cconpre14c121609.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14C INFORMATION
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of
1934
Check the
appropriate box:
[X] Preliminary
Information Statement
[ ] Confidential,
for use of the Commission only (as permitted by Rule 14c-5(d)(21))
[ ] Definitive
Information Statement
COCONNECT,
INC.
(Name
of Registrant as Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
[X] No
fee required
[ ] Fee
computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
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(3)
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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 is
calculated and state how it was
determined.):
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(4) Proposed
maximum aggregate value of transaction:
[ ] 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) Dated
Filed:
COCONNECT,
INC.
2038
Corte Del Nogal, Suite 110
Carlsbad,
CA 92011
NOTICE OF
STOCKHOLDER ACTION TO BE TAKEN
PURSUANT
TO THE WRITTEN CONSENT OF STOCKHOLDERS
WE
ARE NOT ASKING YOU FOR A PROXY AND
YOU
ARE REQUESTED NOT TO SEND US A PROXY.
December
__, 2009
Dear
CoConnect, Inc. Stockholders:
This
Information Statement is furnished to provide notice to stockholders of
CoConnect, Inc., a Nevada corporation (the “Company”), in
connection with approval by our Board of Directors (the “Board”) and a
majority of the stockholders of our common stock, par value $0.001 (the “Common Stock”) to
take the following actions:
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1.
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Authorize
the Board to amend the Company’s Articles of Incorporation filed with the
Nevada Secretary of State (the “Articles”) to
increase the Company’s authorized stock from 150,000,000 shares to
10,000,000,000 shares;
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2.
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Authorize
the Board, at their discretion, to amend the Company’s Articles to
authorize the Board to designate a preferred class of stock (the “Preferred
Stock”);
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3.
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Authorize
the Board, at their discretion, to affect a reverse stock split of the
Company’s common stock as further described herein (the “Reverse
Split”);
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4.
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Authorize
the Board, at their discretion, to affect a forward stock split of the
Company’s common stock as further described herein (the “Forward
Split”);
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5.
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Ratify
the prior appointment of Chang G. Park, CPA as the Company’s independent
public accountant;
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6.
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Confirm
and ratify the prior appointment of Mr. Brad M. Bingham as the Company’s
Interim Chairman of the Board (the “Board
Appointment”); and
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7.
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Authorize
the Board to designate an Employee Stock Incentive Plan (the “Plan” and
collectively with the above described actions, the “Corporate
Actions”).
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Stockholders
of record at the close of business on December 15, 2009 are entitled to notice
of this stockholder action by written consent. Since the actions have been
approved by the holders of the required majority of the outstanding shares of
our voting stock, no proxies were or are being solicited.
Pursuant
to Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the
Corporate Actions cannot become effective until twenty (20) days after the date
this Information Statement is mailed to the Company’s stockholders.
We
anticipate that the amendment will become effective on or after December ___,
2009.
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BY
ORDER OF THE BOARD OF DIRECTORS
/S/
BRAD M. BINGHAM, ESQ.
_______________________________
BY:
BRAD M. BINGHAM, ESQ.
ITS:
INTERIM CHIEF EXECUTIVE OFFICER AND
DIRECTOR
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INFORMATION
STATEMENT
PURSUANT
TO SECTION 14 OF THE
SECURITIES
AND EXCHANGE ACT OF 1934 AND
REGULATION
14C AND SCHEDULE 14c THEREUNDER
____________________
This
Information Statement is circulated to advise the stockholders of action taken
without a meeting upon the written consent of the holders of a majority of the
outstanding shares of the common stock of the Company.
WE
ARE NOT ASKING YOU FOR A PROXY AND
YOU
ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This
Information Statement has been filed with the Securities and Exchange Commission
(the “SEC”) and
is being furnished to the holders of the outstanding shares of common stock of
CoConnect, Inc., a Nevada corporation. The purpose of this Information Statement
is to provide notice that a majority of the Company’s stockholders, have, by
written consent, approved of the Corporate Actions.
