UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 240.14a-12
BINGO.COM, 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual Meeting (the "Meeting") of the
stockholders of Bingo.com, Inc (the "Company") will be held at 1:00 p.m. (local
time in Vancouver, British Columbia, Canada) on Wednesday, June 27, 2001, in the
Thurlow room at the B.C. Gas Building, at 1111 West Georgia Street, Vancouver,
British Columbia, Canada, for the following purposes:
1. To elect as directors for the ensuing year:
David Chalk
Shane Murphy
Randy Peterson
Mitch White
2. To consider and vote upon a proposal to ratify the selection of Grant
Thornton LLP as the Company's independent auditors for the fiscal year
ending December 31, 2001;
3. To consider and vote upon a proposal to approve the Company's 1999 Stock
Option Plan;
4. To consider and vote upon a proposal to approve the Company's 2001 Stock
Option Plan;
5. To consider and vote upon a proposal to amend the Company's Bylaws;
6. To approve the transaction of such other business as may properly come
before the Meeting.
Accompanying this Notice is a Proxy Statement and a form of Proxy.
The enclosed Proxy is solicited by management of the Company and shareholders
may amend it, if desired, by inserting in the space provided, an individual
designated to act as proxyholder at the Meeting.
The holders of Common Stock of the Company of record at the close of business on
May 3, 2001, will be entitled to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. However,
to assure your representation at the meeting, you are urged to sign and return
the enclosed proxy card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose. Any stockholder attending the meeting may vote in
person even if the stockholder has returned a proxy card.
DATED at Marina Del Rey, California, this 5th day of June, 2001.
BY ORDER OF THE BOARD
/s/ "Shane Murphy"
---------------------------------------------
Shane Murphy, President
BINGO.COM, INC.
4223 Glencoe Avenue,
Suite C200
Marina Del Rey, California 90292
PROXY STATEMENT
Information Concerning the Solicitation of Proxies
This Proxy Statement and the accompanying Proxy is furnished to the shareholders
of BINGO.COM, INC. (the "Company") in connection with the solicitation of
proxies for use at the Company's Annual Meeting of Shareholders (the "Annual
Meeting"). The Annual Meeting will be held on Wednesday, June 27, 2001, in the
Thurlow room at the B.C. Gas Building, at 1111 West Georgia Street, Vancouver,
British Columbia, Canada at 1:00 pm. (PST). A copy of the Company's annual
report for the period ended December 31, 2000 on Form 10-K was made available to
shareholders electronically via filing on EDGAR on May 21, 2001, and accompanies
this Proxy Statement.
The enclosed Proxy is solicited by and on behalf of the board of directors of
the Company, with the cost of solicitation borne by the Company. Solicitation
may be made by directors and officers of the Company. Solicitation may be made
by use of the mails, by telephone, facsimile and personal interview. The Company
does not expect to pay any compensation for the solicitation of proxies, except
to brokers, nominees and similar recordholders for reasonable expenses in
mailing proxy materials to beneficial owners.
If the enclosed Proxy is duly executed and received in time for the Annual
Meeting, it is the intention of the persons named in the Proxy to vote the
shares represented by the Proxy FOR the four nominees listed in this Proxy
Statement and FOR the other items listed in the Proxy, unless otherwise
directed. Any proxy given by a shareholder may be revoked before its exercise by
notice to the Company in writing, by a subsequently dated proxy, or at the
Annual Meeting prior to the taking of the shareholder vote. The shares
represented by properly executed, unrevoked proxies will be voted in accordance
with the specifications in the Proxy. Shareholders have one vote for each share
of Common Stock held. Shareholders are not entitled to cumulate their votes.
This Proxy Statement and the accompanying Proxy are being sent to shareholders
on or before June 8, 2001.
Record Date and Voting Rights
The record date for determination of shareholders who are entitled to notice of
and to vote at the Annual Meeting is May 3, 2001.
The Company is authorized to issue up to 50,000,000 shares of Common Stock, with
a par value of $0.0001 per share. As of May 3, 2001, there were 10,088,608
shares of Common Stock issued and outstanding . Each share of Common Stock is
entitled to one vote on all matters submitted for shareholder approval.
-3-
Quorum and Votes Required for Approval.
The presence at the Annual Meeting, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding and entitled to vote on the
record date will constitute a quorum entitled to conduct business at the Annual
Meeting. Abstentions and broker non-votes will be included in the calculation of
the number of shares of Common Stock considered to be present at the Annual
Meeting. Broker non-votes refer to shares held by brokers and other nominees or
fiduciaries that are present at the Annual Meeting but not voted on a matter.
Directors are elected by plurality vote of the votes cast at the Annual Meeting.
Abstentions and broker non-votes will have no effect on the election of
directors.
Interest of Insiders in Material Transactions
Subsequent to December 31, 2000, and as reported by the Company on their Current
Report on Form 8-K as filed with the U.S. Securities and Exchange Commission on
May 3, 2001, the Company entered into a definitive financing arrangement with
Redruth Ventures Inc. a British Virgin Islands corporation ("RRV") and Bingo,
Inc an Anguillia corporation ("BI") (collectively the "Holders").
Under the financing arrangement, the Company issued a convertible debenture
dated for reference April 16, 2001 (the "Debenture") to RRV and BI in the
aggregate amount of $1,250,000.00 due five years from the closing date with 12%
interest (the "Interest Rate") payable annually. Interest shall accrue on the
principal amount from time to time outstanding under the Debenture at the
Interest Rate from the date of the Debenture through April 16, 2003 (the
"Accrued Interest Payment Date"), but the accrued interest is not be payable
until the Accrued Interest Payment Date. Subsequent to the Accrued Interest
Payment Date, interest shall accrue at the Interest Rate and be payable on the
first business day (the "Payment Date") of each succeeding quarter through and
including April 16, 2006. All principal, accrued but unpaid interest and any
other amounts due pursuant to the Debenture shall be due and payable on the
maturity of the Debenture.
Additional terms of the Debenture include the right by RRV and BI to convert,
until the third anniversary date of the Debenture, any or all of the principal
amount of the Debenture outstanding, into shares of Company's Common Stock at a
conversion price of $0.125 per share, subject to adjustment,
The Company may at its option, pay the accrued interest on the Accrued Interest
Payment Date and shall pay all other interest thereafter accrued, in (i) cash in
lawful money of United States of America, (ii) common stock of the Company
("Company Common Stock") or (iii) a combination of both cash and Company Common
Stock. Any amounts remaining unpaid on the Debenture on the maturity date shall
be paid in full in cash on the maturity of the Debenture. Any shares of the
Common Stock of the Company delivered to the Holders in payment of the Debenture
in satisfaction of any interest payment as described above will be valued at
$0.25 per share ("Valuation Price").
Pursuant to the terms of the financing arrangement, the Company issued warrants
giving RRV and BI the right to purchase an additional $3,000,000 worth of shares
of the Company's
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Common Stock at a fixed price of $0.25 per share. The Holders have been given
the right to name four members of an expanded five member board of directors.
Mr. Mitch White and Mr. Randy Peterson nominees disclosed elsewhere in this
Proxy Statement are the designees of RRV.
Subsequent to the issuance of the Debenture, the Company amended the terms of
the Employment agreement with the Company's President and CEO, Shane Murphy.
Particulars of the revised employment agreement are disclosed elsewhere in this
circular under "Employment Contracts and Termination of Employment and Change of
Control Arrangements".
Interest of Certain Persons in Matters to be Acted Upon
No director or senior officer of the Company or any proposed nominee of
management of the Company for election as a director of the Company, nor any
associate or affiliate of any of the foregoing persons, has any material
interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon at the Annual Meeting other than the
election of directors and the approval of the Company's 1999 and 2001 Stock
Option Plans.
BUSINESS OF THE MEETING
There are five matters being presented for consideration by the shareholders at
the Annual Meeting, the election of four directors; the approval of Grant
Thornton LLP as auditor of the Company, the approval by the stockholders of the
Company's 1999 Stock Option Plan the approval by the stockholders of the
Company's 2001 Stock Option Plan and the approval of an amendment to the
Company's Bylaws.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
General
The Company's Bylaws ("Bylaws") provide that the number of directors shall be
increased or decreased from time to time by resolution of the board of directors
or the shareholders. Directors are elected for a term of one year and until
their successors have been elected and qualified. There are currently three
directors of the Company. In connection with the financing arrangement with RRV
and BI disclosed above under "Interest of Insiders in Material Transactions" the
board of directors has authorized the increase in the size of the board from
three to four and has put forward four nominees for election as directors at the
Annual Meeting.
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Information with Respect to Nominees
The following table lists the persons nominated by the board of directors for
election as directors and also lists certain information with respect to those
persons.
Principal Occupation of
Nominee Age Director Since Director Ownership (1) Ownership
- ------------------------ -------- ------------------- ---------------------------- ------------------- --------------
David Chalk 42 October, 2000 Chairman of the Board of Nil Nil
Chalk Network Inc., a
media production company
Shane Murphy 40 July 1999 Chairman of the Board, 1,075,000(2) 9.63%
Chief Executive Officer,
President, Treasurer and
Secretary
Randy Peterson(3) 49 Nominee Detective with the Nil Nil
Vancouver Police Department
Mitch White(4) 40 Nominee Chairman and director of Nil Nil
Cyop Systems International
Ltd., a private software
development company
(1) The ownership includes the beneficial ownership of securities and the
beneficial ownership of securities that can be acquired within 60 days from
May 3, 2001 upon the exercise of options. Each beneficial owner's
percentage ownership is determined by assuming that options that are held
by such person and which are exercisable within 60 days from May 3, 2001,
are exercised, for the purpose of computing percentage ownership.
(2) Includes 1,075,000 options with exercise prices ranging from $0.44 to $0.75
per share (which options are exercisable presently or within 60 days).
(3) Mr. Peterson is one of the RRV representative designees on the Board.
(4) Mr. White is one of the RRV representative designees on the Board
Background of Nominees
David Chalk - Member of the Board of Directors
Mr. Chalk, age 42, has been a director of the Company since October, 2000. Mr.
Chalk is the Chairman of Chalk Network Inc., a media production company
controlled by Mr. Chalk, involved in the production of video vignettes to
companies, video content to airlines and a one-
-6-
half hour television program which provides information about computers and
technology. Prior to 1996, Mr. Chalk was a principal of Doppler Computer
Superstores, a computer retailer.
Shane Murphy - President, Principal Executive Officer and a Member of the Board
of Directors
Mr. Murphy, age 40, has served as the Chairman of the Board, Chief Executive
Officer, President, Treasurer and Secretary of the Company since July 1, 1999.
From June 1996 to June 1999, Mr. Murphy held the positions of Chief Executive
Officer and President at Canadian Capital Management, a private company engaged
in providing consulting services to the marketing industry. From 1986 to 1996,
Mr. Murphy served as Chief Executive Officer and President of Ad Team Canada, a
private marketing communications company that was liquidated in 1996.
Randy Peterson - Nominee Director
Mr. Peterson, age 49, has been a Detective with the Vancouver Police Department,
in British Columbia, Canada, for over 23 years. He has considerable
investigative experience in matters related to gaming, internet related business
practices and internal investigations. Mr. Peterson is a designee of RRV
pursuant to the financing agreement disclosed elsewhere in this document under
the heading "Interest of Insiders in Material Transactions".
Mitch White -Nominee Director
Mr. White, age 40, is a private businessman and the Chairman and a director of
Cyop Systems International Ltd., a privately owned company specializing in
software development for e-commerce systems and pay per play gaming systems. Mr.
White has an extensive background in the music and entertainment industry, and
was previously the Director and Chairman of Starnet Communications International
Inc., a communications company listed on the OTCBB under the symbol SNMM
Vote Required
A majority of votes by the shares of Common Stock present or represented and
voting at the Annual Meeting is required to elect the nominees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING FOR ALL NOMINEES FOR THE
BOARD OF DIRECTORS.
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EXECUTIVE COMPENSATION OF MANAGEMENT, OWNERSHIP OF CERTAIN
STOCKHOLDERS, AND CERTAIN RELATED TRANSACTIONS
The following table lists the Company's executive officers during fiscal year
2000:
Positions with the
Name Company Age Office Held Since
- ------------------------------- ---------------------------- ----- --------------------
Shane Murphy Chairman of the Board, 40 July 1999
Chief Executive Officer,
President, Treasurer and
Secretary
- ------------------------------- ---------------------------- ----- --------------------
James Beau Buck(1) Senior Vice-President 45 April 2000
- ------------------------------- ---------------------------- ----- --------------------
(1) Mr. Buck ceased to be an executive officer of the Company on April 2, 2001.
Executive officers are appointed annually by the board of directors and serve at
the pleasure of the board. There is no family relationship between any of the
executive officers and directors. Memberships on the boards of other public
companies are set out above under "Election of Directors - Background of
Nominees" in the biographies of each of the nominee directors, and memberships
on the boards of other public companies for each of the executive officers who
are not directors are set out below.
Background of Executive Officers
James Beau Buck - Senior Vice-President
Mr. Buck, age 45, served as the Senior Vice-President of the Company from April
2000 to April 2001. From October 1999 to April 2000 Mr. Buck was an executive
producer for the Company. From 1995 to October 1999, Mr. Buck was an independent
internet consultant providing internet, web and technical development services
to many internet based companies including GeoCities.com (now Yahoo),
PriceGrabber.Com and Jexp.com.
Mr. Buck holds a Bachelor of Arts degree from the University of Minnesota.
The biography of Mr Murphy can be found under "Election of Directors -
Background of Nominees".
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon the a review of Forms 3, 4 and 5 furnished to the Company, no
officer, director or beneficial owner of more than ten percent of the Common
Stock of the Company failed to file on a timely basis reports required to be
filed by Section 16(a) of the Exchange Act during the most recent fiscal year.
