000 shares of Common Stock which may be exercised in whole or
in part within 60 days of this Proxy Statement.
(4) Includes options to purchase 350,000 shares of Common Stock which may be
exercised in whole or in part within 60 days of this Proxy Statement.
(5) Includes options to purchase 250,000 shares of Common Stock which may be
exercised in whole or in part within 60 days of this Proxy Statement.
(6) Includes options to purchase 300,000 shares of Common Stock which may be
exercised in whole or in part within 60 days of this Proxy Statement.
(7) Includes 400,000 shares held by Mr. Shepherd's spouse according to the
Company's Transfer Agent's records.
Change in Control
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No change in control of the Company has occurred since the beginning of the
last fiscal year.
DIRECTORS AND EXECUTIVE OFFICERS
The following are the current directors and executive officers of the
Company:
Officer or
Name Age Position Director Since
- ---- --- -------- --------------
Ronald C. Davis 49 President, Chief Executive Officer Inception in 1997
and Director
Richard P. Ott 65 Treasurer and Director December 1997
William R. Wilson 57 Secretary and Director October 1998
Dan Jondron 44 Director, President of Classic Car June 1999
Source, Inc. and North Fork
Webwrx, Inc.
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RONALD C. DAVIS, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr. Davis with twenty-five years of corporate experience has headed two
high-technology companies and was the founder of EWRX. His experience includes
extensive work in corporate structure, financing, capital markets and marketing.
In his career Mr. Davis has either directly been responsible for or assisted a
variety of public companies in the United States and Canada in the high
technology, biotech and industrial sectors. Mr. Davis maintains a wide network
of financial and investor contacts in North America and Europe. Mr. Davis has
been President and Chief Executive Officer of the Company since 1997. From 1994
to 1997, he was a consultant to several public technology companies.
RICHARD OTT, TREASURER AND DIRECTOR
Mr. Ott, has been chairman and president of PBK Engineering in Vancouver,
British Columbia, Canada, an international engineering company active in
International and Canadian industrial and resource development projects. He
currently is a director of Banro Resource Corporation, a publicly-held entity
and several private entities. Mr. Ott is a specialist in the development of
business plans and financial review of projects. Mr. Ott holds a B.Ap.Sc. from
the University of British Columbia. From 1994 to present Mr. Ott has been a
consultant to several public and public resource and real estate companies.
WILLIAM R. WILSON, SECRETARY AND DIRECTOR
Mr. Wilson has been an executive officer in two public companies in the
United States and is the director of two public companies in Canada. His
specialties include merger and acquisitions, due diligence, marketing and
corporate governance. Mr. Wilson holds a Professional Degree in Metallurgical
Engineering from the Colorado School of Mines and MBA from the University of
Southern California. Wilson serves as a director of Banro Resource Corporation
and Sheridan Reserve Incorporated listed on the Toronto OTC (CDN). From 1991 to
1997 he was Chairman of the Board of Gold King Consolidated Inc., traded on the
NASDAQ OTC (BB); from 1996 to 1997 he was Vice President - Operations for Nevada
Manhattan Mining Inc. traded on the NASDAQ OTC (BB); and from 1997 to 1999 he
was President of Grant Reserve Corporation traded on the NASDAQ OTC (BB). All of
the above are natural resource companies except Sheridan Reserve Incorporated
which is an internet company.
DAN JONDRON, DIRECTOR AND PRESIDENT OF CLASSIC CAR SOURCE, INC. AND NORTH
FORK WEBWRX INC.
In 1993, Mr. Jondron founded Classicar.com and developed the associated
company Classic Car Source a destination site on the Internet for classic
vehicle enthusiasts. In 1996, he created North Fork Publishing Group to meet the
expanding needs for custom web-to-database programming and Website development.
He added Classictruckshop.com in August 1998. Mr. Jondron has 13 years
experience in the automotive aftermarket. As a principal speaker and Internet
marketing analyst for the Specialty Equipment Marketing Association (SEMA), the
world's largest automotive aftermarket trade group, Jondron has been a major
speaker at automotive venues across the United States throughout the last four
years.
-4-
Key Employees
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The following lists other individuals who are not executive officers of the
Company but who make significant contributions to the Company as key employees
of the Company:
JOHNSCOTT LEE, 47, VICE PRESIDENT OF TECHNOLOGY
Mr. Lee has 25 years of experience in software development and programming.
After earning a BS (1973) and an MS (1975) in Computer Science from Purdue
University, Lee was employed as a consultant and systems analyst in industries
that range from political consulting to radio engineering. Previously, he held
the position of Senior Analyst at FIServe in Bellevue, Washington. In 1993, he
joined Classicar.com and later North Fork Webrx, Inc. (formerly North Fork
Publishing Group, Inc.) He created e-commerce Websites for on-line ordering,
user registration, on-line inventory, audio and video, live chat and bulletin
boards. Through North Fork Webrx, Inc., he developed programs that allowed
databases to tie in directly with inventory, accounting and fulfillment systems
and software that collects marketing information from Website users. In his
position as Vice President of Technology, Mr. Lee oversees all Information
Systems and Information Technology issues.
CARL LAFLAMME, 40, VICE PRESIDENT OF MARKETING
Mr. LaFlamme oversees all advertising, marketing and public relations for
the Company and its subsidiary companies. His 20-year career has included
advertising and marketing. Since 1994, Mr. LaFlamme has been a Marketing and
Advertising Consultant for businesses primarily in the internet industry, where
he has developed marketing strategies, consulted on Website development, and
provided creative development for several companies including the Company's
subsidiaries, Classic Car Source, Inc. and North Fork Webrx, Inc.
ROBERT R. GILMORE, 47, ACTING CHIEF FINANCIAL OFFICER
Mr. Gilmore serves as acting Chief Financial Officer of the Company and, to
date, has provided the Company with certain financial advice primarily in
connection with the acquisition of Classic Car Source, Inc. and North Fork
Webrx, Inc. and in accounting and financial reporting matters. Mr. Gilmore has
more than twenty years of financial experience. He has served as audit manager
for the Denver office of Coopers & Lybrand, and, during the last five years, he
has served as Chief Financial Officer for Dakota Mining Corporation and as an
independent financial consultant.