This
Information Statement will be mailed on or about December __, 2009 to those
persons who were stockholders of the Company as of the close of business on
December 15, 2009 (the “Record Date”). The
Corporate Actions are expected to become effective on or about January ___, 2010
(the “Effective
Date”). The Company will pay all costs associated with the distribution
of this Information Statement, including the costs of printing and
mailing.
As a
majority of the Company’s stockholders have already approved of the Corporate
Actions by written consent, the Company is not seeking approval for the
Corporate Actions from any of the Company’s remaining stockholders, and the
Company’s remaining stockholders will not be given an opportunity to vote on the
Corporate Actions. All necessary corporate approvals have been obtained, and
this Information Statement is being furnished solely for the purpose of
providing advance notice to the Company’s stockholders of the Corporate Actions
as required by the Securities Exchange Act of 1934 (the “Exchange
Act”).
The
Company’s Board approved the Corporate Actions effective December 15, 2009 and
fixed December 15, 2009 as the Record Date for determining the stockholders
entitled to give written consent to the Corporate Actions. As of December 15,
2009, the majority stockholders who voted for the Corporate Actions held an
aggregate of 166,666 shares of the Company’s outstanding common stock, being
equal to 51.5% of the number of shares then outstanding.
As of the
Record Date, there were 323,483 shares of Common Stock issued and
outstanding
INCREASE
IN AUTHORIZED STOCK
Overview
The Board
has recommended that the shareholders grant authority to the Board to amend the
Articles to increase the Company’s authorized stock from 150,000,000 shares to
10,000,000,000 shares. A copy of the amendment to our Articles has been attached
hereto as an Exhibit A. The general purpose and effect of the amendment to our
Articles is to increase our authorized share capital which we believe will
enhance our ability to finance the development and operation of our
business.
Our Board
approved the amendment to our Articles on December 15, 2009 to increase our
authorized share capital so that such shares will be available for issuance for
general corporate purposes, including financing activities, without the
requirement of further action by our shareholders. Potential uses of
the additional authorized shares may include, but are not limited to, public or
private offerings, conversions of convertible securities, issuance of options
pursuant to employee stock option plans, acquisition transactions and other
general corporate purposes. Increasing the authorized number of
shares of our common stock will give us greater flexibility and will allow us to
issue such shares, in most cases, without the expense of delay of seeking
shareholder approval. We are at all times investigating additional sources
of financing which our Board believes will be in our best interests and in the
best interests of our shareholders.
The
amendment to our Articles to increase our authorized share capital will not have
any immediate effect on the rights of existing shareholders. However,
our Board will have the authority to issue shares of our Common Stock without
requiring future shareholders approval of such issuances, except as may be
required by applicable law or exchange regulations. To the extent
that additional authorized Common Stock is issued in the future, such issuance
will decrease the existing shareholders' percentage equity ownership and,
depending upon the price at which they are issued, could be dilutive to the
existing shareholders. The increase in the authorized number of shares of our
Common Stock and the subsequent issuance of such shares could have the effect of
delaying or preventing a change in control of our Company without further action
by the shareholders. Shares of authorized and unissued Common Stock
could be issued (within limits imposed by applicable law) in one or more
transactions. Any such issuance of additional stock could have the
effect of diluting the earnings per share and book value per share of
outstanding shares of Common Stock, and such additional shares could be used to
dilute the stock ownership or voting rights of a person seeking to obtain
control of our company.
Section
78.385 of the Nevada Revised Statutes provides an outline of the scope of the
amendments of the Articles. This includes the amendments discussed herein. The
procedure and requirements to effect an amendment to the Articles are set forth
in Section 78.390. Section 78.390 provides that proposed amendments must first
be adopted by the Board and then submitted to shareholders for their
consideration and must be approved by a majority of the outstanding voting
securities.
