SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
[X] Definitive Proxy Statement Commission Only (as
[ ] Definitive Additional Materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting Material Under Rule 14a-12
EMAILTHATPAYS.COM, INC.
-----------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
[emailthatpays.com, Inc. Logo]
Dear Stockholder,
You are cordially invited to attend the Annual Meeting of Stockholders
of emailthatpays.com, Inc. (the "Company") to be held on June 26, 2000 at 10:00
a.m. local time at 428 West 6th Avenue, Vancouver BC.
The matters expected to be acted upon at the meeting are described in
detail in the following Notice of the Annual Meeting of Stockholders and Proxy
Statement.
Whether you plan to attend the Annual Meeting or not, it is important
that you promptly complete, sign, date and return the enclosed proxy card. This
will ensure your proper representation at the Annual Meeting.
Sincerely,
/s/ Daniel Hunter
----------------------------
Daniel Hunter
Chief Executive Officer
emailthatpays.com, Inc.
428 West 6th Avenue
Vancouver BC V5Y 1L2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON June 26, 2000
To the Stockholders of emailthatpays.com, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
emailthatpays.com Inc., a Florida corporation (the "Company"), will be held on
June 26, 2000 at 10:00 a.m. local time at 428 West 6th Avenue, Vancouver BC, for
the following purpose:
1. To elect 3 directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to Article IV of the Articles of
Incorporation to increase the maximum number of shares of stock
that the Company is authorized to issue and have outstanding at
any one time from ten million (10,000,000) shares of Common Stock
having a par value of $.005 per share to one hundred million
(100,000,000) shares of Common Stock having a par value of $.005
per share.
3. To approve the 1999 Equity Compensation Plan that was implemented
by the Company on December 21, 1999, as amended.
4. To ratify the selection of KPMG as independent auditors of the
Company for the fiscal year ending December 31, 2000.
5. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on May 19, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof. A list of such stockholders will be available for inspection at the
principal office of the Company.
All stockholders are cordially invited to attend the Annual Meeting.
However, to ensure your representation, you are requested to complete, sign,
date and return the enclosed proxy as soon as possible in accordance with the
instructions on the proxy card. A return addressed envelope is enclosed for your
convenience. Any stockholder attending the Annual Meeting may vote in person
even though the stockholder has returned a proxy previously. Your proxy is
revocable in accordance with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors
/s/ Donald James MacKenzie
--------------------------------
Donald James MacKenzie
President and Secretary
Vancouver, British Columbia
May 31, 2000
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 26, 2000
The enclosed proxy is solicited on behalf of the Board of Directors of
emailthatpays.com Inc., a Florida corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on June 26, 2000, at 10:00 a.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the Company's principal executive
offices at 428 West 6th Avenue, Vancouver BC V5Y 1L2. The Company intends to
mail this Proxy Statement and accompanying proxy card on or about May 31, 2000
to all stockholders entitled to vote at the Annual Meeting.
Voting Rights and Outstanding Shares
Only holders of record of the Company's Common Stock at the close of
business on May 19, 2000, the record date, will be entitled to notice of and to
vote at the Annual Meeting. The required quorum for the transaction of business
at the Annual Meeting is a majority of the shares of Common Stock issued and
outstanding on the record date. At the close of business on May 19, 2000, the
record date, 8,703,093 shares of the Company's Common Stock were issued and
outstanding.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting.
The inspector of elections appointed for the meeting, who will
separately tabulate affirmative and negative votes, abstentions and broker
non-votes, will tabulate all votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 428
West 6th Avenue, Vancouver BC V5Y 1L2, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information as of March 31, 2000
concerning the ownership of Common Stock by (i) each stockholder of the Company
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each person who has been a Director or
executive officer of the Company since the beginning of the last fiscal year and
(iii) all current Directors and executive officers of the Company as a group.
Except as otherwise noted, each person listed below is the sole beneficial owner
of the shares and has sole investment and voting power of such shares. No person
listed below has any option, warrant or other right to acquire additional
securities of the Company except as otherwise noted.
<TABLE>
<CAPTION>
Security Ownership Table
------------------------
Name and Address of Amount and Nature of
Beneficial Owner (1) Beneficial Owner Percent of Class
-------------------- ---------------- ----------------
<S> <C> <C>
Daniel Hunter (2) 1,509,722 (3) 17.1
Bruce Hamlin (4) 284,722 (3) 3.2
Donald James MacKenzie (5) 1,509,722 (3) 17.1
Mitch Drew 47,222 (6) *
Warren Olson 47,222 (6) *
Steven Adelstein (7) 140,559 (8) 1.6
Gus Guilbert (9) 10,516 (10) *
Michael Marcus (11) 500,000 (12) 5.7
All executive officers and 3,398,610 38.5
directors as a group (13)
</TABLE>
* Less than one percent.
(1) Unless otherwise indicated, the business address of all beneficial owners is
428 West 6th Avenue, Vancouver, BC V5Y 1L2.
(2) Mr. Hunter's shares are held by Hunter Holdings Inc. Mr. Hunter is the sole
shareholder of Hunter Holdings Inc.
(3) Includes 9,722 shares which the holder has the right to acquire within 60
days upon the exercise of stock options.
(4) Mr. Hamlin's shares are held by Hamlin Holdings Inc. Mr. Hamlin is the sole
shareholder of Hamlin Holdings Inc.
(5) Mr. MacKenzie's shares are held by Vicdra Holdings Inc. Mr. MacKenzie is the
sole shareholder of Vicdra Holdings Inc.
(6) Includes 47,222 shares which the holder has the right to acquire within 60
days upon the exercise of stock options.
(7) Mr. Adelstein's address is 4950 West Prospect Road, Ft. Lauderdale, FL
33309.
(8) Includes (i) Warrants to purchase up to 30,000 shares of common stock held
by Mr. Adelstein's children; (ii) Warrants to purchase 10,000 shares of
common stock owned by AUW, Inc. ("AUW"), a company of which Mr. Adelstein is
an officer and which is controlled by Mr. Adelstein's family members; (iii)
Warrants to purchase 10,000 shares of common stock owned by Mr. Adelstein's
parents; (iv) 60,709 shares owned by AUW; and (v) 29,850 shares owned by
West Tropical Investments Corp., a company of which Mr. Adelstein is an
officer.
(9) Mr. Guilbert's address is 4950 West Prospect Road, Ft. Lauderdale, FL 33309.
-2-
(10) Includes warrants to purchase up to 5,000 shares of common stock.
(11) Mr. Marcus' address is 27622 Pacific Coast Highway, Malibu, CA 90265.
(12) Includes 300,000 shares held by Canmarc Trading, Inc., a company which is
controlled by Mr. Marcus.
(13) Includes shares held by Messrs. Hunter, Hamlin, MacKenzie, Drew and Olson.
Also includes 123,610 shares which the holders have the right to acquire
within 60 days upon the exercise of stock options.
Change In Control
On October 22, 1999, pursuant to the terms of an Agreement and Plan of
Merger and Reorganization (the "Merger Agreement"), dated as of September 17,
1999, by and among the Company, Realm Acquisition Corp., a wholly-owned
subsidiary of the Company ("Merger Sub") and emailthatpays.com ("email Nevada"),
Merger Sub was merged (the "Merger") with and into email Nevada. Pursuant to the
Merger, the stockholders of email Nevada received one share of the Company's
common stock in exchange for each share of email Nevada's common stock, or an
aggregate of 6,572,000 (post reverse split) shares of the Company's common
stock. In connection with the Merger, the Company 1) issued an aggregate of
693,016 shares (post reverse split) of its common stock in satisfaction of
outstanding debt and in exchange for a $500,000 note receivable, 2) declared a
one-for-ten reverse stock split whereby each share of common stock issued and
outstanding on September 27, 1999 was reclassified and changed to one-tenth of
one share of common stock, and 3) issued 525,000 shares (post reverse split) as
an investment banking fee. Prior to the Merger, the Company had 304,743 (post
reverse split) shares issued and outstanding. Therefore, after the Merger, the
historic stockholders of the Company held 3.8% of the issued and outstanding
shares of the Company and the historic stockholders of email Nevada (together
with the stockholders that received shares in satisfaction of outstanding debt
and in exchange for a $500,000 note receivable and stockholders that received
shares as an investment banking fee) held 96.2% of the issued and outstanding
shares of the Company.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
At the meeting, three directors will be elected to hold office until
the 2001 Annual Meeting of Stockholders and until their respective successors
have been duly elected and qualified. The Board of Directors has nominated each
of the persons set forth below to serve as members of the Board of Directors.
