SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EAGLE BROADBAND, INC.
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(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
EAGLE BROADBAND, INC.
101 Courageous Drive
League City, TX 77573
June 10, 2004
To Our Shareholders:
You are cordially invited to attend the Special Meeting of Shareholders
of Eagle Broadband, Inc., which will be held at 10:00 a.m. Central Daylight
Time, July 20, 2004.
Information about the Special Meeting, including matters on which
shareholders will act, may be found in the Notice of Special Meeting and Proxy
Statement accompanying this letter. We look forward to greeting in person as
many of our shareholders as possible.
The Board of Directors has determined that the adoption of the June
2004 Compensatory Stock Option Plan is advisable and in the best interest of
Eagle Broadband and its stockholders. We have established the stock option plan
to provide those persons who have substantial responsibility for the management
and growth of the Company with additional incentives and opportunity to obtain
or increase their proprietary interest in the Company, thereby encouraging them
to continue in the employ of the Company. The Board recommends you to approve
the adoption of the compensatory stock option plan adopted by the Board. As a
stockholder, you cast one vote for each share you own.
It is important that your shares be represented and voted at the
meeting. Whether or not you plan to attend the Special Meeting, please complete,
sign, date, and promptly return the accompanying proxy in the enclosed envelope
or use the telephone or Internet voting systems to ensure that your shares are
represented at the meeting. Returning the proxy does NOT deprive you of your
right to attend the Special Meeting. If you decide to attend the Special Meeting
and wish to change your proxy vote, you may do so automatically by voting in
person at the meeting.
Sincerely yours,
/S/ David A. Weisman
David A. Weisman
Chairman
EAGLE BROADBAND, INC.
101 COURAGEOUS DRIVE, LEAGUE CITY, TEXAS 77573
_________________________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
July 20, 2004
_________________________________________
The Special Meeting of Shareholders of Eagle Broadband, Inc., will be
held at 2500 South Shore Blvd., League City, Texas 77573, at 10:00 a.m. Central
Daylight Time, July 20, 2004, for the following purpose:
Approval of our June 2004 Compensatory Stock Option Plan.
The close of business on June 3, 2004, has been fixed as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Special Meeting.
By Order of the Board of Directors,
/S/David A. Weisman
David A. Weisman
CHIEF EXECUTIVE OFFICER
Dated: June 10, 2004
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED ENVELOPE SO THAT YOUR SHARES WILL BE VOTED IF YOU
ARE NOT ABLE TO ATTEND THE SPECIAL MEETING. VOTES MAY ALSO BE CAST ONLINE OR BY
TELEPHONE PER THE INSTRUCTIONS ON THE PROXY.
EAGLE BROADBAND, INC.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
The Board of Directors of Eagle Broadband, Inc., a Texas corporation,
prepared this proxy statement for the purpose of soliciting proxies for our
Special Meeting of Shareholders. Our Special Meeting will be held at 2500 South
Shore Blvd., League City, Texas 77573, at 10:00 a.m. Central Daylight Time, July
20, 2004, unless adjourned or postponed. The Board is making this solicitation
by mail, and Eagle will pay all costs associated with this solicitation. When
you see the term "we," "our," or "Eagle," it refers to Eagle Broadband, Inc.,
and its subsidiaries.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Our common stock is the only type of security entitled to vote at the
Special Meeting. On June 3, 2004, the record date for determination of
shareholders entitled to vote at the Special Meeting, there were 191,489,049
shares of common stock outstanding. Each shareholder of record on June 3, 2004,
is entitled to one vote for each share of common stock held by such shareholder
on such date. Shares of common stock may not be voted cumulatively. Abstentions
and broker non-votes will be treated as shares which are present for purposes of
determining the existence of a quorum, but which are not present for purposes of
determining whether a proposal has been approved. The term "broker non-vote"
refers to shares held by a broker in street name which are present by proxy, but
which are not voted on a matter pursuant to rules prohibiting brokers from
voting on non-routine matters without instructions from the beneficial owner of
the shares. In the event a broker votes on a routine matter, such vote will
count as both present and voted for the purposes of determining whether a
proposal has been approved.
Quorum Required
Our Bylaws provide that the holders of a majority of our common stock
issued and outstanding and entitled to vote and that are present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at the Special Meeting. Abstentions and broker non-votes will be counted as
present for the purpose of determining the presence of a quorum.
Votes Required
PROPOSAL 1. Approval of the June 2004 Compensatory Stock Option Plan
requires the affirmative vote of a majority of the votes represented by shares
of common stock present in person or represented by proxy at the Special
Meeting.
Proxies
Whether or not you are able to attend the Special Meeting, you are
urged to complete and return the enclosed proxy, which will be voted as you
direct on your proxy when properly completed. In the event no directions are
specified, such proxies will be voted FOR the approval of the June 2004
Compensatory Stock Option Plan. You may also revoke or change your proxy at any
time before the Special Meeting. To do this, send a written notice of revocation
or another signed proxy with a later date to the Secretary at our principal
executive offices before the beginning of the Special Meeting. You may also
automatically revoke your proxy by attending the Special Meeting and voting in
person. All shares represented by a valid proxy received prior to the Special
Meeting will be voted.
Solicitation of Proxies
We will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional soliciting material furnished to shareholders. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, we may reimburse these persons for their costs of forwarding the
solicitation material to the beneficial owners. The original solicitation of
proxies by mail may be supplemented by solicitation by telephone, telegram, or
other means by directors, officers, employees, or agents of the Company. No
additional compensation will be paid to these individuals for any such services.
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Dissenters' Rights for the Holder of Texas Common Stock
Texas law does not provide for dissenters' rights of appraisal for
holders of Texas common stock in connection with the approval of a compensatory
stock option plan.
Interest of Certain Persons in Matters to Be Acted Upon
The Company's directors and employees will have a direct pecuniary
interest in the approval of the Plan because they may be awarded with additional
shares of Company common stock.
ITEM 1
TO CONSIDER AND ACT UPON A PROPOSAL TO APPROVE THE EAGLE
BROADBAND, INC. JUNE 2004 COMPENSATORY STOCK OPTION PLAN
Background Information
The board of directors has adopted, subject to stockholder approval,
the Company's June 2004 Compensatory Stock Option Plan (the "Plan"). The purpose
of the Plan is to promote the interests of the Company and its stockholders and
give it a competitive advantage by: (i) attracting and retaining executive
personnel and other key employees of outstanding ability; (ii) motivating
executive personnel and other key employees, by means of performance-related
incentives, to achieve longer-range performance goals; and (iii) enabling such
employees to participate in the long-term growth and financial success of the
Company by acquiring a proprietary interest in the Company.
The following summary is qualified in its entirety by reference to the
full text of the Plan, which is attached to this Proxy Statement as APPENDIX A.
General Administration of the Plan
The Plan will be administered by the Compensation Committee of the
board of directors (the "Committee"). The Committee will be authorized to grant
to key employees of the Company awards in the form of stock options, performance
shares, and restricted stock. In addition, the Committee will have the authority
to grant other stock-based awards in the form of stock appreciation rights,
restricted stock units, and stock unit awards. The Plan will become effective
upon approval by the stockholders and will expire ten years from such effective
date unless terminated earlier or extended by the board of directors.
Each member of the Committee must be a "non-employee director" within
the meaning of Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), an
"independent director" as defined by American Stock Exchange rules, and an
"outside director" within the meaning of the Code. The Committee will select
persons to receive grants from among the eligible participants, determine the
types of grants and number of shares to be awarded to grantees, and set the
terms, conditions, and provisions of the grants consistent with the Plan. The
Committee has authority to amend awards and to accelerate vesting and/or
exercisability of awards, provided that it cannot amend an outstanding option to
reduce its exercise price or cancel an option and replace it with an option with
a lower exercise price. The Committee may also establish rules for
administration of the Plan.
Eligibility
The Committee will select grantees from among the key employees,
officers, directors and consultants of the Company and its subsidiaries. The
eligible participants will be those who, in the opinion of the Committee, have
the capacity for contributing in a substantial measure to the successful
performance of the Company. All awards and the terms of any award to eligible
participants who are members of the Committee must also be approved by the board
of directors.