Our Board
has adopted, ratified and approved of the amendment to the Company’s Articles to
increase the Company’s authorized stock from 150,000,000 shares to
10,000,000,000 shares and subsequently submitted the proposed changes to our
shareholders for their approval. The securities that are entitled to
vote to amend our Articles consist of issued and outstanding shares of Common
Stock outstanding as at December 15, 2009, the Record Date for determining
shareholders who are entitled to notice of and to vote on the proposed amendment
to the company’s Articles.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the amendment to the Company’s Articles to increase the
Company’s authorized stock from 150,000,000 shares to 10,000,000,000 shares have
approved of granting authority to the Board to amend the Company’s Articles of
Incorporation to increase the Company’s authorized stock from 150,000,000 shares
to 10,000,000,000 shares.
Overview
The Board
has recommended that the shareholders grant authority to the Board to amend the
Company’s Articles to designate 1,000,000 shares of the Company’s capital stock
as preferred stock (the “Preferred Stock”),
with the designations, rights, preferences or other variations of each class or
series within each class of the shares of Preferred Stock be designated by the
Board at a later time without shareholder approval. A copy of the amendment to
our Articles has been attached hereto as an Exhibit A.
Following
such amendment to the Company’s Articles, the Board may authorize and issue
classes of Preferred Stock, without shareholder approval, that have rights that
are preferential to our Common Stock. Such rights may include, but
are not limited to:
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the
payment of dividends in preference and priority to any dividends on our
Common Stock;
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preference
to any distributions upon any liquidation, dissolution, winding up of our
company or any other reason
whatsoever;
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voting
rights that may rank equally to, or in priority over, our Common
Stock;
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mandatory
redemption by the company in certain circumstances, for amounts that may
exceed the purchase price of the Preferred
Shares;
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conversion
provisions for the conversion of the Preferred Shares into Common
Stock;
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pre-emptive
or first refusal rights in regards to future issuances of Common Stock or
Preferred Shares by the company; or
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rights
that restrict our company from undertaking certain corporate actions
without the approval of the holders of the Preferred
Shares.
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IN
THE EVENT THE COMPANY ISSUES ANY SHARES OF PREFERRED STOCK, THE ISSUANCES OF
SUCH SHARES MAY SEVERELY IMPACT, BY WAY OF RESTRICTING AND POSSIBLY DIMINISHING,
THE VALUE ATTRIBUTABLE TO COMMON STOCK SHAREHOLDERS.
Section
78.385 of the Nevada Revised Statutes provides an outline of the scope of the
amendments of the Articles. This includes the amendments discussed herein. The
procedure and requirements to effect an amendment to the Articles are set forth
in Section 78.390. Section 78.390 provides that proposed amendments must first
be adopted by the Board and then submitted to shareholders for their
consideration and must be approved by a majority of the outstanding voting
securities.
Our Board
has adopted, ratified and approved of the amendment to the Company’s Articles to
designate the Preferred Stock and subsequently submitted the proposed changes to
our shareholders for their approval. The securities that are entitled
to vote to amend our Articles consist of issued and outstanding shares of Common
Stock outstanding as at December 15, 2009, the Record Date for determining
shareholders who are entitled to notice of and to vote on the proposed amendment
to the company’s Articles.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the amendment to the Company’s Articles to designate the
Preferred Stock have approved of granting authority to the Board to amend the
Company’s Articles of Incorporation to designate the Preferred
Stock.
REVERSE
SPLIT
The Board
has recommended that the shareholders grant authority to the Board to affect a
reverse split of the Company’s Common Stock (the “Reverse Split”). The
Reverse Split fraction shall be determined by the Board at a later time and at
anytime until the next meeting of the Company’s shareholders which are entitled
to vote on such actions and shall be limited to one of the following fractional
Reverse Split ratios (each a “Reverse Ratio”): (i)
1-for-10 Reverse Split; (ii) 1-for-20 Reverse Split; (iii) 1-for-50 Reverse
Split; (iv) 1-for-100 Reverse Split; (v) 1-for-250 Reverse Split; (vi) 1-for-500
Reverse Split; (vii) 1-for-750 Reverse Split; and (viii) 1-for-1000 Reverse
Split. In the event the Board affects a Reverse Split, the total number of
authorized shares will remain unchanged.