The directors of the Company are elected to hold office until the next
annual meeting of shareholders or until a successor has been elected and
qualified. Officers of the Company are elected annually by the Board of
Directors and hold office until their successors are duly elected and qualified.
There are no significant employees who are not also directors or executive
officers except as described above. No arrangement or understanding exists
between any of the above officers and directors pursuant to which any one of
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those persons was selected to such office or position. There are no material
legal proceedings pending against the Company.
MEETINGS OF THE BOARD AND COMMITTEES
During the last fiscal year the Company's Board of Directors held four (4)
meetings and took unanimous action through sixteen (16) sets of minutes of
action. All directors attended all four (4) meetings held.
The Company has two standing committees: the Audit and Corporate Governance
Committee and the Compensation Committee.
AUDIT AND CORPORATE GOVERNANCE COMMITTEE. The Company's Audit and Corporate
Governance Committee acts as the liaison between the Company and its independent
public accountants. Richard P. Ott and William R. Wilson are the members of this
committee. The Audit Committee and Corporate Governance Committee did not hold
any meetings during 1999. The Audit and Corporate Governance Committee is
responsible for reviewing and approving the scope of the annual audit undertaken
by the Company's independent accountants and will meet with the accountants to
review the progress and results of their work, as well as any recommendations
the accountants may offer. The Audit and Corporate Governance Committee will
also review the fees of the independent accountants and make recommendations to
the Board of Directors as to the appointment of the accountants. In connection
with the Company's internal accounting controls, the Audit and Corporate
Governance Committee will review the internal audit procedures and reporting
systems in place at the Company and review their accuracy and adequacy with
management and with the Company's independent accountants.
COMPENSATION COMMITTEE. The Company's Compensation Committee, which will
recommend compensation levels to the Board of Directors, consists of Ronald C.
Davis and Richard P. Ott. The Compensation Committee did not hold any meetings
during 1999. The Compensation Committee will review salaries, bonuses, and other
forms of compensation for officers and key employees of the Company and its
subsidiaries, and will establish salaries, benefits, and other forms of
compensation for new employees. Included in the Compensation Committee's
responsibility is the issuance of stock bonuses and stock options under the
Company's stock option plan. In addition, the Compensation Committee will review
other matters concerning compensation and personnel as the Board of Directors
may request. The Compensation Committee will design the Company's compensation
to enable the Company to attract, retain, and reward highly qualified
executives, while maintaining a strong and direct link between executive pay,
the Company's financial performance, and total stockholder return. The
Compensation Committee believes that officers and certain other key employees
should have a significant stake in the Company's stock price performance under
programs which link executive compensation to stockholder return.
Family Relationships
- --------------------
There are no family relationships among the Company's officers and
directors.
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Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors, executive officers and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten percent beneficial owners were complied with
except for the following:
1. Ronald C. Davis filed a Form 3 in March 2000. He became subject to the
Section 16(a) reporting requirements when the Company's Form 10-SB Registration
Statement became automatically effective with the SEC on October 30, 1999.
Additionally, Form 4's were filed in March 2000 reporting transactions that
occurred in December, 1999 and January, 2000. Mr. Davis did not file a Form 5 in
February 2000.
2. William R. Wilson filed a Form 3 in February 2000. He became subject to
the Section 16(a) reporting requirements when the Company's Form 10-SB
Registration Statement became automatically effective with the SEC on October
30, 1999. Mr. Wilson did not file a Form 5 in February 2000.
3. Richard P. Ott filed a Form 3 in March 2000. He became subject to the
Section 16(a) reporting requirements when the Company's Form 10-SB Registration
Statement became automatically effective with the SEC on October 30, 1999. Mr.
Ott did not file a Form 5 in February 2000.
4. Dan Jondron filed a Form 3 in March 2000. He became subject to the
Section 16(a) reporting requirements when the Company's Form 10-SB Registration
Statement became automatically effective with the SEC on October 30, 1999. Mr.
Jondron did not file a Form 5 in February 2000.
5. Peter Shepherd has not yet filed a Form 3. He became subject to the
Section 16(a) reporting requirements when the Company's Form 10-SB Registration
Statement became automatically effective with the SEC on October 30, 1999 due to
the fact that he was the beneficial owner of over ten percent of the Company's
Common Stock on that date. Subsequently, his share ownership has dropped below
ten percent.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
- --------------------------
The following table sets forth information regarding compensation paid to
the Company's CEO and the other executive officers of the Company who received
in excess of $100,000 of salary and bonus from the Company during the fiscal
years ended December 31, 1997, 1998 and 1999:
Long Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------- --------------------------- -----------
Securities
Other Restricted Underlying
Name and Principal Annual Com- Stock Options/ LTIP All Other
Position Year Salary Bonus($) pensation($) Awards(s)($) SARs(#) Payouts($) Compensation($)
- --------------------- ----- -------- --------- ------------- ------------ ------------ ----------- ---------------
Ronald C. Davis, 1999 $55,120 $ 0 $ 0 $ 0 -0- $ 0 $ 0
Chief Executive Officer 1998 $28,000 $ 0 $ 0 $ 0 -0- $ 0 $ 0
President & Director 1997 $ $ 0 $ 0 $ 0 180,000 $ 0 $ 0
Option/SAR Grants
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The following table sets forth certain information regarding options to
purchase shares of Common Stock issued to Executive Officers of the Company
during the fiscal year ended December 31, 1999:
Option/SAR Grants in Fiscal Year 1999
Individual Grants
- ---------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options/SARS
Options/SARS Granted to Exercise or Base
Name Granted (1) Employees in 1999 Price ($/Sh) Expiration Date
----- ------------ ----------------- ---------------- ---------------
Richard P. Ott 150,000 13.6% $0.75 02/01/04
William R. Wilson 150,000 13.6% $0.75 02/01/04
Dan Jondron 75,000 6.8% $0.30 02/01/04
Dan Jondron 75,000 6.8% $1.00 02/01/04
- ------------
(1) All options are immediately vested and exercisable.