Each of the nominees is currently serving as a Directors, and each has indicated
a willingness to continue serving as a Director. Should any nominee become
unavailable to accept election as a Director, the persons named in the enclosed
proxy will vote the shares which they represent for the election of such other
person as the Board of Directors may recommend, unless the Board of Directors
otherwise reduces the number of Directors.
Nominees
The names of the nominees and certain information about them are set forth
below:
Name Age Position Held with the Company
Daniel Hunter 41 Chief Executive Officer, Director
Donald James MacKenzie 43 President and Secretary, Director
H. Earl Joudrie 66 Director
-3-
Mr. Hunter was appointed the Company's Chief Executive Officer and a Director in
October 1999. Mr. Hunter was appointed Chief Executive Officer and a Director of
email Nevada in July 1999. Since September 1998, Mr. Hunter has been the Chief
Executive Officer and a Director of Coastal Media Group Ltd., a 100% owned
subsidiary of the Company. From 1993 to 1998, Mr. Hunter was an account
executive and Partner at Canaccord Capital and has participated in the financing
of numerous private and public companies.
Mr. MacKenzie was appointed the Company's President, Secretary, and a Director
in October 1999. Mr. MacKenzie has been the Secretary, Treasurer, and a Director
of email Nevada since its inception in June 1998. From 1990 to 1998, Mr.
MacKenzie was a senior account executive at BCTV, a major local television
station in Vancouver.
Mr. Joudrie became one of the Company's directors in March 2000 Mr. Joudrie is
also Chairman of the Board of Gulf Canada Resources Ltd. (NYSE:GOU), one of the
leading oil and gas corporations engaged in international exploration,
development, production and marketing of crude oil and natural gas. He is
Chairman of the Board of Algoma Steel, Inc. (NASD:ALGSF) an international steel
producer employing over 4,600 people. and is President, CEO and Director of A&G
Resources Corp., a private resources company. Mr. Joudrie is also Director of
Abitibi- Consolidated (CC:A), an international newsprint manufacturer, Canadian
Tire Corp. LTD. (CT:CTR/A), a major Canadian and international hard goods
retailer, and Atco Ltd. (CC:ACO/X), a premier electricity and natural gas
utility company operating in Canada, the UK and Australia. He is Chairman
Emeritus, Public Policy Forum and Member of the Prime Minister's Advisory
Committee on Government Restructuring. Mr. Joudrie was formerly Chairman of the
Board of AT&T Canada Long Distance Services, Director and Committee Chairman of
Unitel.
Vote Required
A plurality of the votes cast at the meeting is required to elect each
nominee as a Director. Unless authority to vote for any of the nominees named
above is withheld, the shares represented by the enclosed proxy will be voted
FOR the election as Directors of such nominees.
Proxies cannot be voted for more than the three named nominees. The
three candidates receiving the highest number of affirmative votes cast at the
meeting will be elected Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" EACH OF
THE NOMINEES FOR DIRECTOR.
Committees of the Board of Directors and Meetings
The Board of Directors currently performs the functions of the audit, nominating
and compensation committees.
During the 1999 fiscal year, the Board of Directors held 12 meetings. All
incumbent directors attended at least 75% of the aggregate meetings of the Board
of Directors.
Compensation of Directors
The Company's Directors do not receive compensation for their services
as Directors or members of Committees of the Board of Directors.
-4-
Executive Officers
The names of, and certain information regarding, executive officers of the
Company are set forth below. The executive officers serve at the pleasure of the
Board of Directors and the Chief Executive Officer.
Name Age Title
----------------------- --- ---------------------------------
Daniel Hunter 41 Chief Executive Officer, Director
Donald James MacKenzie 43 President and Secretary, Director
Bruce Hamlin 42 Vice-President
Mitch Drew 37 Vice President of Sales
Warren Olson 40 Chief Financial Officer
Mr. Hunter was appointed the Company's Chief Executive Officer and a Director in
October 1999. Mr. Hunter was appointed Chief Executive Officer and a Director of
email Nevada in July 1999. Since September 1998, Mr. Hunter has been the Chief
Executive Officer and a Director of Coastal Media Group Ltd., a 100% owned
subsidiary of the Company. From 1993 to 1998, Mr. Hunter was an account
executive and Partner at Canaccord Capital and has participated in the financing
of numerous private and public companies.
Mr. MacKenzie was appointed the Company's President, Secretary, and a Director
in October 1999. Mr. MacKenzie has been the Secretary, Treasurer, and a Director
of email Nevada since its inception in June 1998. From 1990 to 1998, Mr.
MacKenzie was a senior account executive at BCTV, a major local television
station in Vancouver.
Mr. Hamlin joined the Company as a Vice-President in July 1999. Prior to joining
the Company, Mr. Hamlin spent 11 years as a senior account executive at WIC
Western International Communications Inc., a broadcasting company with radio and
television holdings throughout Canada.
Mr. Drew joined the Company as Vice President of Sales in November 1999. From
1997-1999, Mr. Drew was a senior sales executive at CHEK TV, a CTV network
affiliate based in Victoria, British Columbia, Canada. Prior to CHEK TV, Mr.
Drew was an account executive at BCTV.
Mr. Olson joined the Company as Chief Financial Officer in December 1999. From
1997 to 1999, Mr. Olson was the General Manager of CHEK TV. From 1990 - 1997,
Mr. Olson was the Vice-President of Finance and Administration for BCTV and CHEK
TV.
Executive Compensation
The following Summary Compensation Table sets forth the cash
compensation and certain other components of the compensation received by the
two persons serving in the capacity as the Company's Chief Executive Officer and
the one most highly compensated executive officer whose total compensation in
1999 exceeded $100,000. (the "Named Executive Officers").
-5-
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------- --------------------------------------------------------
Awards Payouts
--------------------------------------------------------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options / LTIP Compen-
Year Salary Bonus sation Award SAR Payouts sation
---- ------ ----- ------ ----- --- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel Hunter, 1999 $ 89,584 - - - 70,000 - -
Chief Executive 1998 $ 26,970
Officer
Steven Adelstein, 1999 (1) $100,000 - - - 50,000 (2) - -
Former Chairman
and President
Donald James 1999 $103,684 - - - 70,000 - 776(3)
MacKenzie 1998 $ 57,312
President
</TABLE>
(1) For the period from January 1, 1999 through October 29, 1999, the date that
Mr. Adelstein resigned from his positions as Chairman and President.
(2) Includes 50,000 warrants held by Mr. Adelstein's family members and
affiliates. See Security Ownership Table.
(3) Term life insurance premiums paid by the Company.
Stock Option Grants and Exercises
The following Option / SAR Grants Table shows information regarding grants of
stock options in this last completed fiscal year to the executive officers named
in the Summary Compensation Table.
