PRELIMINARY
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for use by the Commission Only (as permitted by
Rule 14e-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
SYNERGY TECHNOLOGIES CORPORATION
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1. Title of each class of securities to which transaction applies:
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 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:
PRELIMINARY PROXY
SYNERGY TECHNOLOGIES CORPORATION
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders
of Synergy Technologies Corporation which will be held at our corporate
headquarters at 335 25th Street S.E., Calgary, Alberta Canada on February 18,
2002 at 10:30 a.m. We look forward to greeting as many of our shareholders as
possible. Details of business to be conducted at the special meeting are
provided in the attached Notice of Special Meeting and Proxy Statement. Whether
or not you attend the special meeting it is important that your shares be
represented and voted at the meeting. Therefore, we urge you to sign, date and
promptly return the enclosed proxy in the envelope provided. If you decide to
attend the special meeting, you will of course be able to vote in person, even
if you have previously submitted your proxy.
On behalf of the Board of Directors, we would like to express our
appreciation for your continued interest in the affairs of the Company.
On Behalf of the Board of Directors,
/s/ Kelly Warrack
Corporate Secretary
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NOTICE OF SPECIAL MEETING
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of the
Shareholders of SYNERGY TECHNOLOGIES CORPORATION ("we," "us" or the "Company")
will be held at the offices of Synergy Technologies Corporation located at 335
25th Street S.E., Calgary, Alberta, Canada at 10:30 o'clock in the AM (Calgary
time) on the 18th day of February, 2002 for the following purposes:
(1) To act upon a proposal to amend our Articles of Incorporation to
increase the number of shares of common stock we are authorized to issue from
50,000,000 shares of Common Stock to 100,000,000 shares of Common Stock.
(2) To ratify and approve the 2002 Stock Option Plan adopted by the
Board of Directors.
(3) To consider such other business as may properly come before the
meeting.
RECORD DATE: You are entitled to vote if you were a shareholder of record at
the close of business on December 28, 2001.
ATTENDANCE IN PERSON: If you were a shareholder of record on the record date,
you are entitled to, and we would be delighted if you would, come to and vote at
the meeting in person.
VOTING BY PROXY: Please send in your proxy (or voting instructions to your
broker) as soon as possible so that your shares can be voted at the meeting in
accordance with your instructions. Please refer to the questions and answers
beginning on page 2 and the instructions on the proxy card.
By order of the Board of Directors
Kelly Warrack,
Corporate Secretary
January 9, 2001
SYNERGY TECHNOLOGIES CORPORATION
335 25th Street, S.E.
Calgary, Alberta T2A 7H8
Canada
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PRELIMINARY
PROXY STATEMENT
YOUR VOTE IS VERY IMPORTANT PLEASE SEND IN YOUR PROXY AS SOON AS POSSIBLE SO
THAT YOUR SHARES CAN BE VOTED AT THE MEETING IN ACCORDANCE WITH YOUR
INSTRUCTIONS, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING OF
SHAREHOLDERS IN PERSON. THIS PROXY STATEMENT DESCRIBES THE MATTERS TO BE VOTED
ON AND CONTAINS SPECIFIC INSTRUCTIONS TO FACILITATE YOUR VOTING.
Your Board of Directors is soliciting proxies for a Special Meeting of
Shareholders of Synergy Technologies Corporation to be held on February 18,
2002. We are distributing this Proxy Statement to shareholders on or about
January 10, 2001.
SOME QUESTIONS AND ANSWERS
WHAT AM I BEING ASKED TO VOTE ON?
You are being asked to vote on:
(1) Ratification of an amendment to our Articles of Incorporation to increase
the number of shares of common stock we are authorized to issue to 100,000,000
shares.
(2) The adoption and ratification of the 2002 Stock Option Plan; and
(3) Your grant of a proxy will also confer on the holders of the proxy authority
to vote in their best judgment on any other matters that may properly come
before the meeting.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
The Board recommends a vote FOR the amendments to the Articles of Incorporation
to increase the number of shares of common that we are authorized to issue; and
FOR ratification of the 2002 Stock Option Plan.
WHO IS ENTITLED TO VOTE?
You are entitled to vote if you were the owner of shares of our common stock at
the close of business on December 28, 2001, the record date for voting. This
includes (1) shares held on that date directly by you as the shareholder of
record and (2) shares held on that date for your account as beneficial owner by
a broker, bank or other nominee.
WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS
A BENEFICIAL OWNER?
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If the shares are registered directly in your name on the records maintained by
our transfer agent, American Stock Transfer & Trust Company, you are the
shareholder of record of those shares and we are sending the proxy materials
directly to you. As the shareholder of record, you are entitled to vote these
shares in person at the meeting or to designate a proxy to vote for you. We have
enclosed a proxy card to permit you to instruct the proxy holder on how to vote
your shares. If your shares are held in a brokerage account or by a bank or
other nominee, those shares are registered on the records maintained by the
transfer agent in the name of the broker, bank or other nominee. The broker,
bank or other nominee shares held like that are frequently referred to as being
held in "street name." If your shares are held in street name, the broker, bank
or other nominee is the holder of record and will get the proxy materials from
us in sufficient quantities to pass on a set to you. You, as the beneficial
owner, have the right to direct the broker, bank or other nominee on how to vote
and you are invited to attend the meeting if you want to. Nevertheless, if you
do attend, you will be entitled to vote only if the record holder of these
shares appoints you as its proxy. Your broker, bank or other nominee has
enclosed a voting instruction card so that you can give instructions on how to
vote your shares.
HOW DO I VOTE?
Shareholders may vote their shares at the Special Meeting either in person or by
proxy. Since many shareholders may be unable to attend the meeting in person, we
send to all shareholders of record cards that permit them to designate proxies
to represent them at the meeting and to direct the designated proxies on how to
vote. Brokers, banks and nominees also send cards to beneficial owners to permit
them to provide instructions as to how they wish their shares to be voted.
HOW DO I VOTE BY MAIL?
Shareholders of record who wish to vote by mail should complete the enclosed
proxy card to indicate their voting instructions and then sign, date and mail
the proxy card in the postage-paid envelope provided. Beneficial owners may
direct their vote by mail by completing, signing and returning the voting
instruction card provided by their broker, bank or nominee.
HOW DO I VOTE AT THE SPECIAL MEETING?
We will pass out ballot papers to any shareholder of record who wants to vote in
person at the Special Meeting rather than by proxy. If you hold your shares
through a broker, bank or nominee, you must obtain a proxy from that institution
to enable you to vote in person at the meeting.
WHOM AM I DESIGNATING AS MY PROXY?