-8-
Board Committees
There are currently no committees of the board of directors.
Board of Directors Meetings
The Company's board of directors did not meet in person during the last fiscal
year, but approved all actions required by unanimous consent.
Involvement in Certain Legal Proceedings.
To the best knowledge of the executive officers and directors of the Company,
neither the Company nor any of its executive officers, directors or nominees are
parties to any legal proceeding or litigation other than as described below.
Further, the executive officers and directors know of no threatened or
contemplated legal proceedings or litigation other than as described below. None
of the executive officers and directors have been convicted of a felony or none
have been convicted of any criminal offense, felony and misdemeanour relating to
securities or performance in corporate office. To the best of the knowledge of
the executive officers and directors, no investigations of felonies, misfeasance
in office or securities investigations are either pending or threatened at the
present time.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the aggregate cash compensation paid for services
rendered to the Company during the last three fiscal years by the Company's
Chief Executive Officer and the Company's most highly compensated executive
officers who served as such at the end of the last fiscal year (the "Named
Executive Officers").
Long-Term
Annual Compensation Compensation Awards
- --------------------------- --------- ------------------------------------------------ -----------------------------
Name and Principal Other Annual Securities Underlying
Position Year Salary ($) Bonus ($) Compensation ($) Options/SARs (#) (1)
- --------------------------------------------------------------------------------------------------------------------
Shane Murphy(2) 2000 $250,099 Nil Nil 500,000
President, Chief
Executive Officer 1999 $125,000 Nil Nil 600,000
1998 Nil Nil Nil Nil
- --------------------------- --------- ------------ --------------- ------------------- -----------------------------
James Beau Buck(3) 2000 $139,384 Nil Nil Nil
1999 $8,307 Nil Nil 400,000
1998 Nil Nil Nil Nil
- --------------------------- --------- ------------ --------------- ------------------- -----------------------------
(1) Represents options granted pursuant to the Company's Non-Qualified Stock
Option Plan adopted by the Directors of the Company effective September 1,
1999, which Plan is set for ratification by the shareholders at this Annual
Meeting
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(2) Mr. Murphy commenced employment with the Company on July 1, 1999 and is
employed through the Company's Canadian subsidiary. The dollar figures
representing amounts paid to Mr. Murphy are denominated in Canadian
dollars.
(3) Mr. Buck commenced employment with the Company in October 1999, and ceased
to be an officer of the Company on April 2, 2001.
Stock Option Plan
In September 1999, the directors of the Company adopted a non-qualified stock
option plan (the "1999 Stock Option Plan"). Under the 1999 Stock Option Plan,
options to purchase shares the Company's Common Stock may be granted to
employees and to such other persons who are not employees as determined by the
1999 Stock Option Plan administrator (the "Administrator"). The maximum
aggregate number of shares of the Company's Common Stock subject to option under
the 1999 Stock Option Plan may not exceed 1,895,000. In determining the number
of shares of the Company's Common Stock subject to each option granted under the
1999 Stock Option Plan, consideration is given to the present and potential
contribution by such person to the success of the Company. The exercise price is
determined by the Administrator, provided that the exercise price for any
covered employee (as that term is defined for the purposes of Section 162(m) (3)
of the Internal Revenue Code of 1986 as amended (the "Code"), may not be less
than the fair market value per share of the Common Stock at the date of grant by
the Administrator. Each option is for a term not in excess of ten years except
in the case of the death of an optionee, in which case the option is exercisable
for a maximum of twelve months thereafter, or in the case of an optionee ceasing
to be a participant under the 1999 Stock Option Plan for any reason other than
cause or death, in which case the option is exercisable for a maximum of 30 days
thereafter. The 1999 Stock Option Plan does not provide for the granting of
financial assistance, whether by way of a loan, guarantee or otherwise, by the
Company in connection with any purchase of shares of Common Stock from the
Company.
During the most recently completed fiscal year, 500,000 options with an exercise
price of $0.44 were granted to Mr. Murphy under the 1999 Stock Option Plan. The
1999 Stock Option Plan is subject to approval at the Annual Meeting. No SARs
(stock appreciation rights) were granted during this period.
The following table sets forth details of all exercises of options granted under
the 1999 Stock Option Plan during the financial year of the Company ended
December 31, 2000 by each of the Named Executive Officers and the value as at
December 31, 2000 of unexercised options granted under the 1999 Stock Option
Plan on an aggregate basis:
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END
OPTION VALUES
- -------------------------- --------------- ------------ -------------------------------- -------------------------------
Shares Value of Options at Year
Acquired on Value Number of Options at Year End End(1)Exercisable /
Name Exercise Realized Exercisable / Unexercisable Unexercisable
- -------------------------- --------------- ------------ -------------------------------- -------------------------------
Shane Murphy Nil Nil 874,998/275,002 $Nil(2)/Nil
- -------------------------- --------------- ------------ -------------------------------- -------------------------------
James Beau Buck Nil Nil 233,334/166,666 $Nil(2)/Nil
- -------------------------- --------------- ------------ -------------------------------- -------------------------------
(1) On December 29, 2000, the closing price of Common Stock on the OTC Bulletin
Board was $0.33. For purposes of the foregoing table, stock options with an
exercise price less than that amount are considered to be in-the-money and
are considered to have a value equal to the difference between this amount
and the exercise price of the stock option multiplied by the number of
shares covered by the stock option.
(2) These options were not in-the-money based on the December 29, 2000 closing
price of $0.33 for the Company's Common Stock.
Long Term Incentive Plan Awards
The Company does not have any Long Term Incentive Plans. Directors receive no
compensation for their service as such, although they do receive reimbursement
for reasonable expenses incurred in attending meetings of the board of
directors. The Company has no obligation or policy to grant stock options to
directors.
The Company may in the future create retirement, pension, profit sharing,
insurance and medical reimbursement plans covering its Officers and Directors.
At the present time, no such plans exist. No advances have been made or are
contemplated by the Company to any of its Officers or Directors.
Employment Contracts and Termination of Employment and Change of Control
Arrangements
The Company and Mr. Murphy entered into a three-year employment agreement
commencing July 1, 1999, which is subject to an additional renewal for a one
year -year period at the end of each term unless terminated by either party with
at least three months' prior written notice. The employment agreement includes a
covenant not to compete for a term of one year after termination of the
officer's employment. The agreement provides that in the event that Mr. Murphy's
employment is terminated by the Company without "cause" (as defined in the
agreement), he would be entitled to a severance payment in an amount equal to
six months' base salary. The agreement further provides that in the event that
Mr. Murphy's employment is terminated by Mr. Murphy as a result of a "change of
control" (as defined in the agreement), he would be entitled to a severance
payment in an amount equal to two times annual salary in effect at that time.
Subsequent to the Company's most recent financial year end, and in consideration
of the financing arrangement with RRV and BI disclosed above under "Interest of
Insiders in Material Transactions", the Company amended the employment agreement
with Mr. Murphy. The
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revised employment agreement provides for an indefinite
term, and provides for the issuance of shares in the Common Stock of the Company
to Mr. Murphy on the closing of the aforementioned financing arrangement. The
shares issuable to Mr. Murphy will subject to an escrow agreement and have not
yet been issued.
The Company has entered into an indemnification agreement with each of its
Directors. These agreements require the Company, among other things, to
indemnify such persons against certain liabilities that may arise by reason of
their status or service as Directors or officers (other than liabilities arising
from actions involving intentional misconduct, fraud or a knowing violation of
law), to advance their expenses incurred as a result of a proceeding as to which
they may be indemnified and to cover such persons under any directors' and
officers' liability insurance policy maintained by the Company. These
indemnification agreements are separate and independent of indemnification
rights under the Company's Bylaws and are irrevocable.
Repricing of Options
During the fiscal year ended December 31, 2000, the Company repriced an
aggregate of 800,000 options granted to Messrs. Murphy and Buck under the 1999
Stock Option Plan from $1.31 to $0.75. The 1999 Stock Option Plan is subject to
ratification at the Annual Meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of December 31, 2000, the outstanding Common
Stock of the Company owned of record or beneficially by each Named Executive
Officer and Director, and by each person who owned of record, or was known by
the Company to own beneficially, more than 5% of the Company's Common Stock and
the shareholdings of all Directors and Executive Officers as a group. A person
is deemed to be the beneficial owner of securities that can be acquired by such
person within 60 days from such date upon the exercise of options. Each
beneficial owner's percentage ownership is determined by assuming that options
that are held by such person and which are exercisable within 60 days from the
date are exercised. As of December 31, 2000, there were 10,088,608 shares of the
Company's Common Stock issued and outstanding.
Percentage of Shares
Name Shares Owned Owned
- ------------------------------------------------------------ -------------------- ----------------------
Shane Murphy(1)(2), President and member of the 1,075,000 9.63%
Board of Directors
- ------------------------------------------------------------ -------------------- ----------------------
James Beau Buck(1)(3), Senior Vice President 350,000 3.35%
- ------------------------------------------------------------ --------------------- -----------------------
David Chalk(1), Member of the Board of Directors Nil Nil
- ------------------------------------------------------------ --------------------- -----------------------
Steven C. Camps(1), Member of the Board of Directors Nil Nil
- ------------------------------------------------------------ --------------------- -----------------------
Michael Townsend(4) 765,000 7.58%
- ------------------------------------------------------------ --------------------- -----------------------
ALL OFFICERS & DIRECTORS AS A
GROUP(5)(Five Individuals) 1,435,000 12.45%
- ------------------------------------------------------------ --------------------- -----------------------
Except as noted below, all shares are held beneficially and of record and each
record shareholder has sole voting and investment power.
(1) These individuals are the executive officers and directors of the Company
and may be deemed to be "parents or founders" of the Company as that term
is defined in the Rules and Regulations promulgated under the 1933 Act.
(2) Includes 1,075,000 options with exercise prices ranging from $0.44 to $0.75
per share (which options are exercisable presently or within 60 days).
(3) Includes 350,000 options with an exercise prices ranging from $0.75 to
$3.00 per share (which options are exercisable presently or within 60
days).
(4) Mr. Townsend is a private investor. The information contained herein with
respect to his holdings is derived from information received from the
Company's Transfer Agent.
(5) Includes 1,435,000 options that are exercisable presently or within 60
days.
CHANGES IN CONTROL
As disclosed elsewhere in this Proxy Statement under "Interest of Insiders in
Material Transactions", the Company entered into a definitive agreement
financing arrangement with Redruth Ventures Inc. a British Virgin Islands
corporation ("RRV") and Bingo, Inc an Anguillia corporation ("BI") (collectively
the "Holders"). Certain of the terms of the financing agreement provide that the
Holders will be given the right to name four members of an expanded five member
board of directors. Mr. Mitch White and Mr. Randy Peterson nominees disclosed
elsewhere in this Proxy Statement are the designees of RRV. At the point that BI
names its designees to the board, the management and control of the board of
directors will have changed such that RRV and BI will have the ability to and
will have designated a majority of the board and will effectively control the
board and the Company. It is not known at this time when this change of control
will be effective. The Company will make the necessary filings disclosing any
change of control at the time that it occurs.
PROPOSAL NO. 2 - APPROVAL OF AUDITOR
Relationship with Independent Auditor
The Company has retained the firm of Grant Thornton LLP, as independent auditor
of the Company for the fiscal year ending December 31, 2001. Grant Thornton LLP
have been the Company's independent auditors of the Company since their
appointment on July 24, 2000.
Effective July 24, 2000, and as reported in the Company's Current Report on Form
8-K dated July 24, 2000, the board of directors approved the appointment of
Grant Thornton, LLP, Los Angeles, California, as the Company's new independent
accountants as of July 24, 2000. As of July 24, 2000, the existing accountants,
Davidson & Company, had not resigned, declined to stand for re-election or been
dismissed.
During the Company's two most recent fiscal years ending December 31, 1999, the
Company had no disagreements with Davidson & Company on any matter of accounting
principles or practices, financial statement disclosure, auditing scope or
procedure which disagreements, if not resolved to the satisfaction of Davidson &
Company, would have caused it to make reference to the subject matter of the
disagreement in connection with its reports.
-13-
During the Company's two most recent fiscal years ending December 31, 1999,
there have been no reportable events with Davidson & Company, required to be
disclosed by Item 304(a) (1) (v) of Regulation S-K of the SEC.
On August 17, 2000, Davidson & Company were dismissed as the Company's principal
accountants. Following August 17, 2000, Davidson & Company continue to work with
the Company on a project-by-project basis as the audit functions are
transitioned to Grant Thornton, LLP. Davidson & Company were dismissed in
connection with the relocation of the Company's executive offices to Los
Angeles, California. Davidson & Company's sole offices are located in Vancouver,
British Columbia, Canada.
The report of Davidson & Company on the audited financial statements for either
of the years ended December 31, 1999 or December 31, 1998 did not contain an
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles, except that the report
contained an explanatory paragraph regarding our ability to continue as a going
concern.
The dismissal of Davidson & Company was effective as of August 17, 2000, was
approved by the board of directors, and was not due to any disagreement between
the Company and Davidson & Company. During the two fiscal years prior to and
preceding the dismissal of Davidson & Company, there were no disagreements with
Davidson & Company on any matter of accounting principles or practices,
financial statement disclosures or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Davidson & Company would
have caused them to make reference thereto in their report on the Company's
financial statements for the period.
The Company does not expect a representative of Grant Thornton LLP to be present
at the Annual Meeting and as such they will not be available at the meeting to
respond to questions.
Ratification of the appointment of Grant Thornton LLP as the Company's
independent auditors for 2001 requires that the votes cast in favor of this
matter exceed the votes cast in opposition. Any shares not voted (whether by
abstention, broker non-vote or otherwise) have no impact on the vote for this
matter.