Shares Subject to the Plan
Subject to adjustment as described below, a maximum of 10,000,000
shares of Company common stock may be issued under the Plan. Any shares of
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Company common stock subject to awards that are forfeited or withheld in payment
of any exercise price or taxes will again be available for grant. Also, if an
award terminates without shares of Company common stock being issued, then the
shares that were subject to the award will again be available for grant. The
shares may be authorized and unissued shares or treasury shares. In the event of
a stock split, stock dividend, spin-off, or other relevant change affecting the
Company's common stock, the Committee shall make appropriate adjustments to the
number of shares available for grants and to the number of shares and price
under outstanding grants made before the event.
Types of Awards Under the Plan
Stock Options
The Committee may grant awards in the form of options to purchase
shares of the Company's common stock. With regard to each such option, the
Committee will determine the number of shares subject to the option, the manner
and time of the exercise of the option, and the exercise price per share of
stock subject to the option, provided, however, that the exercise price of any
"Incentive Stock Option" (as defined in the Plan) may not be less than 100% of
the fair market value of the shares of Company common stock on the date the
option is granted. The exercise price may, at the discretion of the Committee,
be paid by a participant in cash, shares of Company common stock or a
combination thereof. The period of any option shall be determined by the
Committee, but no Incentive Stock Option may be exercised later than 10 years
after the date of grant. The aggregate fair market value, determined at the date
of grant of the Incentive Stock Option, of Company common stock for which an
Incentive Stock Option is exercisable for the first time during any calendar
year as to any participant shall not exceed the maximum limitation as provided
in Section 422 of the Code. The effect of a grantee's termination of employment
by reason of death, retirement, disability, or otherwise will be specified in
the option agreement evidencing the grant of the option.
Stock Appreciation Rights
The Plan also authorizes the Committee to grant stock appreciation
rights ("SARs"). Upon exercising an SAR, the holder receives for each share with
respect to which the SAR is exercised, an amount equal to the difference between
the exercise price (which may not be less than the fair market value of such
share on the date of grant unless otherwise determined by the Committee) and the
fair market value of the Company common stock on the date of exercise. At the
Committee's discretion, payment of such amount may be made in cash, shares of
Company common stock, or a combination thereof. Each SAR granted will be
evidenced by an agreement specifying the terms and conditions of the award,
including the effect of termination of employment (by reason of death,
disability, retirement or otherwise) on the exercisability of the SAR. No SAR
may have a term of greater than 10 years.
Performance Shares
The Plan permits the Committee to grant awards of performance shares to
eligible employees from time to time. These awards are contingent upon the
achievement of certain performance goals established by the Committee. The
length of time over which performance will be measured, the performance goals,
and the criteria to be used in determining whether and to what degree the goals
have been attained will be determined by the Committee. The Committee will also
determine the effect of termination of employment of a grantee (by reason of
death, retirement, disability or otherwise) during the performance period.
Restricted Stock and Restricted Stock Units
Under the Plan, the Committee may award restricted shares of the
Company's common stock and restricted stock units to eligible employees from
time to time and subject to certain restrictions as determined by the Committee.
The nature and extent of restrictions on such shares and units, the duration of
such restrictions, and any circumstance which could cause the forfeiture of such
shares or units shall be determined by the Committee. The Committee will also
determine the effect of the termination of employment of a recipient of
restricted stock or restricted stock units (by reason of retirement, disability,
death or otherwise) prior to the lapse of any applicable restrictions.
Other Stock Based Awards
In addition, the Committee shall have authority under the Plan to grant
stock unit awards, which can be in the form of common stock or units, the value
of which is based, in whole or in part, on the value of the Company's common
stock. Such stock unit awards will be subject to such terms, restrictions,
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conditions, vesting requirements and payment rules as the Committee may
determine. Stock unit awards may not be assigned, sold, transferred, pledged or
otherwise encumbered prior to the date shares are issued or, if later, the date
provided by the Committee at the time of grant of the stock unit award. Stock
unit awards may relate in whole or in part to certain performance criteria
established by the Committee at the time of grant. The Committee will also
determine the effect of termination of employment of a stock unit award
recipient (by reason of death, retirement, disability or otherwise) during any
applicable vesting period.
Awards to Covered Employees
The Plan permits the Committee to grant qualified performance-based
awards ("Awards") to the chief executive officer and the four other highest
compensated officers of the Company (the "Covered Employees"). These Awards are
intended to qualify as performance-based pay under Section 162(m) of the Code to
enable the Company to deduct the compensation paid to the Covered Employees
attributable to these Awards. In general, Section 162(m) limits the deduction
for compensation paid to the Covered Employees to a dollar limitation
($1,000,000), but permits performance-based pay to be deductible without regard
to the dollar limitation.
If the Award is a stock option or SAR grant with an exercise price
equal to the fair market value of the underlying shares of common stock on the
date of grant, the Award qualifies as performance-based pay under Section 162
(m).
If performance shares are granted, then the Committee will establish
performance goals based on the attainment of one or more of the following
measures with respect to the Company or an affiliate, or a subsidiary, division
or department of the Company or an affiliate for whom the Covered Employee
performs services: revenue growth; earnings before interest, taxes, depreciation
and amortization; earnings before interest and taxes; operating income; pre- or
after-tax income; earnings per share from continuing operations; other board or
committee approved performance measurements; earnings per share; cash flow; cash
flow per share; return on equity; return on invested capital; return on assets;
economic value added (or an equivalent metric) ; share price performance; total
stockholder return; improvement in or attainment of expense levels; or
improvement in or attainment of working capital levels. The preceding goals may
be based on attaining specified levels of Company performance under one or more
of the measures described above relative to the performance of other companies.
The Committee will establish the relevant goals at a time when the
outcome is substantially uncertain, and the Committee will certify whether the
goals have been attained. This process of establishing goals and confirming
their attainment is intended to comply with Section 162(m) and permit the Award
to qualify as deductible performance-based pay.
Change in Control
In order to preserve the rights of participants in the event of a
Change in Control (as defined in the Plan), the Committee in its discretion may,
at the time a grant is made or at any time thereafter, take one or more of the
following actions: (i) provide for the acceleration of any time period relating
to the exercise of an award; (ii) provide for the purchase of the award upon the
participant's request for an amount of cash or other property that could have
been received upon the exercise or realization of the award had the award been
currently exercisable or payable; (iii) adjust the terms of the award in a
manner determined by the Committee to reflect the Change in Control; (iv) cause
the award to be assumed, or new rights substituted therefore, by another entity;
or (v) make such other provisions as the Committee may consider equitable and in
the best interests of the Company.
Amendment and Termination of the Plan
The board of directors may amend, alter, suspend, discontinue or
terminate the Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval which (a) is required to be
approved by stockholders to comply with applicable laws or rules, (b) increase
the number of shares of Company common stock reserved for issuance under the
Plan or (c) would cause the Company to be unable to grant Incentive Stock
Options.
Federal Income Tax Consequences
Under current U.S. federal tax law, the following are the U.S. federal
income tax consequences generally arising with respect to awards made under the
Plan.
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Exercise of Incentive Stock Option and Subsequent Sale of Shares
A participant who is granted an Incentive Stock Option does not realize
taxable income at the time of the grant or at the time of exercise. If the
participant makes no disposition of shares acquired pursuant to the exercise of
an Incentive Stock Option before the later of two years from the date of grant
or one year from such date of exercise ("statutory holding period") any gain (or
loss) realized on such disposition will be recognized as a long-term capital
gain (or loss). Under such circumstances, the Company will not be entitled to
any deduction for federal income tax purposes.
However, if the participant disposes of the shares during the statutory
holding period, that will be considered a disqualifying disposition. Provided
the amount realized in the disqualifying disposition exceeds the exercise price,
the ordinary income a participant shall recognize in the year of a disqualifying
disposition will be the lesser of (i) the excess of the amount realized over the
exercise price, or (ii) the excess of the fair market value of the shares at the
time of the exercise over the exercise price; and the Company generally will be
entitled to a deduction for the amount of ordinary income recognized by such
participant. The ordinary income recognized by the participant is not considered
wages and the Company is not required to withhold, or pay employment taxes, on
such ordinary income. Finally, in addition to the ordinary income described
above, the participant shall recognize capital gain on the disqualifying
disposition in the amount, if any, by which the amount realized in the
disqualifying disposition exceeds the fair market value of the shares at the
time of the exercise, and shall be long-term or short-term capital gain
depending on the participant's post-exercise holding period for such shares.