You will be designating Marc Cernovitch, our Vice President, and Kelly Warrack,
our Secretary/Treasurer, as proxies to vote your shares in accordance with your
instructions. Alternatively, a shareholder has the right to appoint a person to
attend and act for him on his behalf at the Meeting other than the persons named
in the enclosed Instrument of Proxy. To exercise this right a shareholder shall
strike out the names of the persons named in the Instrument
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of Proxy and insert the name of his nominee in the blank space provided, or
complete another Instrument of Proxy. The completed Instrument of Proxy should
be deposited with its registrar and transfer agent, American Stock Transfer &
Trust Company, at 59 Maiden Lane, New York, NY 10038, fax to (718) 921-8145, or
with the offices of the Company at 335 25th Street SE, Calgary, Alberta T2A 7H8,
fax to (403) 290-1257, at least 48 hours before the time of the Meeting or any
adjournment thereof, excluding Saturdays and holidays.
HOW WILL MY PROXY VOTE MY SHARE?
The designated proxies will vote according to your instructions as indicated on
the proxy card. If you sign your proxy card but do not indicate voting
instructions on one or more of the business matters listed, the proxies will
vote all uninstructed shares in accordance with the recommendations of the
Board.
MAY I REVOKE MY PROXY?
You may revoke or amend your proxy, in addition to revocation in any other
manner permitted by law, in any one of the following ways:
(1) By attending the Special Shareholders Meeting in person, revoking your proxy
at that time and either voting the shares yourself or appointing a new person to
act as your proxy; or
(2) By signing a Proxy bearing a later date and forwarding it to the company at
the address of its principal offices located at 335 25th Street SE, Calgary,
Alberta T2A 7H8, Canada. Any such new proxy must be postmarked no later than
February 6, 2002 and must be received by the Company by February 12, 2002; or
(3) By sending a letter to the company at its principal offices located at 335
25th Street SE, Calgary, Alberta T2A 7H8, Canada signed by each of the
registered shareholders indicating the shareholder's intention to revoke or
amend the proxy. If you intend to amend the proxy, please advise us as to the
exact amendments you wish to make. Letters intended to revoke or amend a proxy
must be postmarked no later than February 6, 2002 and must be received by the
Company by February 12, 2002.
HOW MANY SHARES CAN VOTE?
As of the record date, we had issued and outstanding 33,835,843 shares of common
stock. The holders of these shares are each entitled to one vote for each share
held.
HOW MANY SHARES NEED TO BE REPRESENTED FOR THE MEETING TO CONDUCT BUSINESS?
The meeting can conduct business only if the holders of a majority of the shares
outstanding on the record date are present at the meeting in person or by proxy.
Both abstentions and broker non-votes are counted as present for the purpose of
determining the presence of a quorum. Abstentions are also counted as shares
present and entitled to be voted. Broker non-votes,
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however, are not counted as shares present and entitled to be voted with respect
to the matter on which the broker has expressly not voted. Generally, a broker
will not vote shares that it holds for a beneficial owner for or against a
particular proposal if (1) the broker has not received voting instructions from
the beneficial owner and (2) under the rules applicable to the broker it is not
allowed to vote on the particular proposal without voting instructions.
HOW MANY VOTES ARE NEEDED FOR MATTERS TO BE ADOPTED AT THE MEETING?
The matters to be voted on will be declared adopted if they receive the
affirmative vote of a majority of the shares present or represented at the
meeting.
IS CUMULATIVE VOTING ALLOWED IN THE ELECTION OF DIRECTORS?
No. Each share is entitled to one vote in the election of directors as on every
other matter.
WHO WILL COUNT THE VOTES?
Your Corporate Secretary or an inspector appointed specifically for the Meeting
will count the votes unless a shareholder present at the meeting requests count
by inspectors of election, in which event the Chairman of the meeting will
appoint two inspectors, who may but need not be shareholders, to effect the
count.
WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
The Chairman will announce the results of the meeting. In addition, we will
publish them on our web site - www.synergytechnologies.com - and in our annual
report on Form 10-KSB for the 2001 fiscal year that we expect to file with the
SEC by March 31, 2002.
WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?
The Company will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials. In addition to mailing these proxy
materials, our directors and officers, who will not receive any additional
compensation for their soliciting activities, may seek to contact shareholders
by telephone or other electronic means. We will also reimburse brokers, and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses incurred by them in forwarding proxy materials to shareholders.
MAY I PROPOSE ACTIONS FOR CONSIDERATION AT FUTURE SHAREHOLDER MEETINGS,
INCLUDING DIRECTOR NOMINATIONS?
You may submit proposals for consideration at future shareholder meetings,
including director nominations.
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PROPOSALS:
In order for a shareholder proposal to be considered for inclusion in the proxy
statement for our next year's Annual Meeting, our Corporate Secretary must
receive the written proposal by no later than March 31, 2002. Any such proposal
will need to comply with SEC regulations regarding the inclusion or shareholder
proposals in company-sponsored proxy materials. You may also move the adoption
of proposed resolutions from the floor at the Annual Meeting, but then you
should not expect proxies to vote in favor of it.
NOMINATIONS OF DIRECTOR CANDIDATES:
You may suggest director candidates for consideration by our Board. Any such
suggestion should be addressed to our Corporate Secretary. You may also make a
director nomination from the floor at the Annual Meeting, but then you should
not expect proxies to be voted in favor of your nominee.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At December 21, 2001, there were 33,835,843 shares of common stock
outstanding.
The following table tells you, as of December 21, 2001, about:
o Each beneficial owner of more than 5% of our common stock;
o Beneficial ownership of shares of our common stock by each of our
current directors and officers; and beneficial ownership of shares
of our common stock by all of our directors and officers as a
group.
For the purpose of this table, the beneficial ownership of a person
includes shares as to which that person has sole or shared voting or investment
power as well as shares that the person has the right to acquire within 60 days
(such as upon conversion of convertible securities or exercise of warrants or
options) from December 21, 2001. For the purpose of calculating the ownership
percentages, we have considered to be outstanding both the total number of
shares actually outstanding on December 21, 2001 and the total number of shares
that the named people then had the right to acquire within 60 days.
TABLE APPEARS ON FOLLOWING PAGE
8
Number of Shares Percentage of
of Common Stock Outstanding
Name Owned Beneficially Common Shares
---- -------------------- -------------
Thomas E. Cooley 1,097,659 3.2%
Cameron Haworth 278,837 0.8%
James Shone 124,400 0.3%
Marc Cernovitch 1,701,622 4.8%
James E. Nielson 823,846 2.4%
Duane F. Baumert 128,500 0.3%
Barry Coffey 150,000 0.4%
Kelly Warrack 142,000 0.4%
Laxarco Holdings Limited 14,793,510 43.72%
Directors and officers
as a group (8 persons) 4,411,864 12.2%
* Less than 1%.
1. Mr. Cooley's shareholdings include options to purchase 250,000 shares
of common stock, all of which are exercisable within 60 days of the
date hereof. Mr. Cooley is also a shareholder of Laxarco Holding
Limited but disclaims any investment control over or beneficiary
interest in the shares of Synergy owned by Laxarco Holding Limited,
for purposes hereof, and the proportion of shares in Laxarco owned by
him are not included in this table.
2. Mr. Haworth's shareholdings include options to purchase 244,500 shares
of common stock which are exercisable within 60 days of the date
hereof.
3. Mr. Shone's shareholdings include options and warrants to purchase
112,200 shares of common stock which are exercisable within 60 days of
the date hereof.