Option / SAR Grants Table
-------------------------
<TABLE>
<CAPTION>
Number of
Securities Percent of
Underlying Total Options /
Options / SARs Granted
SARs To Employees Exercise Or Expiration
Granted (#) In Fiscal Year Base Price Date
----------- -------------- ---------- ----
<S> <C> <C> <C> <C>
Daniel Hunter 70,000 7% $5.75 12-21-2009
Donald James 70,000 7% $5.75 12-21-2009
MacKenzie
</TABLE>
The following Aggregate Options / SAR Exercises in and Fiscal Year-End
Option / SAR Value Table provides information concerning each exercise of stock
options (or tandem SARs) and freestanding SARs during the last completed fiscal
year by the executive officers named in the Summary Compensation Table and the
fiscal year-end value of unexercised options and SARs.
-6-
Aggregate Options / SAR Exercises in and
Fiscal Year-End Option / SAR Value Table
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Unexercised Value of Unexercised
Options / SARs At In-The-Money Options
Shares FY-End (#) / SARs At FY-End ($)
Acquired On Value Exercisable / Exercisable /
Exercise Realized Unexercisable Unexercisable
-------- -------- ------------- -------------
<S> <C> <C> <C> <C>
Daniel Hunter - - - / 70,000 0 / 201,250(1)
Steven Adelstein - - 50,000 / 0 0(2) / 0
Donald James - - - / 70,000 0 / 201,250(1)
MacKenzie
</TABLE>
(1) FY-End Option/SAR Values based on exercise price of $5.75 per share and
March 31, 2000 closing price of $8.625 per share.
(2) FY-End Option/SAR Values based on exercise price of $12.50 per share and
March 31, 2000 closing price of $8.625 per share.
Certain Relationships and Related Transactions
As presented in the following table, Mr. Hunter, the Company's Chief
Executive Officer, has personally and through a controlled company advanced
funds to the Company for working capital purposes.
December 31, 1999 December 31, 1998
-------------------------------------------------------------------------------
Controlled company $ 146,804 $ 217,530
Mr. Hunter 0 28,667
----------- -----------
146,804 246,197
Less: current portion 55,667 0
=========== ===========
$ 91,137 $ 246,197
The advance from the controlled company is unsecured, bears interest at
an annual rate of 7%, and is repayable over 36 months commencing July 19, 1999
with blended monthly payments of $5,348. Annual maturities of the controlled
company advance are:
Year Amount
---- ------
2000 $55,667
2001 $59,692
2002 $31,445
Mr. Hunter's advances are unsecured, non-interest bearing and have no
set terms of repayment. Mr. Hunter also personally guarantees the Company's
loans payable.
-7-
During March 2000, all outstanding amounts owing to Mr. Hunter's
controlled-company were paid in full.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
certain of the Company's officers and persons who own more than ten percent of
the Company's common stock (collectively the "Reporting Persons") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports.
Based on the Company's review of the copies of these reports received
by the Company, and representations received from Reporting Persons, the Company
believes that, all filings required to be made by the Reporting Persons for the
period July 12, 1999 (the effective date of the Company's Form 10-SB) through
March 31, 2000 have been made, except for filings required to be made by Mr.
Adelstein and by Gus Guilbert, the Company's former Secretary. Between July 12,
1999 and October 29, 1999 Mr. Adelstein and Mr. Guilbert were the Company's only
directors and officers. On October 29, 1999 Mr. Adelstein and Mr. Guilbert
resigned from their director and officer positions. Neither Mr. Adelstein nor
Mr. Guilbert made any reports of ownership and changes in ownership. Messrs.
Hunter, MacKenzie, Hamlin, Drew and Olson have filed the appropriate reports,
however the reports were filed late.
PROPOSAL NO. 2:
AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
On May 5, 2000, the Board of Directors unanimously approved an
amendment to the Company's Amended and Restated Articles of Incorporation to
increase the authorized number of shares of Common Stock of the Company from
10,000,000 to 100,000,000. The number of authorized shares of preferred stock of
the Company will remain unchanged at 2,000,000 shares.
If approved by the stockholders, the amendment will become effective
upon the filing of Articles of Amendment to the Articles of Incorporation with
the Florida Secretary of State. The amendment would change Article IV, of the
Company's Amended and Restated Articles of Incorporation to read in its entirety
as follows:
"ARTICLE IV
CAPITAL STOCK
The maximum number of shares of stock that this Corporation is
authorized to issue and have outstanding at any one time shall
be one hundred million (100,000,000) shares of Common Stock
having a par value of $.005 per share and two million
(2,000,000) shares of Preferred Stock having a par value of
$.01 per share. Series of the Preferred Stock may be created
and issued from time to time, with such designations,
preferences, conversion rights, cumulative, relative,
participating, optional, or other rights, qualifications,
limitations, or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the
creation and issuance of such series of preferred stock as
adopted by the Board of Directors pursuant to the authority in
this paragraph given."
Purpose and Effect of the Amendment
At March 31, 2000, the Company had 8,703,092 shares of Common Stock
outstanding. Taking into account shares authorized for stock options granted
under the Company's 1999
-8-
Equity Compensation Plan, as well as shares subject to warrants to purchase
Common Stock (without considering the "net exercise" provisions of such
warrants), the Company currently has fewer than 500,000 shares remaining
available for other purposes. Accordingly, the objective of the increase in the
authorized number of shares of Common Stock is to ensure that the Company has
sufficient shares available for future issuances.
The Board of Directors believes that it is prudent to increase the
authorized number of shares of Common Stock to the proposed level in order to
increase the total number of shares available for issuance to meet business
needs as they arise. Such future activities may include, without limitation,
financings, establishing strategic relationships with corporate partners,
providing equity incentives to employees, officers or directors, or effecting
stock splits or dividends. The additional shares of Common Stock authorized may
also be used to acquire or invest in complementary businesses or products or to
obtain the right to use complementary technologies. Although the Board of
Directors has no current plans, proposals or understandings, (with the exception
of the amendment to increase the aggregate number of shares of Common Stock
authorized for issuance under the 1999 Equity Compensation Plan from 1,000,000
to 2,000,000 - as more fully described in Proposal 4) to use any of the
additional authorized shares for any purposes, the Board believes it is in the
best interest of the Company to maintain the ability to do so in the future.
Approval of the increase in the number of authorized shares of Common
Stock would not affect the rights, privileges, and preferences of the holders of
currently outstanding shares of Common Stock of the Company, except for the
effects incidental to increasing the number of shares of the Company's Common
Stock outstanding.
If the stockholders approve the increase in the number of authorized
shares of Common Stock, the Board of Directors may cause the issuance of
additional shares of Common Stock without further vote of stockholders of the
Company, except as provided under Florida corporate law or under the rules of
the Nasdaq OTC Bulletin Board or any national securities exchange on which
shares of Common Stock of the Company are then listed. Current holders of Common
Stock have no preemptive or like rights, which means that current stockholders
do not have a prior right to purchase any new issue of capital stock of the
Company in order to maintain their ownership interest therein. The issuance of
additional shares of Common Stock would decrease the proportionate equity
interest of the Company's current stockholders and, depending upon the price
paid for such additional shares, could result in dilution to the Company's
current stockholders.
Potential Anti-Takeover Effect
In the event this proposal is approved, it could, under certain
circumstances, have an anti- takeover effect, although this is not the intention
of this proposal. The increased number of authorized shares of Common Stock
could discourage, or be used to impede, an attempt to acquire or otherwise
change control of the Company. The private placement of shares of Common Stock
into "friendly" hands, for example, could dilute the voting strength of a party
seeking control of the Company.
Although the Company has no present intention to use the additional
authorized shares of Common Stock for such purposes, if this proposal is
adopted, more capital stock of the Company would be available for such purposes
than is currently available.
Vote Required
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the Meeting will be required to approve the amendment
to the Company's Articles of Incorporation increasing the number of authorized
shares of Common Stock from 10,000,000 to 100,000,000.
-9-
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK.
PROPOSAL NO. 3
APPROVAL OF THE COMPANY'S 1999 EQUITY COMPENSATION PLAN
Description of the Plan
General. On December 21, 1999, the Board of Directors approved The 1999
Equity Compensation Plan (the "Plan"). The Board of Directors considered the
adoption of the Plan to be in the Company's best interest so that the Company
may attract high quality employees necessary to build the Company and to provide
ongoing incentives to the Company's employees in the form of options to purchase
the Company's Common Stock.