Disclosure of Auditor Fees
Audit Fees: Fees paid or to be paid to Grant Thornton LLP in connection with the
audit of the Company's annual financial statements for the year ended December
31, 2000 and the review of the Company's interim financial statements included
in the Company's Quarterly Reports on Form 10-Q during the year ended December
31, 2000, totalled approximately $97,531.00.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Grant Thornton LLP to provide services to the Company
regarding financial information systems design and implementation during the
year ended December 31, 2000.
-14-
All Other Fees:
Fees paid to Grant Thornton LLP by the Company during the year ended December
31, 2000 for tax advisory and other consultation services were approximately
$16,282.00.
Vote Required
A majority of votes by the shares of Common Stock present or represented and
voting at the Annual Meeting is required to ratify the appointment of the
Independent Auditors..
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR 2001.
PROPOSAL NO. 3 - APPROVAL OF 1999 stock option plan
RESOLVED, that the Shareholders of the Company authorize and
approve the 1999 Stock Option Plan in the form presented to
this meeting.
The board of directors has unanimously approved, subject to stockholder approval
at the Annual Meeting, the Bingo.com, Inc. Non-Qualified Stock Option Plan (the
"1999 Stock Option Plan"). The purposes of the 1999 Stock Option Plan are to
retain the services of valued key employees and consultants of the Company and
such other persons as the Plan Administrator (as defined below) shall select in
accordance with the eligibility conditions set out in the 1999 Stock Option
Plan, to encourage such persons to acquire a greater proprietary interest in the
Company, thereby strengthening their incentive to achieve the objectives of the
shareholders of the Company, and to serve as an aid and inducement in the hiring
of new employees and to provide an equity incentive to consultants and other
persons selected by the Plan Administrator.
The 1999 Stock Option Plan provides for awards in the form of stock options,
which shall be non-qualified stock options. The board of directors has granted
stock options under the 1999 Stock Option Plan. As of May 3, 2001, there were
options outstanding under the 1999 Stock Option Plan exercisable for 1,500,000
shares of Common Stock with per share exercise prices ranging from $0.44 to
$3.00 and with expiration dates ranging from July 1 2004 to December 13, 2005.
The 1999 Stock Option Plan authorizes the issuance of up to 1,895,000 shares of
Common Stock in connection with awards under the 1999 Stock Option Plan. As of
May 3, 2001, there were 2 persons granted Options under the 1999 Stock Option
Plan, and no shares of Common Stock had been issued upon the exercise of stock
options granted under the 1999 Stock Option Plan. The benefits that will be
received by or allocated to various participants in the 1999 Stock Option Plan
is not currently determinable. On May 3, 2001, the closing per share price of
the Common Stock was approximately $0.15.
The board of directors believes that the 1999 Stock Option Plan has aided the
Company in attracting, motivating and retaining quality employees and management
personnel. The board of directors believes it is important to approve the 1999
Stock Option Plan to provide additional flexibility to the Company in connection
with the structuring of compensation packages through the ability to award
options for shares of Common Stock.
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Stockholder approval of the 1999 Stock Option Plan is required in order that any
options granted to any Covered Employee (as that term is defined under the
Internal Revenue Code of 1986, as amended (the "Code")) will be eligible for the
exclusion set forth in Section 162(m)(4) of the Code with respect to the
deductibility by the Company of certain compensation.
Vote Required
A majority of votes by the shares of Common Stock present or represented and
voting at the Annual Meeting is required to approve and ratify the 1999 Stock
Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
1999 STOCK OPTION PLAN. IT IS THE INTENTION OF THE PERSONS NAMED IN THE
ACCOMPANYING FORM OF PROXY TO VOTE THE SHARES REPRESENTED THEREBY IN FAVOR OF
SUCH APPROVAL UNLESS OTHERWISE INSTRUCTED IN SUCH PROXY.
Principal Provisions of the 1999 Stock Option Plan
The following summary of the 1999 Stock Option Plan is qualified in its entirety
by reference to the full text of the 1999 Stock Option Plan, which is attached
as Appendix A to this Proxy Statement.
Administration: The 1999 Stock Option Plan shall be administered initially by
the board of directors of the Company (the "Board"), except that the Board may,
in its discretion, establish a committee composed of two (2) or more members of
the Board or two (2) or more other persons to administer the Plan, which
committee (the "Committee") may be an executive, compensation or other
committee, including a separate committee especially created for this purpose.
The Committee shall have the powers and authority vested in the Board hereunder
(including the power and authority to interpret any provision of the Plan or of
any Option). The members of any such Committee shall serve at the pleasure of
the Board. A majority of the members of the Committee shall constitute a quorum,
and all actions of the Committee shall be taken by a majority of the members
present. Any action may be taken without a meeting by a written instrument
signed by all of the members of the Committee and any action so taken shall be
fully effective as if it had been taken at a meeting. The Board or, if
applicable, the Committee is referred to herein as the "Plan Administrator."
Subject to the provisions of the 1999 Stock Option Plan, and with a view to
effecting its purpose, the Plan Administrator shall have sole authority, in its
absolute discretion, to (i) construe and interpret this Plan; (ii) define the
terms used in the Plan; (iii) prescribe, amend and rescind the rules and
regulations relating to this Plan; (iv) correct any defect, supply any omission
or reconcile any inconsistency in this Plan; (v) grant Options under this Plan;
(vi) determine the individuals to whom Options shall be granted under this Plan;
(vii) determine the time or times at which Options shall be granted under this
Plan; (viii) determine the number of shares of Common Stock subject to each
Option, the exercise price of each Option, the duration of each Option and the
times at which each Option shall become exercisable; (ix) determine all other
terms and conditions of the Options; and (x) make all other determinations and
interpretations necessary and advisable for the administration of the Plan. All
decisions, determinations and
-16-
interpretations made by the Plan Administrator shall be binding and conclusive
on all participants in the Plan and on their legal representatives, heirs and
beneficiaries.
The Board or, if applicable, the Committee may delegate to one or more executive
officers of the Company the authority to grant Options under this Plan to
employees of the Company who, on the Date of Grant, are not subject to Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") with
respect to the Common Stock ("Non-Insiders"), and are not "covered employees" as
such term is defined for purposes of Section 162(m)(3) of the Internal Revenue
Code of 1986, as amended (the "Code") ("Non-Covered Employees"), and in
connection therewith the authority to determine: (i) the number of shares of
Common Stock subject to such Options; (ii) the duration of the Option; (iii) the
vesting schedule for determining the times at which such Option shall become
exercisable; and (iv) all other terms and conditions of such Options. The
exercise price for any Option granted by action of an executive officer or
officers pursuant to such delegation of authority shall not be less than the
fair market value per share of the Common Stock on the Date of Grant. Unless
expressly approved in advance by the Board or the Committee, such delegation of
authority shall not include the authority to accelerate vesting, extend the
period for exercise or otherwise alter the terms of outstanding Options. The
term "Plan Administrator" when used in any provision of this Plan other than
Sections 2, 5(f), 5(m), and 11 shall be deemed to refer to the Board or the
Committee, as the case may be, and to any executive officer to whom the Board or
Committee, as applicable, has delegated authority to grant Options pursuant to
the Plan, insofar as such provisions may be applied to persons that are
Non-Insiders and Non-Covered Employees and Options granted to such persons.
Shares: The total number of shares of Common Stock available for distribution
under the 1999 Stock Option Plan is 1,895,000 subject to adjustment as set forth
in the 1999 Stock Option Plan. In the event that any outstanding Option expires
or is terminated for any reason, the shares of Common Stock allocable to the
unexercised portion of such Option may again be subject to an Option granted to
the same Optionee or to a different person eligible under the 1999 Stock Option
Plan; provided however, that any cancelled Options will be counted against the
maximum number of shares with respect to which Options may be granted to any
particular person as set forth in the 1999 Stock Option Plan.
Eligibility: Options may be granted to Employees and to such other persons who
are not Employees as the Plan Administrator shall select. Options may be granted
in substitution for outstanding Options of another corporation in connection
with the merger, consolidation, acquisition of property or stock or other
reorganization between such other corporation and the Company or any subsidiary
of the Company. Options also may be granted in exchange for outstanding Options.
The participants in the Plan are selected from among those eligible in the sole
discretion of the Committee.
Awards to Participants: All Options shall be Non-Qualified Stock Options, that
is, options which do not qualify for treatment under Section 422 of the Internal
Revenue Code of 1986, as amended ("Code").
The exercise price shall be fixed by the Plan Administrator at whatever price
the Plan Administrator may determine in the exercise of its sole discretion;
provided that the per share exercise price for any Option granted to a "covered
employee" as such term is defined for
-17-
purposes of Section 162(m)(3) of the Code ("Covered Employee") shall not be less
than the fair market value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrator in good faith; and, provided further, that
Options granted in substitution for outstanding options of another corporation
in connection with the merger, consolidation, acquisition of property or stock
or other reorganization involving such other corporation and the Company or any
subsidiary of the Company may be granted with an exercise price equal to the
exercise price for the substituted option of the other corporation, subject to
any adjustment consistent with the terms of the transaction pursuant to which
the substitution is to occur.
At the time of the grant of the Option, the Plan Administrator shall designate,
the expiration date of the Option, provided that no Option granted under the
1999 Option Plan shall have a term exceeding 10 years from the date of grant. An
Option will be exercisable at such times, over such term and subject to such
terms and conditions as the Plan Administrator determines.
Payment of the exercise price may be made in such manner as the Plan
Administrator may provide, including cash, delivery of shares of Common Stock
already owned.
Upon an optionee's termination of employment or other qualifying relationship,
the Option will be exercisable to the extent determined by the Plan
Administrator; provided, however, that unless employment or such other
qualifying relationship is terminated for cause (as may be defined by the Plan
Administrator in connection with the grant of any stock option), the stock
option will remain exercisable (to the extent that it was otherwise exercisable
on the date of termination) for at least one year after the date of termination
if termination was caused by death or disability or at least 30 days from the
date of termination if termination was caused by other than death or disability,
unless the exercise period is extended by the Plan Administrator until a date
not later than the expiration date of the Option.
Term of the 1999 Stock Option Plan: The 1999 Stock Option Plan will not expire
unless terminated by the Board. Termination of the 1999 Stock Option Plan by the
Board shall not terminate any Option granted prior to such termination.
Amendment of the 1999 Stock Option Plan: The 1999 Stock Option Plan allows the
Board to amend the 1999 Stock Option Plan in certain without stockholder
approval, unless such approval is required to comply with a tax law or
regulatory requirement.
PROPOSAL NO. 4 - APPROVAL OF 2001 stock option plan
RESOLVED, that the Shareholders of the Company authorize and
approve the 2001 Stock Option Plan in the form presented to
this meeting.
The board of directors has unanimously approved, subject to stockholder approval
at the Annual Meeting, the Bingo.com, Inc. 2001 Stock Option Plan (the "2001
Stock Option Plan"),. The purpose of the 2001 Stock Option Plan is to: provide
incentive to employees, directors, advisors and consultants of the Company to
encourage proprietary interest in the Company, to encourage such employees to
remain in the employ of the Company or such directors, advisors and consultants
to remain in the service of the Company, and to attract new employees,
directors, advisors and consultants with outstanding qualifications.
-18-
The 2001 Stock Option Plan provides for awards in the form of stock options,
which shall be issued either as an Incentive Stock Option or a Nonstatutory
Stock Option. As of May 3, 2001, there were no options outstanding under the
2001 Stock Option Plan.
The 2001 Stock Option Plan authorizes the issuance of up to 2,000,000 shares of
Common Stock in connection with awards under the 2001 Stock Option Plan. The
benefits that will be received by or allocated to various participants in the
2001 Stock Option Plan is not currently determinable. On May 3, 2001, the
closing per share price of the Common Stock was approximately $0.15.
The board of directors believes it is important to establish and approve the
2001 Stock Option Plan and to increase the number of shares of Common Stock that
may be issued or distributed in connection with incentive compensation awards to
qualifying participants and to provide additional flexibility to the Company in
connection with the structuring of compensation packages through the ability to
award options for shares of Common Stock.
Vote Required
A majority of votes by the shares of Common Stock present or represented and
voting at the Annual Meeting is required to approve and ratify the 2001 Stock
Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
2001 STOCK OPTION PLAN. IT IS THE INTENTION OF THE PERSONS NAMED IN THE
ACCOMPANYING FORM OF PROXY TO VOTE THE SHARES REPRESENTED THEREBY IN FAVOR OF
SUCH APPROVAL UNLESS OTHERWISE INSTRUCTED IN SUCH PROXY.
Principal Provisions of the 2001 Stock Option Plan
The following summary of the 2001 Stock Option Plan is qualified in its entirety
by reference to the full text of the 2001 Stock Option Plan, which is attached
as Appendix B to this Proxy Statement.
Administration: The 2001 Stock Option Plan shall be administered in the
discretion of the Board from time to time, by the Board of by a Plan Committee
(as defined in the 2001 Stock Option Plan) which shall be appointed by the
Board. The Board or, if applicable, the Plan Committee is referred to herein as
the "Administrator." The Administrator shall have the full power and authority
to operate, manage and administer the 2001 Stock Option Plan (including the
power and authority to interpret any provision of the 2001 Stock Option Plan or
of any Option). The members of any such Plan Committee shall serve at the
pleasure of the Board.
If the shares of Common Stock are registered under the Exchange Act , and
Section 16 Participants are to receive grants of Options under the 2001 Stock
Option Plan, such grants are to be approved by the Board, or by a Plan
Committee, or a sub committee of the Plan Committee or other committee of the
Board consisting solely of two or more directors, each of whom shall be a "non
employee director" within the meaning of Rule 16b-3(b)(3) of the Exchange Act,
and an "outside director" within the meaning of Section 162(m) of the Code.