There were no options exercised during the last fiscal year by the
Company's executive officers.
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Compensation of Directors
- -------------------------
The Company does not currently pay any of its directors fees or any other
compensation for duties performed as directors, other than the options described
in the table above. Mr. Davis and Mr. Jondron are salaried employees of the
company with Mr. Davis receiving a monthly salary in Canadian dollars equivalent
to $6,700 and Mr. Jondron receiving a monthly salary of $7,083. Mr. Ott and Mr.
Wilson perform various consulting duties for the Company. Their services are
reimbursed at consulting fees consistent with, or less than, similar services
provided as consultants to other companies with businesses comparable to the
Company.
Employment Contracts and Termination of Employment and Change-in-Control
- --------------------------------------------------------------------------------
Arrangements
- ------------
The Company has employment contracts with Dan Jondron and Johnscott Lee.
The Company does not currently have an employment agreement with Ronald C. Davis
but the directors intend to provide to Mr. Davis a contract similar to the one
it has with Mr. Jondron.
Mr. Jondron has an Employment Agreement with the Company as President of
Classic Car Source, Inc. and North Fork Webrx, Inc. for three years ending May
4, 2002. The Agreement contains certain non-compete clauses, benefits and
termination clauses. The Agreement provides for an annual salary of $85,000 and
a signing bonus of $50,000. The Agreement has no "golden parachute" clause.
Mr. Lee has an Employment Agreement with the Company as Vice President of
Technology for three years ending May 4, 2002. The Agreement contains certain
non-compete clauses, benefits and termination clauses. The Agreement provides
for an annual salary of $75,000 and a signing bonus of $50,000. The Agreement
has no "golden parachute" clause.
Report on Repricing of Options/SARs
- -----------------------------------
The Company has not re-priced any of the options it has granted since its
incorporation in 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 1998, $203,241 had been advanced to the Company by
certain shareholders, including the Chief Executive Officer of the Company. Of
the total, $199,203 was settled in the first quarter of 1999 through the
issuance of 664,010 shares of Common Stock of the Company, representing a price
of $0.30 per share, which was the approximate fair market value of these
restricted shares on date of issuance. As of December 31, 1999, $138,700 had
been advanced to the Company by certain shareholders.
Ronald C. Davis was issued 142,000 shares of the Company's Common Stock on
February 22, 1999 as debt repayment at a price of $0.30 per share in repayment
-9-
of debt owed by the Company to Mr. Davis of $42,600. Susan Davis, wife of Mr.
Davis, was issued 239,666 shares of the Company's Common Stock on February 22,
1999 at a price of $0.30 per share in repayment of debt owed by the Company to
Mrs. Davis of $71,890.
The Company has entered into Employment Agreements with Dan Jondron and
Johnscott Lee which provide for the payment of a $50,000 signing bonus to each
of Messrs Jondron and Lee. Such bonuses were to be paid in two equal
installments - $25,000 upon the signing of the Employment Agreement and $25,000
on July 1, 1999. To date, the Company has not paid the signing bonuses to
Messrs. Jondron or Lee.
Consulting fees of $21,208 were paid to William R. Wilson, a Director of
the Company.
PROPOSAL NUMBER ONE
ELECTION OF FOUR DIRECTORS
At this time, the Company's Board of Directors intends to recommends the
election to the Board of the four nominees listed below. If Proposal One is
approved, each of the Directors would hold office until the next Annual Meeting
of Shareholders and/or until their successors are elected and qualified or until
their earlier death, resignation or removal.
All members of the present Board of Directors have been nominated for
reelection to the Board. The persons named as "proxies" in the enclosed form of
Proxy, intend to vote for the four nominees for election as Directors unless
otherwise instructed in such proxy. If at the time of the Annual Meeting, any of
the nominees named below should be unable to serve, which event is not expected
to occur, the discretionary authority provided in the Proxy will be exercised to
vote for such substitute nominee and nominees, if any, as shall be designated by
the Board of Directors. In the election of directors, that number of candidates
equaling the number of directors to be elected, having the highest number of
votes cast in favor of their election, are elected to the board of directors.
The Officers and Directors have advised the Company that they plan to vote their
shares in favor of each of the nominees set forth below.
Nominees
- --------
The following table sets forth the name and age of each nominee for
Director, indicating all positions and offices with the Company presently held
by him, the period during which he has served as such, and the class and term
for which he has been nominated, assuming for these purposes the approval by the
shareholders of Proposal One and the related amendment of the Articles of
Incorporation:
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Name Age Position Year First Director
- ---- --- -------- -------------------
Ronald C. Davis 49 President, Chief Executive Inception in 1997
Officer and Director
Richard P. Ott 65 Treasurer and Director December 1997
William R. Wilson 57 Secretary and Director October 1998
Dan Jondron 44 Director and President of June 1999
Classic Car Sources, Inc.
and North Fork Webrx, Inc.
Additional information regarding the nominees for directors and the
executive officers, compensation of executive officers, related party
transactions involving the Company and the directors and executive officers and
their affiliates, compliance with Section 16(a) of the 1934 Act and information
regarding Board committees and meetings of the Board and committees can be found
beginning on page 3 of this Proxy Statement.
Vote Required
- -------------
Each shareholder entitled to vote at the meeting has the right to vote the
number of shares held by him for each of the four (4) director nominees.
Election of the director nominees requires the affirmative vote of a majority of
the votes cast at the Annual Meeting.
PROPOSAL NUMBER TWO
RATIFICATION OF COMPANY'S STOCK OPTION PLAN AND
AND APPROVAL OF FURTHER AMENDMENTS
In May, 1999 the shareholders approved a revised stock option plan for the
Company entitled The EWRX Internet Systems Stock Option Plan (the "Stock Option
Plan"). In August, 1999, the Board of Directors of the Company adopted further
technical revisions to the Stock Option Plan and, on April 20, 2000, approved an
amendment to increase the number of shares authorized under the Stock Option
Plan by 1,615,640 shares to 3,200,000 shares. The Board agreed to submit to
shareholders at the Annual Meeting the revised Stock Option Plan for
ratification and the further amendment to the Stock Option Plan for approval to
increase the number of shares subject to the Stock Option Plan. A total of
1,584,360 shares of Common Stock are currently issuable pursuant to the Stock
Option Plan.