On May 5, 2000, the Board of Directors approved an amendment to the
Plan to increase the maximum number of aggregate shares reserved for issuance
under the Plan from 1,000,000 to 2,000,000 shares. The Board of Directors
considered the amendment of the plan to increase the number of shares reserved
for issuance thereunder to be in the Company's best interest so that the Company
may continue to attract high quality employees necessary to build the Company
and to provide ongoing incentives to the Company's employees in the form of
options to purchase the Company's Common Stock.
The Plan, as amended, is attached to this Proxy Statement as Annex A.
As of March 31, 2000, options covering an aggregate of 806,833 shares
were outstanding under the Plan and 193,167 shares remained available for future
grants. As of March 31, 2000, the options outstanding under the Plan had a
weighted average exercise price of $4.40 per share with expiration dates between
December 2009 and January 2010.
The Plan provides for the grant of up to 2,000,000 incentive or
non-qualified stock options or shares of restricted stock to employees and key
advisors (an "Optionee") of the Company. Options granted under the Plan
generally vest ratably over a period of three years and expire ten years from
the date of grant. If an Optionee ceases employment with or service to the
Company (a "Termination"), the Optionee may exercise any vested option at the
time of Termination within such period of time specified in the option
agreement. In the absence of a specified time in the option agreement, the
option remains exercisable for three months following the Optionee's
Termination. Unvested options revert to the Plan at the date of the Termination.
If, after Termination, the Optionee does not exercise the options within the
time specified, the Option shall terminate and the shares revert to the Plan.
Purpose. The purpose of the Plan is to enable the Company to attract
and retain highly qualified personnel who contribute to the Company's success by
their ability, ingenuity and industry and to provide incentives that are linked
directly to increases in stockholder value to the participating officers,
directors, employees, consultants, advisors and others.
Administration. To the extent applicable, the Plan shall be
administered by a compensation committee (the "Committee") consisting of two or
more persons the Board appoints, all of whom are "outside directors" as defined
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and related Treasury regulations and who are "non-employee directors" as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). In the event the Board does not appoint a Committee, the
Board shall serve as the Committee. As of March 31, 2000, the Board serves as
the Committee.
-10-
The Committee, in its sole discretion, shall have full power and
authority to administer and interpret the Plan, make factual determinations,
adopt or amend rules, regulations, agreements and instruments for implementing
the Plan. The Committee's interpretations of the Plan and determinations shall
be conclusive and binding on all parties having any interest in the Plan or in
any awards granted hereunder.
Eligibility All employees of the Company and the Company's subsidiaries
("Employees"), including Employees who are officers or members of the Board, and
members of the Board who are not Employees ("Non-Employee Directors") shall be
eligible to participate in the Plan. Advisors, consultants, independent
contractors and others that perform services for the Company or any of its
subsidiaries ("Key Advisors") shall be eligible to participate in the Plan if
they render bona fide services and the services are not in connection with the
offer or sale of securities in a capital-raising transaction.
The Committee shall select the Employees, Non-Employee Directors and
Key Advisors to receive Grants and determine the number of shares of Company
Stock that will be subject to each Grant. The aggregate number of shares of
Company Stock that may be subject to Grants made under the Plan to any one
individual or entity during any calendar year is 1,000,000 shares
Standard Option Terms. A stock option grant instrument between the
Company and the optionee evidences each option. The following terms and
conditions generally apply to all options, unless a participant's particular
stock option grant instrument provides otherwise:
Exercise of the Option. Generally, the optionee must earn the right to
exercise the option by continuing to work for the Company. The Committee
determines when options granted under the Plan may be exercisable, but in no
event can any option be exercised more than ten years after the date of grant.
Unless otherwise provided in the stock option grant instrument, the purchase
price of shares purchased upon exercise of an option shall be paid in cash.
Exercise Price. The purchase price (the "Exercise Price") of Company
Stock subject to an Option shall be determined by the Committee and may be equal
to, greater than, or less than the Fair Market Value of a share of Company Stock
on the date the Option is granted, provided, however, that (A) the Exercise
Price of an Incentive Stock Option shall be equal to, or greater than, the Fair
Market Value of a share of Company Stock on the date the Incentive Stock Option
is granted; (B) an Incentive Stock Option may not be granted to an Employee who,
at the time of grant, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
of the Company, unless the Exercise Price is greater than 110% of the Fair
Market Value of Company Stock on the date of grant; (C) in the case of an option
intended to qualify as performance based compensation (as described in Section
162(m)(4)(c) of the Code), the Exercise Price shall not be less than 100% of the
Fair Market Value of Company Stock on the date of grant; and (D) if required by
the applicable state law, the Exercise Price cannot be less than the stock's par
value.
Termination of Employment. If an optionee's employment or other service
with the Company terminates for any reason other than permanent and total
disability, death, or for cause, options under the Plan may be exercised within
90 days after such termination, but may be exercised only to the extent the
options were exercisable on the date of termination, subject to the condition
that no option may be exercised after expiration of its term.
Death or Disability. If an optionee should die or become permanently
and totally disabled while employed by or engaged in other service for the
Company, options may be exercised at any time within one year following the date
of death or disability, but only to the extent the options were exercisable on
the date of death or disability, subject to the condition that no option may be
exercised after expiration of its term.
-11-
Termination for Cause. In the event an Employee ceases to be employed
by the Company on account of a termination for cause, all vested Options shall
terminate as of the date of termination.
Termination of Options. All options granted under the Plan expire on
the date specified in the stock option grant instrument, but in no event shall
the term of such options exceed ten years. However, all incentive stock options
granted under the Plan to any participant who owns stock possessing more than
10% of the total combined voting power of the Company's outstanding capital
stock must expire no later than five years from the date of grant.
Nontransferability of Options. An option is nontransferable by the
optionee otherwise than by will or the laws of descent and distribution, and is
exercisable during the optionee's lifetime only by the optionee, or in the event
of the optionee's death, by a person who acquires the right to exercise the
option by bequest or inheritance or by reason of the death of the optionee. The
Plan permits the Committee to modify this limitation to permit transfers of
nonstatutory stock options to family members through such terms as the Committee
may determine.
Change of Control. The Committee may, in its sole discretion, provide
in a Grant Instrument that upon a Change of Control (i) the Committee will
provide each Grantee who has outstanding Grants with written notice of the
Change of Control; (ii) all outstanding Options shall automatically accelerate
and become fully exercisable and (iii) the restrictions and conditions on all
outstanding Restricted Stock shall immediately lapse. If the Committee does not
provide such terms in the Grant Instrument, a Change of Control will not impact
a Grant.
Other Provisions. The grant instrument may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Committee or the Board of Directors.
Securities Subject to the Option Plan. The Common Stock issuable under
the Plan may be either shares of authorized but unissued Common Stock or
reacquired shares of Common Stock.
In the event of any change in the Company's capital structure (whether
by reason of any recapitalization, stock dividend, stock split, combination of
shares, merger, reorganization, consolidation or other similar change in
corporate structure), appropriate adjustments shall be made by the Board of
Directors in the number of shares subject to each option and the per share
exercise price therefore.
Amendment and Termination of the Plan. The Board may amend or terminate
the Plan at any time; provided, however, that the Board shall not amend the Plan
without stockholder approval if such approval is required by Section l62 (m) of
the Code. The Plan shall terminate on the day immediately preceding the tenth
anniversary of its effective date, unless the Plan is terminated earlier by the
Board or is extended by the Board with the approval of the stockholders. A
termination or amendment of the Plan that occurs after a Grant is made shall not
materially impair the rights of a Grantee unless the Grantee consents. The
termination of the Plan shall not impair the power and authority of the
Committee with respect to an outstanding Grant. Whether or not the Plan has
terminated, an outstanding Grant may be terminated or amended in accordance with
the Plan or, may be amended by agreement of the Company and the Grantee
consistent with the Plan.