Special tax rules apply when all or a portion of the exercise price of
an Incentive Stock Option is paid by delivery of already owned shares, but
generally it does not materially change the tax consequences described above.
However, the exercise of an Incentive Stock Option with shares which are, or
have been, subject to an Incentive Stock Option, before such shares have
satisfied the statutory holding period, generally will result in the
disqualifying disposition of the shares surrendered.
Notwithstanding the favorable tax treatment of Incentive Stock Options
for regular tax purposes, as described above, for alternative minimum tax
purposes, an Incentive Stock Option is generally treated in the same manner as a
nonqualified stock option. Accordingly, a participant must generally include as
alternative minimum taxable income for the year in which an Incentive Stock
Option is exercised, the excess of the fair market value of the shares acquired
on the date of exercise over the exercise price of such shares. However, to the
extent a participant disposes of such shares in the same calendar year as the
exercise, only an amount equal to the optionee's ordinary income for regular tax
purposes with respect to such disqualifying disposition will be recognized for
the optionee's calculation of alternative minimum taxable income in such
calendar year.
Exercise of Nonqualified Stock Option and Subsequent Sale of Shares
A participant who is granted a nonqualified stock option does not
realize taxable income at the time of the grant, but does recognize ordinary
income at the time of exercise in an amount equal to the excess of the fair
market value of the shares acquired on the date of exercise over the exercise
price of such shares; and the Company generally will be entitled to a deduction
for the amount of ordinary income recognized by such participant. The ordinary
income recognized by the participant is considered supplemental wages and the
Company is required to withhold, and the Company and the participant are
required to pay applicable employment taxes, on such ordinary income.
Upon the subsequent disposition of shares acquired through the exercise
of a nonqualified stock option, any gain (or loss) realized on such disposition
will be recognized as a long-term, or short-term, capital gain (or loss)
depending on the participant's post-exercise holding period for such shares.
Lapse of Restrictions on Restricted Stock and Subsequent Sale of Shares
A participant who has been granted an award of restricted stock or
restricted stock units does not realize taxable income at the time of the grant.
When the restrictions lapse, the participant will recognize ordinary income in
an amount equal to the excess of the fair market value of the shares at such
time over the amount, if any, paid for such shares; and the Company generally
will be entitled to a deduction for the amount of ordinary income recognized by
such participant. The ordinary income recognized by the participant is
considered supplemental wages and the Company is required to withhold, and the
Company and the participant are required to pay applicable employment taxes, on
such ordinary income. Upon the subsequent disposition of the formerly restricted
shares, any gain (or loss) realized on such disposition will be recognized as a
long-term, or short-term, capital gain (or loss) depending on the participant's
holding period for such shares after their restrictions lapse.
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Under Section 83(b) of the Code, a participant who receives an award of
restricted stock may elect to recognize ordinary income for the taxable year in
which the restricted stock was received equal to the excess of the fair market
value of the restricted stock on the date of the grant, determined without
regard to the restrictions, over the amount (if any) paid for the restricted
stock. Any gain (or loss) recognized upon a subsequent disposition of the shares
will be capital gain (or loss) and will be long-term or short-term depending on
the post-grant holding period of such shares. If, after making the election, a
participant forfeits any shares of restricted stock, or sells restricted stock
at a price below its fair market value on the date of grant, such participant is
only entitled to a tax deduction with respect to the consideration (if any) paid
for the restricted stock, not the amount elected to be included as income at the
time of grant.
SARs, Performance Shares and Stock Unit Awards
A participant who is granted a SAR does not realize taxable income at
the time of the grant, but does recognize ordinary income at the time of
exercise of the SAR in an amount equal to the excess of the fair market value of
the shares (on the date of exercise) with respect to which the SAR is exercised,
over the grant price of such shares; and the Company generally will be entitled
to a deduction for the amount of ordinary income recognized by the such
participant.
A participant who has been awarded a performance share or a stock unit
award does not realize taxable income at the time of the grant, but does
recognize ordinary income at the time the award is paid equal to the amount of
cash (if any) paid and the fair market value of shares (if any) delivered; and
the Company generally will be entitled to a deduction for the amount of ordinary
income recognized by the such participant.
The ordinary income recognized by a participant in connection with a
SAR, performance share, or a stock unit award is considered supplemental wages
and the Company is required to withhold, and the Company and the participant are
required to pay applicable employment taxes, on such ordinary income.
To the extent, if any, that shares are delivered to a participant in
satisfaction of either the exercise of a SAR, or the payment of a performance
share or stock unit award, upon the subsequent disposition of such shares any
gain (or loss) realized will be recognized as a long-term, or short-term,
capital gain (or loss) depending on the participant's post-delivery holding
period for such shares.
New Plan Benefits
Grants and awards under the Plan, which may be made to Company
executive officers, directors and other employees, are not presently
determinable. If the stockholders approve the Plan, such grants and awards will
be made at the discretion of the Committee or the board of directors in
accordance with the compensation policies of the Committee, which are discussed
in the "Report of the Compensation Committee."
BASED UPON TNE RECOMMENDATION OF TNE COMPENSATION COMMITTEE, THE BOARD
HAS APPROVED THE ADOPTION OF OUR JUNE 2004 COMPENSATORY STOCK OPTION PLAN AND
RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED PLAN. THE APPROVAL OF SUCH
PLAN REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK PRESENT OR REPRESENTED BY PROXY AND
REPRESENTED AT THE ANNUAL MEETING.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As June 3, 2004, a total of 191,489,049 shares of our common stock were
outstanding. The following table sets forth, as of June 3, 2003, certain
information with respect to shares beneficially owned by: (a) each person who is
known by us to be the beneficial owner of more than 5% of our outstanding shares
of common stock, (b) each of our directors, (c) the executive officers named in
the Summary Compensation Table below, and (c) all current directors and
executive officers as a group.
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share the
power to vote or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
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acquire shares (for example, upon exercise of an option or warrant) within sixty
days of the date as of which the information is provided. In computing the
percentage ownership of any person, the amount of shares is deemed to include
the amount of shares beneficially owned by such person by reason of such
acquisition rights. As a result, the percentage of outstanding shares of any
person as shown in the following table does not necessarily reflect the person's
actual voting power at any particular date.
To our knowledge, except as indicated in the footnotes to this table
and pursuant to applicable community property laws, the persons named in the
table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them. Unless otherwise indicated, the
business address of the individuals listed is Eagle Broadband, Inc., 101
Courageous Drive, League City, Texas 77573.
SHARES BENEFICIALLY OWNED
Beneficial Owner Number of Shares Percent of Class
---------------- ---------------- ----------------
David Weisman 1,328,965(1) Less than 1%
H. Dean Cubley 3,095,283(2) 1.6%
Christopher W. Futer 153,689 Less than 1%
A. L. Clifford 561,782(3) Less than 1%
Glenn Allan Goerke 161,937(4) Less than 1%
C. J. Reinhartsen 103,391 Less than 1%
Lorne E. Persons, Jr. 294,787 Less than 1%
-----------------
Directors and Executive Officers
as a Group (8 persons) 2.9 %
(1) Includes options to purchase 300,000 shares at an exercise price of
$0.41 per share; 400,000 shares of common stock at an exercise price of
$0.60 per share; and 500,000 shares of common stock at an exercise
price of $0.75 per share.
(2) Includes options to purchase 2,000,000 shares of common stock at an
exercise price of $0.41 per share; 3,333 shares of common stock at an
exercise price of $0.60 per share; and 1,923 shares of common stock at
an exercise price of $0.60 per share.
(3) Includes 105,000 shares, which are held in the name of The Clifford
Family Trust, and 61,667 shares held by Mr. Clifford's wife. (4)
Includes options to purchase 25,000 shares of common stock at an
exercise price of $0.41 per share.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive
officers, and the persons who beneficially own more than ten percent of our
common stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Copies of all filed reports are required to
be furnished to us. Based solely on the reports received by us and on the
representations of the reporting persons, we believe that these persons have
complied with all applicable filing requirements during the fiscal year ended
August 31, 2003.