The description of the Stock Option Plan is qualified by its entirety by
reference to the full text of such Stock Option Plan, a copy of which is
attached as Appendix A to this Proxy Statement.
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General
- -------
The name of the Stock Option Plan is: "EWRX Internet Systems Inc. Stock
Option Plan." The Stock Option Plan has been established to closely align the
interests of management of the Company and its affiliates with its shareholders,
and to maintain competitive compensation levels for such persons through
provision of equity ownership in the form of incentive stock options ("ISO's")
granted to its employees and non-qualified stock options ("NQO's) granted to its
officers, directors, key employees and certain consultants.
The Stock Option Plan was amended and restated on May 6, 1999 by the
shareholders of the Company. Certain technical amendments to the Stock Option
Plan were adopted by the Board of Directors in August, 1999, subject to
ratification of such amendment by the shareholders at the next annual or special
meeting of shareholders. No awards can be made under the Stock Option Plan after
the end of the Company's fiscal year in 2008; provided however, that the Stock
Option Plan, and all awards made under the Stock Option Plan prior to such dates
shall remain in effect until such awards have been satisfied or terminated in
accordance with their terms. The Stock Option Plan is not subject to the
Employee Retirement Income Security Act of 1974.
The Stock Option Plan is administered by a Compensation Committee appointed
by the Board of Directors from its members (which may be the full Board). The
members of the Committee sit at the pleasure of the Board and may be replaced by
it. The Committee members are fiduciaries and have authority to designate the
persons eligible to participate and receive awards under the Stock Option Plan,
set the option price and make and amend all rules and regulations relating to
the Stock Option Plan.
Employees Who May Participate in the Stock Option Plan
- ------------------------------------------------------
All employees of the Company are eligible (but not all may be selected) to
participate in the Stock Option Plan. Non-employee directors and consultants may
also participate but are not entitled to receive incentive stock options. The
Committee (or the Board if it chooses to act) shall select persons entitled to
receive stock options under the Stock Option Plan with each member exercising
his/her discretion as to eligibility of an employee to receive the stock option.
Purchase of Securities Pursuant to the Stock Option Plan and Payment for
- --------------------------------------------------------------------------------
Securities Offered
- ------------------
There is no period of eligibility for an optionee to participate in the
Stock Option Plan, although the Committee may establish eligibility rules for
new optionees and also establish "vesting" periods for the stock options granted
to be effective. Stock options granted under the Stock Option Plan can have a
maximum duration of five years, and no stock options can be granted after the
end of the Company's fiscal year in 2008. The Option exercise price is set by
the Committee at the time of grant. In the case of ISO's, the price must equal
the fair market value of the common stock at the time of grant. In the case of
NQO's, the price is established by the Committee in its discretion with
reference to fair market value at the time of grant, but such price may be less
than the fair market value. There are no limits on the amount of shares an
eligible employee can receive under the Stock Option Plan; except that the
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aggregate fair market value of common stock subject to an ISO granted to an
employee which may be exercised for the first time by such employee in any
calendar year cannot exceed $100,000.
Optionees must pay the full exercise price for shares purchased under a
stock option at the time of exercise. There are no installment or deferred
payment terms under the Stock Option Plan. The Stock Option Plan does authorize
the Committee to grant options accompanied by stock appreciation rights as well
as rights to have stock withheld or rights to deliver stock already owned in
payment of the exercise price of an option. The terms and conditions of such
rights are set forth in an individual's stock option agreement.
Employees are not required or permitted to contribute a part of his/her
wages to the Stock Option Plan. The Company does not issue periodic reports to
employees who are granted options under the Stock Option Plan. Securities issued
under the Stock Option Plan will be from authorized but unissued shares of the
Company. There are no fees, commissions or other similar charges associated with
issuance of shares of common stock under the Stock Option Plan, except possible
transfer agent costs.
Resale Restrictions
- -------------------
Shares issued to optionees upon exercise of stock options under the Stock
Option Plan are "restricted securities" as defined under the Securities Act of
1933, unless a Form S-8 Registration Statement covering such shares is
effective. Restricted shares cannot be freely sold and must be sold pursuant to
an exemption from registration (such as Rule 144) which exemptions typically
impose conditions on the sale of the shares. The Company is considering filing a
Form S-8 Registration Statement with the Securities and Exchange Commission in
the near future covering sale of shares upon exercise of stock options under the
Stock Option Plan.
Tax Effects of Stock Option Plan Participation
- ----------------------------------------------
The following discussion is a general summary of the material federal
income tax consequences to participants under the Stock Plan. The discussion is
based on the Internal Revenue Code of 1986, as amended (the "Code"), regulations
thereunder, rulings and decisions now in effect, all of which are subject to
change. This summary does not discuss all aspects of federal income taxation
that may be relevant to a particular participant in light of such participant's
personal investment circumstances. In addition, state and local income taxes are
not discussed and may vary from locality to locality.
NON-QUALIFIED STOCK OPTIONS. Participants who hold non-qualified stock
options do not recognize income as a result of the grant of such options, but
normally recognize compensation taxable at ordinary income rates upon the
exercise of such options to the extent that the fair market value of the shares
of common stock on the date of the exercise of such options exceeds the option
exercise price paid. The Company will be required to withhold taxes for its
employees on such ordinary income. Subject to Section 162(m) of the Internal
Revenue Code, discussed below, the Company will be entitled to a tax deduction
in an amount equal to the amount that the participant is required to include in
ordinary income at the time of such inclusion. Upon the exercise of a
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non-qualified stock option, the optionee's initial tax basis for shares of the
Company's common stock acquired will be the option exercise price paid plus the
amount of ordinary income recognized by the participant.