No Additional Rights. Neither the establishment of, nor a participant's
participation in, the Plan shall be held or construed to confer upon any person
any right to employment by the Company or any subsidiary of the Company.
Federal Income Tax Information. Incentive Stock Options. Incentive
stock options under the Option Plan are intended to be eligible for the
favorable federal income tax treatment accorded "incentive stock options" under
the Code.
-12-
There are generally no federal income tax consequences to the
optionholder or the Company by reason of the grant or exercise of an incentive
stock option. However, the exercise of an incentive stock option may increase
the optionholder's alternative minimum tax liability, if any.
If an optionholder holds stock acquired through exercise of an
incentive stock option for at least two years from the date on which the option
is granted and at least one year from the date on which the shares are
transferred to the optionholder upon exercise of the option, any gain or loss on
a disposition of such stock will be a long-term capital gain or loss.
Generally, if the optionholder disposes of the stock before the
expiration of either of these holding periods (a "disqualifying disposition"),
then at the time of disposition the optionholder will realize taxable ordinary
income equal to the lesser of (i) the excess of the stock's fair market value on
the date of exercise over the exercise price or (ii) the optionholder's actual
gain, if any, on the purchase and sale. The optionholder's additional gain or
any loss upon the disqualifying disposition will be a capital gain or loss,
which will be long-term or short-term depending on whether the stock was held
for more than one year.
To the extent the optionholder recognizes ordinary income by reason of
a disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
Nonstatutory Stock Options. Nonstatutory stock options granted under
the Option Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionholder or the Company by
reason of the grant of a nonstatutory stock option. Upon exercise of a
nonstatutory stock option, the optionholder normally will recognize taxable
ordinary income equal to the excess, if any, of the stocks fair market value on
the date of exercise over the option exercise price. However, to the extent the
stock is subject to certain types of vesting restrictions, the taxable event
will be delayed until the vesting restrictions lapse unless the participant
elects to be taxed on receipt of the stock. With respect to employees, the
Company is generally required to withhold from regular wages or supplemental
wage payments an amount based on the ordinary income recognized. Subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Code and
the satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionholder.
Upon disposition of the stock, the optionholder will recognize a
capital gain or loss equal to the difference between the selling price and the
sum of the amount paid for such stock plus any amount recognized as ordinary
income upon exercise of the option (or vesting of the stock). Such gain or loss
will be long-term or short-term depending on whether the stock was held for more
than one year. Slightly different rules may apply to optionholders who acquire
stock subject to certain repurchase options or who are subject to Section 16(b)
of the Exchange Act.
Non-Statutory Stock Options Granted to Non-residents of the United
States. Generally, non-residents of the United States who are granted stock
options fall under the income tax provisions that are applicable to the country
where they performed the service. For Federal Income Tax purposes, the company
will not be entitled to any business expense deductions for options granted to
non-residents.
-13-
Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that compensation to
such covered employee exceeds $1 million. It is possible that compensation
attributable to stock options, when combined with all other types of
compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation if
the option is granted by a compensation committee comprised solely of "outside
directors" and either (i) the plan contains a per-employee limitation on the
number of shares for which options may be granted during a specified period, the
per- employee limitation is approved by the stockholders and the exercise price
of the option is no less than the fair market value of the stock on the date of
grant or (ii) the option is granted (or exercisable) only upon the achievement
(as certified in writing by the compensation committee) of an objective
performance goal established in writing by the compensation committee while the
outcome is substantially uncertain, and the option is approved by stockholders.
New Plan Benefits. The following table presents certain information
with respect to shares granted during the Company's last fiscal year under the
Option Plan to (i) the executive officers named in the Summary Compensation
Table, (ii) all current executive officers as a group, (iii) all employees,
including all current officers who are not executive officers, as a group and
(iv) all current non-employee directors as a group. As of May 5, 2000 there has
been no determination by the Compensation Committee with respect to future
awards under the Option Plan.
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) (1) Number of Shares
Underlying Options
Granted
<S> <C> <C>
Daniel Hunter 402,500 70,000
Chief Executive Officer and Director
Donald James MacKenzie 402,500 70,000
President and Secretary, Director
All current executive officers as a group 3,565,000 620,000
All current non-employee directors as a group 0 0
All employees, including all current officers 1,253,500 218,000
who are not executive officers, as a group
</TABLE>
(1) Exercise price multiplied by the number of shares granted.
Vote Required
The affirmative vote of a majority of the votes cast affirmatively or
negatively at the meeting, whether in person or by proxy, is required to ratify
the Plan. If the stockholders fail to approve the Plan, all Options granted
under the Plan shall be non-qualified options.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE PROPOSAL TO RATIFY THE APPROVAL OF THE COMPANY'S 1999
EQUITY COMPENSATION PLAN.
-14-
PROPOSAL NO. 4:
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed KPMG LLP, independent public
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 2000. The Board of Directors proposes that the
stockholders ratify this appointment. KPMG LLP has audited the Company's
financial statements annually since its inception in 1998. The Company expects
that representatives of KPMG will be present at the Annual Meeting, will have
the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
In the event that stockholders fail to ratify the appointment, the
Board of Directors will reconsider its selection. Even if the selection is
ratified, the Board of Directors, in its discretion, may direct the appointment
of a different independent accounting firm at any time during the year if the
Board of Directors determines that such a change would be in the Company's and
its stockholders' best interests.
Vote Required
The affirmative vote of a majority of the votes cast affirmatively or
negatively at the meeting, whether in person or by proxy, is required to ratify
the appointment of the independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP TO SERVE
AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
stockholder action at the Annual Meeting. However, if other matters do properly
come before the Annual Meeting or any adjournments or postponements thereof, the
Board of Directors intends that the persons named in the proxies will vote upon
such matters in accordance with their best judgment.
Whether or not you intend to be present at the meeting, you are urged
to fill out, sign, date and return the enclosed proxy at your earliest
convenience.
MISCELLANEOUS
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is January 31, 2001.
Solicitation of Proxies
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this Proxy Statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation
-15-
materials to such beneficial owners. Original solicitation of proxies by mail
may be supplemented by telephone, telegram or personal solicitation by
directors, officers or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees for
such services.
Annual Report
The Annual Report for the fiscal year ended December 31, 1999 is being
mailed to the stockholders with this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Donald James MacKenzie
--------------------------------
Donald James MacKenzie
Secretary
Vancouver, British Columbia
May 31, 2000
-16-
ANNEX A
emailthatpays.com, Inc.
1999 EQUITY COMPENSATION PLAN
emailhthatpays.com, Inc.
1999 EQUITY COMPENSATION PLAN
The name of this plan is the emailhthatpays.com, Inc.1999 Equity
Compensation Plan (the "Plan"). The Board of Directors (the "Board") of
emailthatpays.com, Inc. (the "Company") adopted the Plan on December 21, 1999
subject to the approval of the Company's stockholders, which approval was
obtained on [_______________________]. The purpose of the Plan is to enable the
Company to attract and retain highly qualified personnel who contribute to the
Company's success by their ability, ingenuity and industry and to provide
incentives that are linked directly to increases in stockholder value to the
participating officers, directors, employees, consultants, advisors and others.
1. Administration.
(a) Committee. To the extent applicable, the Plan shall be
administered by a compensation committee (the "Committee") consisting of two or
more persons the Board appoints, all of whom are "outside directors" as defined
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and related Treasury regulations and who are "non-employee directors" as
defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). In the event the Board does not appoint a Committee, the
Board shall serve as the Committee. The Board may remove individuals, add
individuals, and fill vacancies on the Committee from time to time, all in
accordance with the Plan, the Company's Articles of Incorporation, the Company's
By-Laws and applicable law. Appointment to the Committee shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board.