Following
the effectiveness, if any, of a Reverse Split, current shareholders shall be
issued fewer shares of Common Stock, with such number of shares dependent on the
Reverse Ratio ratified by the Board. For example, if the Board approves of a
1-for-10 Reverse Split, a shareholder owning 100 shares of Common Stock prior to
such Reverse Split would hold 10 shares of Common Stock following such Reverse
Split. THE HIGHER THE REVERSE
RATIO (1-FOR-1000 BEING HIGHER THAN 1-FOR-100 FOR EXAMPLE), THE GREATER
THE REDUCTION OF RELATED SHARES EACH EXISTING SHAREHOLDER, POST
REVERSE SPLIT, WILL
EXPERIENCE.
In
deciding whether to implement the Reverse Split and the Reverse Ratio to be
used, the Board will consider, among other things, (i) the potential impact
and anticipated benefits in the event the Company moves toward profitability,
(ii) the market price of the Company’s Common Stock, (iii) the number
of shares that will be outstanding after the split, (iv) the stockholders’
equity at such time, (v) the shares of Common Stock available for issuance
in the future, (vi) the liquidity of the Common Stock in the market, and
(vii) the nature of the Company’s operations. The Board shall maintain the
right to elect not to proceed with the Reverse Split if it determines, in its
sole discretion, that this proposal is no longer in the best interests of the
Company.
Purposes of the Reverse Split
The Board
believes that the Company’s outstanding shares may need to be reduced with the
goal of (i) creating a capital structure that better reflects a potentially
profitable company, (ii) better matching the number of shares outstanding
with the size of the Company in terms of market capitalization, shareholders’
equity, operations and potential earnings, (iii) better enabling the
Company to raise funds to finance our possible sales and marketing activities
and (iv) facilitating higher levels of institutional stock ownership where
investment policies generally prohibit investments in lower-priced
securities.
The Board
believes that in order to provide a meaningful level of earnings per share,
assuming the Company achieves profitability, the Reverse Split may provide a
share count that is more consistent with the Company’s potential economics.
Specifically, the lower share count may facilitate meaningful levels of per
share earnings and better enable our shareholders to identify changes in
operating results as the Company potentially moves towards
profitability.
The Board
further believes that an increased stock price may encourage investor interest
and improve the marketability of our Common Stock to a broader range of
investors, and thus improve liquidity.
Because
of the trading volatility often associated with low-priced stocks, many
brokerage firms and institutional investors have internal policies and practices
that either prohibit them from investing in low-priced stocks or tend to
discourage individual brokers from recommending low-priced stocks to their
customers. The Board believes that the possible higher market price resulting
from the Reverse Split may, to some extent, reduce the negative effects on the
marketability and liquidity of the Common Stock inherent in some of the policies
and practices of institutional investors and brokerage firms described above.
Additionally, a higher share price may give the Company the added flexibility to
list its shares on a different stock exchange or quotation service, such as the
Nasdaq National Market, although the Company has no current plans to do
so.
The
purpose of seeking shareholder approval of a range of exchange ratios (rather
than a fixed exchange ratio) is to provide the Company with the flexibility to
achieve the desired results of the Reverse Split. Following the approval of this
corporate action, the Board will affect a Reverse Split only upon the Board’s
determination that a Reverse Split would be in the best interests of the Company
at that time. If the Board were to affect a Reverse Split, the Board would set
the timing for such a split and select the specific ratio as set forth herein.
No further action on the part of shareholders will be required to either
implement or abandon the Reverse Split. If the Board determines to implement the
Reverse Split, we would communicate to the public, prior to the effective date
of the Reverse Split, additional details regarding the Reverse Split, including
the specific ratio the board selects. If the Board does not implement the
Reverse Split by December 31, 2010, the authority granted in this proposal
to implement the Reverse Split will terminate.