INCENTIVE STOCK OPTIONS. Participants who hold incentive stock options will
not be considered to have received taxable income upon either the grant of an
incentive stock option or its exercise. Upon the sale or other taxable
disposition of shares of common stock, long-term capital gain will normally be
recognized in the full amount of the difference between the amount realized and
the option exercise price if no disposition of shares has taken place within
either (a) two years from the date of grant of the incentive stock option or (b)
one year from the date of transfer of such shares of the Company common stock to
the participant upon exercise. If shares of the Company's common stock acquired
upon the exercise of an incentive stock option are sold or otherwise disposed of
before the end of the one-year or two-year periods referenced above, the
difference between the option exercise price and the fair market value of the
shares of the common stock on the date of the option's exercise will be taxed as
ordinary income; the balance of the gain, if any, will be taxed as capital gain.
If the optionee disposes of the shares of the Company's common stock acquired
upon the exercise of an incentive stock option before the expiration of the
one-year or two-year periods referenced above and the amount realized is less
than the fair market value of the shares at the date of exercise, the
participant's ordinary income is limited to the excess, if any, of the amount
realized over the option exercise price paid. Subject to Section 162(m) of the
Internal Revenue Code, discussed below, the Company will be entitled to a tax
deduction in regard to an incentive stock option only to the extent the
participant has ordinary income upon sale or other disposition of the shares of
the Company common stock. The difference between the fair market value of the
common stock on the exercise date and the exercise price of an incentive stock
option is deemed to be a "tax preference" under the alternative minimum tax
rules of the Internal Revenue Code. The consequences of the application of these
provisions to individual participants may vary depending on their particular
circumstances.
STOCK APPRECIATION RIGHTS. Participants who hold stock appreciation rights
do not recognize income as a result of a grant of a stock appreciation right.
Nonetheless, they normally recognize compensation taxable at ordinary income
rates upon exercise of the stock appreciation right equal to the amount of cash
and/or the then fair market value of any shares of common stock received.
Subject to Section 162(m) of the Internal Revenue Code, discussed below, the
Company will be entitled to a tax deduction in an amount equal to the amount
that the participant is required to include in ordinary income at the time of
such inclusion and will be required to withhold taxes on such ordinary income.
SECTION 162 OF THE INTERNAL REVENUE CODE. Under Section 162(m) of the Code,
income tax deductions of publicly traded companies may be limited to the extent
total compensation, including base salary, annual bonus, stock option exercises
and non-qualified benefits paid in 1994 and thereafter for certain executive
officers exceeds $1 million (less the amount of any "excess parachute payments"
as defined in Section 280G of the Code) in any one year. However, under Section
162(m), the deduction limit does not apply to certain "performance -based"
compensation established by an independent compensation committee which is
adequately disclosed to, and approved by, stockholders. In particular, stock
options and stock appreciation rights will satisfy the performance-based
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exception if the awards are made by a qualifying compensation committee, the
plan sets the maximum number of shares that can be granted to any particular
employee within a specified period and the compensation is based solely on an
increase in the stock price after the grant date. Grants of stock options and
stock appreciation rights under the Stock Plan are intended to conform to the
performance-based exception under Section 162(m) of the Code.
Investment of Funds
- -------------------
There is no investment of funds under the Stock Option Plan.
Withdrawal from the Stock Option Plan; Assignment of Interest
There are no provisions for withdrawal by an optionee in the Stock Option
Plan. An optionee is not permitted to assign or pledge his/her stock options
granted under the Stock Option Plan, except by will or under the laws of descent
and distribution.
Forfeitures and Penalties
- -------------------------
If an employee terminates his employment with the Company, except
termination due to death, permanent disability or retirement, his/her stock
options terminate 30 days after termination. Upon death of an optionee, his/her
successors or representatives may exercise any rights the optionee had at the
date of death for a period of one year thereafter. Upon permanent disability or
retirement of an optionee, he/she may exercise any rights he/she had at the date
of retirement or permanent disability for period of 36 months (in the case of
NQO's) and 12 months (in the case of ISO's).
Charges, Deductions and Liens
- -----------------------------
Other than transfer agent fees, transfer taxes and similar charges, there
are no other fees or costs to which an optionee is subject under the Stock
Option Plan. There are no provisions for creation of lien to secure any
obligations under the Stock Option Plan.
Vote Required
- -------------
The affirmative vote of a majority of the shares represented at the meeting
and entitled to vote will be required to approve this Proposal. Management
recommends the shareholders vote in favor of Proposal No. 2.
FINANCIAL INFORMATION
A copy of the Company's Annual Report for the fiscal year ended December
31, 1999, including Audited Financial Statements, is being sent to shareholders
with this Proxy Statement. The following additional documents which have been
filed with the Securities and Exchange Commission are incorporated by reference
herein: Quarterly Report on Form 10-QSB/A2 for the quarter ended September 30,
1999 and Current Reports on Form 8-K, dated February 1, 2000 and February 29,
2000.
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OTHER MATTERS
Management does not know of any other matters to be brought before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the appointees named in the enclosed form of proxy to vote in
accordance with their best judgment on such matters.
ANNUAL REPORT
The Company's Annual Report to Shareholders which contains the Form 10-KSB
for the fiscal year ended December 31, 1999 is enclosed herewith, and is
incorporated by reference in this ProxyStatement.
SHAREHOLDER PROPOSALS
Any shareholder proposing to have any appropriate matter brought before the
2001 Annual Meeting of Shareholders must submit such proposal in accordance with
the proxy rules of the Commission. Such proposals should be sent to the
Secretary of the Company not later than February 28, 2001 to be considered for
inclusion in the 2001 Proxy Statement.
By Order of the Board of Directors:
EWRX INTERNET SYSTEMS INC.
Date: May 8, 2000 Ronald C. Davis
Chief Executive Officer, President
and Director
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APPENDIX A
----------
EWRX INTERNET SYSTEMS INC.
Stock Option Plan
ARTICLE I - GENERAL
1.01. Purpose. The purposes of this Stock Option Plan (the "Plan") are to:
(1) closely associate the interests of the management of EWRX Internet Systems
Inc. and its Subsidiaries and Affiliates (collectively referred to as the
"Company") with the shareholders by reinforcing the relationship between
participants' rewards and shareholder gains; recognizing that such persons will
be largely responsible for the future growth and success of the Company, (2)
provide management with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; (4) provide an incentive to directors,
management and other key employees for continuous employment with the Company
and (5) provide alternative types of stock options: incentive stock options
("ISO") and Non-Qualified stock options ("NQO"). ISO's are intended to have the
rights and limitations set forth in Internal Revenue Code ss. 422.