-19-
Subject to the provisions of the 2001 Stock Option Plan, and with a view to
effecting its purpose, the Administrator shall have sole authority, in its
absolute discretion, to (i) construe and interpret the 2001 Stock Option Plan;
(ii) define the terms used in the 2001 Stock Option Plan; (iii) prescribe, amend
and rescind the rules and regulations relating to the 2001 Stock Option Plan;
(iv) correct any defect, supply any omission or reconcile any inconsistency in
the 2001 Stock Option Plan; (v) grant Options under the 2001 Stock Option Plan;
(vi) determine the individuals to whom Options shall be granted under the 2001
Stock Option Plan; (vii) determine the time or times at which Options shall be
granted under the 2001 Stock Option Plan; (viii) determine the number of shares
of Common Stock subject to each Option, the exercise price of each Option, the
duration of each Option and the times at which each Option shall become
exercisable; (ix) determine all other terms and conditions of the Options; and
(x) make all other determinations and interpretations necessary and advisable
for the administration of the 2001 Stock Option Plan. All decisions,
determinations and interpretations made by the Administrator shall be binding
and conclusive on all participants in the 2001 Stock Option Plan and on their
legal representatives, heirs and beneficiaries.
Shares: The total number of shares of Common Stock available for distribution
under the 2001 Stock Option Plan is 2,000,000 subject to adjustment as set forth
in the 2001 Stock Option Plan.
Eligibility: All employees of the Company and its subsidiaries, including
officers, directors and certain advisors, who render services to the Company,
are eligible to participate in the 2001 Stock Option Plan.
Awards to Participants: The 2001 Stock Option Plan provides for the grant of
Options as Incentive Stock Options or a Nonstatutory Stock Options.
Each Option shall state the Exercise Price. To the extent required by law or
regulation, the Exercise Price in the case of an Option granted to an Optionee
who owns more than ten percent (10%) of the total combined voting power of all
classes of outstanding stock of the Company shall not be less than one hundred
ten percent (110%) of the Fair Market Value on the Grant Date. The Exercise
Price in the case of any Nonstatutory Stock Option, shall not be less than
eighty-five percent (85%) of the Fair Market Value on the Grant Date. The
Exercise Price in the case of any Incentive Stock Option granted to persons
other than to an Optionee who owns more than ten percent (10%) of the total
combined voting power of all classes of outstanding stock of the Company, shall
not be less than the Fair Market Value on the Grant Date.
At the time of the grant of the Option, the Plan Administrator shall designate,
the expiration date of the Option, provided that no Option granted under the
2001 Stock Option Plan shall have a term exceeding 10 years from the date of
grant, and no Option granted to an Optionee who owns more than ten percent (10%)
of the total combined voting power of all classes of outstanding stock of the
Company shall be exercisable after the expiration of five (5) years from the
Grant Date (or less, in the discretion of the Administrator). An Option will be
exercisable at such times, over such term and subject to such terms and
conditions as the Plan Administrator determines.
Payment of the exercise price may be made in such manner as the Plan
Administrator may provide, including cash, delivery of shares of Common Stock
already owned.
-20-
Upon an Optionee's termination of employment or other qualifying relationship,
the Option will be exercisable to the extent determined by the Administrator;
provided, however, that unless employment or such other qualifying relationship
is terminated for cause (as may be defined by the Administrator in connection
with the grant of any stock option), the Option will remain exercisable (to the
extent that it was otherwise exercisable on the date of termination) for at
least 12 months after the date of termination if termination was caused by death
or disability or at least 90 days from the date of termination if termination
was caused by other than death or disability.
During the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee or the Optionee's guardian or legal representative and shall not be
assignable or transferable. Any Option granted shall be non transferable other
than by will or the laws of descent and distribution. Any other attempted
alienation, assignment, pledge, hypothecation, attachment, execution or similar
process, whether voluntary or involuntary, with respect to all or any part of
any Option or right thereunder, shall be null and void and, at the Company's
option, shall cause all of the Optionee's rights under the Option to terminate.
Term of the 2001 Stock Option Plan: The 2001 Stock Option Plan will be effective
upon Stockholder approval. The 2001 Stock Option Plan will expire on the tenth
anniversary of the effective date, unless terminated sooner by the Board.
Amendment of the 2001 Stock Option Plan: The 2001 Stock Option Plan allows the
Board to amend the 2001 Stock Option Plan in certain respects without
stockholder approval, unless such approval is required to comply with a tax law
or regulatory requirement.
PROPOSAL NO. 5 - AMENDMENT OF THE COMPANY'S BYLAWS
The Company's Bylaws currently provide that a the holders of a majority of the
shares entitled to vote shall constitute a quorum for the transaction of
business at any regular or special meeting of the stockholders of the Company.
This requires the attendance at any meeting of the stockholders of the Company,
either in person or by proxy, persons holding and entitled to vote, of 50% plus
one of the issued and outstanding shares of the Company's Common Stock.
As the Company's shares of Common Stock are publicly traded, and a significant
number of the Company's shares of Common Stock are held by nominees and brokers
holding street accounts, management believes that it is difficult to ensure that
a quorum as required under the current Bylaws can be constituted. The Company
was incorporated in the State of Florida pursuant to the Florida Business
Corporation Act, (the "Act") which legislation permits the quorum to consist of
no less than one-third of the shares entitled to vote. Management believes that
this number of would be a more attainable level, and believes that it is in the
best interests of the Company to adopt the lesser quorum requirement permitted
by the Act, and accordingly amend Section 2.04 of the Company's Bylaws.
The following resolutions authorize the amendment of Section 2.04 of the
Company's Bylaws and the specifically the amendment of the number of shares
required to constitute a quorum entitled to conduct business at a meeting of the
stockholders of the Company.
An amendment to the Bylaws that adds, changes, or deletes a greater or lesser
quorum or voting requirement shall meet the same quorum requirement and be
adopted by the same vote and
-21-
voting groups required to take action under the quorum and voting requirements
then in effect or proposed to be adopted, whichever is greater. As such, the
proposed amendment must be approved by the majority of the shares of the
Company's Common Stock voting in person or by proxy at the Annual Meeting.
Accordingly, management requests that shareholders ratify the amendment to the
Company's Bylaws by passing an ordinary resolution in the following terms:
"WHEREAS the Directors have determined that it is in the best interests of the
Company to amend Section 2.04 of the Bylaws of the Company by deleting the
existing Section 2.04 of the Company's Bylaws in its entirety and replace it
with the following text:
"Section 2.04 Quorum, Adjourned Meetings. The holders of not
less than one-third of the shares entitled to vote shall
constitute a quorum for the transaction of business at any
regular or special meeting. In case a quorum shall not be
present at a meeting, the meeting may be adjourned from time
to time without notice other than announcement at the time of
adjournment of the date, time and place of the adjourned
meeting. If a quorum is present, a meeting may be adjourned
from time to time without notice other than announcement at
the time of adjournment of the date, time and place of the
adjourned meeting. At adjourned meetings at which a quorum is
present, any business may be transacted that might have been
transacted at the meeting as originally noticed. If a quorum
is present when a meeting is convened, the shareholders
present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders
originally present to leave less than a quorum."
RESOLVED THAT:
1. Section 2.04 of the Bylaws of the Company be amended by deleting the
existing Section 2.04 of the Company's Bylaws in its entirety and
replacing it with the text presented to the meeting, to have effect
from the date of this resolution.
2. any officer or director of the Company is authorized and directed on
behalf of the Company to deliver certify and insert the amended Section
2.04 of the Company's Bylaws in the Company's minute book and to
execute all documents and to do all things as in the opinion of such
person may be necessary or desirable in connection with the foregoing;
and
3. any one or more of the directors and officers of the Corporation be
authorized and directed to perform all such acts, deeds and things and
execute, under the seal of the Corporation or otherwise, all such
documents and other writings, including treasury orders, stock exchange
and securities commission forms, as may be required to give effect to
the true intent of this resolution."
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE AMENDMENT OF SECTION 2.04 OF THE
COMPANY'S BYLAWS.
-22-
OTHER MATTERS
Transfer Agent
The Interwest Transfer Co., Inc., located at 1981 East, 4800 South, Suite 100
Salt Lake City Utah USA 84117 , phone (801) 272-9294, fax (801) 277-3147 is the
transfer agent for the Company's shares of Common Stock.
Stockholder Proposals
Stockholder proposals intended to be presented at the next Annual Meeting of
Stockholders of the Company must meet the requirements of Rule 14a-8 promulgated
by the Securities and Exchange Commission and must be received by the Company at
its principal executive offices by December 31, 2001 in order to be considered
for inclusion in the Company's proxy statement relating to such meeting.
Additional Information
Each shareholder has received the Company's Annual Report containing the
Company's 2000 audited financial statements, including the report of its
independent chartered accountants. Upon receipt of a written request, the
Company will furnish to any shareholder, without charge, a copy of the Company's
2000 Form 10-K as filed with the SEC under the Securities Exchange Act of 1934
(including the financial statements and the schedules thereto and a list briefly
describing the exhibits thereto). Shareholders should direct any request to the
Company, 4223 Glencoe Avenue, Suite C200, Marina Del Rey, California, USA 90292
Attention: Shane Murphy, President.
Action on Other Matters
The board of directors knows of no other matters to be brought before the
shareholders at the Annual Meeting. In the event other matters are presented for
a vote at the Annual Meeting, the proxy holders will vote shares represented by
properly executed proxies in their discretion in accordance with their judgement
on such matters.
At the Annual Meeting, management will report on the Company's business and
shareholders will have the opportunity to ask questions.
BINGO.COM, INC.
By Order of the Board of Directors
/s/ "Shane Murphy"
------------------------------------------
Shane Murphy
President
Marina Del Rey, California
June 5, 2001
-23-
APPENDIX A
BINGO.COM, INC.
NON-QUALIFIED STOCK OPTION PLAN
The Bingo.com, Inc. Non-Qualified Stock Option Plan (the "Plan"),
effective September 1, 1999, provides for the granting of options to acquire
shares of common stock (the "Common Stock"), of Bingo.com, Inc., a Florida
corporation (the "Company").
Stock options granted under this Plan are referred to as "Options."
1. PURPOSES.
The purposes of this Plan are to retain the services of valued key
employees and consultants of the Company and such other persons as the Plan
Administrator shall select in accordance with Section 3 below, to encourage such
persons to acquire a greater proprietary interest in the Company, thereby
strengthening their incentive to achieve the objectives of the shareholders of
the Company, and to serve as an aid and inducement in the hiring of new
employees and to provide an equity incentive to consultants and other persons
selected by the Plan Administrator.
2. ADMINISTRATION.
This Plan shall be administered initially by the Board of Directors of
the Company (the "Board"), except that the Board may, in its discretion,
establish a committee composed of two (2) or more members of the Board or two
(2) or more other persons to administer the Plan, which committee (the
"Committee") may be an executive, compensation or other committee, including a
separate committee especially created for this purpose. The Committee shall have
the powers and authority vested in the Board hereunder (including the power and
authority to interpret any provision of the Plan or of any Option). The members
of any such Committee shall serve at the pleasure of the Board. A majority of
the members of the Committee shall constitute a quorum, and all actions of the
Committee shall be taken by a majority of the members present. Any action may be
taken without a meeting by a written instrument signed by all of the members of
the Committee and any action so taken shall be fully effective as if it had been
taken at a meeting. The Board or, if applicable, the Committee is referred to
herein as the "Plan Administrator."
Subject to the provisions of this Plan, and with a view to effecting
its purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (i) construe and interpret this Plan; (ii) define the terms used
in the Plan; (iii) prescribe, amend and rescind the rules and regulations
relating to this Plan; (iv) correct any defect, supply any omission or reconcile
any inconsistency in this Plan; (v) grant Options under this Plan; (vi)
determine the individuals to whom Options shall be granted under this Plan;
(vii) determine the time or times at which Options shall be granted under this
Plan; (viii) determine the number of shares of Common Stock subject to each
Option, the exercise price of each Option, the duration of each Option and the
times at which each Option shall become exercisable; (ix) determine all other
terms and conditions of the Options; and (x) make all other determinations and
interpretations necessary and advisable for the administration of the Plan. All
decisions, determinations and interpretations made by the Plan Administrator
shall be binding and conclusive on all participants in the Plan and on their
legal representatives, heirs and beneficiaries.
The Board or, if applicable, the Committee may delegate to one or more
executive officers of the Company the authority to grant Options under this Plan
to employees of the Company who, on the Date of Grant, are not subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") with respect to the Common Stock ("Non-Insiders"), and are not "covered
employees" as such term is defined for purposes of Section 162(m)(3) of the Code
("Non-Covered Employees"), and in connection therewith the authority to
determine: (i) the number of shares of Common Stock subject to such Options;
(ii) the duration of the Option; (iii) the vesting schedule for determining the
times at which such Option shall become exercisable; and (iv) all other terms
and
1
conditions of such Options. The exercise price for any Option granted by action
of an executive officer or officers pursuant to such delegation of authority
shall not be less than the fair market value per share of the Common Stock on
the Date of Grant. Unless expressly approved in advance by the Board or the
Committee, such delegation of authority shall not include the authority to
accelerate vesting, extend the period for exercise or otherwise alter the terms
of outstanding Options. The term "Plan Administrator" when used in any provision
of this Plan other than Sections 2, 5(f), 5(m), and 11 shall be deemed to refer
to the Board or the Committee, as the case may be, and to any executive officer
to whom the Board or Committee, as applicable, has delegated authority to grant
Options pursuant to the Plan, insofar as such provisions may be applied to
persons that are Non-Insiders and Non-Covered Employees and Options granted to
such persons.
3. ELIGIBILITY.
Options may be granted to Employees and to such other persons who are
not Employees as the Plan Administrator shall select. Options may be granted in
substitution for outstanding Options of another corporation in connection with
the merger, consolidation, acquisition of property or stock or other
reorganization between such other corporation and the Company or any subsidiary
of the Company. Options also may be granted in exchange for outstanding Options.