(b) Committee Authority. The Committee shall act through a
majority vote. The Committee shall have the sole authority to (i) determine to
whom grants shall be made under the Plan, (ii) determine the type, number of
shares and terms and conditions of the grants, (iii) determine the time when the
grants will be made and the duration of any applicable exercise or restriction
period, including the criteria for exercisability and the acceleration of
exercisability and (iv) deal with any other matters arising under the Plan.
(c) Committee Determinations. The Committee, in its sole
discretion, shall have full power and authority to administer and interpret the
Plan, make factual determinations, adopt or amend rules, regulations, agreements
and instruments for implementing the Plan. The Committee's interpretations of
the Plan and determinations shall be conclusive and binding on all parties
having any interest in the Plan or in any awards granted hereunder.
2. Grants. Awards under the Plan may consist of grants of incentive
stock options as described in Section 5 ("Incentive Stock Options"),
nonqualified stock options as described in Section 5 ("Nonqualified Stock
Options" and, together with Incentive Stock Options, "Options"), and restricted
stock as described in Section 6 ("Restricted Stock") (hereinafter collectively
referred to as "Grants"). All Grants shall be subject to the terms and
conditions set forth in this Plan and to the other terms and conditions
consistent with this Plan as the Committee deems appropriate and specifies in
writing in a grant instrument (a "Grant Instrument"). In the event there is an
inconsistency between the terms of the Grant Instrument and the terms of the
Plan, the terms of the Plan shall
-1-
govern. The Committee shall approve the provisions of each Grant Instrument.
Grants under need not be uniform as among the Grantees.
3. Shares Subject to the Plan
(a) Shares Authorized. Subject to the adjustment specified in
subsection (b), the aggregate number of shares of common stock of the Company
("Company Stock") that may be issued or transferred under the Plan is 2,000,000
shares. The aggregate number of shares of Company Stock that may be subject to
Grants made under the Plan to any one individual or entity during any calendar
year is 1,000,000 shares ("Award Limit"). The shares may be authorized but
unissued shares of Company Stock or reacquired shares of Company Stock. If and
to the extent Options granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised, or if any
shares of Restricted Stock are forfeited, the shares subject to the Grants shall
again be available to grant. However, to the extent Section 162(m) of the Code
requires, such shares continue to be counted against the Award Limit.
(b) Adjustments. If there is any change in the number or kind
of shares of Company Stock outstanding by reason of (i) a stock dividend,
spinoff, recapitalization, stock split or combination or exchange of shares,
(ii) a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) a reclassification or change in par value, or (iv)
any other extraordinary or unusual event affecting the outstanding Company Stock
as a class without the Company's receipt of consideration, or if the value of
outstanding shares of Company Stock is substantially reduced as a result of a
spinoff or the Company's payment of an extraordinary dividend or distribution,
the Committee may adjust the maximum number of shares of Company Stock that any
individual or entity participating in the Plan may be granted in any year, the
maximum number of shares of Company Stock available for Grants, the number of
shares covered by outstanding Grants, the kind of shares issued under the Plan,
and the price per share or the applicable market value of such Grants to reflect
any increase or decrease in the number or change in the kind or value of issued
shares of Company Stock to preclude, to the extent practicable, the enlargement
or dilution of rights and benefits under such Grants; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated. Any
adjustments the Committee determines shall be final.
With respect to Options which are granted to Section
162(m) Participants and are intended to qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code, no adjustment or action
described in this section 3(b) or in any other provision of the Plan shall be
authorized to the extent that such adjustment or action would cause the Option
to fail to qualify under Section 162(m)(4)(C) of the Code, or any successor
provisions thereto. Furthermore, no adjustment or action shall be authorized to
the extent the adjustment or action would result in short-swing profit liability
under Section 16 of the Exchange Act or violate the exemptive conditions of Rule
16b-3 of the Exchange Act unless the Committee determines that the Option or
other award is not to comply with such exemptive conditions. The number of
shares of Common Stock subject to any Option shall always be rounded to the next
whole number.
-2-
No adjustments will be made to Incentive Stock Options
unless the following requirements are satisfied: (x) the adjustment is caused by
a merger, consolidation, acquisition of stock or property, spinoff,
reorganization, or a partial or complete liquidation ("Corporate Transaction");
(y) the value of the substituted or assumed option immediately after the
Corporation Transaction does not exceed the value of the Incentive Stock Option
immediately preceding the transaction; and (z) the substituted or assumed option
does not give the participant additional benefits which he or she did not have
with the prior option.
4. Eligibility for Participation.
(a) Eligible Persons. All employees of the Company and the Company's
subsidiaries ("Employees"), including Employees who are officers or members of
the Board, and members of the Board who are not Employees ("Non- Employee
Directors") shall be eligible to participate in the Plan. Advisors, consultants,
independent contractors and others that perform services for the Company or any
of its subsidiaries ("Key Advisors") shall be eligible to participate in the
Plan if they render bona fide services and the services are not in connection
with the offer or sale of securities in a capital-raising transaction.
(b) Selection of Grantees. The Committee shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants. Employees, Key
Advisors and Non-Employee Directors who receive Grants under this Plan shall
hereinafter be referred to as "Grantees." The Grantees can be individuals,
partnerships, limited liability companies, joint ventures, corporations, trusts
or unincorporated organizations or similar entities.
5. Granting of Options.
(a) Number of Shares. The Committee shall determine the number of
shares of Company Stock that will be subject to each Grant.
(b) Type of Option and Price.
(i) The Committee may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Code or Nonqualified Stock Options that are not intended to so
qualify or any combination of Incentive Stock Options and Nonqualified Stock
Options, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees, Non-Employee Directors and Key Advisors.
(ii) The purchase price (the "Exercise Price") of Company Stock
subject to an Option shall be determined by the Committee and may be equal to,
greater than, or less than the Fair Market Value (as defined below) of a share
of Company Stock on the date the Option is granted, provided, however, that (A)
the Exercise Price of an Incentive Stock Option shall be equal to, or greater
than, the Fair Market Value of a share of Company Stock on the date the
Incentive Stock Option is granted; (B) an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary of the Company, unless the Exercise Price is
greater than 110% of the Fair Market Value of Company Stock on the date of
grant; (C) in the case of an option intended to qualify as performance based
compensation (as described in Section 162(m)(4)(c) of the Code), the Exercise
Price shall
-3-
not be less than 100% of the Fair Market Value of Company Stock on the date of
grant; and (D) if required by the applicable state law, the Exercise Price
cannot be less than the stock's par value.
(iii) The Fair Market Value per share shall mean the fair market
value determined by such methods or procedures as shall be established from time
to time by the Committee.
(c) Option Term. The Committee shall determine the term of each
Option, provided, however, the term shall not exceed ten years from the date of
grant and, provided further that, an Incentive Stock Option that is granted to
an Employee who, at the time of grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, or any parent or subsidiary of the Company, may not have a term that
exceeds five years from the date of grant.
(d) Vesting and Exercisability of Options. Options shall vest and
become exercisable in accordance with the terms and conditions the Committee
specifies in the Grant Instrument and pursuant to the provisions of section 5(e)
below.
(e) Termination of Employment.
(i) Unless otherwise provided in the Grant Instrument, the
termination of an Employee's employment with the Company for any reason shall
cause all unvested Options to terminate. Unless otherwise provided in the Grant
Instrument, an Employee must exercise all vested Options pursuant to the
following rules:
(A) In the event an Employee ceases to be Employed by the
Company (as defined in subsection (iii)) on account of a "Termination for Cause"
(as defined in subsection (iii)), all vested Options shall terminate as of the
date of termination.
(B) In the event an Employee has a "Permanent Disability" or
dies, the Employee must exercise all vested Options within one year after the
determination of such Permanent Disability or date of death.