1.02. Administration. (a) The Plan shall be administered by a Compensation
Committee appointed by the Board of Directors of the Company (the "Committee"),
as constituted from time to time.
(b) The Committee shall have the authority, in its sole discretion and
from time to time to:
(i) designate the individuals eligible to participate in the Plan;
(ii) grant awards provided in the Plan in such form and amount as the
Committee shall determine;
(iii) impose the price at which the option may be exercised and such
limitations, restrictions and conditions upon any such award as
the Committee shall deem appropriate; and
(iv) interpret the Plan, adopt, amend and rescind rules and
regulations relating to the Plan, and make all other
determinations and take all other action necessary or advisable
for the implementation and administration of the Plan.
(c) Decisions and determinations of the Committee on all matters relating
to the Plan shall be in its sole discretion and shall be conclusive.
(d) An option granted hereunder shall be clearly identified as an ISO or
NQO.
1
(e) Notwithstanding the foregoing provisions, nothing herein shall be
deemed to prohibit (i) the full Board of Directors from approving
grants of options, or (ii) a majority of voting shareholders of the
Company from approving or ratifying grants of options at a duly called
meeting (in the case of ratfication, held no later than the date of
the next annual meeting of shareholders). It is the intention of this
paragraph to permit grants of options under this Plan to have the full
benefit of the provisions of Rule 16b-3 under the Securities Exchange
Act of 1934, as applicable.
1.03. Eligibility for Participation. Participants in the Plan shall be
selected by the Committee from the directors, officers, managers, and other key
employees of the Company who occupy responsible managerial or professional
positions, may also include outside consultants, all of whom have the capability
of making a substantial contribution to the success of the Company. In making
this selection and in determining the form and amount of awards, the Committee
shall consider any factors deemed relevant, including the individual's
functions, responsibilities, value of services to the Company and past and
potential contributions to the Company's profitability and sound growth. Only
employees of the Company may receive ISO's.
1.04. Types of Awards Under Plan. Awards under the Plan may be in for the
form of any one or more of the following:
(i) Non-Qualified Stock Options, as described in Article II; and
(ii) Incentive Stock Options, as described in Article III.
1.05. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of the Company's Common Stock
("Common Stock"). The maximum number of shares of Common Stock, which may be
issued under the Plan, shall be 1,584,360 shares, subject to increases approved
by the shareholders of the Company.
(b) Any shares of Common Stock subject to a Non-Qualified Stock Option
or Incentive Stock Option which for any reason is terminated unexercised or
expires shall again be available for issuance under the Plan.
1.06 Effective Date and Term of Plan.
(a) The Plan shall become effective on the date approved by the
holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at duly called meeting of Shareholders of the Company
to be called to consider and vote upon the Plan.
(b) No awards shall be made under the Plan after the last day of the
Company's fiscal year ending in 2008 provided, however, that the Plan and all
awards made under the Plan prior to such date shall remain in effect until such
awards have been satisfied or terminated in accordance with the Plan and the
terms of such awards.
2
ARTICLE II -NON-QUALIFIED STOCK OPTIONS
2.01. Award of Non-Qualified Stock Options. The Committee may from time to
time, and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any participant in the Plan
one or more options to purchase for cash the number of shares of Common Stock
("NQO") allocated by the Committee. The date an NQO is granted shall mean the
date selected by the Committee as of which the Committee allocates a specific
number of shares to a participant pursuant to the Plan.
2.02. Stock Option Agreements. The grant of an NQO shall be evidenced by a
written Stock Option Agreement, executed by the Company and the holder of
options (the "Optionee"), stating the number of shares of Common Stock subject
to the Stock Option evidenced thereby, and in such form as the Committee may
from time to time determine.
2.03. Stock Option Price. The option price per share of Common Stock
deliverable upon the exercise of an NQO shall be set by the Board of Directors
based on Fair Market Value at the time options are granted by the Board of
Directors.
2.04. Term and Exercise. Each NQO shall be fully exercisable for a period
designated by the Committee not to exceed five years from the date of grant
thereof (the "option term"). No NQO shall be exercisable after the expiration of
its option term.
2.05. Manner of Payment. Each Stock Option Agreement shall set forth the
procedure governing the exercise of the Stock Option granted thereunder, and
shall provide that, upon such exercise in respect of any shares of Common Stock
subject thereto, the Optionee shall pay to the Company, in full, the option
price for such shares with cash or good funds.
2.06. Delivery of Stock Certificates. As soon as practicable after receipt
of cash payment or good funds as full payment, the Company shall deliver to the
Optionee a certificate or certificates for such shares of Common Stock. The
Optionee shall become a shareholder of the Company with respect to Common Stock
represented by share certificates so issued and as such shall be fully entitled
to receive dividends, to vote and to exercise all other rights of a shareholder.
2.07. Death of Optionee.
(a) Upon the death of an Optionee, any rights which have become exercisable on
or before the date of death may be exercised by the Optionee's estate, or by a
person who acquires the right to exercise such Stock Option by bequest or
inheritance following the death of the Optionee, provided that such exercise
occurs within both the remaining effective term of the Stock Option and one year
after the Optionee's death.
3
(b) The provisions of this Section shall apply notwithstanding the fact that the
Optionee's employment may have terminated prior to death, but only to the extent
of any rights which were exercisable on the date of death.
2.08. Retirement or Disability. Upon termination of the Optionee's
employment by reason of retirement or permanent disability (as each is
determined by the Committee), the Optionee may, within 36 months from the date
of termination, exercise any NQO's to the extent such options had become
exercisable on or before such termination of employment.
2.09. Termination for Other Reasons. Except as provided in Sections 2.07
and 2.08, or except as otherwise determined by the Committee, all unexercised
NQO's shall terminate 30 days after the termination of the Optionee's employment
or contractual arrangement with the Company.