Any person to whom an Option is granted under this Plan is referred to as an
"Optionee." Any person who is the owner of an Option is referred to as a
"Holder."
4. STOCK.
The Plan Administrator is authorized to grant Options to acquire up to
a total of 1,895,000 shares of the Company's authorized but unissued, or
reacquired, Common Stock which shares have been reserved for this purpose. The
number of shares with respect to which Options may be granted hereunder is
subject to adjustment as set forth in Section 5(m) hereof. In the event that any
outstanding Option expires or is terminated for any reason, the shares of Common
Stock allocable to the unexercised portion of such Option may again be subject
to an Option granted to the same Optionee or to a different person eligible
under Section 3 of this Plan; provided however, that any canceled Options will
be counted against the maximum number of shares with respect to which Options
may be granted to any particular person as set forth in Section 3 hereof.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrator (the "Agreement"). Agreements may
contain such provisions, not inconsistent with this Plan, as the Plan
Administrator in its discretion may deem advisable. All Options also shall
comply with the following requirements:
(a) Number of Shares and Type of Option.
Each Agreement shall state the number of shares of Common
Stock to which it pertains. All Options shall be Non-Qualified Stock Options,
that is, options which do not qualify for treatment under Section 422 of the
Internal Revenue Code of 1986, as amended ("Code").
(b) Date of Grant.
Each Agreement shall state the date the Plan Administrator has
deemed to be the effective date of the Option for purposes of this Plan (the
"Date of Grant").
2
(c) Option Price.
Each Agreement shall state the price per share of Common Stock
at which it is exercisable. The exercise price shall be fixed by the Plan
Administrator at whatever price the Plan Administrator may determine in the
exercise of its sole discretion; provided that the per share exercise price for
any Option granted to a "covered employee" as such term is defined for purposes
of Section 162(m)(3) of the Code ("Covered Employee") shall not be less than the
fair market value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrator in good faith; and, provided further, that
Options granted in substitution for outstanding options of another corporation
in connection with the merger, consolidation, acquisition of property or stock
or other reorganization involving such other corporation and the Company or any
subsidiary of the Company may be granted with an exercise price equal to the
exercise price for the substituted option of the other corporation, subject to
any adjustment consistent with the terms of the transaction pursuant to which
the substitution is to occur.
(d) Duration of Options.
At the time of the grant of the Option, the Plan Administrator
shall designate, subject to paragraph 5(g) below, the expiration date of the
Option. In the absence of action to the contrary by the Plan Administrator in
connection with the grant of a particular Option, all Options granted under this
Section 5 shall expire ten (10) years from the Date of Grant.
(e) Vesting Schedule.
No Option shall be exercisable until it has vested. The
vesting schedule for each Option shall be specified by the Plan Administrator at
the time of grant of the Option prior to the provision of services with respect
to which such Option is granted; provided, that if no vesting schedule is
specified at the time of grant, the Option shall vest according to the following
schedule:
Number of Years Percentage of Total
Following Date of Grant Option Vested
- ------------------------------------- ---------------------------------
One 20%
Two 40%
Three 60%
Four 80%
Five 100%
The Plan Administrator may specify a vesting schedule for all or any
portion of an Option based on the achievement of performance objectives
established in advance of the commencement by the Optionee of services related
to the achievement of the performance objectives. Performance objectives shall
be expressed in terms of one or more of the following: return on equity, return
on assets, share price, market share, sales, earnings per share, costs, net
earnings, net worth, inventories, cash and cash equivalents, gross margin or the
Company's performance relative to its internal business plan. Performance
objectives may be in respect of the performance of the Company as a whole
(whether on a consolidated or unconsolidated basis any parent or subsidiary
corporation, or any subdivision, operating unit, product or product line of
either of the foregoing. Performance objectives may be absolute or relative and
may be expressed in terms of a progression or a range. An Option that is
exercisable (in whole or in part) upon the achievement of one or more
performance objectives may be exercised only following written notice to the
Optionee and the Company by the Plan Administrator that the performance
objective has been achieved.
3
(f) Acceleration of Vesting.
The vesting of one or more outstanding Options may be
accelerated by the Plan Administrator at such times and in such amounts as it
shall determine in its sole discretion. The vesting of Options also shall be
accelerated under the circumstances described in Section 5(m) below.
(g) Term of Option.
Vested Options shall terminate, to the extent not previously
exercised, upon the occurrence of the first of the following events: (i) the
expiration of the Option, as designated by the Plan Administrator in accordance
with Section 5(d) above; (ii) the date of an Optionee's termination of
employment or contractual relationship with the Company or any parent or
subsidiary corporation for cause (as determined in the sole discretion of the
Plan Administrator); (iii) the expiration of thirty (30) days from the date of
an Optionee's termination of employment or contractual relationship with the
Company or any parent or subsidiary corporation for any reason other than cause,
death or Disability (as defined below), unless the exercise period is extended
by the Plan Administrator until a date not later than the expiration date of the
Option; or (iv) the expiration of one year from termination of an Optionee's
employment or contractual relationship by reason of death or Disability (as
defined below), unless the exercise period is extended by the Plan Administrator
until a date not later than the expiration date of the Option. Upon the death of
an Optionee, any vested Options held by the Optionee shall be exercisable only
by the person or persons to whom such Optionee's rights under such Option shall
pass by the Optionee's will or by the laws of descent and distribution of the
Optionee's domicile at the time of death, and only until such Options terminate
as provided above. For purposes of the Plan, unless otherwise defined in the
Agreement, "Disability" shall mean medically determinable physical or mental
impairment which has lasted or can be expected to last for a continuous period
of not less than twelve (12) months or that can be expected to result in death.
The Plan Administrator shall determine whether an Optionee has incurred a
Disability on the basis of medical evidence acceptable to the Plan
Administrator. Upon making a determination of Disability, the Plan Administrator
shall, for purposes of the Plan, determine the date of an Optionee's termination
of employment or contractual relationship.
Unless accelerated in accordance with Section 5(f) above,
unvested Options shall terminate immediately upon termination of employment of
the Optionee by the Company for any reason whatsoever, including death or
Disability. For purposes of this Plan, transfer of employment between or among
the Company and/or any parent or subsidiary corporation shall not be deemed to
constitute a termination of employment with the Company or any parent or
subsidiary corporation. For purposes of this subsection, employment shall be
deemed to continue while the Optionee is on military leave, sick leave or other
bona fide leave of absence (as determined by the Plan Administrator). The
foregoing notwithstanding, employment shall not be deemed to continue beyond the
first ninety (90) days of such leave, unless the Optionee's re-employment rights
are guaranteed by statute or by contract.
(h) Exercise of Options.
Options shall be exercisable, in full or in part, at any time
after vesting, until expiration of the Option term. If less than all of the
shares included in the vested portion of any Option are purchased, the remainder
may be purchased at any subsequent time prior to the expiration of the Option
term. No portion of any Option for less than one hundred (100) shares (as
adjusted pursuant to Section 5(m) below) may be exercised; provided, that if the
vested portion of any Option is less than one hundred (100) shares, it may be
exercised with respect to all shares for which it is vested. Only whole shares
may be issued pursuant to an Option, and to the extent that an Option covers
less than one (1) share, it is unexercisable.
Options or portions thereof may be exercised by giving written
notice to the Company, which notice shall specify the number of shares to be
purchased, and be accompanied by payment in the amount of the aggregate exercise
price for the Common Stock so purchased, which payment shall be in the form
specified in Section 5(i) below. The Company shall not be obligated to issue,
transfer or deliver a certificate of Common Stock to the Holder of any Option,
until provision has been made by the Holder, to the satisfaction of the Company,
for the payment of the aggregate exercise price for all shares for which the
Option shall have been exercised and for satisfaction of any tax withholding
obligations associated with such exercise. During the lifetime of an Optionee,
4
Options are exercisable only by the Optionee or a transferee who takes title to
such Option in the manner permitted by Section 5(k) hereof. It shall be a
condition precedent to the exercise of any Option granted hereunder that the
Holder shall enter into a Stock Transfer Agreement with the Company.
(i) Payment upon Exercise of Option.
Upon the exercise of any Option, the aggregate exercise price
shall be paid to the Company. The Holder may pay for all or any portion of the
aggregate exercise price in cash, by certified or cashier's check, or by
complying with one or more of the following alternatives:
(1) by delivering to the Company shares of Common Stock
previously held by such Holder, or by the Company withholding shares of Common
Stock otherwise deliverable pursuant to exercise of the Option, which shares of
Common Stock received or withheld shall have a fair market value at the date of
exercise (as determined by the Plan Administrator) equal to the aggregate
exercise price to be paid by the Optionee upon such exercise;
(2) by delivering a properly executed exercise notice together
with irrevocable instructions to a broker promptly to sell or margin a
sufficient portion of the shares and deliver directly to the Company the amount
of sale or margin loan proceeds to pay the exercise price; or
(3) by complying with any other payment mechanism approved by
the Plan Administrator at the time of exercise.
(j) Rights as a Shareholder.
A Holder shall have no rights as a shareholder with respect to
any shares covered by an Option until such Holder becomes a record holder of
such shares, irrespective of whether such Holder has given notice of exercise.
Subject to the provisions of Section 5(m) hereof, no rights shall accrue to a
Holder and no adjustments shall be made on account of dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights declared on, or created in, the Common Stock for which the
record date is prior to the date the Holder becomes a record holder of the
shares of Common Stock covered by the Option, irrespective of whether such
Holder has given notice of exercise.
(k) Transfer of Option.
Options granted under this Plan and the rights and privileges
conferred by this Plan may not be transferred, assigned, pledged or hypothecated
in any manner (whether by operation of law or otherwise) other than by will, by
applicable laws of descent and distribution or pursuant to a qualified domestic
relations order, and shall not be subject to execution, attachment or similar
process; provided however, that any Agreement may provide, or be amended to
provide, that an Option to which it relates is transferable without payment of
consideration to immediate family members of the Optionee or to corporations,
trusts, partnerships, or limited liability companies established exclusively for
the benefit of the Optionee and the Optionee's immediate family members. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any
Option or of any right or privilege conferred by this Plan contrary to the
provisions hereof, or upon the sale, levy or any attachment or similar process
upon the rights and privileges conferred by this Plan, such Option shall
thereupon terminate and become null and void.
(l) Securities Regulation and Tax Withholding.
(1) Shares shall not be issued with respect to an Option
unless the exercise of such Option and the issuance and delivery of such shares
shall comply with all relevant provisions of law, including, without limitation,
Section 162(m) of the Code, any applicable state securities laws, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations thereunder
and the requirements of any stock exchange or automated inter-dealer quotation
system of a registered national securities association upon which such shares
may then be listed, and such issuance shall be further subject to the approval
of counsel for the Company with respect to such compliance, including the
availability of an exemption from registration for the issuance and sale of such
shares.
5
The inability of the Company to obtain from any regulatory body the authority
deemed by the Company to be necessary for the lawful issuance and sale of any
shares under this Plan, or the unavailability of an exemption from registration
for the issuance and sale of any shares under this Plan, shall relieve the
Company of any liability with respect to the non-issuance or sale of such
shares.
As a condition to the exercise of an Option, the Plan
Administrator may require the Holder to represent and warrant in writing at the
time of such exercise that the shares are being purchased only for investment
and without any then-present intention to sell or distribute such shares. At the
option of the Plan Administrator, a stop-transfer order against such shares may
be placed on the stock books and records of the Company, and a legend indicating
that the stock may not be pledged, sold or otherwise transferred, unless an
opinion of counsel is provided stating that such transfer is not in violation of
any applicable law or regulation, may be stamped on the certificates
representing such shares in order to assure an exemption from registration. The
Plan Administrator also may require such other documentation as may from time to
time be necessary to comply with applicable laws, including federal and state
securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF
OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
(2) The Holder shall pay to the Company by certified or
cashier's check, promptly upon exercise of an Option or, if later, the date that
the amount of such obligations becomes determinable, all applicable federal,
state, local and foreign withholding taxes that the Plan Administrator, in its
discretion, determines to result upon exercise of an Option or from a transfer
or other disposition of shares of Common Stock acquired upon exercise of an
Option or otherwise related to an Option or shares of Common Stock acquired in
connection with an Option. Upon approval of the Plan Administrator, a Holder may
satisfy such obligation by complying with one or more of the following
alternatives selected by the Plan Administrator:
(A) by delivering to the Company shares of Common
Stock previously held by such Holder, or by the Company withholding
shares of Common Stock otherwise deliverable pursuant to the exercise
of the Option, which shares of Common Stock received or withheld shall
have a fair market value at the date of exercise (as determined by the
Plan Administrator) equal to any withholding tax obligations arising as
a result of such exercise, transfer or other disposition;
(B) by executing appropriate loan documents approved
by the Plan Administrator by which the Holder borrows funds from the
Company to pay any withholding taxes due under this Paragraph 2, with
such repayment terms as the Plan Administrator shall select; or
(C) by complying with any other payment mechanism
approved by the Plan Administrator from time to
time.
(3) The issuance, transfer or delivery of certificates of
Common Stock pursuant to the exercise of Options may be delayed, at the
discretion of the Plan Administrator, until the Plan Administrator is satisfied
that the applicable requirements of applicable securities laws and the
withholding provisions of the Code have been met and that the Holder has paid or
otherwise satisfied any withholding tax obligation as described in (2) above.
(m) Stock Dividend or Reorganization.