(C) In the event an Employee ceases to be employed by the
Company for any other reason, the Employee must exercise all vested Options
within ninety (90) days of the date of termination.
(ii) Unless otherwise provided in the Grant Instrument, the
termination of a Key Advisor's relationship with the Company or a Non-Employee
Director's engagement with the Company for any reason shall not impact the
vesting or exercisability of the Key Advisor's or Non-Employee Director's
Options.
(iii) For purposes of Sections 5(e), 6, 7 and 8:
(A) "Company," when used in the phrase "employed by the
Company," shall mean the Company and its parent and subsidiary corporations, if
any exist.
-4-
(B) "Employed by the Company" shall mean employment or
service as an Employee, Key Advisor or member of the Board (so that, for
purposes of exercising Options and satisfying conditions with respect to
Restricted Stock, a Grantee shall not be considered to have terminated
employment or service until the Grantee ceases to be an Employee, Key Advisor or
member of the Board), unless the Committee determines otherwise.
(C) "Permanent Disability" means any physical or mental
disability that prevents a Grantee from performing one or more of the essential
functions of his or her position for a period of ninety (90) days or more in any
twelve (12) month period and which is expected to be of permanent duration;
provided that if such term is otherwise defined in any employment agreement
which the Grantee and the Company are party, such other definition shall
prevail.
(D) "Termination for Cause" shall mean, except to the extent
the Committee otherwise specifies, a finding by the Committee that the Grantee
has breached his, her or its employment, service, noncompetition,
nonsolicitation or other similar contract with the Company, or has been engaged
in disloyalty to the Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or dishonesty in the course of his,
her or its employment or service, or has disclosed trade secrets or confidential
information of the Company to persons not entitled to receive such information.
(f) Exercise of Options. A Grantee may exercise an Option that has
become exercisable, in whole or in part, by delivering the following to the
Company: (i) written notice signed by the Grantee or other person then entitled
to exercise the Option specifying the number of shares in respect of which the
Option is to be exercised; (ii) such representations and documents as the
Committee, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Exchange Act, and any other
federal or state securities laws or regulations; and the Committee may, in its
absolute discretion, take whatever additional actions it deems appropriate to
effect such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars; and
(iii) the Exercise Price. The Committee may provide in the Grant Instrument that
a Grantee can satisfy the exercise price in cash or by other methods, including
delivery of shares of Company Stock having a Fair Market Value on the date of
exercise equal to the Exercise Price. Unless otherwise provided in the Grant
Instrument, the Grantee shall pay the Exercise Price in cash. The Grantee shall
pay the Exercise Price and the amount of any withholding tax due (pursuant to
Section 7) at the time of exercise.
(g) Limits on Incentive Stock Options. Each Incentive Stock Option
shall provide that, if the aggregate Fair Market Value of the stock on the date
of the grant with respect to which Incentive Stock Options are exercisable for
the first time by a Grantee during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary, exceeds
$100,000, then the Option, as to the excess, shall be treated as a Nonqualified
Stock Option. An Incentive Stock Option shall not be granted to any person who
is not an Employee of the Company or a parent or subsidiary (within the meaning
of Section 424(f) of the Code).
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6. Restricted Stock Grants. The Committee may grant Restricted Stock to
Employees, Key Advisors and Non-Employee Directors pursuant to the terms the
Committee provides in a Grant Instrument. The following provisions are
applicable to the Restricted Stock:
(a) General Requirements. The Committee shall determine the number
of shares of Restricted Stock granted to a Grantee. The Committee shall also
determine the consideration, if any, a Grantee must pay for the Restricted
Stock. The Restricted Stock shall be subject to the restrictions the Committee
determines, which shall lapse pursuant to the schedule the Committee provides in
a Grant Instrument. The period of time during which the Restricted Stock is
subject to restrictions is the "Restriction Period."
(b) Restrictions. Unless otherwise provided in the Grant Instrument,
the Restricted Stock shall be subject to the following restrictions: if the
Grantee ceases to be Employed by the Company (as defined in section
5(e)(iii)(B)) during the Restriction Period, or if other specified conditions
are not met, the Restricted Stock Grant shall terminate as to all shares covered
by the Grant as to which the restrictions have not lapsed; and during the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 8(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions. The
Grantee shall be entitled to have the legend removed from the stock certificate
covering the shares subject to restrictions when all restrictions on such shares
have lapsed. The Committee may determine that the Company will not issue
certificates for shares of Restricted Stock until all restrictions on such
shares have lapsed, or that the Company will retain possession of certificates
for shares of Restricted Stock until all restrictions on such shares have
lapsed.
(c) Right to Vote and to Receive Dividends. Unless the Committee
determines otherwise, during the Restriction Period, the Grantee shall have the
right to vote shares of Restricted Stock and to receive any dividends or other
distributions paid on such shares, subject to any restrictions the Committee
deems appropriate.
(d) Lapse of Restrictions. All restrictions imposed on Restricted
Stock shall lapse upon the expiration of the applicable Restriction Period and
the satisfaction of all conditions imposed by the Committee. The Committee may
determine, as to any or all Restricted Stock Grants, that the restrictions shall
lapse without regard to any Restriction Period.
(e) Performance Based Compensation. The Committee may grant
Restricted Stock to an individual or entity covered under Section 162(m) of the
Code that vests upon the attainment of performance targets for the Company which
are related to one or more of the following performance goals: (i) pre-tax
income, (ii) operating income, (iii) cash flow, (iv) earnings per share, (v)
return on equity, (vi) return on invested capital or assets and (vii) cost
reductions or savings. To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(c) of the Code,
with respect to Restricted Stock which may be granted to one or more employees
covered under Section 162(m) of the Code, no later than ninety days following
the commencement of any fiscal year in question or any other designated fiscal
period, the Committee shall, in writing, (i) designate the employees covered
under Section 162(m) of the Code, (ii) select the performance goal or goals
applicable to the fiscal year or other designated fiscal period, (iii) establish
the various targets and bonus amounts which may be earned for such fiscal year
or other designated fiscal period and (iv) specify the relationship between
performance goals and targets and the amounts to be earned by each Section
162(m) participant for such fiscal year or other designed fiscal period.
Following the completion of each fiscal year or other designated fiscal period,
the Committee shall certify in writing whether the applicable
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performance target has been achieved for such fiscal year or other designated
fiscal period. In determining the amount earned by a Section 162(m) participant,
the Committee shall have the right to reduce (but not to increase) the amount
payable at a given level of performance to take into account additional factors
that the Committee may deem relevant to the assessment of individual or
corporate performance for the fiscal year or other designed fiscal period.
7. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall be subject
to applicable federal, state and local tax withholding requirements. The Company
shall have the right to deduct from all Grants, or from other wages paid to the
Grantee, any federal, state or local taxes required by law to be withheld with
respect to such Grants. In the case of Options and other Grants paid in Company
Stock, the Company may require the Grantee or other person receiving such shares
to pay to the Company the amount of any taxes that the Company is required to
withhold with respect to the Grants, or the Company may deduct from other wages
paid by the Company the amount of any withholding taxes due with respect to the
Grants.
(b) Election to Withhold Shares. If the Committee permits, a Grantee
may elect to satisfy the Company's income tax withholding obligation with
respect to an Option or Restricted Stock paid in Company Stock by having shares
withheld up to an amount that does not exceed the Grantee's maximum marginal tax
rate for federal (including FICA), state and local tax liabilities. The election
must be in a form and manner prescribed by the Committee and shall be subject to
the Committee's prior approval.
8. Transferability of Grants
(a) Nontransferability of Grants. Unless otherwise provided in a
Grant Instrument, except as provided in subsection (b), only the Grantee may
exercise rights under a Grant during the Grantee's lifetime. A Grantee may not
transfer those rights except by will or by the laws of descent and distribution
or, with respect to Grants other than Incentive Stock Options, if permitted in
any specific case by the Committee, pursuant to a domestic relations order (as
defined under the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the regulations thereunder). When a Grantee dies, the
personal representative or other person entitled to succeed to the rights of the
Grantee ("Successor Grantee") may exercise such rights. A Successor Grantee must
furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Grantee's will or under the applicable laws of descent and
distribution.