4. Mr. Cernovitch's shareholdings includes options and warrants to
purchase 904,806 shares of common stock which are exercisable within
60 days of the date hereof.
5. Mr. Nielson's shareholdings include options and warrants to purchase
496,923 shares of common stock which are exercisable within 60 days of
the date hereof.
6. Mr. Baumert's shareholdings includes (i) 3,5000 shares of common stock
registered in his wife's name and held in her retirement account and
(ii) options to purchase 125,000 shares of common stock which are
exercisable within 60 days of the date hereof.
7. Mr. Coffey's shareholdings are all options to purchase 200,000 shares
of common stockwhich are exercisable within 60 days of the date
hereof.
8. Mr. Warrack's shareholdings include options and warrants to purchase
120,000 shares which are exercisable within 60 days of the date hereof
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following summary compensation table sets forth the compensation
paid by us to our chief executive officer and all other officers who received in
excess of $100,000 for the periods indicated.
SUMMARY COMPENSATION TABLE
========================================== ============ ================= ================== ============== =================
OTHER ANNUAL SECURITIES ALL OTHER
YEAR SALARY($USD) COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION OPTIONS (USD)
========================================== ============ ================= ================== ============== =================
Cameron Haworth, President and Director 1999 0 - 150,000(1) -
========================================== ============ ================= ================== ============== =================
Cameron Haworth, President and Director 2000 66,134 - - -
========================================== ============ ================= ================== ============== =================
John Gradek, Chief Executive Officer and 2000 44,018 - - -
Director (3)
========================================== ============ ================= ================== ============== =================
Thomas E. Cooley, Director of 1999 0 - 220,648(2) -
Technology, President & Director of
Syngen Technologies Limited and Director
of Carbon Resources Limited
========================================== ============ ================= ================== ============== =================
Thomas E. Cooley, Director(4), Director 2000 140,000 10,673 250,000 1,583
of Technology, President & Director of
Syngen Technologies Limited and
President & Director of Carbon Resources
Limited
========================================== ============ ================= ================== ============== =================
(1) Mr. Haworth received options for 250,000 shares of common stock in exchange
for his services as President and a member of the Board of Directors for the
years 1998 and 1999. Since the exercise price for such options exceeded the
market price for the shares during the time that they were earned, no value has
been ascribed to such options.
(2) Mr. Cooley received 220,648 shares of Synergy as compensation for his
services in 1999, which was valued
at $143,921USD.
(3) Mr. Gradek served as CEO from August 15, 2000 through January 15, 2001 and
was a director from September 14, 1999 to January 15, 2001.
(4) Mr. Cooley was appointed to the Board of Directors of Synergy on August 2,
2000.
Compensation of Directors.
At present members of the Board of Directors of Synergy Technologies
Corporation are not compensated for their services as directors.
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Management Contracts and Related Party Compensation Arrangements.
During the twelve-month period ended December 31, 2000, Glidarc
Technologies Inc., a Texas corporation of which Thomas Cooley is an officer,
rendered consulting services to the Company and its subsidiaries in the amount
of $146,919, of which $23,515 remains outstanding for said period. During the
nine months ended September 30, 2001, Glidarc rendered services to the Company
in the amount a total of $134,132 in consulting fees of which $1,409 remains
outstanding.
During the nine months ended September 30, 2001, Huntingtown Associates
LLC, a Connecticut corporation of which Mr. Baumert is the sole proprietor,
rendered consulting services to the Company in the amount of $54,646. The
Company currently owes Huntingtown $61,876 for services rendered as at the
quarter ended September 30, 2001.
Option/SAR Grants During the Most Recently Completed Financial Year.
============================= =================== ==================== ================ ===================== =================
MARKET VALUE OF
% OF TOTAL SECURITIES
OPTIONS/SARS EXERCISE OR UNDERLYING
SECURITIES UNDER GRANTED IN BASE PRICE OPTIONS/SARS ON EXPIRATION
OPTIONS/SARS FINANCIAL ($/SECURITY) THE DATE OF GRANT DATE
NAME OF OPTIONEE GRANTED (#) YEAR ($/SECURITY)
============================= =================== ==================== ================ ===================== =================
Cameron Haworth, President 250,000 8.2% $1.00 $132,705 January 4, 2010
and Director
============================= =================== ==================== ================ ===================== =================
John Gradek, Chief 200,000 6.7% $1.00 $106,200 January 4,
Executive Officer and 2010(1)
Director (1)
============================= =================== ==================== ================ ===================== =================
Thomas E. Cooley (2) 250,000 8.2% $1.00 $132,705 January 4, 2010
Director, Director of
Technology, President &
Director of Syngen
Technologies Limited and
President & Director of
Carbon Resources Limited
============================= =================== ==================== ================ ===================== =================
(1) Mr. Gradek served as CEO from August 15, 2000 through January 15, 2001 and
was a director from September 14,1999 to January 15, 2001. Mr. Gradek's
options were cancelled on January 16, 2001.
(2) Mr. Cooley was appointed to the Board of Directors of Synergy on
August 2, 2000.
Aggregated Option/SAR Exercises During The Most Recently Completed Financial
Year and Financial Year-End Option/SAR Values.
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================================= ============== ================== ========================= =====================
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FINANCIAL YEAR END OPTIONS/SARS AT
(#) FINANCIAL YEAR END
SECURITIES AGGREGATE EXERCISABLE/ ($)
ACQUIRED ON VALUE REALIZED UNEXERCISABLE EXERCISABLE/
NAME OF OPTIONEE EXERCISE (#) ($) UNEXERCISABLE
================================= ============== ================== ========================= =====================
Cameron Haworth, President and Nil Nil 250,000 exercisable Nil
Director
================================= ============== ================== ========================= =====================
John Gradek, Chief Executive Nil Nil 200,000 exercisable Nil
Officer and Director (1)
================================= ============== ================== ========================= =====================
Thomas E. Cooley (2) Director, Nil Nil 250,000 exercisable Nil
Director of Technology,
President & Director of Syngen
Technologies Limited and
President & Director of Carbon
Resources Limited
================================= ============== ================== ========================= =====================
(1) Mr. Gradek served as CEO from August 15, 2000 through January 15, 2001 and
was a director from September 14,1999 to January 15, 2001. Mr. Gradek's options
were cancelled on January 16, 2001.
(2) Mr. Cooley was appointed to the Board of Directors of Synergy on
August 2, 2000. A total of 105,000 stock options were exercised by certain
directors, officers, employees and consultants during the year ended
December 31, 2000 at $1.00 per share. No pension plan or retirement benefit
plans hav
ITEM OF BUSINESS NO. 1
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF THE COMPANY
AND A CLASS OF PREFERRED STOCK
Your Board of Directors has adopted a resolution to amend our Articles
of Incorporation, subject to the approval of the shareholders, to increase the
number of shares of common stock the company is authorized to issue from
50,000,000 shares to 100,000,000 shares of common stock
As of December 21, 2001, there were 33,835,843 outstanding shares of
Common Stock and 16,164,157 shares of common stock remain authorized for
issuance. As of the date of this Proxy Statement, we are obligated to issue
9,492,380 additional shares of common stock pursuant to the terms of certain
agreements to which we are party.