COMPENSATION
Chief Executive Officer Compensation
During the fiscal year ended August 31,2003, Dr. H. Dean Cubley served
as chief executive officer. Dr. Cubley's salary was $275,000 per year. Dr.
Cubley earned 300,000 options during the fiscal year ended August 31, 2003.
Mr. David Weisman was elected to the position of chief executive
officer in September 2003. Mr. Weisman's salary is $275,000 during the fiscal
year ended August 31, 2004. Mr. Weisman has earned 1,200,000 options to the
current date since the start of his employment.
7
Executive Compensation
The following table contains compensation data for our
named executive officers who received total annual
salary and bonus for the fiscal years ended August 31, 2003, 2002 and 2001 in
excess of $100,000.
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
COMPENSATION COMPENSATION AWARDS
------------ ---------------------
Securities Underlying ALL OTHER
NAME AND Salary Bonus Options COMPENSATION
PRINCIPAL POSITIONS YEAR ($) ($) (#) ($)
------------------- ---- --------- ---- --------------------- ------------
H. Dean Cubley, CEO 2003 275,000 -- 300,000 options at $0.41 --
2002 275,000 -- -- --
2001 185,000 -- -- --
Options, Warrants, and Stock Appreciation Rights
Our 1996 Stock Option Plan provides for the issuance of an aggregate of
1,000,000 shares of common stock. No options under the plan were issued to any
executive officers or directors in fiscal 2003.
The following table sets forth information concerning option exercises
during the fiscal year ended August 31, 2003, and option holdings as of August
31, 2003, with respect to our named executive officers. No stock appreciation
rights were outstanding at the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Value Number of Securities Value of Unexercised
Shares Acquired Realized Underlying Unexercised In-the-Money
Name on Exercise (#) ($) Options at FY-End (#) Options at FY-End ($)
- ---- --------------- -------- --------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
H. Dean Cubley 0 0 300,000 0 - 0
The fair market value of our common stock at August 31, 2003, was $.47
per share. Since the exercise price of the options listed above is $0.60 per
share, the options were not in-the-money as of the end of our fiscal year, and
no value is set forth in the above table under Securities and Exchange
Commission rules.
Compensation of Directors
Directors received $2,000 cash and $2,500 in shares of common stock,
and $1,000 cash and $1,250 in shares of common stock, for meetings attended in
person and via teleconference, respectively. In addition members of the Audit
Committee and the Compensation Committee receive $1,000 for each committee
meeting and the secretary receives $1,000 additional for each board meeting.
Employment Agreements
David Weisman has an existing employment agreement with the Company
that he entered into effective September 2003. Mr. Weisman's current agreement
for the position of chief executive officer is at an annual salary of $275,000
and is effective through April 2, 2005. The agreement includes incentives of
options some of which vest over the 18-month duration of his employment contract
and some of which are based upon the attainment of market capitalization
milestones and some of which are based on the cumulative revenue of the Company.
To date Mr. Weisman has earned five-year options to purchase 300,000 shares at
$0.41, plus 400,000 shares at $0.60, plus 500,000 shares at $0.75 per share.
8
Mr. Weisman's agreement has early termination provisions and standard
non-compete, non-disclosure, trade secret, and proprietary information
protection.
Dr. Cubley has an existing employment agreement with the Company that
he entered into effective January 2001. Dr. Cubley's current agreement for the
position of Chief Technology officer is at an annual salary of $275,000 and is
effective through September 2004. The agreement includes incentives of options
some of which are based upon the attainment of market capitalization milestones
and some of which are based on the cumulative revenue of the Company. To date
Dr. Cubley has earned five-year options to purchase 2,000,000 shares at $0.41
per share.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee for the fiscal year ended August 31, 2003,
consisted of A. L. Clifford, Glenn Allan Goerke, Jim Reinhartsen and Lorne
Persons. None of our executive officers or board members served on a
compensation committee for any other company.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors supervises our
executive compensation. We seek to provide executive compensation that will
support the achievement of our financial goals while attracting and retaining
talented executives and rewarding superior performance. In performing this
function, the Compensation Committee reviews executive compensation surveys and
other available information.
We seek to provide an overall level of compensation to our executives
that are competitive within our industry and other companies of comparable size
and complexity. Compensation in any particular case may vary from any industry
average on the basis of annual and long-term performance as well as individual
performance. The Compensation Committee will exercise its discretion to set
compensation where in its judgment external, internal or individual
circumstances warrant it. In general, we compensate our executive officers
through a combination of base salary, annual incentive compensation in the form
of cash bonuses and long-term incentive compensation in the form of stock
options.
Base salary levels for our executive officers are set generally to be
competitive in relation to the salary levels of executive officers in other
companies within our industry or other companies of comparable size, taking into
consideration the position's complexity, responsibility and need for special
expertise. In reviewing salaries in individual cases the Compensation Committee
also takes into account individual experience and performance.
We provide long-term incentive compensation through our stock option
plan. The number of shares covered by any grant is generally determined by the
then current stock price, subject in certain circumstances, to vesting
requirements. In special cases, however, grants may be made to reflect increased
responsibilities or reward extraordinary performance.
Stock Performance Graph
This section includes a tabular comparison of the cumulative total
stockholder return on: our common stock against the cumulative total return of
the NASDAQ Index and the communications equipment peer group ("Peer Group") for
the period of five fiscal years commencing August 31, 1998, and ending August
31, 2003. The graph and table assume that $100 was invested on August 31, 1998,
in each of our common stock, the NASDAQ Index and the Peer Group, and that all
dividends were reinvested. Our Peer Group consists of companies that we believe
are engaged in the same or similar business as Eagle Broadband. The comparisons
shown in the comparison below are based upon historical data. The stock price
performance shown in the comparison below is not necessarily indicative of, nor
intended to forecast, the potential future performance of our common stock.
9
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
----------------------------------------------------------------------------------------------------------------------------
29-Aug-98 31-Aug-99 31-Aug-00 31-Aug-01 31-Aug-02 31-Aug-03
----------------------------------------------------------------------------------------------------------------------------
Eagle Broadband Inc. $100 $107 $470 $63 $37 $35
----------------------------------------------------------------------------------------------------------------------------
Nasdaq US $100 $186 $284 $121 $91 $122
----------------------------------------------------------------------------------------------------------------------------
Communications $100 $158 $224 $116 $37 $54
Equipment, NEC
----------------------------------------------------------------------------------------------------------------------------
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information, as of August 31, 2003, with
respect to the Company's compensation plans under which common stock is
authorized for issuance.
Number of Securities Remaining
Number of Securities To be Available for Future Issuance
Issued Upon Exercise of Weighted Average Exercise Under Equity Compensation Plans
Outstanding Options, Warrants Price of Outstanding Options, (Excluding Securities Reflected
and Rights Warrants and Rights in Column A)
Plan Category (A) (B) (C)
- --------------------------------- ------------------------------- -------------------------------- ---------------------------------
Equity Compensation Plans
Approved by Security Holders 406,131 $1.27 551,370
Equity Compensation Plans Note
Approved by Security Holders (1) 5,991,667 $1.47 0
--------- ----- -
Total 6,397,798 $1.45 551,371
10
STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the Exchange Act, proposals that shareholders
intend to have included in our proxy statement and form of proxy for our next
annual meeting must be received no later than August 30, 2004. Moreover, with
respect to any proposal by a shareholder not seeking to have the proposal
included in the proxy statement but seeking to have the proposal considered at
our next annual meeting, such shareholder must provide written notice of such
proposal to our Secretary at our principal executive offices by November 16,
2004. With respect to a proposal not to be included in the proxy statement, in
the event notice is not timely given, the persons who are appointed as proxies
may exercise their discretionary voting authority with respect to such
proposals, if the proposal is considered at our next annual meeting, even if the
shareholders have not been advised of the proposal. In addition, shareholders
must comply in all respects with the rules and regulations of the Securities and
Exchange Commission then in effect and the procedural requirements of our
Bylaws.
OTHER MATTERS
The Board knows of no other business to come before the Special Meeting.