(b) Transfer of Nonqualified Stock Options. Notwithstanding the
foregoing, the Committee may provide, in a Grant Instrument, that a Grantee may
transfer Nonqualified Stock Options to family members or other persons or
entities according to such terms as the Committee may determine; provided that
the Grantee receives no consideration for the transfer of an Option and the
transferred Option shall continue to be subject to the same terms and conditions
as were applicable to the Option immediately before the transfer.
9. Change of Control.
(a) Definition. As used herein, a "Change of Control" shall means
the happening of any of the following events: (i) an acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) of beneficial
-7-
ownership of 50% or more of either the then outstanding shares of common stock
of the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; excluding the following: (a) any acquisition directly from the
Company, other than any acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Company (b) any acquisition by the Company or (c) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company; or (ii) a change in the
composition of the Board such that the individuals who, as of the effective
date, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that for
purposes of this definition, that any individual who becomes a member of the
Board subsequent to the Effective Date, whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be pursuant to this provision)
shall be considered as though the individual were a member of the Incumbent
Board; or (iii) the merger, reorganization, consolidation or sale or other
disposition of all or substantially all of the Company's assets.
(b) Assumption of Grants. Upon a Change of Control where the Company
is not the surviving corporation (or survives only as a subsidiary of another
corporation), all outstanding Options that are not exercised shall be assumed
by, or replaced with comparable options or rights by, the surviving corporation.
(c) Notice and Acceleration. The Committee may, in its sole
discretion, provide in a Grant Instrument that upon a Change of Control (i) the
Committee will provide each Grantee who has outstanding Grants with written
notice of the Change of Control; (ii) all outstanding Options shall
automatically accelerate and become fully exercisable and (iii) the restrictions
and conditions on all outstanding Restricted Stock shall immediately lapse. If
the Committee does not provide such terms in the Grant Instrument, a Change of
Control will not impact a Grant.
10. Requirements for Issuance or Transfer of Shares. No Company Stock
shall be issued or transferred in connection with any Grant hereunder unless and
until all legal requirements applicable to the issuance or transfer of such
Company Stock have been complied with to the satisfaction of the Committee. The
Committee shall have the right to condition any Grant made to any Grantee
hereunder on such Grantee's undertaking in writing to comply with such
restrictions on his or her subsequent disposition of such shares of Company
Stock as the Committee shall deem necessary or advisable as a result of any
applicable law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
the Plan will be subject to such stop-transfer orders and other restrictions as
may be required by applicable laws, regulations and interpretations, including
any requirement that a legend be placed thereon.
11. Amendment and Termination of the Plan.
(a) Amendment. The Board may amend or terminate the Plan at any
time; provided, however, that the Board shall not amend the Plan without
shareholder approval if such approval is required by Section l62(m) of the Code.
-8-
(b) Termination of Plan. The Plan shall terminate on the day
immediately preceding the tenth anniversary of its effective date, unless the
Plan is terminated earlier by the Board or is extended by the Board with the
approval of the shareholders.
(c) Termination and Amendment of Outstanding Grants. A termination
or amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents. The termination of
the Plan shall not impair the power and authority of the Committee with respect
to an outstanding Grant. Whether or not the Plan has terminated, an outstanding
Grant may be terminated or amended in accordance with the Plan or, may be
amended by agreement of the Company and the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document.
No other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
12. Funding of the Plan. This Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Grants under this Plan. In no
event shall interest be paid or accrued on any Grant, including unpaid
installments of Grants.
13. Rights of Participants. Nothing in this Plan shall entitle any
Employee, Key Advisor, Non-Employee Director or other person or entity to any
claim or right to be granted a Grant under this Plan. Neither this Plan nor any
action taken hereunder shall be construed as giving any individual or entity any
rights to be retained by or in the employ of the Company or any other employment
rights.
14. No Fractional Shares. No fractional shares of Company Stock shall
be issued or delivered pursuant to the Plan or any Grant. The Committee shall
determine whether cash, other awards or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
15. Headings. Section headings are for reference only. In the event of
a conflict between a title and the content of a Section, the content of the
Section shall control.
16. Effective Date of the Plan. Subject to the approval of the
Company's shareholders, the Plan shall be effective on December 21, 1999.
17. Miscellaneous.
(a) Grants in Connection with Corporate Transactions and Otherwise.
Nothing contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the business or assets
of any corporation, firm or association, including Grants to employees thereof
who become Employees of the Company, or for other proper corporate purposes, or
(ii) limit the right of the Company to grant stock options or make other awards
outside of this Plan. Without limiting the foregoing, the Committee may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for a stock option or restricted stock grant made by such
corporation. The terms and conditions of the substitute grants may vary from the
terms and conditions required by the Plan and from those of the substituted
stock incentives. The Committee shall prescribe the provisions of the substitute
grants.
-9-
(b) Loans. The Committee may, in its discretion, extend a loan in
connection with the exercise or receipt of a grant under this Plan. The terms
and conditions of any such loan shall be set by the Committee.
(c) Compliance with Law. The Plan, the exercise of Options and the
obligations of the Company to issue or transfer shares of Company Stock must be
subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to persons subject to section
16 of the Exchange Act, it is the intent of the Company that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3
of the Exchange Act or its successors under the Exchange Act. The Committee may
revoke any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee may
also adopt rules regarding the withholding of taxes on payments to Grantees. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.
(d) Approval of Plan by Stockholders. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. If the stockholders fail to
approve such Plan, all Options granted hereunder shall be Non-Qualified Options.
(e) Governing Law. The validity, construction, interpretation and
effect of the Plan and Grant Instruments issued under the Plan shall exclusively
be governed by and determined in accordance with the law of the State of
Florida.
-10-
emailthatpays.com, Inc.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned, revoking all previous proxies, hereby appoints Daniel Hunter
and Donald James MacKenzie, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on this proxy,
all shares of common stock of emailthatpays.com, Inc. (the "Company") held of
record by the undersigned on May 19, 2000 at the Annual Meeting of Stockholders
to be held on June 26, 2000 and any adjournments or postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES.
Dear Stockholder:
Please take note of the important information enclosed with this proxy.
There are a number of issues related to the operation of the Company that
require your immediate attention.
Your vote counts, and you are strongly encouraged to exercise you right
to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares
will be voted. Then sign the card and return your proxy in the enclosed postage
paid envelope.
Thank you in advance for your prompt consideration of these
matters.
Sincerely,
emailthatpays.com, Inc.
[X] Please mark votes as in this example
(1) Election of directors. Nominees:
Daniel Hunter,
Donald James MacKenzie,
H. Earl Joudrie.
[ ] FOR all nominees for director named above.
[ ] WITHHOLD AUTHORITY to vote for all nominees for
director named above.
[ ] FOR all nominee for director named above, except
WITHHOLD AUTHORITY to vote for the nominee(s) whose
name(s) is (are) lined through.
(2) To approve an amendment to Article IV of the Articles of
Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve the 1999 Equity Compensation Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) To ratify the selection of KPMG as independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) In their discretion, the proxies are authorized to vote upon
any other business that may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
NOTE ADDRESS CHANGE HERE:
-----------------------------------------
Name
-----------------------------------------
Street Address
-----------------------------------------
City State Country Zip Code
Please sign exactly as name appears hereon. Joint owners should each sign.
Executors, trustees, guardians or other administrators, fiduciaries should give
full title as such. If signing for a corporation, please sign in full corporate
name by a duly authorized officer.
Signature: ____________________ Date: _____________
Signature: ____________________ Date: _____________