Your Board of Directors has no specific plans at this time to issue any
additional shares of common stock, however, one can foresee some situations in
which it might become advantageous to do so. For example:
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o We may wish to raise additional capital for our operations through the
sale of common stock. Since the inception of our technology
development operations in 1999, we have been able to fund our
operations by selling shares of common stock. Our current capital
reserves will permit us to continue operating through the third
quarter of 2002. Thereafter, assuming we are not generating revenues
from business activities in an amount sufficient to support our
operations, we will have to fund further operations through the sale
of capital stock,.
o We may wish to compensate officers and consultants by issuing them
shares of common stock, a practice in which we have engaged in the
past. As the shareholders are aware from reading our financial
reports, because we have so far generated only limited revenues, we
have been required to pay for some of our expenses, such as
compensation of officers and consultants, in shares of our common
stock. We may continue the practice of paying officers and consultants
in shares of common stock and, therefore, would be required to
maintain a sufficient number of authorized but unissued shares for
such purpose.
o We may be required or find it advantageous to issue shares of common
stock in connection with transactions that may be beneficial to us,
including an acquisition of technology.
Approval of the amendment to the Articles of Incorporation to increase
the number of shares of common stock authorized to issue is important to our
company because the relatively small remaining number of authorized shares of
common stock that we currently are permitted to issue (6,671,777 shares), will
impair our ability to enter into transactions that may be beneficial to us,
including raising capital through the sale of equity; whereas, after the
amendment we will be able to issue 56,671,777 additional shares of common
stock..
Accordingly, an amendment to the Articles of Incorporation that
increases the total number of shares available for issuance would afford the
corporation flexibility in several key areas.
It is for these reasons that your Board of Directors believes that it
is a good idea to amend our Articles of Incorporation as described herein and
have some authorized but unissued common shares available.
The additional shares of common stock to be authorized for issuance
upon the adoption of the amendment would possess rights identical to the
currently authorized common stock. The holders of common stock are entitled to
one vote for each share held of record on all matters to be voted on by the
stockholders. All voting is on a non-cumulative basis. The holders of common
stock do not have any preemptive rights, conversion rights, or applicable
redemption or sinking fund provisions. The amendment to authorize the issuance
of additional shares of common stock will not have any effect on the par value
of the common stock.
If the shareholders approve the recommended amendment to our Articles
of Incorporation, it would have the effect of authorizing the Board of Directors
to issue the
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additionally authorized shares without further action by the shareholders,
except as may be required in a specific case by applicable law or the
regulations of any exchange on which our outstanding shares are listed. The
issuance of additional shares of common stock could reduce existing
shareholders' percentage ownership and voting power in Synergy and, depending on
the transaction in which the shares are issued, could affect the per share book
value or other per share financial measures. The availability of additional
shares of common stock could discourage, or make more difficult, efforts to
obtain control of the company.
If approved by the shareholders, the amendment of the Articles of
Incorporation will become effective upon the filing of Articles of Amendment
with the Department of Corporations of the State of Nevada.
YOUR BOARD URGES A VOTE FOR THE AMENDMENT OF THE ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THE COMPANY IS
AUTHORIZED TO ISSUE FROM 50,000,000 SHARES TO 100,000,000 SHARES.
VOTE REQUIRED
To be approved and go into effect, the amendment of the Articles of
Incorporation to increase the authorized capital stock of Synergy Technologies
Corporation requires the affirmative vote of A MAJORITY OF THE NUMBER OF SHARES
ISSUED AND OUTSTANDING ON THE RECORD DATE.
ITEM OF BUSINESS NO. 2
ADOPTION OF 2002 STOCK OPTION PLAN
By resolution dated December 14, 2002, the Board of Directors adopted
the 2002 Stock Option Plan to take effect on January 1, 2002, subject to the
approval of the stockholders.
Description of 2002 Stock Option Plan.
The following is a brief summary of the 2002 Stock Option Plan (the
"Plan"), which the Board of Directors believes to be desirable to attract and
retain executive and other key employees of outstanding ability; options under
the Plan may also be granted to directors, advisors and consultants. We have
attached a copy of the Plan as Appendix A to this proxy statement.
The 2002 Stock Option Plan authorizes the issuance of statutory and
non-statutory options to purchase up to 10,000,000 shares of our common stock.
The Plan is administered by the Board, which may empower a committee to
administer the Plan. The Board is generally empowered to interpret the Plan,
prescribe rules and regulations relating thereto, determine the terms of the
option agreements, amend them with the consent of the optionee, determine the
individuals to whom options are to be granted, and determine the
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number of shares subject to each option and the exercise price thereof. The per
share exercise price for options granted under the Plan is determined by the
Board, provided that the exercise price of incentive stock options will not be
less than 100% of the fair market value of a share of the common stock on the
date the option is granted (110% of fair market value on the date of grant of an
incentive stock option if the optionee owns more than 10% of our common stock).
Upon exercise of an option, the optionee may pay the purchase price with
previously acquired securities of the Company.
Options will be exercisable for a term determined by the Board, which
will not be greater than ten years from the date of grant and five years in the
case of incentive stock options except that an Incentive Stock Option granted to
the beneficial owner of more than 10% of the outstanding shares of our common
stock shall expire, to the extent that it has not theretofore been exercised, at
the close of business five (5) years from the date of grant. Options may be
exercised only while the original grantee has a relationship with us which
confers eligibility to be granted options or within three months after
termination of such relationship with us, or up to one year after death or total
and permanent disability. In the event of the termination of such relationship
between the original grantee and us for cause, as defined in the Plan, all
options granted to that original optionee terminate immediately. In the event of
certain basic changes in the Company, including a reorganization, merger or
consolidation of the Company, or the purchase of shares pursuant to a tender
offer for shares of our common stock, in the discretion of the Board or
administering committee, each option may become fully and immediately
exercisable. Incentive stock options are not transferable other than by will or
the laws of descent and distribution. Non-qualified stock options may be
transferred to the optionee's spouse or lineal descendants, subject to certain
restrictions. Options may be exercised during the holder's lifetime only by the
holder, his or her guardian or legal representative.
Options granted pursuant to the Plan may be designated as incentive
stock options ("ISO"), with the attendant tax benefits provided under Sections
421 and 422 of the Internal Revenue Code of 1986. Accordingly, the Plan provides
that the aggregate fair market value determined at the time an ISO is granted of
the common stock subject to incentive stock options exercisable for the first
time by an employee during any calendar year under all our plans may not exceed
$100,000. The Board may modify, suspend or terminate the Plan; provided, that
certain material modifications affecting the Plan must be approved by the
shareholders, and any change in the Plan that may adversely affect an optionee's
rights under an option previously granted under the Plan requires the consent of
the optionee.