(1) If (i) the Company shall at any time be involved in the
substitution of a new option for an outstanding Option, or the assumption of an
Option, by a corporation, or a parent or subsidiary of such corporation, by
reason of a merger, consolidation, acquisition of property or stock, separation,
reorganization, or liquidation of the Company; (ii) the Company shall declare a
dividend payable in, or shall subdivide or combine, its Common Stock or (iii)
any other event with substantially the same effect shall occur, the Plan
Administrator shall, subject to applicable law, with respect to each outstanding
Option, proportionately adjust the number of shares of Common Stock subject to
such Option and/or the exercise price per share so as to preserve the rights of
the Holder substantially proportionate to the rights of the Holder prior to such
event, and to the extent that such action shall
6
include an increase or decrease in the number of shares of Common Stock subject
to outstanding Options, the number of shares available under Section 4 of this
Plan shall automatically be increased or decreased, as the case may be,
proportionately, without further action on the part of the Plan Administrator,
the Company, the Company's shareholders, or any Holder.
(2) In the event that the presently authorized Common Stock of
the Company is changed into the same number of shares with a different par
value, or without par value, the stock resulting from any such change shall be
deemed to be Common Stock within the meaning of the Plan, and each Option shall
apply to the same number of shares of such new stock as it applied to old shares
immediately prior to such change.
(3) If the Company shall at any time declare an extraordinary
dividend with respect to the Common Stock, whether payable in cash or other
property, the Plan Administrator may, subject to applicable law, in the exercise
of its sole discretion and with respect to each outstanding Option,
proportionately adjust the number of shares of Common Stock subject to such
Option and/or adjust the exercise price per share so as to preserve the rights
of the Holder substantially proportionate to the rights of the Holder prior to
such event, and to the extent that such action shall include an increase or
decrease in the number of shares of Common Stock subject to outstanding Options,
the number of shares available under Section 4 of this Plan shall automatically
be increased or decreased, as the case may be, proportionately, without further
action on the part of the Plan Administrator, the Company, the Company's
shareholders, or any Holder.
(4) The foregoing adjustments in the shares subject to Options
shall be made by the Plan Administrator, or by any successor administrator of
this Plan, or by the applicable terms of any assumption or substitution
document.
(5) The grant of an Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge,
consolidate or dissolve, to liquidate or to sell or transfer all or any part of
its business or assets.
6. EFFECTIVE DATE; TERM.
Options may be granted by the Plan Administrator on or after the date
as of which the Plan is effective, as first stated above (the "Effective Date"),
and until this Plan is terminated by the Board in its sole discretion.
Termination of this Plan shall not terminate any Option granted prior to such
termination. Any Option granted by the Plan Administrator to any Covered
Employee prior to the approval of this Plan by the shareholders of the Company
shall be granted subject to ratification of this Plan by the shareholders of the
Company within twelve (12) months after the Effective Date. If such shareholder
ratification is sought and not obtained, any Options granted to Covered
Employees will not be eligible for the exclusion set forth in Section 162(m)(4)
of the Code with respect to the deductibility by the Company of certain
compensation.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.
Whether or not any Options are to be granted under this Plan shall be
exclusively within the discretion of the Plan Administrator, and nothing
contained in this Plan shall be construed as giving any person any right to
participate under this Plan. The grant of an Option shall in no way constitute
any form of agreement or understanding binding on the Company or any parent or
subsidiary corporation, express or implied, that the Company or any parent or
subsidiary corporation will employ or contract with an Optionee for any length
of time,
7
nor shall it interfere in any way with the Company's or, where applicable, any
parent or subsidiary corporation's right to terminate Optionee's employment at
any time, which right is hereby reserved.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock
issued upon the exercise of Options shall be used for general corporate
purposes, unless otherwise directed by the Board.
10. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrator shall be indemnified by
the Company for all reasonable expenses and liabilities of any type or nature,
including attorneys' fees, incurred in connection with any action, suit or
proceeding to which they or any of them are a party by reason of, or in
connection with, this Plan or any Option granted under this Plan, and against
all amounts paid by them in settlement thereof (provided that such settlement is
approved by independent legal counsel selected by the Company), except to the
extent that such expenses relate to matters for which it is adjudged that such
Plan Administrator member is liable for willful misconduct; provided, that
within fifteen (15) days after having notice of the institution of any such
action, suit or proceeding, the Plan Administrator member involved therein
shall, in writing, notify the Company of such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to
prosecute or defend the same.
11. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify, amend or terminate
this Plan or modify or amend Options granted under this Plan, including, without
limitation, such modifications or amendments as are necessary to maintain
compliance with applicable statutes, rules or regulations; provided however,
that the events triggering acceleration of vesting of outstanding Options may be
modified, expanded or eliminated without the consent of Holders. The Plan
Administrator may condition the effectiveness of any such amendment on the
receipt of shareholder approval at such time and in such manner as the Plan
Administrator may consider necessary for the Company to comply with or to avail
the Company and/or the Optionees of the benefits of any securities, tax, market
listing or other administrative or regulatory requirement. Without limiting the
generality of the foregoing, the Plan Administrator may modify grants to persons
who are eligible to receive Options under this Plan who are foreign nationals or
employed outside the United States to recognize differences in local law, tax
policy or custom.
Dated: September 1, 1999 BINGO.COM, INC.
By: /s/ "Shane Murphy"
--------------------------------
Its: President
----------------------------------
Title
8
APPENDIX B
BINGO.COM, INC.
2001 STOCK OPTION PLAN
1. PURPOSE. The Plan is intended to provide incentive to employees,
directors, advisors and consultants of the Corporation to encourage proprietary
interest in the Corporation, to encourage such employees to remain in the employ
of the Corporation or such directors, advisors and consultants to remain in the
service of the Corporation, and to attract new employees, directors, advisors
and consultants with outstanding qualifications.
2. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, the capitalized terms used herein shall have the following
meanings:
(a) "Administrator" shall mean the Board or the Plan Committee
of the Board, whichever shall be administering the Plan from time to time in the
discretion of the Board, as described in Section 4 of the Plan.
(b) "Board" shall mean the Board of Directors of the
Corporation.
(c) "Change of Control" shall mean, a change of control of a
nature that would be required to be reported in response to Item 1 of Form 8-K
required to be filed pursuant to the Exchange Act; provided that, without
limitation, such a Change of Control shall be deemed to have occurred if:
(i) the Shareholders of the Corporation approve a
definitive agreement to sell, transfer, or otherwise dispose of all or
substantially all of the Corporation's assets and properties; or
(ii) any "person" (as such term is used in Section
13(d) and 14(d) of the Exchange Act), other than the Corporation or any
"person" who as of the date this Plan is adopted by the Board, is a
director or officer of the Corporation (including any trust of such
director or officer), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing fifty percent (50%) or more
of the combined voting power of the Corporation's then outstanding
securities; provided, however, that the following shall not constitute
a "Change of Control" of the Corporation:
(a) any acquisition directly from the
Corporation (excluding any acquisition resulting from the exercise of a
conversion or exchange privilege in respect of outstanding convertible
or exchangeable securities);
(b) any acquisition by an employee benefit
plan (or related trust) sponsored or maintained by the Corporation or
any corporation controlled by the Corporation; or
(c) upon the death of any person who as of
the date of this Agreement is a director or officer of the Corporation,
the transfer (x) by testamentary disposition or the laws of intestate
succession to the estate or the legal beneficiaries or heirs of such
person, or (y) by the provisions of any living trust to the named
current income beneficiaries thereof of the securities of the
Corporation beneficially owned by such director or officer of the
Corporation; or
(iii) during any period of two consecutive years
during the term of this Plan, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least
a majority thereof, unless the election of each director who was not a
director at the beginning of such period has been approved in advance
by directors representing at least two-thirds of the directors then in
office who were directors at the beginning of the period; or
(iv) the Shareholders of the Corporation approve the
dissolution of the Corporation or a definitive agreement to merge or
consolidate the Corporation with or into another entity in which the
Corporation is not the continuing or surviving corporation or pursuant
to which any shares of the Corporation's stock would be converted into
cash, securities or other property of another entity, other than a
merger of the Corporation in which holders of the Shares immediately
prior to the merger own, either directly or indirectly, fifty percent
(50%) or more of the equity interests or combined voting power of the
surviving entity immediately after the merger as immediately before.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Commission" shall mean the Securities and Exchange
Commission.
(f) "Corporation" shall mean Bingo.com, Inc., a Florida
corporation.
(g) "Disability" shall mean a medically determinable physical
or mental impairment which has made an individual incapable of engaging in any
substantial gainful activity. A condition shall be considered a Disability only
if (i) it can be expected to result in death or has lasted or it can be expected
to last for a continuous period of not less than twelve (12) months, and (ii)
the Administrator, based upon medical evidence, has expressly determined that
Disability exists.
(h) "Employee" shall mean an individual who is employed
(within the meaning of Section 3401 of the Code and the regulations thereunder)
by the Corporation.
-2-
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Exercise Price" shall mean the price per Share
determined by the Administrator, at which an Option may
be exercised.
(k) "Fair Market Value" shall mean the value of one (1) Share,
determined as follows:
(i) If the Shares are (A) listed on an exchange, the
closing price as reported for composite transactions on the date of
valuation, or, if no sale occurred on that date, then the mean between
the closing bid and asked prices on such exchange on such date, or (B)
traded on the National Market System (the "NMS") of The Nasdaq Stock
Market, Inc. ("Nasdaq"), the last sale price on the date of valuation,
or if no sale occurred on that date, the last sale price on the
business day immediately prior to the date of valuation, or, if no sale
occurred on such date, then the mean between the highest bid and lowest
asked prices as of the close of business on the business day
immediately prior to the date of valuation, as reported on Nasdaq;
(ii) If the Shares are not traded on an exchange or
the NMS but are otherwise traded over-the-counter, the mean between the
highest bid and lowest asked prices quoted on Nasdaq as of the close of
business on the date of valuation, or, if on such day such Shares are
not quoted on Nasdaq, the mean between the representative bid and asked
prices on such date in the United States over-the-counter market as
reported by the OTC Bulletin Board or the National Quotation Bureau,
Inc., or any similar successor organization; or
(iii) If neither clause (i) nor (ii) above applies,
the Fair Market Value shall be determined by the Administrator in good
faith. Such determination shall be conclusive and binding on all
persons.
(l) "Grant Date" shall mean the date on which the granting of
an Option is authorized by the Administrator or such other date as prescribed by
the Administrator.
(m) "Incentive Stock Option" shall mean an option described
in Section 422 of the Code.
(n) "Nonstatutory Stock Option" shall mean an option that does
not meet the requirements of Section 422(b) of the Code or is not intended to be
an Incentive Stock Option.
(o) "Option" shall mean any stock option granted pursuant to
the Plan.
-3-
(p) "Option Agreement" shall mean a written stock option
agreement evidencing the grant of an Option.
(q) "Option Limit" shall have the meaning assigned to it in
Section 6.
(r) "Optionee" shall mean a Participant who has received an
Option.
(s) "Participant" shall have the meaning assigned to it in
Section 5(a) hereof.
(t) "Plan" shall mean this Bingo.com, Inc. 2001 Stock Option
Plan, as it may be amended from time to time.
(u) "Plan Committee" shall mean a committee of two or more
directors appointed by the Board to administer the Plan.
(v) "Purchase Price" shall mean the Exercise Price multiplied
by the number of Shares with respect to which an Option is exercised.
(w) "Retirement" shall mean the voluntary termination of
employment by an employee after qualifying for early or normal retirement under
any pension plan or profit sharing or benefit plan of the Corporation or its
Subsidiaries. If an employee is not covered by any such plan, "Retirement" shall
mean voluntary termination of employment after the employee has attained age
sixty-five (65) and after the employee has attained the tenth (10th) anniversary
of his or her last preceding date of hire, or as otherwise determined in the
Administrator's sole discretion.
(x) "Section 16 Participant" shall mean a Participant who is
(or, in the opinion of the Administrator, may be) generally subject to the
Section 16 Requirements with respect to purchases and sales of Shares or other
equity securities of the Corporation.
(y) "Section 16 Requirements" shall mean the those obligations
and requirements imposed on officers and directors by Sections 16(a) and 16(b)
of the Exchange Act and the rules of the Commission promulgated thereunder.
(z) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(aa) "Subsidiary" shall mean any subsidiary corporation as
defined in Section 425(f) of the Code.
(bb) "Share" shall mean one share of Common Stock of the
Corporation, adjusted in accordance with Section 10 of the Plan (if applicable).
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(cc) "Shareholders" shall mean holders of Shares.
(dd) "Transfer Agent" shall mean a third-party organization
retained by the Corporation to maintain the stock transfer records of the
Corporation.
3. EFFECTIVE DATE. The Plan was adopted by the Board effective May 31,
2001. Options granted prior to obtaining Shareholder approval in accordance with
Section 15 of the Plan shall be granted subject to such shareholder approval and
must be rescinded if such approval is not obtained in accordance with such
section.
4. ADMINISTRATION.
(a) Administrator. Subject to subsection (c) below, the Plan
shall be administered, in the discretion of the Board from time to time, by the
Board or by a Plan Committee which shall be appointed by the Board. The Board
may from time to time remove members from, or add members to, the Plan
Committee. Vacancies on the Plan Committee, however caused, shall be filled by
the Board. The Board shall appoint one of the members of the Plan Committee as
Chairman. The Administrator shall hold meetings at such times and places as it
may determine. Acts of a majority of the members of the Administrator at which a
quorum is present, or acts reduced to or approved in writing by the unanimous
consent of the members of the Administrator, shall be the valid acts of the
Administrator.
(b) Powers of Administrator. The Administrator shall from time
to time at its discretion select the Optionees who are to be granted Options,
determine the number of Shares to be subject to Options to be granted to each
Optionee and designate such Options as Incentive Stock Options or Nonstatutory
Stock Options. The Administrator shall have full power and authority to operate,
manage and administer the Plan and interpret and construe the Plan and the terms
of all Option Agreements. The interpretation and construction by the
Administrator of any provision of the Plan or of any Option or Option Agreement
shall be final. No member of the Administrator shall be liable for any action or
determination made in good faith with respect to the Plan or any Option.