ARTICLE III - INCENTIVE STOCK OPTIONS
3.01. Award of Incentive Stock Options. The Committee may, from time to
time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any officer, director or
other key employee in the Plan one or more "Incentive Stock Options" (intended
to qualify as such under the provisions of section 422 of the Internal Revenue
Code of 1986, as amended ("ISO") to purchase for cash the number of shares of
Common Stock allotted by the Committee. The date an ISO is granted shall mean
the date selected by the Committee as of which the Committee allots a specific
number of ISO's to a participant pursuant to the Plan.
3.02. Incentive Stock Option Agreements. The grant of an ISO shall be
evidenced by a written Incentive Stock Option Agreement, executed by the Company
and "Optionee"), stating the number of shares of Common Stock subject to the ISO
evidenced thereby, and in such form as the Committee may from time to time
determine.
3.03. Incentive Stock Option Price. The option price per share of Common
Stock deliverable upon the exercise of an Incentive Stock Option shall be 100%
of the Fair Market Value of a share of Common Stock on the date the Incentive
Stock Option is granted or 110% of such value if granted to a person owning in
excess of 10% of the Company's outstanding stock.
3.04. Term and Exercise. Each ISO shall be fully exercisable one month from
the date of its grant and unless a longer period is provided by the Committee
and may be exercised during a period of determined by the Committee from the
date of grant thereof, (not to exceed five years) (the "Option Term") or less if
so specified by the Committee. No ISO shall be exercisable after the expiration
of its Option Term.
3.05. Maximum Amount of Incentive Stock Option Grant. The aggregate fair
market value (determined on the date the option is granted) of Common Stock
subject to an ISO granted to an Optionee which may be exercised for the first
time by such Optionee in any calendar year shall not exceed $100,000.
4
3.06. Death of Optionee.
(a) Upon the death of the Optionee, any ISO which had become
exercisable on or before the date of death may be exercised by the Optionee's
estate or by a person who acquires the right to exercise such ISO by bequest or
inheritance following the death of the Optionee, provided that such exercise
occurs within both the remaining option term of the ISO and one year after the
Optionee's death.
(b) The provisions of this Section shall apply notwithstanding the
fact that the Optionee's employment may have terminated prior to death, but only
to the extent of any ISO which were exercisable on the date of death.
3.07. Retirement or Disability. Upon the termination of the Optionee's
employment by reason of permanent disability or retirement (as each is
determined by the Committee), the Optionee may, within 36 months from the date
of such termination of employment, exercise any ISO's to the extent such ISO's
had become exercisable on or before the date of such termination of employment.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Internal Revenue Code of 1986 upon the exercise of an ISO will not be
available to an Optionee who exercises any Incentive Stock Options more than (i)
12 months after the date of termination of employment due to permanent
disability or (ii) three months after the date of termination of employment due
to retirement.
3.08. Termination for Other Reasons. Except as provided in Sections 3.06
and 3.07 or except as otherwise determined by the Committee, all Incentive Stock
Options shall terminate 30 days after the termination of the Optionee's
employment or contractual arrangement with the Company.
3.09. Applicability of Stock Options Sections. Sections 2.05 and 2.06 shall
also apply to Incentive Stock Options. Said Sections are incorporated by
reference in this Article III as though fully set forth herein.
ARTICLE IV - MISCELLANEOUS
4.01. General Restriction. Each award under the Plan shall be subject to
the requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any state or Federal law,
or (ii) the consent or approval of any government regulatory body, or (iii) an
agreement by the grantee of an award with respect to the disposition of shares
of Common Stock, is necessary or desirable as a condition of, or in connection
with, the granting of such award or the issue or purchase of shares of Common
Stock thereunder, such award may not be consummated in whole or in part unless
such listings, registration, qualification, consent, approval or agreement shall
have been effected or obtained free of any conditions not acceptable to the
Committee. The certificates evidencing ownership of shares of Common Stock
acquired upon exercise of any Stock Option or Incentive Stock Option awarded
under the Plan shall bear such legends as the Committee shall approve as
necessary or desirable to conform to applicable laws and regulations relating to
the sale of securities.
5
4.02. Non-Assignability. No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by the laws of descent
and distribution. During the life of the recipient, such award shall be
exercisable only by such person or by such person's guardian or legal
representative.
4.03. Withholding Taxes. Whenever the company proposes or is required to
issue or transfer shares of Common Stock under the Plan, the Company shall have
the right to require the grantee to remit to the Company an amount sufficient to
satisfy any Federal, state and/or local withholding tax requirements prior to
the delivery of any certificate or certificates for such shares. Alternatively,
the Company may issue or transfer such shares of Common Stock net of the number
of shares sufficient to satisfy the withholding tax requirements. For
withholding tax purposes, the shares of Common Stock shall be valued on the date
the withholding obligation is incurred.
4.04. Right to Terminate Employment. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment of the Company or effect any right which
the Company may have to terminate the employment of such participant.
4.05. Non-Uniform Determinations. The Committee's determinations under the
Plan (including without limitation determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms and provisions of
such awards and the agreements evidencing same) need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly situated.
4.06. Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect thereto unless and until
certificates for shares of Common Stock are issued to him.
4.07. Definitions. In this Plan the following definitions shall apply:
(a) "Subsidiary" means any corporation of which, at the time more than 50% of
the shares entitled to vote generally in an election of directors are owned
directly or indirectly by EWRX Internet Systems Inc. or any subsidiary thereof.
(b) "Affiliate" means any person or entity which directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with EWRX Internet Systems Inc.
(c) "Fair Market Value" as of any date and in respect of any share of Common
Stock means the average of the closing price for the late five trading date or
on the next business day, if such date is not a business day, of a share of
6
Common Stock on any stock exchange or any stock market upon which the Common
Stock may then be listed or traded, or if the Common Stock is not so listed or
traded then the fair market value of shares of Common Stock shall be as
determined by the Committee in such other manner as it may deem appropriate. In
no event shall the fair market value of any share of Common Stock be less than
its par value.
(d) "Option price" means the purchase price per share of Common Stock
deliverable upon the exercise of a Stock Option or Incentive Stock Option.
(e) "Optionee" means the holder of a stock option as described in Article II or
in Incentive Stock Option as described in Article III.