Federal Income Tax Information
The following is a general summary as of the date of this proxy
statement of the federal income tax consequences to the Company and Participants
under the 2001 Stock Option Plan. Federal tax laws may change and the federal,
state and local tax consequences for any Participant will depend upon his or her
individual circumstances. Each Participant has been and is encouraged to seek
the advice of a qualified tax advisor regarding the tax consequences of
participation in the 2002 Stock Option Plan.
15
Incentive Stock Options. A Participant will recognize no income upon grant of an
incentive stock option and incur no tax on its exercise (unless the Participant
is subject to the alternative minimum tax as described below). If the
Participant holds shares acquired upon exercise of an incentive stock option for
more than one year after the date the option was exercised and for more than two
years after the date the option was granted, the Participant generally will
realize capital gain or loss (rather than ordinary income or loss) upon
disposition of the shares. This gain or loss will be equal to the difference
between the amount realized upon disposition and the amount paid for the shares.
If the Participant disposes of shares acquired upon exercise of an
incentive stock option prior to the expiration of either required holding period
(a "disqualifying disposition"), the gain realized upon disposition, up to the
difference between the fair market value of the shares on the date of exercise
(or, if less, the amount realized on a sale of the shares) and the option
exercise price, will be treated as ordinary income. Any additional gain will be
capital gain, taxed at a rate that depends upon the amount of time the shares
were held by the Participant.
Alternative Minimum Tax. The difference between the fair market value of the
shares acquired upon exercise of an incentive stock option on the date of
exercise and the exercise price is an adjustment to income for purposes of
alternative minimum tax. Upon a sale of shares that is not a disqualifying
disposition, alternative minimum taxable income is reduced in the year of sale
by the excess of the fair market value of the shares acquired upon exercise of
an incentive stock option at exercise over the amount paid for the shares.
Nonqualified Stock Options. A Participant will not recognize any taxable income
at the time a nonqualified stock option is granted. However, upon exercise of a
nonqualified stock option, the Participant must include in income as
compensation an amount equal to the difference between the fair market value of
the shares on the date of exercise and the participant's exercise price. The
included amount must be treated as ordinary income by the Participant and may be
subject to withholding by the Company. Upon resale of the shares by the
Participant, any subsequent appreciation or depreciation in the value of the
shares will be treated as capital gain or loss.
Maximum Tax Rates. The maximum federal tax rate applicable to ordinary income is
39.6%. Long-term capital gain is taxed at a maximum federal rate of 20%. To
receive long-term capital gain treatment, the stock must be held for more than
one year.
Tax Treatment of the Company. The Company generally will be entitled to a
deduction in connection with the exercise of a nonqualified stock option by a
Participant or the receipt of restricted stock or stock bonuses by a Participant
to the extent that the Participant recognizes ordinary income, provided that the
Company timely reports the income to the Internal Revenue Service. The Company
will be entitled to a deduction in connection with the disposition of shares
acquired upon exercise of an incentive stock option only to the extent that the
Participant recognizes ordinary income on a disqualifying disposition of the
shares.
Options Outstanding Under Existing Option and Award Plans.
16
We believe that it is important for you to know that at the date hereof
we have outstanding 3,619,356 options to purchase up to a like number of shares
of common stock under five other employee and director stock option and award
plans previously adopted by the shareholders. These options are exercisable at
various times from the date hereof through 2010 at prices ranging from $1.00 to
$1.56. Some of these options are subject to vesting provisions which may or may
not be achieved. At the date hereof, we have 629,856 shares of Common Stock
remaining available for issuance under the above-mentioned stock option plans.
The Board of Directors recommends that you vote in favor of approving
their adoption of the 2002 Stock Option Plan.
VOTE REQUIRED
Approval of the 2002 Stock Option Plan requires the affirmative vote of
a majority of the votes cast by shareholders present at the meeting in person or
by proxy.
ITEM OF BUSINESS NO. 3
OTHER BUSINESS
We do not know of any other item of business that may come before the
meeting, except a motion to adjourn. If at the meeting a sufficient number of
votes are not cast to adopt one or more of the items proposed for adoption, the
persons named in the accompanying form of proxy may vote to adjourn the meeting
to another specific date and time to permit continued solicitation of proxies.
ANNUAL REPORT
Shareholders may request a copy of our Annual Report on Form 10-KSB for
the year ended December 31, 2000 and Forms 10-QSB for the quarters ended March
31, 2001, June 30, 2001 and September 30, 2001, all as filed with the Securities
and Exchange Commission, by contacting us at (403) 269-2274.
By order of the Board of Directors
Kelly Warrack,
Corporate Secretary
17
APPENDIX A
2002 STOCK OPTION PLAN
SYNERGY TECHNOLOGIES CORPORATION
2002 STOCK OPTION PLAN
1. DEFINITIONS
The following terms when used in this Plan shall, except where the
context otherwise requires, have the following meanings:
(a) The term "Act" shall mean the Securities Act 1933 as now in effect
or hereafter amended,
(b) The term "Board" shall mean the Board of Directors of the
Corporation.
(c) The Term "Code" shall mean the Internal Revenue Code of 1986 as now
in effect or hereafter amended.
(d) The Term "Common Shares" shall mean the Common Shares, $0.002 par
value, of the Corporation (as hereinafter defined) or such other capital stock
as may hereafter be authorized and listed in lieu thereof,
(e) The term "Corporation" shall mean SYNERGY TECHNOLOGIES CORPORATION,
a Nevada corporation, or any successor thereto.
(f) The Term "Discharged for Cause" shall mean discharge for
dishonesty, theft, disclosing trade secrets of the Corporation or, if
hereinafter incorporated or acquired, any Subsidiary (as hereinafter defined),
entering into competition, directly or indirectly, with the Corporation or any
Subsidiary while employed, or using the Corporation's or any Subsidiary's
facilities or premises for the conduct of illegal or unlawful activities,
transactions or business.
(g) The Term "Effective Date" shall mean the date upon which this Plan
becomes effective.
(h) The term "Exchange Act" shall mean the Securities Exchange Act of
1934 as now in effect or hereafter amended.
(h) The term "Incentive Stock Option" shall mean every Option (as
hereinafter defined) granted under the Plan (as hereinafter defined) which is
intended to qualify as an Incentive stack option pursuant to Section 422 of the
Code.
(i) The term 'Non-Qualified Stock Option" shall mean every Option (as
hereinafter defined) granted under the Plan (as hereinafter defined) which is
not as Incentive Stock Option.
(j) The term "Option" shall mean any right to purchase shares Common
Stock to be granted under the Plan.
(l) The term "Option Price" shall mean the price at which a share of
Common Stock may be purchased upon exercise of an Option,
(m) The term " Plan" shall mean the SYNERGY TECHNOLOGIES CORPORATION
2002 Stock Option Plan."
(n) The term "Subsidiary" shall be defined in the same manner as the
term "subsidiary corporation" is defined in section 424(f) of the code.
(o) The term "Warrant" shall mean any right to purchase shares of
common shares, such as is commonly called an option, warrant or right, which is
not granted under the Plan.