By Order of the Board of Directors
/S/David A. Weisman
David A. Weisman, Chief Executive Officer
June 10, 2004
League City, Texas
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN,
DATE, AND PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. YOU
MAY ALSO VOTE ONLINE OR BY TELEPHONE AS INDICATED ON THE ACCOMPANYING PROXY. YOU
MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE SPECIAL MEETING. IF YOU DECIDE TO
ATTEND THE SPECIAL MEETING AND WISH TO CHANGE YOUR PROXY VOTE, YOU MAY DO SO
AUTOMATICALLY BY VOTING IN PERSON AT THE MEETING.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER. YOUR PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE SPECIAL MEETING.
11
APPENDIX A
Eagle Broadband, Inc.
JUNE 2004 COMPENSATORY STOCK OPTION PLAN
SECTION 1. Purpose
The purpose of the June 2004 Compensatory Stock Option Plan (the "Plan")
is to promote the interests of Eagle Broadband, Inc. (the "Company") and its
stockholders by giving the Company a competitive advantage in attracting,
retaining and motivating employees, officers, consultants and Directors capable
of assuring the future success of the Company, to offer such persons incentives
that are directly linked to the profitability of the Company's business and
increases in stockholder value, and to afford such persons an opportunity to
acquire a proprietary interest in the Company.
SECTION 2. Definitions
"Act" shall mean the Securities Act of 1933, as amended from time to
time.
"Affiliate" shall mean any entity that, directly or indirectly through
one or more intermediaries, is controlled by, controlling or under common
control with the Company.
"Applicable Laws" shall mean the legal requirements relating to the
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.
"Award" shall mean a grant or award granted under the Plan, as evidenced
by an Award Agreement.
"Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan. Each Award
Agreement shall be subject to the applicable terms and conditions of the Plan
and any other terms and conditions (not inconsistent with the Plan) determined
by the Committee.
"Board of Directors" or "Board" shall mean the Board of Directors of the
Company.
"Change in Control" shall have the meaning set forth in Section 12 of the
Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.
"Committee" shall mean a committee of Directors designated by the Board
to administer the Plan, which shall initially be the Compensation Committee of
the Board of Directors. The Committee shall be composed of not less than such
number of Directors as shall be required to permit Awards granted under the Plan
to qualify under Rule 16b-3 and under Section 162(m) of the Code, and each
member of the Committee shall be an Outside Director.
"Common Stock" or "Stock" shall mean the common stock of the Company.
"Company" shall mean Eagle Broadband, Inc., a Texas corporation.
"Covered Employee" shall mean a Participant designated prior to the grant
of an Award by the Committee who is or may be a "covered employee" within the
meaning of Section 162(m)(3) of the Code in the year in which any such Award is
granted or in the year in which such Award is expected to be taxable to such
Participant.
"Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive amounts due the
Participant in the event of the Participant's death. In the absence of an
effective designation by the Participant, the term "Designated Beneficiary"
shall mean the Participant's estate.
"Director" shall mean a member of the Board, including any Outside
Director.
"Effective Date" shall have the meaning set forth in Section 13 of the
Plan.
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"Eligible Individual" shall mean any employee, officer, Director or
consultant providing services to the Company or any Affiliate, and prospective
employees and consultants who have accepted offers of employment or consultancy
from the Company or any Affiliate, whom the Committee determines to be an
Eligible Individual.
"Employee" shall mean any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of the
Company or any Affiliate and, with respect to any Incentive Stock Option granted
to such person, who is an employee for purposes of Section 422 of the Code;
provided, however, that neither service as a Director nor payment of a
Director's fee shall be sufficient to constitute employment for purposes of the
Plan. The Company shall determine in good faith and in the exercise of its
discretion whether an individual has become or has ceased to be an Employee and
the effective date of such individual's employment or termination of employment
without regard to any notice period or period of "leave", as the case may be.
For purposes of an individual's rights, if any, under the Plan as of the time of
the Company's determination, all such determinations by the Company shall be
final, binding and conclusive, notwithstanding that the Company or any court of
law or governmental agency subsequently makes a contrary determination.
"Employer" shall mean the Company or any Affiliate. "Exercise Price" has
the meaning set forth in Section 6 of the Plan. "Exchange Act" means the
Securities Exchange Act of 1934, as amended from time to time.
"Fair Market Value" shall mean the closing price of the Common Stock on
the last day prior to the date in question on which the Stock was traded on the
American Stock Exchange or such other national securities market or exchange as
may at the time be the principal market for the Common Stock as designated by
the Committee, or if the Shares were not traded on such national securities
market or exchange on such date, then on the next preceding date on which the
Shares are traded, all as reported by such source as the Committee may select.
"Fiscal Year" shall mean the fiscal year of the Company beginning on
September 1 and ending on the following August 31.
"Incentive Stock Option" means any Stock Option granted under Section 6
of the Plan that is designated as, and intended to qualify as, an "incentive
stock option" within the meaning of Section 422 of the Code.
"Non-Stock-Based Incentive Compensation" refers to incentive compensation
whose value is not based in whole or in part on the value of Common Stock.
"Nonqualified Stock Option" means any Option granted under Section 6 of
the Plan that is not an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
"Outside Director" means any Director who qualifies as an "outside
director" within the meaning of Section 162(m) of the Code, as a "non-employee
director" within the meaning of Rule 16b-3 and as an "independent director"
within the meaning of the listing requirements of the American Stock Exchange or
such other national securities market or exchange as may at the time be the
principal market for the Common Stock.
"Participant" means an Eligible Individual designated to be granted an
Award under the Plan.
"Payment Value" shall mean the dollar amount assigned to a Performance
Share, which shall be equal to the Fair Market Value of the Common Stock on the
day of the Committee's determination under Section 8(c) with respect to the
applicable Performance Cycle.
"Performance Cycle" or "Cycle" shall mean the period of years selected by
the Committee during which performance is measured for the purpose of
determining the extent to which an award of Performance Shares has been earned.
"Performance Goals" means the performance goals established by the
Committee in connection with the grant of an Award. In the case of Qualified
Performance-Based Awards, (i) such goals shall be based on the attainment of one
or more of the following objective measures with respect to the Company or an
Affiliate, or such subsidiary, division or department of the Company or an
Affiliate for or within which the Participant performs services: revenue growth;
earnings before interest, taxes, depreciation, and amortization; earnings before
A-2
interest and taxes; operating income; pre- or after- tax income; earnings per
share; earnings per share from continuing operations; other board or committee
approved performance measurements; cash flow; cash flow per share; return on
equity; return on invested capital; return on assets; economic value added (or
an equivalent metric); share price performance; total stockholder return;
improvement in or attainment of expense levels; improvement in or attainment of
working capital levels; (ii) such Performance Goals shall be set by the
Committee in writing within the time period prescribed by Section 162(m) of the
Code so that the outcome is substantially uncertain at the time the Performance
Goals are established; and (iii) the Committee certifies that such Performance
Goals were met. Such Performance Goals also may be based upon the attaining of
specified levels of Company performance under one or more of the measures
described above relative to the performance of other companies.
"Qualified Performance-Based Award" means an Award of Restricted Stock,
Restricted Stock Units or Performance Shares designated as such by the Committee
at the time of grant, based upon a determination that (i) the recipient is or
may be a Covered Employee in the year in which the Company would expect to be
able to claim a tax deduction with respect to such Restricted Stock, Restricted
Stock Units, Options or Performance Shares and (ii) the Committee wishes such
Award to qualify for the Section 162(m) Exemption.
"Restricted Period" shall mean the period of years selected by the
Committee during which a grant of Restricted Stock or Restricted Stock Units may
be forfeited to the Company.
"Restricted Stock" shall mean shares of Common Stock contingently granted
to a Participant under Section 9 of the Plan.
"Restricted Stock Unit" shall mean any unit granted under Section 9 of
the Plan evidencing the right to receive a Share (or the cash payment equal to
the Fair Market Value of a Share) at some future date.
"Rule 16b-3" shall mean Rule 16b-3, as promulgated by the Securities and
Exchange Commission under Section 16(b) of the Exchange Act, as amended from
time to time.