(f) "Optioned Shares" means the number of shares the Optionee is entitled as a
result of his being granted options in the Stock Option Plan.
(g) "Non-Qualified Stock Option" refers to non-qualified stock options under
Article II.
(h) "Incentive Stock Option" refers to incentive stock options under Article
III.
4.08. Leaves of Absence. The Committee shall be entitled to make such
rules, regulations and determinations as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of any award. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine (i) whether or not any such leave of absence shall constitute a
termination of employment within the meaning of the Plan and (ii) the impact, if
any, of any such leave of absence on awards under the Plan theretofore made to
any recipient who takes such leave of absence.
4.09. Newly Eligible Employees. The Committee shall be entitled to make
such rules, regulations, determinations and awards as it deems appropriate in
respect of any employee who becomes eligible to participate in the Plan or any
portion thereof after the commencement of an award or incentive period.
4.10. Adjustments.
Effect of Take-over Bid
-----------------------
If a bona fide offer ("the Offer") for Shares is made to shareholders
generally or to a class of shareholders which includes the Optionee, which
Offer, if accepted in whole or in part, would result in the offeror
exercising control over the Company within the meaning of Nevada Statutes,
then the Company shall, immediately upon receipt of the notice of the
Offer, notify shareholders with full particulars thereof. Such Option may
be exercised in whole or in part by the Optionee so as to permit the
Optionee to tender the Optioned Shares pursuant to the Offer if the offer
is completed.
7
Effect of Amalgamation, Consolidation or Merger
-----------------------------------------------
If the Company amalgamates, consolidates or with or merges with into
another company any Shares receivable on the exercise of an Option shall be
converted into securities or cash which the Optionee would have received
upon such amalgamation, consolidated or merger if the Optionee had
exercised his Option immediately prior to the record date applicable to
such amalgamation, consolidation or merger, and the option price shall be
adjusted appropriately by the Board.
Adjustment in Shares Subject to the Plan
----------------------------------------
If there is any change in the shares through or by means of a
declaration of stock dividends of Shares of consolidations, subdivisions or
reclassification of Shares, or otherwise, the number of Shares available
under the Plan, the Shares subject to any Option, and the purchase price
thereof shall be adjusted appropriately by the Committee and such
adjustment shall be effective and binding for all purposes of the Plan.
4.11. Amendment of the Plan.
(a) The Committee may, without further action by the shareholders and
without receiving further consideration from the participants,
amend this Plan or condition or modify awards under the Plan in
response to changes in securities or other laws or rules,
regulations or regulatory interpretations
(b) The Committee may at any time and from time to time terminate or
modify or amend the Plan in any respect, except that without
shareholder approval the Committee may not (i) increase the
maximum number of shares of Common Stock which may be issued
under the Plan, (ii) extend the period during which any award may
be granted or exercised or (iii) change the persons eligible to
receive ISO's. The termination or any modification or amendment
of the Plan, except as provided in subsection (a), shall not,
without the consent of a participant, affect a participant's
rights under an award previously granted.
4.12. No Representations or Warranty
The Company makes no representation or warranty as to the future market
value of any shares issued in accordance with the provisions of the Plan.
4.13. Interpretation
The Plan will be governed by and construed in accordance with the laws of
the State of Nevada.
8
4.14. Compliance with Applicable Law
If any provision of the Plan or any agreement entered into pursuant to the
Plan contravenes any law or any order, policy, by-law or regulation of any
regulatory body or stock exchange having authority over the Company or the Plan,
then such provision shall be deemed to be amended to the extent required to
bring such provision into compliance therewith.
4.15 Stock Appreciation Rights, Etc.
The grant of Options hereunder may be accompanied by grant of stock
appreciation rights, rights to have stock withheld or rights to deliver stock
already owned in payment of the exercise price of an option. The terms and
conditions of such rights shall be set forth in the agreement evidencing such
Options or amendments thereto.
9
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PROXY
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EWRX INTERNET SYSTEMS INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 14, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS: That the undersigned shareholder of EWRX
Internet Systems Inc. (the "Company") hereby constitutes and appoints Ronald C.
Davis and William R. Wilson, or either of them, as attorneys and proxies to
appear, attend and vote all of the shares of the Common Stock of EWRX Internet
Systems Inc. standing in the name of the undersigned at the Annual Meeting of
Shareholders of EWRX Internet Systems Inc. to be held at the Westin Bayshore,
1601 West Georgia Street, Vancouver, British Columbia, Canada Y6G 3V4, on June
14, 2000, at 2:00 p..m., and at any adjournment or adjournments thereof.
1. A proposal to elect the following four Directors: Ronald C. Davis,
Richard P. Ott, William R. Wilson and Dan Jondron. (Each shareholder entitled to
vote at the meeting has the right to vote the number of shares held by him for
each of the four (4) director nominees. (Election of the director nominees
requires the affirmative vote of a majority of the votes cast at the Annual
Meeting.)
For all nominees __________.
Withhold authority to vote for all nominee(s) _________.
Withhold authority to vote for nominee(s) named below:
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2. Ratification of the Company's amended Stock Option Plan and approval of
a further amendment to the Stock Option Plan to increase the authorized stock
issuable under the Stock Option Plan to 3,200,000 shares.
For __________ Against __________
3. Such other business as may properly come before the meeting, or any
adjournment or adjournments thereof.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH
RESPECT TO PROPOSALS ONE AND TWO. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED HEREBY WILL BE VOTED FOR PROPOSALS ONE AND TWO. THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY OTHER BUSINESS.
Please mark, date and sign your name exactly as it appears hereon and
return the Proxy in the enclosed envelope as promptly as possible. It is
important to return this Proxy properly signed in order to exercise your right
to vote if you do not attend the meeting and vote in person. When signing as
agent, partner, attorney, administrator, guardian, trustee or in any other
fiduciary or official capacity, please indicate your title. If stock is held
jointly, each joint owner must sign.
Date: ____________, 2000
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Signature(s)
Address if different from that on label:
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Street Address
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City, State and Zip Code
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Number of shares
Please check if you intend to be present at the meeting: ________
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