(p) Any term used in the plan in the masculine gender shall include the
feminine gender or, in the case of a consultant or an advisor, the neuter
gender.
2. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of the
Board (hereinafter referred to as the "Committee") which shall consist of two or
more persons who shall be selected by and serve at the pleasure of the Board. In
the event that the Board has not appointed a Compensation Committee or at the
election of the Board, the Plan shall be administered by the Board.
(b) The Committee or, if applicable, the Board, is authorized to
interpret the Plan and may from time to time adopt such rules and regulations
for carrying out the Plan as it may deem best. The Committee or, if applicable,
the Board, may correct any defect or supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it shall deem
expedient to carry it into effect, and it shall be the sole and final judge of
such expediency. The determinations of the Committee or, if applicable, the
Board on the matters referred to in this paragraph 2 shall be conclusive.
(c) Subject to the terms, provisions and conditions of the Plan, the
Committee or, if applicable, the board shall have exclusive jurisdiction (i) to
select the optionees to be granted options, (ii) to determine the number of
shares subject to each Option, (iii) to determine the time or times when the
Options will be granted, (iv) to determine the Option Price of the shares
subject to each Option, which Option Price may be higher than, or equal to, (or
less than) the fair market value of a share of the Common Shares on the
respective date of grant (except as provided in the succeeding sentence) and
shall be subject to adjustment as provided in paragraph 10 of the Plan, (v) to
determine the dates after which the Option may be exercised, in whole or in
part, and (vi) to prescribe the form, which shall be consistent with the Plan,
of the instruments evidencing any Options granted under the Plan. Any Options
granted under the Plan to an optionee shall be at the fair market value of a
share of the Common Shares on the respective date of grant and, if the optionee
on the date of grant is the beneficial owner of more than 10% of the outstanding
shares of the Common Shares, the exercise price of the Incentive Stock Option
shall be 110% of the fair market value of a share of the Common Shares on such
date.
In addition, anything in the Plan to the contrary notwithstanding, an
Incentive Stock Option shall be subject to such limitations on exercise or other
provisions as required by the Code or the regulations promulgated thereunder.
3. GRANT OF OPTION
(a) The aggregate number of shares as to which Options may be granted
pursuant to the Plan shall be 10,000,000 shares of the Common Shares, subject to
adjustment as provided in paragraph 10 hereof,
(b) An optionee shall be granted an Option for such number of shares of
the Common Shares as may be determined by the Committee or, if applicable, the
Board. Nothing contained in the Plan shall be construed to preclude the granting
of an Option or Options to an optionee in addition to any Option or Options
already granted to him and in existence or in addition to any outstanding
Warrant owned by him, provided that in each event the is eligible under the
provisions of paragraph 4 hereof. (An Option shall be Non-Qualified Stock Option
unless the optionee is an employee of the Corporation or a Subsidiary and
requests in writing that he be granted an Incentive Stock Option.). An Incentive
Stock Option shall not be granted later than ten years from the tenth
anniversary of the date that the Plan is adopted by the holders of a majority of
the outstanding shares of the Common Shares.
(c) Whenever any Option granted pursuant to the Plan terminates under
the terms hereof prior to exercise thereof, the Committee or, if applicable, the
Board may grant a new Option or Options with respect to such shares; provided,
however, that the Committee or, if applicable, the Board may not grant any such
Option if the effect of such grant would be to increase the number of shares
which may be issued upon exercise of Options granted under the Plan to more then
the amount provided in paragraph 3(a) hereof, subject to adjustment as provided
in paragraph 10 hereof.
4. ELIGIBLE OPTIONEES
Every key employee (including officer) of the Corporation or of any
Subsidiary (or any director of, or consultant or advisor to, the Corporation as
may be selected by the Committee or, if applicable, the Board) is eligible for
grant of an Option under the Plan, (except that, if the optionee is not an
employee of the Corporation or a Subsidiary, he may receive only a Non-Qualified
Stock Option and except that bona fide services shall be rendered by the
consultant or advisor and such services must not be in connection with the offer
or sale of securities in a capital raising transaction.
5. EXERCISE OF OPTIONS
(a) Except as provided in paragraphs 7 and 10 hereof, the Option shall
be exercisable, either in its entirety or in such installments (which may be
accumulated) as the resolution granting the Option of the Committee or, if
applicable, the Board shall provide.
Each optionee may exercise his Option with respect to all shares then
available for purchase or with respect to such lesser number of shares as he may
from time to time desire prior to the expiration or termination of the option.
(b) Except as another date (whether later or earlier) for the
expiration or termination of the Option is provided in the resolution of the
Committee or, if applicable, the Board granting an Option, each Option shall
expire and become void, to the extent it has not theretofore been exercised, at
the close of business five (5) years from the date of grant; provided, however,
that no Option may be granted to expire more than ten (10) years from the date
of grant. An Incentive Stock Option granted to the beneficial owner of more than
10% of the outstanding shares of the Common Shares shall expire and become void,
to the extent that it has not theretofore been exercised, at the close of
business five (5) years from the date of grant.
6. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP
An Option shall terminate and all rights thereunder shall cease upon
termination of the optionee's employment (or termination of his directorship or
consulting or advisory relationship) unless (a) such termination is by reason of
the optionee's death, in which event the provisions of paragraph 7(a) hereof
shall govern; (b) such termination is as a result of the optionee's disability
(as determined by the Committee or, if applicable, the Board) or his retirement
in accordance with the retirement policies of the Corporation or the Subsidiary
by which the optionee was employed ( or for which he served as a director,
consultant or advisor) in which event the provisions of paragraph 7(b) shall
govern; (c) such termination is for a reason other than Discharge for Cause and
under the terms of an employment, consulting or advisory agreement with the
Corporation and/or a Subsidiary such optionee was entitled to notice of
termination, in which event the provisions of paragraph 7(c) shall govern; (d)
such termination is for a reason other than Discharge for Cause, in which event
the provisions of paragraph 7(d) hereof shall govern; and (e) the Committee or,
if applicable, the Board otherwise provides when it grants the Option.
7. RIGHTS TO EXERCISE OPTION IN EVENT OF DEATH OR OTHER
TERMINATION OF EMPLOYMENT
(a) If an optionee shall die while In the employ of the Corporation or
a Subsidiary, or within three (3) months after leaving the employ (because of
his retirement or disability as provided in paragraph 7(b) hereof (or if the
optionee shall die serving as a director of, or as a consultant or an advisor
to, the Corporation, or within three (3) months after such cessation of service
(because of his retirement or disability as provided in paragraph 6(b) hereof)
his Option may be exercised, whether or not such Option was exercisable by him
at the date of his death, by the person or persons to whom his rights under the
Option are transferred by will or by the laws of descent and distribution, or by
his legal representative(s), whichever shall be applicable, at any time or from
time to time for one (1) year after the earlier of his death or his cessation of
service as an employee, director, consultant or advisor
(b) If an Optionee shall retire or become disabled and leave the
employee of the Corporation and all of its Subsidiaries (or cease to be a
director of, or a consultant or an advisor
to, the Corporation) for any such reasons, as prescribed in paragraph 6(b)
hereof, his Option may be exercised by him, whether or not such Option was
exercisable by him at the date of his retirement or his ceasing to be an
employee (director, consultant or advisor) because of disability, at any time or
from time to time for three (3) months after the date of his retirement or his
ceasing to be an employee (director, consultant or advisor) because of
disability.