(c) Disinterested Administration. If the Shares are registered
under the Exchange Act and Section 16 Participants are to receive grants of
Options hereunder, such grants shall be approved by the Board or by a Plan
Committee, or a subcommittee of the Plan Committee or other committee of the
Board, consisting solely of two or more directors, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3(b)(3) of the Exchange
Act and an "outside director" within the meaning of Section 162(m) of the Code.
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5. PARTICIPATION.
-------------
(a) Eligibility. The Optionee shall be such persons
(collectively, "Participants"; individually a "Participant") as the
Administrator may select from among the following classes of persons, subject to
the terms and conditions of Section 5(b) below:
(i) Employees (who may be officers, whether or not
they are directors) of the Corporation or of a Subsidiary and
non-employees to whom an offer of employment has been
extended; and
(ii) directors, advisors and consultants of the
Corporation or a Subsidiary.
Notwithstanding provisions of the first paragraph of this Section 5(a),
the Administrator may at any time or from time to time designate one or more
directors as being ineligible for selection as Participants in the Plan for any
period or periods of time. The Administrator may, in its sole discretion and
upon such terms as it deems appropriate, require as a condition of the grant of
an Option to a Participant that the Participant surrender for cancellation some
or all of the Options which have been previously granted to such person under
this Plan or otherwise. An Option, the grant of which is conditioned upon such
surrender, may have an option price lower (or higher) than the exercise price of
such surrendered Option, may cover the same (or a lesser or greater) number of
shares as such surrendered Option, may contain such other terms as the
Administrator deems appropriate, and shall be exercisable in accordance with its
terms, without regard to the number of shares, price, exercise period or any
other term or condition of such surrendered Option.
(b) Ten-Percent Shareholders. To the extent required by law or
regulation, a Participant who, at the time of grant, owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding stock of
the Corporation or its parent shall not be eligible to receive an Option unless
(i) the Exercise Price of the Shares subject to such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such Shares on the Grant
Date.
(c) Stock Ownership. For purposes of Section 5(b) above, in
determining stock ownership, a Participant shall be considered as owning the
stock owned, directly or indirectly, by or for his or her brothers and sisters,
spouse, ancestors and lineal descendants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate or trust shall be considered as
being owned proportionately by or for its shareholders, partners or
beneficiaries. Stock with respect to which such Participant holds an Option
shall not be counted.
(d) Outstanding Stock. For purposes of Section 5(b) above,
"outstanding stock" shall include all stock actually issued and outstanding
immediately after the grant of the
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Option to the Optionee. "Outstanding stock" shall not include Shares authorized
for issue under outstanding Options held by the Optionee or by any other person.
6. STOCK. The stock subject to Options granted under the Plan shall be
from the Corporation's authorized but unissued or reacquired Shares. The
aggregate number of Shares which may be issued upon exercise of Options under
the Plan at any time shall not exceed Two Million (2,000,000) Shares (the
"Option Limit"), subject to adjustment as provided for in this Plan.
Notwithstanding the foregoing, for so long as the Corporation shall be subject
to the California Corporate Securities Law of 1968, as amended (the "California
Securities Law"), in connection with the Plan and Options granted thereunder,
the total number of Shares issuable upon exercise of all outstanding Options and
the total number of Shares provided for under any stock bonus or similar plan of
the Corporation may not exceed the applicable percentage as calculated in
accordance with the conditions and exclusions of Section 260.140.45 of Title 10
of the California Code of Regulations based on the Shares of the Corporation
which are outstanding at the time the calculation is made. Notwithstanding the
foregoing, upon the full or partial payment of any Purchase Price by the
transfer to the Corporation of Shares or upon satisfaction of tax withholding
provisions in connection with any such exercise or any other payment made or
benefit realized under this Plan by the transfer or relinquishment of Shares,
there shall be deemed to have been issued or transferred under this Plan only
the net number of Shares actually issued or transferred by the Corporation. In
the event any outstanding Option granted under this Plan for any reason expires
or is canceled or terminated, the Shares allocable to the unexercised portion of
such Option shall again be available to be granted as Options under this Plan.
Notwithstanding the previous sentence, to the extent required by Section 162(m)
of the Code, Shares subject to Options which are canceled continue to be counted
against the Option Limit and if, after an Option grant, the price of Shares
subject to such Option is reduced, the transaction is treated as a cancellation
of the Option and a grant of a new Option and both the Option deemed to be
canceled and the Option deemed to be granted are counted against the Option
Limit. The limitations established by this Section 6 shall be subject to
adjustment in the manner provided in Section 10 hereof upon the occurrence of an
event specified in Section 10.
7. TERMS AND CONDITIONS OF OPTIONS.
(a) Stock Option Agreements. Each Option shall be evidenced by
an Option Agreement in such other form as the Administrator shall from time to
time determine. Such Option Agreements need not be identical but shall comply
with and be subject to the terms and conditions set forth in this Section 7.
(b) Nature of Option. Each Option shall state whether it is
an Incentive Stock Option or a Nonstatutory Stock Option.
(c) Optionee's Undertaking. Each Optionee shall agree to
remain in the employ or service of the Corporation and to render services for a
period as shall be determined by the
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Administrator, from the Grant Date of the Option or such other date agreed to by
the Optionee and the Corporation, but such agreement shall not impose upon the
Corporation any obligation to retain the Optionee in their employ or service for
any period.
(d) Number of Shares. Each Option shall state the number of
Shares to which it pertains and shall provide for the adjustment thereof in
accordance with the provisions of Section 10 hereof.
(e) Exercise Price; Exercise of Options. Each Option shall
state the Exercise Price. To the extent required by law or regulation, the
Exercise Price in the case of an Option granted to an Optionee described in
Section 5(b) hereof, shall not be less than one hundred ten percent (110%) of
the Fair Market Value on the Grant Date. The Exercise Price in the case of any
Nonstatutory Stock Option, shall not be less than eighty-five percent (85%) of
the Fair Market Value on the Grant Date. The Exercise Price in the case of any
Incentive Stock Option granted to persons other than to an Optionee described in
Section 5(b) hereof, shall not be less than the Fair Market Value on the Grant
Date. At the sole discretion of the Administrator, any Option granted under this
Plan to any Participant may be exercisable in whole or in part immediately upon
the grant thereof, or only after the occurrence of a specified event and/or only
in installments, which installments may be equal or otherwise, and which
installments may vary as to the number thereof as well as to whether any
unexercised installments are cumulative through the life of a particular Option;
provided that, in any event, to the extent required by law or regulation such
Option shall be exercisable at a minimum rate of at least twenty percent (20%)
per year over the period five years from the Grant Date for the Option in
question; however, in the case of an Option granted to a Participant who is a
director, consultant, advisor or officer of the Corporation, the Administrator
may provide that the Option may become fully exercisable, subject to reasonable
conditions such as continued employment or service to the Corporation, at any
time or during any period established by the Administrator.
(f) Medium and Time of Payment; Notice. The Purchase Price
shall be payable in full in United States dollars upon the exercise of the
Option; provided, however, that if the applicable Option Agreement so provides,
or the Administrator in its sole discretion otherwise approves thereof, the
Purchase Price may (to the extent permitted by applicable law) be paid by the
surrender of Shares in good form for transfer, owned by the person exercising
the Option and having a Fair Market Value on the date of exercise equal to the
Purchase Price.
In the event the Corporation determines that it is required to withhold
state, United States Federal or foreign income tax as a result of the exercise
of an Option, as a condition to the exercise thereof, an Optionee must make
arrangements satisfactory to the Corporation to enable it to satisfy such
withholding requirements before the Optionee shall be permitted to exercise the
Option. Payment of such withholding requirements may be made, in the discretion
of the Administrator, (i) in cash, (ii) by delivery of Shares registered in the
name of the Optionee and held for a period of six (6) months or more by the
Optionee or (iii) any combination of (i) and (ii) above.
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The Optionee shall exercise an Option by completing and delivering to
the Corporation, concurrently with the payment of the Purchase Price in the
manner described above, an exercise notice in such form as the Administrator
shall from time to time determine.
(g) Term and Non-Transferability of Options. Each Option shall
state the time or times when all or part thereof becomes exercisable. No Option
shall be exercisable after the expiration of ten (10) years (or less, in the
discretion of the Administrator) from the Grant Date; except that no Incentive
Stock Option granted to an Optionee described in Section 5(b) hereof shall be
exercisable after the expiration of five (5) years from the Grant Date (or less,
in the discretion of the Administrator). During the lifetime of the Optionee,
the Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative and shall not be assignable or transferable. The Option
shall not be transferable by the Optionee other than by will or the laws of
descent and distribution. Any other attempted alienation, assignment, pledge,
hypothecation, attachment, execution or similar process, whether voluntary or
involuntary, with respect to all or any part of any Option or right thereunder,
shall be null and void and, at the Corporation's option, shall cause all of the
Optionee's rights under the Option to terminate.
(h) Cessation of Employment (Except by Death, Disability or
Retirement). If an Optionee's employment or service with the Corporation ceases
for any reason or no reason, whether voluntarily or involuntarily, with or
without cause, other than pursuant to death, Disability or Retirement, such
Optionee shall have the right, subject to the restrictions referred to in
Section 7(g) above, to exercise the Option at any time within ninety (90) days
after such cessation, but, except as otherwise provided in the applicable Option
Agreement, only to the extent that, at the date of such cessation, the
Optionee's right to exercise such Option had accrued pursuant to the terms of
the applicable Option Agreement and had not previously been exercised.
For purposes of this Section 7(h), the employment relationship shall be
treated as continuing intact while the Optionee is on military leave, sick leave
or other bona fide leave of absence (to be determined in the sole discretion of
the Administrator). The foregoing notwithstanding, in the case of an Incentive
Stock Option, employment shall not be deemed to continue beyond the ninetieth
(90th) day after the Optionee ceased active employment, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
(i) Death of Optionee. If an Optionee's employment or service
with the Corporation ceases by reason of the Optionee's death, or after ceasing
to be a Participant but during the period in which he or she could have
exercised the Option under this Section 7, and has not fully exercised the
Option, then the Option may be exercised in full, subject to the restrictions
referred to in Section 7(g) above, at any time within twelve (12) months after
the Optionee's death by the executor or administrator of his or her estate or by
any person or persons who have acquired the Option directly from the Optionee by
bequest or inheritance, but, except as otherwise provided in the applicable
Option Agreement, only to the extent that, at the date of death, the Optionee's
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right to exercise such Option had accrued and had not been forfeited pursuant to
the terms of the applicable Option Agreement and had not previously been
exercised.
(j) Disability of Optionee. If an Optionee's employment or
service with the Corporation ceases by reason of the Optionee's Disability, such
Optionee shall have the right, subject to the restrictions referred to in
Section 7(g) above, to exercise the Option at any time within twelve (12) months
after such cessation by reason of Disability, but, except as provided in the
applicable Option Agreement, only to the extent that, at the date of such
cessation, the Optionee's right to exercise such Option had accrued pursuant to
the terms of the applicable Option Agreement and had not previously been
exercised.
(k) Retirement of Optionee. If an Optionee's employment or
service with the Corporation ceases by reason of the Optionee's Retirement, such
Optionee shall have the right, subject to the restrictions referred to in
Section 7(g) above, to exercise the Option at any time within ninety (90) days
after the date of Retirement, but only to the extent that, at the date of such
cessation, the Optionee's right to exercise such Option had accrued pursuant to
the terms of the applicable Option Agreement and had not previously been
exercised.
(l) Time of Cessation of Service. For purposes of this Plan,
the Optionee's employment or service shall be deemed to have ceased or be
terminated on the date when the Optionee's employment or service in fact ceased
or Optionee is in fact terminated.
(m) Rights as a Shareholder. No one shall have rights as a
Shareholder with respect to any Shares covered by an Option until the date of
the issuance of a stock certificate for such Shares. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 10 hereof.
(n) Modification, Extension and Renewal of Options. Within the
limitations of the Plan, the Administrator may modify an Option, extend or renew
outstanding Options or accept the cancellation of outstanding Options (to the
extent not previously exercised) for the granting of new Options in substitution
therefor. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option previously granted. With the consent of the affected Optionee,
the Administrator may cancel any agreement evidencing Options. In the event of
such cancellation, the Administrator may authorize the granting of new Options,
which may or may not cover the same number of Shares that have been the subject
of the prior award, at such Exercise Price and subject to such terms, conditions
and discretions as would have been applicable under this Plan had the canceled
Options not been granted.
(o) Substitution of Options. Notwithstanding any inconsistent
provisions or limits under the Plan, in the event the Corporation acquires
(whether by purchase, merger or
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otherwise) all or substantially all of outstanding capital stock or assets of
another corporation or of any reorganization or other transaction qualifying
under Section 424 of the Code, the Administrator may, in accordance with the
provisions of that Section, substitute Options under the Plan for options under
the plan of the acquired corporation; provided, however, that (i) the excess of
the aggregate fair market value of the shares subject to an option immediately
after the substitution over the aggregate option price of such shares is not
more than the similar excess immediately before such substitution and (ii) the
new option does not give persons additional benefits, including any extension of
the exercise period.
(p) Forfeiture of Option Gain and Unexercised Options Held By
Directors, Officers or Consultants who Engage in Certain Activities. At the
discretion of the Administrator, and unless otherwise prohibited by applicable
laws, an Option Agreement provided to a director, officer or consultant of the
Corporation may provide that if at any time within (i) the term of an Option
granted to a Optionee or (ii) within one year after the termination of such
Optionee's employment or service with the Corporation for any reason or no
reason or (iii) within one year after such Optionee exercises any portion of an
Option, whichever is the latest, such Optionee engages in any activity in direct
competition with the principal business of the Corporation, or inimical,
contrary or harmful to the interests of the Corporation, including, but not
limited to: (A) conduct related to Optionee's employment for which either
criminal or civil penalties against Optionee may be sought, (B) violation of
Corporation policies, including, without limitation, the Corporation's insider
trading policy, (C) accepting employment with or serving as a consultant,
advisor or in any other capacity to an employer that is in direct competition
with or acting against the interests of the Corporation, including employing or
recruiting any present, former or future employee of the Corporation, (D)
disclosing or misusing any confidential information or material concerning the
Corporation, or (E) participating in a hostile takeover attempt against the
Corporation, then, at the discretion of the Administrator, (1) any Options
granted under the Plan to such Optionee shall terminate effective the date on
which such Optionee entered into such activity, unless terminated sooner by
operation of another term or condition of the Plan, and (2) any gain realized by
such Optionee from exercising all or a portion of any Option shall be paid by
Optionee to the Corporation.