"Section 162(m) Exemption" shall mean the exemption from the limitation
on deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.
"Share" or "Shares" shall mean a share or shares of Common Stock. "Stock
Appreciation Right" shall mean a right granted under Section 7 of the
Plan.
"Stock Exchange" shall mean the American Stock Exchange or such other
national securities market or exchange as may at the time be the principal
market for the Shares.
"Stock Unit Award" shall mean an award of Common Stock or units granted
under Section 10 of the Plan.
"Stockholders Meeting" shall mean the annual meeting of stockholders of
the Company in each year.
SECTION 3. Administration
(a) Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject to the terms of the Plan and to
applicable law, the Committee shall have full power and authority to: (i)
designate Participants;
(ii) determine whether and to what extent any type (or types) of Award is to be
granted hereunder;
(iii) determine the number of Shares to be covered by (or the method
by which payments or other rights are to be determined in
connection with) each Award;
(iv) determine the terms and conditions of any Award or Award
Agreement;
(v) subject to Section 11 hereof, amend the terms and conditions
of any Award or Award Agreement and accelerate the vesting
and/or exercisability of any Option or waive any restrictions
relating to any Award; provided, however, that (A) except for
adjustments pursuant to Section 5(c) of the Plan, in no event
may any Option granted under this Plan be (x) amended to
A-3
decrease the Exercise Price thereof, (y) cancelled in
conjunction with the grant of any new Option with a lower
Exercise Price, or (z) otherwise subject to any action that
would be treated, for accounting purposes, as a "repricing" of
such Option, unless such amendment, cancellation, or action is
approved by the stockholders of the Company to the extent
required by applicable law and stock exchange rules and (B)
the Committee may not adjust upward the amount payable to a
Covered Employee with respect to a Qualified Performance-Based
Award or waive or alter the Performance Goals associated
herewith in a manner that would violate Section 162(m) of the
Code;
(vi) determine whether, to what extent and under what circumstances
the exercise price of Awards may be paid in cash, Shares,
other securities, other Awards or other property, or canceled,
forfeited or suspended;
(vii) determine whether, to what extent and under what circumstances
cash, Shares, other securities, other Awards, other property
and other amounts payable with respect to an Award under the
Plan shall be deferred either automatically or at the election
of the holder thereof or the Committee;
(viii) interpret and administer the Plan and any instrument or
agreement, including an Award Agreement, relating to the Plan;
(ix) adopt, alter, suspend, waive or repeal such rules, guidelines
and practices and appoint such agents as it shall deem
advisable or appropriate for the proper administration of the
Plan; and
(x) make any other determination and take any other action that
the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to
the Plan or any Award or Award Agreement shall be within the
sole discretion of the Committee, may be made at any time, and
shall be final, conclusive and binding upon all persons,
including without limitation, the Company, its Affiliates,
subsidiaries, stockholders, Eligible Individuals and any
holder or beneficiary of any Award.
(b) Action by the Committee; Delegation. Except to the extent
prohibited by applicable law or the applicable rules of a Stock Exchange, the
Committee may delegate all or any part of its duties and powers under the Plan
to one or more persons, including Directors or a committee of Directors, subject
to such terms, conditions and limitations as the Committee may establish in its
sole discretion; provided, however, that the Committee shall not delegate its
powers and duties under the Plan (i) with regard to officers or Directors of the
Company or any Affiliate who are subject to Section 16 of the Exchange Act or
(ii) in a manner that would cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption; and provided, further, that any such delegation may be
revoked by the Committee at any time.
(c) Power and Authority of the Board. Notwithstanding anything to the
contrary contained herein, except to the extent that the grant or exercise of
such authority would cause any Award or transaction to become subject to (or
lose an exemption under) the short-swing profit recovery provisions of Section
16 of the Exchange Act or cause an Award designated as a Qualified
Performance-Based Award not to qualify for, or to cease to qualify for, the
Section 162(m) Exemption, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan. To the extent that any permitted action taken by
the Board conflicts with action taken by the Committee, the Board action shall
control.
SECTION 4. Eligibility
Any Eligible Individual shall be eligible to be designated a
Participant. In determining which Eligible Individuals shall receive an Award
and the terms of any Award, the Committee may take into account the nature of
the services rendered by the respective Eligible Individuals, their present and
potential contributions to the success of the Company, or such other factors as
the Committee, in its discretion, shall deem relevant. All Awards and the terms
of any Award to Eligible Individuals who are members of the Committee must also
be approved by the Board of Directors. Notwithstanding the foregoing, Incentive
Stock Options may be granted only to full-time or part-time Employees (which
term as used herein includes, without limitation, officers and Directors who
also are Employees), and an Incentive Stock Option shall not be granted to an
Employee of an Affiliate unless such Affiliate also is a "subsidiary
corporation" of the Company within the meaning of Section 424(f) of the Code or
any successor provision.
SECTION 5. Shares Available for Awards
(a) Shares Available. Subject to adjustment as provided in Section 5(c)
of the Plan, the aggregate number of Shares that may be issued under the Plan
shall be 10,000,000. Shares that may be issued under the Plan may be authorized
but unissued Shares or Shares re-acquired and held in treasury.
A-4
(b) Accounting for Awards. For purposes of this Section 5, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan. Any Shares that are used by a Participant as
full or partial payment to the Company of the purchase price relating to an
Award, including in connection with the satisfaction of tax obligations relating
to an Award, shall again be available for granting Awards (other than Incentive
Stock Options) under the Plan. In addition, if any Shares covered by an Award or
to which an Award relates are not purchased or are forfeited, or if an Award
otherwise terminates without delivery of any Shares, then the number of Shares
counted against the aggregate number of Shares available under the Plan with
respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan.
(c) Adjustments. In the event of any change in corporate capitalization
(including, but not limited to, a change in the number of Shares outstanding),
such as a stock split or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other distribution of stock
or property of the Company (including any extraordinary cash or stock dividend),
any reorganization (whether or not such reorganization comes within the
definition of such term in Section 368 of the Code) or any partial or complete
liquidation of the Company, the Committee or Board may make such substitution or
adjustments in the aggregate number and kind of shares reserved for issuance
under the Plan, and the maximum limitation upon Stock Options and Stock
Appreciation Rights and other Awards to be granted to any Participant, in the
number, kind and Exercise Price of shares subject to outstanding Stock Options
and Stock Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its sole
discretion (including, without limitation, the provision of an amount in cash in
consideration for any such Awards); provided, however, that the number of shares
subject to any Award shall always be a whole number. Without limiting the
generality of the foregoing, in connection with any Disaffiliation of a
subsidiary of the Company, the Committee shall have the authority to arrange for
the assumption or replacement of Awards with new awards based on shares of the
affected subsidiary or by an affiliate of an entity that controls the subsidiary
following the Disaffiliation. For purposes hereof, "Disaffiliation" of a
subsidiary shall mean the subsidiary's ceasing to be a subsidiary of the Company
for any reason (including, without limitation, as a result of a public offering,
spinoff, sale or other distribution or transfer by the Company of the stock of
the subsidiary).
(d) Award Limitations. No more than 100,000 shares of Common Stock may be
subject to Qualified Performance-Based Awards granted to any Eligible
Individual, including a Covered Employee, in any Fiscal Year.
SECTION 6. Stock Options
(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Eligible Individuals to whom Options
shall be granted (which may be Nonqualified Stock Options or Incentive Stock
Options), the number of shares to be covered by each Option, the exercise price
for each Option, and the conditions and limitations applicable to the exercise
of each Option. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may
be prescribed by Section 422 of the Code.
(b) Exercise Price. The Exercise Price per Share purchasable under a Option
shall be determined by the Committee; provided, however, that, unless otherwise
determined by the Committee, such Exercise Price shall not be less than 100% of
the Fair Market Value of a Share on the date of grant of such Option.
(c) Time and Method of Exercise. The Committee shall determine the time or times
at which an Option may be exercised in whole or in part and the method or
methods by which, and the form or forms (including, without limitation, cash,
Shares, other securities, other Awards or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to the
applicable Exercise Price) in which, payment of the Exercise Price with respect
thereto may be made or deemed to have been made. (d) Option Term. The term of
each Stock Option shall be fixed by the Committee at the time of grant, but in
no event shall be more than 10 years from the date of grant.