(c) In the event that, pursuant to the terms of an employment,
consulting or advisory agreement between the optionee and the Corporation and/or
a Subsidiary, such optionee shall be entitled to notice of termination of
employment and such optionee shall be terminated for a reason other than
Discharge for Cause, then such optionee may exercise his Option, whether or not
such Option was exercisable at the time of delivery of the notice of
termination, at any time or from time to time for thirty (30) days after
delivery of the notice,
(d) In the event an Optionee is discharged by the Corporation and/or a
Subsidiary for a reason other than Discharge for Cause or the Optionee
voluntarily terminates his employment (directorship or consulting or advisory
arrangement) such Optionee may exercise his Option only as to such shares as to
which the Option was exercisable at the date of his discharge or his voluntary
termination at any time or from time to time for thirty (30) days from the date
of his discharge or his terminations of employment (directorship, or consulting
or advisory arrangement).
(e) This paragraph 7 is subject to the provisions of paragraph 11
hereof.
8. NON-TRANSFERABILITY OF OPTIONS
(a) No Option shall be transferable otherwise than by will or by the
laws of descent and distribution, and each Option is exercisable during the
lifetime of an optionee only by him or, in the case of the optionee's certified
incompetency, by his duly authorized legal representative(s). Anything in the
foregoing to the contrary notwithstanding, an optionee may request that the
shares of the Common Shares to be issued upon the exercise of an Option be
issued in his and his spouse's name as joint tenants, with right of ownership.
(b) No Options nor any rights of the optionee pursuant to his Option
shall be subject to pledge, hypothecation, execution, attachment or similar
process.
9. EXERCISE OF OPTION AND PAYMENT FOR SHARES
(a) There shall bean exercise of an Option upon receipt by the
Corporation, at its principal office, during the term of such Option of (i) a
written notice signed by the optionee advising of his exercise of such Option
with respect to a specified number of shares, the notice to be in such form and
to contain such provisions as may at the time be required by the Committee or,
if applicable, the Board, including representations which comply with paragraph
12 hereof and his commitment pursuant to paragraph 11 (b) hereof, and (ii)
payment in United States funds of the full purchase price of the shares covered
by the notice. A check, bank draft or money order will be accepted as payment
subject to collection, and stock certificates registered in the name of the
optionee for the shares of the Common Shares covered by such exercise will be
delivered in the ordinary course of business after such collection; provided
that the Corporation shall not be obligated to deliver any shares of the Common
Shares until there has been compliance with any federal or state law or
regulations which the Corporation may deem applicable. If a person or persons to
whom the rights of an optionee under an Option are transferred by will or by
laws of descent and distribution shall become entitled to exercise an Option as
provided in paragraph 7(a) hereof, or if the legal representative(s) of an
optionee shall become so entitled, references to the optionee in this paragraph
9 shall, except where the context otherwise requires, be deemed to mean such
person or persons or such legal representative(s).
(b) A person entitled to exorcise an Option shall have none of the
rights of a shareholder with respect to shares subject to such Option until such
shares shall have been issued upon exercise of such Option,
(c) Anything in paragraph 9(a) to the contrary notwithstanding an
optionee may, in lieu of payment by check, bank draft or money order, surrender
to the Corporation shares of the Common Shares having a fair market value on the
date of exercise at least equal to the product of the Option Price and the
number of shares of the Common Shares as to which the Option was exercised. For
the purpose of the foregoing calculation, the fair market value of a share of
the Common Shares shall be the mean of the high bid and the low asked process
quoted on the date of exercise (i) in the National Association of Securities
Dealers Automated Quotation ("NASDAQ") System if the Common Shares are traded in
the NASDAQ System; (ii) on the exchange on which the Common Shares are then
traded; or (iii) in the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. or in the pink shoots as reported by the National
Quotation Bureau, Inc., if not traded in the NASDAQ system or on an exchange.
10. STOCK DIVIDEND CAPITAL CHANGES
(a) In the event that the Corporation shall pay a stock dividend with
respect to, or affect a subdivision or combination of shares or a
reclassification of the Common Shares, the Board shall make such adjustments in
the number and kind of shares then subject to each Option and the Option Price
as it may deem appropriate to reflect such action, and such adjustment shall
take effect at such time and in such a manner as the Board determine may in its
discretion.
(b) In the event of a complete or partial liquidation or reorganization
of the Corporation, including a merger, consolidation or sale or distribution of
assets, the Board may (i) make such adjustments, if any, as it may deem
appropriate in the provisions of any Option as to the Option Price and as to the
kind and number of shares or kind and amount of properly deliverable upon
exercise of such Option, (ii) terminate any Option at, or prior to, the
effective date of the liquidation or reorganization, or (iii) provide in
connection with the liquidation or reorganization for the assumption of any
Option by any surviving, consolidated or successor corporation or corporations.
(c) Notwithstanding any provisions of the Plan to the contrary, an
optionee shall have the right to exercise his Option in whole or in part as to
all shares then subject to the Option, whether or not such Option is otherwise
exercisable on such date, at any time subsequent to (i) the sale or
transfer by the Corporation of all or substantially all of its assets or the
merger or consolidation of the Corporation Mere the Corporation is not the
surviving entity (other than a transfer of assets to, or a merger or
consolidation with, a Subsidiary, (ii) the sale or transfer of shares of the
Corporation by the Corporation and/or any one or more of its shareholders, in
one or more transactions, related or unrelated, to one or more Persons under
circumstances whereby any Person (as such term is defined in the Exchange Act)
and its Affiliates (as such term is defined in the Exchange Act) shall own,
after such sales and transfers, at least one-fourth, but less than one-half, of
the shares of the Corporation having voting power for the election of directors,
unless such sale or transfer has been approved in advance by three-fourths of
the directors of the Corporation who have been directors of the Corporation for
at least two years (or who have been elected, or nominated for election by the
shareholder of the Corporation, by the directors who have so served), (iii) the
sale or transfer of shares of the Corporation by the Corporation and/or any one
or more of its shareholders, in one or more transactions, related or unrelated,
to one or more Persons under circumstances whereby any Person and its Affiliates
shall own, after such sales and transfers, at least one-half of the shares of
the Corporation having voting power for the election of directors, or (iv) the
election of one or more individuals to the Board which election results in
one-third of the directors of the Corporation consisting of individuals who have
not been directors of the Corporation for at least two years, unless such
individuals have been elected as directors, or nominated for election by the
shareholders of the Corporation as directors, by three-fourths of the directors
of the Corporation who have been directors of the Corporation for at least two
years.