(q) Right of Set-Off. Optionee shall consent to a deduction
from any amounts the Corporation owes Optionee from time to time (including
amounts owed as wages or other compensation, fringe benefits or vacation pay, as
well as any other amounts owed to Optionee by the Corporation), to the extent of
the amounts Optionee owes the Corporation, including pursuant to subparagraph
(p) above. Whether or not the Corporation elects to make any set-off in whole or
in part, if the Corporation does not recover by means of set-off the full amount
Optionee owes to the Corporation, Optionee shall agree to pay immediately the
unpaid balance to the Corporation.
(r) Other Provisions. An Option Agreement authorized under the
Plan may contain such terms and provisions not inconsistent with the terms of
the Plan (including, without
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limitation, restrictions upon the exercise of the Option) as the Administrator
shall deem advisable in its sole and absolute discretion.
8. LIMITATION ON ANNUAL AWARDS.
(a) Limitation on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined as of the Grant Date) of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionee during any calendar year under the Plan and all other plans
maintained by the Corporation or its parent, exceeds $100,000, such excess
Options shall be treated as Nonstatutory Stock Options. For the purposes of this
Section 8, Incentive Stock Options shall be taken into account in the order in
which they were granted.
(b) Limitation on Total Options Granted. As long as the Plan
is in effect, at no time will Options granted to any Participant pursuant to the
Plan exceed 1,000,000 Shares, subject to adjustment as provided for in Section
10.
9. TERM OF PLAN. Options may be granted pursuant to the Plan
until the expiration of the Plan ten (10) years after the effective date
referred to in Section 3.
10. EFFECT OF CERTAIN EVENTS.
(a) Adjustments Upon Changes in Stock. The Administrator shall
make or provide for such adjustments in the Option Limit, the Exercise Price and
in the number or kind of shares or other securities (including shares or other
securities of another issuer) covered by this Plan and outstanding Options as
the Administrator in its sole discretion, exercised in good faith, shall
determine is equitably required to prevent dilution or enlargement of rights of
optionees that would otherwise result from (a) any stock dividend, stock split,
combination of shares, issuance of rights or warrants to purchase stock,
spin-off, recapitalization or other changes in the capital structure of the
Corporation, (b) any merger, consolidation, reorganization or partial or
complete liquidations, or (c) any other corporate transaction or event having an
effect similar to any of the foregoing. The Administrator also shall make or
provide for such adjustment in the number or kind of shares of the Corporation's
capital stock or other securities (or in shares or other securities of another
issuer) which may be acquired pursuant to Options granted under the Plan and the
number of such securities to be awarded to each Optionee as the Administrator in
its sole discretion, shall determine is appropriate to reflect any transaction
or event described in the preceding sentence. In the event of any such
transaction or event, the Administrator may provide in substitution for any or
all outstanding Options under the Plan such alternative consideration (including
securities of any surviving entity) as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all Options so replaced. In any case, such substitution of
securities shall not require the consent of any person who is granted Options
pursuant to the Plan. The determination of the Administrator as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive.
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(b) Change of Control. In addition to the rights set forth in
Section 10(a) above, in the event of a Change of Control, the Administrator may
in its sole discretion, without obtaining Shareholder approval or the consent of
any person granted Options under the Plan, take one or more of the following
actions:
(i) Accelerate the exercise dates of any outstanding
Option, or make the Option fully vested and exercisable;
(ii) Pay cash to any or all owners of Options in
exchange for the cancellation of their outstanding Options; or
(iii) Make any other adjustments or amendments to the
Plan and outstanding Options and substitute new Options for
outstanding Options.
(c) Adjustment Determination. To the extent that the foregoing
adjustments relate to securities of the Corporation, such adjustments shall be
made by the Administrator, whose determination shall be conclusive and binding
on all persons.
(d) Limitation on Rights. Except as expressly provided in this
Section 10, the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger or consolidation or spinoff
of assets or stock of another corporation, and any issue by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or Exercise Price of Shares subject to an Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
11. SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance. No Shares shall be issued upon the
exercise of any Option unless and until the Corporation has determined that:
(i) it and the Optionee have taken all actions
required to register the offer and sale of the Shares under
the Securities Act, or to perfect an exemption from the
registration requirements thereof;
(ii) any applicable listing requirement of any stock
exchange on which the Shares are listed has been satisfied;
and
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(iii) any other applicable provision of state, United
States Federal or foreign law has been satisfied.
(b) Restrictions on Transfer; Representations of Optionee;
Legends. Regardless of whether the offering and sale of Shares under the Plan
has been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Corporation may impose restrictions
upon the grant of Options and the sale, pledge or other transfer of Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Corporation and its counsel, such restrictions are necessary
or desirable in order to achieve compliance with the provisions of the
Securities Act, the securities laws of any state or any other law. In the event
that the sale of Shares under the Plan is not registered under the Securities
Act but an exemption is available which requires an investment representation or
other representation, each Optionee shall be required to represent that such
Shares are being acquired for investment, and not with a view to the sale or
distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Corporation and its counsel. Stock certificates
evidencing Shares acquired under the Plan pursuant to an unregistered
transaction shall bear the following restrictive legend and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). ANY TRANSFER OR PLEDGE OF SUCH SECURITIES WILL BE
INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN
EFFECT AS TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR
THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH
TRANSFER OR PLEDGE TO COMPLY WITH THE ACT."
Any determination by the Corporation and its counsel in connection with
any of the matters set forth in this Section 11 shall be conclusive and binding
on all persons.
(c) Registration or Qualification of Securities. The
Corporation may, but shall not be obligated to, register or qualify the sale of
Shares under the Securities Act or any other applicable law. The Corporation
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under the Plan to comply with any law.
(d) Exchange of Certificates. If, in the opinion of the
Corporation and its counsel, any legend placed on a stock certificate
representing Shares sold under the Plan is no longer required, the holder of
such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of Shares but without such legend.
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12. AMENDMENT OF THE PLAN. The Board may from time to time, with
respect to any Shares at the time not subject to Options, suspend or discontinue
the Plan or revise or amend it in any respect whatsoever except that, without
the approval of the Corporation's Shareholders, no such revision or amendment
shall:
(a) Be made if Shareholder approval is required by applicable
law, regulation or the requirements of The Nasdaq Stock Market or any exchange
or interdealer network where the Shares are trading;
(b) Increase the number of Shares which may be issued under
the Plan; or
(c) Amend this Section 12 to defeat its purpose.
Without limiting the generality of the foregoing, the Administrator may
amend this Plan to eliminate provisions which are no longer necessary as a
result of changes in tax or securities laws or regulations, or in the
interpretation thereof.
13 FINANCIAL STATEMENTS. Each Optionee shall receive financial
statements of the Corporation not less than annually.
14 APPLICATION OF FUNDS. The proceeds received by the Corporation from
the sale of Shares pursuant to the exercise of an Option will be used for
general corporate purposes.
15 APPROVAL OF SHAREHOLDERS. The Plan must be approved by the
affirmative vote of the holders of a majority of the Corporation's outstanding
shares of voting capital stock on or before the date twelve (12) months from the
date the Plan was adopted by the Board.
16 GOVERNING LAW. This Plan, and the Option Agreements, shall be
governed by and enforced and construed in accordance with the internal
substantive laws (and not the laws of conflicts of laws) of the State of
California.
To record the adoption of the Plan by the Board as of May 31, 2001, the
Board has caused its authorized officers to sign the Plan and affix the
corporate seal hereto.
BINGO.COM, INC.
By: /s/ Shane Murphy
-------------------------------------------
Shane Murphy
Chairman of the Board, President
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PROXY
THIS PROXY IS SOLICITED BY MANAGEMENT OF BINGO.COM, INC. (THE "COMPANY") FOR USE
AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS (THE "MEETING") TO BE HELD ON
WEDNESDAY, JUNE 27, 2001 AND ANY ADJOURNMENT THEREOF.
The undersigned shareholder of the Company hereby appoints Shane Murphy, a
director of the Company, or failing this person, Jamie Lanfranco, a member of
management of the Company, or in the place of both of the foregoing,
______________________________ (PLEASE PRINT NAME), as proxyholder for and on
behalf of the undersigned, with power of substitution, to attend, act and vote
for and in the name of the undersigned at the Meeting and at every adjournment
thereof, with respect to all or _______________ of the common shares of the
Company registered in the name of the undersigned. Unless otherwise expressly
stated herein by the undersigned, receipt of this proxy, duly executed and
dated, revokes any former proxy given to attend and vote at the meeting and at
any adjournment thereof. Unless the undersigned directs otherwise, the nominee
is hereby instructed to vote the common shares of the Company held by the
undersigned as follows:
For Withhold
1. (a) to elect David Chalk as director |_| |_|
(b) to elect Shane Murphy as director |_| |_|
(c) to elect Randy Peterson as director |_| |_|
(d) to elect Mitch White as director |_| |_|
2. To appoint Grant Thornton LLP as the auditor and to |_| |_|
authorize the directors to set the auditor's
remuneration.
For Against
3. To approve, the Bingo.Com, Inc. 1999 Stock Option |_| |_|
Plan
4. To approve, the Bingo.Com, Inc. 2001 Stock Option |_| |_|
Plan
5. To approve, the amendment of the Company's Bylaws |_| |_|
6. To approve transaction of other business. |_| |_|
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The undersigned shareholder hereby revokes any proxy previously given to attend
and vote at the Meeting.
Signature: ________________________ Date: ____________________________
(Proxy must be signed and dated)
Name: _________________________________________
(Please Print)
If someone other than the named shareholder signs this Proxy on behalf of the
named shareholder, documentation acceptable to the Chairman of the Meeting must
be deposited with this Proxy granting signing authority to the person signing
the proxy.
To be used at the Meeting, this Proxy must be received at the offices of the
Interwest Transfer Co., Inc. by mail or by fax no later than 48 hours preceding
the Meeting or with the Chairman of the Meeting on the day of the Meeting prior
to its commencement. The mailing address of the Interwest Transfer Co., Inc. is
1981 East 4800 South Suite 100, Salt Lake City, Utah 84117, and its fax number
is (801)277-3147.
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1. If the shareholder wishes to attend the Meeting to vote on the resolutions
in person, please register your attendance with the Company's scrutineers
at the Meeting.
2. If the shareholder's securities are held by an intermediary (eg. a broker)
and the shareholder wishes to attend the Meeting to vote on the
resolutions, please insert the shareholder's name in the blank space
provided, do not indicate a voting choice by any resolution, sign and date
and return the Proxy in accordance with the instructions provided by the
intermediary. Please contact the intermediary if there are any questions.
At the Meeting a vote will be taken on each of the resolutions as set out
on this Proxy and the shareholder's vote will be counted at that time.
3. If the shareholder cannot attend the Meeting but wishes to vote on the
resolutions, the shareholder can appoint another person, who need not be a
shareholder of the Company, to vote according to the shareholder's
instructions. To appoint someone other than the nominees named by
management, please insert your appointed proxyholder's name in the space
provided, sign and date and return the Proxy. Where no choice on a
resolution is specified by the shareholder, this Proxy confers
discretionary authority upon the shareholder's appointed proxyholder to
vote for or against or withhold vote with respect to that resolution,
provided that with respect to a resolution relating to a director nominee
or auditor, the proxyholder only has the discretion to vote or not vote for
such nominee.
4. If the shareholder cannot attend the Meeting but wishes to vote on the
resolutions and to appoint one of the nominees named by management as
proxyholder, please leave the wording appointing a nominee as shown, sign
and date and return the Proxy. Where no choice is specified by a
shareholder on a resolution shown on the Proxy, a nominee of management
acting as proxyholder will vote the securities as if the shareholder had
specified an affirmative vote.
5. The securities represented by this Proxy will be voted or withheld from
voting in accordance with the instructions of the shareholder on any ballot
of a resolution that may be called for and, if the shareholder specifies a
choice with respect to any matter to be acted upon, the securities will be
voted accordingly. With respect to any amendments or variations in any of
the resolutions shown on the Proxy, or matters which may properly come
before the Meeting, the securities will be voted by the nominee appointed
as the proxyholder, in its sole discretion, sees fit. 6. If the shareholder
votes by completing and returning the Proxy, the shareholder may still
attend the Meeting and vote in person should the shareholder later decide
to do so. To vote in person at the Meeting, the shareholder must revoke the
Proxy in writing as set forth in the Information Circular. 7. This Proxy is
not valid unless it is dated and signed by the shareholder or by the
shareholder's attorney duly authorized by the shareholder in writing, or,
in the case of a corporation, by its duly authorized officer or attorney
for the corporation. If the Proxy is executed by an attorney for an
individual shareholder or joint shareholders or by an officer or an
attorney of a corporate shareholder, the instrument so empowering the
officer or the attorney, as the case may be, or a notarial copy thereof,
must accompany the Proxy. 8. To be valid, this Proxy, duly dated and
signed, must arrive at the office of the Transfer Agent of the Company, not
less than 48 hours (excluding Saturdays, Sundays and holidays) before the
time for holding the Meeting, or delivered to the Chairman of the Meeting
prior to the commencement of the Meeting.
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