(e) Incentive Stock Options. The Committee may designate Options as Nonqualified
Stock Options or as Incentive Stock Options. Any Incentive Stock Option
authorized under the Plan shall contain such provisions as the Committee shall
deem advisable, but shall in all events be consistent with and contain all
provisions required in order to qualify the Stock Option as an Incentive Stock
Option. To the extent that any Stock Option is not designated as an Incentive
Stock Option or even if so designated does not qualify as an Incentive Stock
Option on or subsequent to its grant date, it shall constitute a Nonqualified
Stock Option.
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SECTION 7. Stock Appreciation Rights
The Committee is hereby authorized to grant Stock Appreciation Rights
to Eligible Individuals subject to the terms of the Plan. Each Stock
Appreciation Right granted under the Plan shall confer on the holder upon
exercise the right to receive, as determined by the Committee, cash or a number
of Shares or a combination of cash and Shares equal to the excess of (A) the
Fair Market Value of one Share on the date of exercise (or, if the Committee
shall so determine, at any time during a specified period before or after the
date of exercise) over (B) the grant price of the Stock Appreciation Right as
determined by the Committee, which grant price shall not be less than 100% of
the Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right, unless otherwise determined by the Committee. Subject to the
terms of the Plan, the grant price, term, methods of exercise, dates of
exercise, methods of settlement, the effect of termination of employment (by
reason of death, disability, retirement or otherwise) on the exercisability and
any other terms and conditions (including conditions or restrictions on the
exercise thereof) of any Stock Appreciation Right shall be as determined by the
Committee, provided, that in no event shall the term of a Stock Appreciation
Right be longer than ten years.
SECTION 8. Performance Shares
(a) The Committee shall have sole and complete authority to determine
the Eligible Individuals who shall receive Performance Shares, the number of
such shares for each Performance Cycle, the Performance Goals on which each
Award shall be contingent, the duration of each Performance Cycle, and the value
of each Performance Share. There may be more than one Performance Cycle in
existence at any one time, and the duration of Performance Cycle may differ from
each other. The Committee may, prior to or at the time of the grant, designate
Performance Awards as Qualified Performance-Based Awards, in which event it
shall condition the settlement thereof upon the Committee's certification of the
attainment of the Performance Goals.
(b) The Committee shall establish Performance Goals for each Cycle on
the basis of such criteria and to accomplish such objectives as the Committee
may from time to time select.
(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established Performance
Goals.
(d) Payment Values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable after the expiration of the Performance
Cycle and the Committee's determination under paragraph (c), above. The
Committee shall determine whether Payment Values are to be distributed in the
form of cash or shares of Common Stock or a combination of cash and shares of
Common Stock.
SECTION 9. Restricted Stock and Restricted Stock Units
The Committee is hereby authorized to grant Restricted Stock and
Restricted Stock Units to Eligible Individuals with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:
(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units
shall be subject to such restrictions as the Committee may impose (including,
without limitation, limitation on transfer, forfeiture conditions, limitation on
the right to vote a Share of Restricted Stock or the right to receive any
dividend or other right or property with respect thereto), which restrictions
may lapse separately or in combination at such time or times, in such
installments or otherwise as the Committee may deem appropriate. The grant or
vesting of Restricted Stock and Restricted Stock Units may be performance-based
or time-based or both. Restricted Stock and Restricted Stock Units may be
Qualified Performance-Based Awards, in which event the grant or vesting, as
applicable, of such Restricted Stock or Restricted Stock Units shall be
conditioned upon the attainment of Performance Goals.
(ii) Stock Certificates; Delivery of Shares.
(A) Any Restricted Stock granted under the Plan shall be
evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or issuance
of one or more stock certificates. Any certificate issued in
respect of shares of Restricted Stock shall be registered in
the name of such Participant and shall bear an appropriate
legend referring to the applicable Award Agreement and
possible forfeiture of such shares of Restricted Stock. The
Committee may require that the certificates evidencing such
shares be held in custody by the Company until the
restrictions thereon shall have lapsed and that, as a
condition of any Award of Restricted Stock, the Participant
shall have delivered a stock power, endorsed in blank,
relating to the Shares covered by such Award.
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(B) In the case of Restricted Stock Units, no Shares or other
property shall be issued at the time such Awards are
granted. Upon the lapse or waiver of restrictions and the
restricted period relating to Restricted Stock Units (or at
such later time as may be determined by the Committee),
Shares or other cash or property shall be issued to the
holder of the Restricted Stock Units and evidenced in such
manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock
certificates.
(iii) Forfeiture. Except as otherwise determined by the Committee, upon
a Participant's termination of employment (as determined under criteria
established by the Committee) during the applicable restriction period, all
applicable Shares of Restricted Stock and Restricted Stock Units at such time
subject to restriction shall be forfeited and reacquired by the Company.
SECTION 10. Other Stock-Based Awards
(a) In addition to granting Options, Stock Appreciation Rights,
Performance Shares, Restricted Stock and Restricted Stock Units, the Committee
shall have authority to grant to Participants Stock Unit Awards that can be in
the form of Common Stock or units, the value of which is based, in whole or in
part, on the value of Common Stock. Subject to the provisions of the Plan,
including Section 10(b) below, Stock Unit Awards shall be subject to such terms,
restrictions, conditions, vesting requirements and payment rules (all of which
are sometimes hereinafter collectively referred to as "rules") as the Committee
may determine in its sole and complete discretion at the time of grant. The
rules need not be identical for each Stock Unit Award.
(b) In the sole and complete discretion of the Committee, a Stock Unit
Award may be granted subject to the following rules:
(1) Any shares of Common Stock which are part of a Stock Unit Award may not be
assigned, sold, transferred, pledged or otherwise encumbered prior to the
date on which the Shares are issued or, if later, the date provided by the
Committee at the time of grant of the Stock Unit Award.
(2) Stock Unit Awards may provide for the payment of cash consideration by the
person to whom such Award is granted or provide that the Award, and any
Common Stock to be issued in connection therewith, if applicable, shall be
delivered without the payment of cash consideration, provided that for any
Common Stock to be purchased in connection with a Stock Unit Award the
purchase price shall be at least 50% of the Fair Market Value of such
Common Stock on the date such Award is granted.
(3) Stock Unit Awards may relate in whole or in part to certain performance
criteria established by the Committee at the time of grant.
(4) Stock Unit Awards may provide for deferred payment schedules and/or vesting
over a specified period of employment.
(5) In such circumstances as the Committee may deem advisable, the Committee
may waive or otherwise remove, in whole or in part,
any restriction or limitation to which a Stock Unit Award was made
subject at the time of grant.
(d) In the sole and complete discretion of the Committee, an Award,
whether made as a Stock Unit Award under this Section 10 or as an Award granted
pursuant to Sections 6 through 9, may provide the Participant with (i) dividends
or dividend equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to an Award.
SECTION 11. Amendment and Termination
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company, no amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval:
(i) requires stockholder approval under the rules or regulations of the Stock
Exchange, or any other securities exchange that are applicable to the
Company;
(ii) increases the number of Shares authorized under the Plan as specified in
Section 5(a) of the Plan; or
(iii) without such stockholder approval, would cause the Company to be unable,
under the Code, to grant Incentive Stock Options under the Plan.
(b) Amendments to Awards. The Committee may waive any conditions or
rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in an Award Agreement, the
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Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof or such amendment would cause a
Qualified Performance-Based Award to cease to qualify for the Section 162(m)
Exemption.
(c) Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
SECTION 12. General Provisions
(a) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of a Participant for federal income tax
purposes (or the income tax laws of any other foreign jurisdiction) with respect
to any Award under the Plan, the Participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be withheld with
respect to such amount. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, be entitled to take such action and
establish such procedures as it deems appropriate to withhold or collect all
applicable payroll, withholding, income or other taxes from such Participant. In
order to assist a Participant in paying all or a portion of the federal, state,
local and foreign taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares or other property otherwise to
be delivered upon exercise or receipt of (or the lapse of restrictions relating
to) such Award with a Fair Market Value equal to the amount of such taxes or
(ii) delivering to the Company Shares or other property other than Shares
issuable upon exercise or receipt of (or the lapse of restrictions relating to)
such Award with a Fair Market Value equal to the amount of such taxes, provided
that, in either case, not more than the legally required minimum withholding may
be settled with Shares. Any such election must be made on or before the date
that the amount of tax to be withheld is determined.