Anything in subparagraph (i) of this paragraph 10(c) to the contrary
notwithstanding, the Corporation shall give notice to each optionee, at least
ten (10) days prior to the date of the meeting of shareholders called to approve
the sale by the Corporation of all or substantially all of its assets or the
merger or consolidation of the Corporation where it is not the survivor, of such
proposed sale, merger or consolidation and if, after such notice, the optionee
does not exercise the Option in its entirety on or prior to the effective date
of any such sale, merger or consolidation, then the Option, to the extent not so
exercised shall have no further force and effect unless the Board, in any such
merger or consolidation, has made provision for the corporation surviving the
merger or consolidation to assume the Option.
For the purposes of this paragraph 10(c), "Person" shall mean an
individual, partnership, firm, trust, corporation or other similar entity. When
two or more Persons act as a partnership, limited partnership, syndicate, or
other group for the purpose of acquiring, holding, or disposing of securities of
the Corporation, such syndicate or group shall be deemed a "Person" within the
meaning of this paragraph 1 0(c). For the purpose of this paragraph 10(c),
"Affiliate" shall mean any Person that directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, any Person.
11. OTHER CONDITIONS
(a) If at any time counsel to the Corporation shall be of the opinion
that any sale or delivery of shares of the Common Shares pursuant to the
exercise of any Option is or may be under the circumstances unlawful, the
Corporation shall have no obligation to make such sale or delivery, or to take
any action or refrain from taking any action to make such sale or delivery
lawful, and the right to exercise any Option shall be suspended until, in the
opinion of counsel, such sale or delivery shall be unlawful. Upon the
termination of any period of suspension under this paragraph, any Option
affected by such suspension which shall not then have expired or terminated
shall be reinstated as to all shares available for purchase before such
suspension and as to shares which would otherwise have become available for
purchase during the period such suspension, but no such suspension shall extend
the term of any Option. If any Option is deemed or declared void or
unexercisable for any reason, no other Options shall be thereby affected.
(b) It shall also be a condition precedent to an optionee's right to
exercise an Option that he shall have entered into arrangement with the
Corporation, in form and substance satisfactory to the Committee, or if
applicable, the Board, with respect to any applicable withholding tax
requirements.
12. REPRESENTATIONS BY OPTIONEES
(a) So long as a registration statement filed under the Act shall not
be effective with respect to the Plan, the Optionee shall represent to the
Corporation, upon receipt of the Option, (i) that he is familiar with the
operations and financials status of the Corporation and, if hereinafter
incorporated or acquired, its Subsidiaries, (ii) that he is aware that the
Corporation is obligated to file periodic reports under Section 13 of the
Exchange Act and the copies thereof may be obtained from the Corporation or the
Securities and Exchange Commission upon request; (iii) that he understands the
financial and other information relating to the Corporation that has been
furnished, or made available, to him or has an advisor who has such
understanding, and has advised him, with respect thereto, (iv) that the Option
granted to him is being taken by him for investment and not with a view to, or
in connection with any distribution thereof and (v) all shares of the Common
Shares purchased upon exercise of such Option, whether by him or, in the case of
his death, by the person or persons to whom his rights under such Option are
transferred by will or by the laws of descent or distribution or by his legal
representative(s) are to be so taken shall be registered prior to the issuance
thereof under the Act, the optionee or the other person exercising the Option as
permitted by paragraph 7 hereof will be required to give a representation in
writing that he is acquiring such shares as an investment and not with a view
to, or in connection with, the sale or distribution of any thereof,
(b) The Committee or, if applicable, the Board may require such
additional or alternative representations by the optionee, whether upon receipt
of the Option by the Optionee and/or upon the exercise thereof, as the Committee
or, if applicable, the Board, acting upon the advice of counsel to the
Corporation, deems necessary or advisable (i) in order to comply with the Act or
any other applicable status, rule or regulation relating to stock options or
(ii) which is deemed to be in the best interests of the Corporation.
13. TAX STATUS
(a) The Corporation makes no representation as to the tax status of any
Option or the tax consequences (under federal laws of any state or other
jurisdiction) of the granting of any of the Options, any exercise thereof or of
any sale of shares acquired pursuant thereto.
(b) Whenever a reference is made in the Plan or in any instrument
delivered pursuant thereto to any section of the Code and such section is later
amended, superseded or redesignated under a new section number, the reference in
the Plan shell, unless the Board shall provide to the contrary, be automatically
amended to reflect such amendment, redesignation or other change,
14. AMENDMENT OF PLAN
The Board may suspend or terminate the Plan with respect to any shares
as to which Options have not been granted and may, at any time or from time to
time, amend the Plan in any respect, except that after this Plan has been
submitted to, and the Board has obtained the approval of, the shareholders of
the Corporation, then, without the approval of shareholders holding a majority
of the shares of stock of the Corporation then issued and outstanding and
entitled to vote, no amendment shall be made (a) increasing or decreasing the
number of 'shares reserved under paragraph 3(a) hereof (other than as provided
in paragraph 10 hereof), (b) changing the designation of the class of eligible
optionees, as provided in paragraph 4 hereof, to receive Options hereunder; and
(c) extending the term during which the Options may be granted or exercised.
15. EFFECTIVENESS OF PLAN
The Plan shall become effective, in accordance with the provisions of
the resolutions of the Board of Directors approving the Plan, which were adopted
on December 14, 2001, on January 1, 2002, subject to the approval of the Plan by
the holders of a majority of the outstanding shares of the Common Shares. The
Plan shall terminate and have no further force and effect, except as to Options
theretofore granted, at the close of business on the tenth anniversary of the
date that the Plan is adopted by the holders of a majority of the outstanding
shares of the Common Shares.
16. TIME OF GRANTING OPTIONS
The date of grant of an Option under the Plan shall, for all purposes,
be the date on which the Committee or, if applicable, the Board makes the
determination granting such Option; and no grant shall be doomed effective under
the Plan prior to such date. Notice of the determination shall be given to each
optionee to whom an Option is so granted within a reasonable time after the date
of such grant.
17. TERMINATION OF RIGHTS OF ACTION
Every right of action arising out of. or in connection with, the Plan
by or on behalf of the Corporation or a Subsidiary, or by any shareholder of the
Corporation or a Subsidiary against any past, present or future member of the
Committee or, if applicable, the Board or against any employee, consultant or
advisor, or by any employee, consultant or advisor (past, present or future)
against the corporation or a subsidiary shall, irrespective of the place of
residence of any such shareholder, director, employee, consultant or advisor,
cease and be barred by the expiration of three (3) years from the date of the
act or omission in respect of which such right to action is alleged to have
arisen.
18. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of the Common
Shares pursuant to the Options will be used for general corporate purposes.
19. DECLINING MARKET PRICE
In the event the fair market value of a share of the Common Shares
declines below the Option Price set forth in any Non-Qualified Stock Option, the
Committee or, if applicable, the Board may, at any time, adjust reduce, cancel
and re-grant any unexercised Non-Qualified Stock Option or take any similar
action it deems to be for the benefit of the Optioned in light of the declining
fair market value for the Common Shares; provided, however, that none of the
foregoing actions may be taken by the Committee without the prior approval of
the Board.