(b) Awards. Each Award hereunder shall be evidenced by an Award
Agreement, delivered to the Participant or Outside Director and shall specify
the terms and conditions thereof and any rules applicable thereto, including but
not limited to the effect on such Award of the death, retirement or other
termination of employment of the Participant or Outside Director and the effect
thereon, if any, of a Change in Control of the Company.
(c) No Rights to Awards. No Eligible Individual or other person shall
have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Individuals or holders or
beneficiaries of Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to any Participant or with respect to different
Participants.
(d) No Right to Employment. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be construed as giving
a Participant the right to be retained in the employ of the Employer. Further,
the Employer expressly reserves the right at any time to dismiss a Participant
free from any liability, or any claim under the Plan, except as provided herein
or in any agreement entered into with respect to an Award.
(e) No Rights as Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she has become the holder thereof. Notwithstanding
the foregoing, in connection with each grant of Restricted Stock or Stock Unit
Award hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of
such Restricted Stock or Stock Unit Award.
(f) Construction of the Plan. The validity, construction,
interpretation, administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of Texas.
(g) Change in Control. In order to preserve Participant's rights under
an Award in the event of a transaction or occurrence that the Committee
reasonably determines to constitute a change in control of the Company (a
"Change-in-Control"), the Committee in its discretion may, at the time an Award
is made or any time thereafter, take one or more of the following actions: (i)
provide for the acceleration of any time period relating to the exercise of the
Award, (ii) provide for the purchase of the Award upon the Participant's request
for an amount of cash or other property that could have been received upon the
exercise or realization of the Award had the Award been currently exercisable or
payable, (iii) adjust the terms of the Award in a manner determined by the
Committee to reflect the Change in Control, (iv) cause the Award to be assumed,
or new rights substituted therefore, by another entity, or (v) make such other
provision as the Committee may consider equitable and in the best interests of
the Company.
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(h) Forms of Payment Under Awards. Subject to the terms of the Plan,
payments or transfers to be made by the Company or an Affiliate upon the grant,
exercise or settlement of an Award may be made in such form or forms as the
Committee shall determine (including, without limitation, cash, Shares,
promissory notes (provided, however, that the acceptance of such notes does not
conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities,
other Awards or other property or any combination thereof), and may be made in a
single payment or transfer, in installments or on a deferred basis, in each case
in accordance with rules and procedures established by the Committee. Such rules
and procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of dividend equivalents with respect to installment or
deferred payments.
(i) Section 16 Compliance; Section 162(m) Administration. The Plan is
intended to comply in all respects with Rule 16b-3 or any successor provision,
as in effect from time to time, and in all events the Plan shall be construed in
accordance with the requirements of Rule 16b-3. If any Plan provision does not
comply with Rule 16b-3 as hereafter amended or interpreted, the provision shall
be deemed inoperative. The Board, in its absolute discretion, may bifurcate the
Plan so as to restrict, limit or condition the use of any provision of the Plan
with respect to persons who are officers or Directors subject to Section 16 of
the Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Eligible Individuals. The Company intends that all Stock
Options and Stock Appreciation Rights granted under the Plan to individuals who
are or who the Committee believes will be Covered Employees will constitute
"qualified performance-based compensation" within the meaning of Section 162(m)
of the Code.
(j) Restrictions. Shares shall not be issued pursuant to the exercise
or payment of the Exercise Price or purchase price relating to an Award unless
such exercise or payment and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Act, the Exchange Act, the rules and regulations promulgated
thereunder, the requirements of any applicable stock exchange and the Texas
Business Corporations Act, as amended from time to time. As a condition to the
exercise or payment of the Exercise Price or purchase price relating to such
Award, the Company may require that the person exercising or paying the Exercise
Price or purchase price represent and warrant that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation and warranty is required by law. All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable, and the Committee may direct appropriate stop transfer orders
and cause other legends to be placed on the certificates for such Shares or
other securities to reflect such restrictions.
(k) Limits on Transfer of Awards. No Award and no right under any such
Award shall be transferable by a Participant otherwise than by will or by the
laws of descent and distribution and the Company shall not be required to
recognize any attempted assignment of such rights by any Participant; provided,
however, that, if so determined by the Committee, a Participant may, in the
manner established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant and receive any property distributable
with respect to any Award upon the death of the Participant; and provided,
further, that, if so determined by the Committee, a Participant may transfer a
Nonqualified Stock Option to any Family Member (as such term is defined in the
General Instructions to Form S-8 (or successor to such Instructions or such
Form)) at any time that such Participant holds such Stock Option, whether
directly or indirectly or by means of a trust or partnership or otherwise,
PROVIDED that the Participant may not receive any consideration for such
transfer, the Family Member may not make any subsequent transfers other than by
will or by the laws of descent and distribution and the Company receives written
notice of such transfer. Except as otherwise determined by the Committee, each
Award (other than an Incentive Stock Option) or right under any such Award shall
be exercisable during the Participant's lifetime only by the Participant or, if
permissible under applicable law, by the Participant's guardian or legal
representative. Except as otherwise determined by the Committee, no Award (other
than an Incentive Stock Option) or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or other encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate. Notwithstanding the above,
in the discretion of the Committee, awards may be transferable pursuant to a
Qualified Domestic Relations Order ("QDRO"), as determined by the Committee or
its designee.
(1) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.
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SECTION 13. Effective Date of Plan
Upon its adoption by the Board, the Plan shall be submitted for
approval by the stockholders of the Company and shall be effective as of the
date of such approval (the "EFFECTIVE DATE").
SECTION 14. Term of the Plan
The Plan will terminate on the tenth anniversary of the Effective Date
or any earlier date of discontinuation or termination established pursuant to
Section 3 of the Plan. However, unless otherwise expressly provided in the Plan
or in an applicable Award Agreement, any Award theretofore granted may extend
beyond such date, and the authority of the Committee provided for hereunder
with respect to the Plan and any Awards, and the authority of the Board to
amend the Plan, shall extend beyond the termination of the Plan.
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EAGLE BROADBAND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF EAGLE BROADBAND, INC.
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD AT
10:00 A.M. CENTRAL TIME, JULY 20, 2004
The undersigned shareholder of Eagle Broadband, Inc. (the "Company") hereby
appoints David Weisman proxy for the undersigned, each with full power of
substitution, to represent and to vote as specified in this Proxy all the shares
of common stock of the Company which the undersigned would be entitled to vote
at the Special Meeting of Shareholders of the Company to be held at 2500 South
Shore Blvd., League City, Texas 77573, at 10:00 a.m., July 20, 2004, and any and
all adjournments or postponements thereof, with all of the powers which the
undersigned would possess if personally present. The undersigned shareholder
hereby revokes any proxy or proxies heretofore executed for such matters.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER AS DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1. THE UNDERSIGNED SHAREHOLDER MAY REVOKE THIS PROXY AT
ANY TIME BEFORE IT IS VOTED BY DELIVERING TO THE CORPORATE SECRETARY OF THE
COMPANY EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY EXECUTED PROXY
BEARING A LATER DATE, OR BY APPEARING AT THE SPECIAL MEETING AND VOTING IN
PERSON.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED RETURN
ENVELOPE
1. To approve the June 2004 Compensatory For Against Abstain
Stock Option Plan.
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Special Meeting, or any adjournment or
postponement thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and Proxy
Statement.
DATED:______________________________ _____________________________________
[Signature]
-------------------------------------
[Signature if jointly held]
-------------------------------------
[Printed Name]
Please date and sign exactly as your name(s) is (are) shown on the share
certificate(s) to which the Proxy applies. When shares are held as
joint-tenants, both should sign. When signing as an executor, administrator,
trustee, guardian, attorney-in fact, or other fiduciary, please give full title
as such. When signing as a corporation, please sign in full corporate name by
President or other authorized officer. When signing as a partnership, please
sign in partnership name by an authorized person.
End of Filing