After the
effective date of the Reverse Split, each shareholder will own less shares of
our Common Stock, but the per-share value of these shares may increase
proportionately. The Reverse Split would not change the number of authorized
shares of Common Stock designated by our Articles of Incorporation. Following
the Effective Date and amendment to our Articles, we will have authorized
10,000,000,000 million shares of Common Stock. Thus, following a Reverse Split,
because the number of issued and outstanding shares of Common Stock would
decrease, the number of shares remaining available for issuance under our
Articles would effectively increase. These additional shares of Common Stock
would be available for issuance from time to time for corporate purposes such
as, but not limited to, raising additional capital, acquisitions of companies or
assets and sales of stock or securities convertible into or exercisable for
Common Stock. We believe that the availability of the additional shares may
provide us with the flexibility to meet our business needs as they arise. If we
issue additional shares for any purposes, the ownership interest of our current
shareholders would be diluted in the same manner as would result from any other
share issuance.
This
proposal has been prompted solely by the business considerations discussed in
the preceding paragraphs. Nevertheless, the additional shares of Common Stock
that would become available for issuance following the Reverse Split could also
be used by the Company’s management to delay or prevent a change in control. The
Board is not aware of any pending takeover or other transactions that would
result in a change in control of the Company, and the proposal was not adopted
in response to any such proposals.
All
outstanding options and warrants to purchase shares of our Common Stock,
including any held by our officers and directors, would be adjusted as a result
of the Reverse Split. In particular, the number of shares issuable upon the
exercise of each instrument would be reduced, and the exercise price per share,
if applicable, would be increased, in accordance with the terms of each
instrument and based on the ratio of the Reverse Split.
No
fractional shares of our Common Stock will be issued as a result of the Reverse
Split. In the event the proposed Reverse Split leaves a shareholder with a
fraction of a share, the number of shares due to the shareholder shall be
rounded up. For example, if the proposed Reverse Split leaves an individual
shareholder with one and one half shares, the shareholder will be issued, post
proposed Reverse Split, two whole shares.
In
connection with the approval of the Reverse Split, shareholders of the Company
will not have a right to dissent and obtain payment for their shares under the
NRS, the Articles or bylaws.
Tax Consequences to Common
Shareholders
The
following discussion sets forth the material United States federal income tax
consequences that management believes will apply with respect to the Company and
the shareholders of the Company who are United States holders at the effective
time of the Reverse Split. This discussion does not address the tax consequences
of transactions effectuated prior to or after the Reverse Split, including,
without limitation, the tax consequences of the exercise of options, warrants or
similar rights to purchase stock. For this purpose, a United States holder is a
shareholder that is: (i) a citizen or resident of the United States,
(ii) a domestic corporation, (iii) an estate whose income is subject
to United States federal income tax regardless of its source, or (iv) a
trust if a United States court can exercise primary supervision over the trust’s
administration and one or more United States persons are authorized to control
all substantial decisions of the trust. This discussion does not describe all of
the tax consequences that may
be relevant to a holder in light of his particular
circumstances or to holders subject to special rules (such as dealers
in securities, financial institutions,
insurance companies, tax-exempt organizations,
foreign individuals and entities and persons who acquired their
Common Stock as compensation). In
addition, this summary is limited to shareholders who hold their Common Stock as
capital assets. This discussion also does not address any tax consequences
arising under the laws of any state, local or foreign jurisdiction. Accordingly,
each shareholder is strongly urged to consult with a tax adviser to determine
the particular federal, state, local or foreign income or other tax consequences
to such shareholder related to the reverse split.
No gain
or loss should be recognized by a shareholder upon his or her exchange of
pre-Reverse Split shares for post-Reverse Split shares except for those
associated with any additional shares the shareholder receives (i) as a result
of rounding up any post-Reverse Split fractional shares or (ii) due to the
Reverse Threshold. The aggregate tax basis of the post-Reverse Split shares
received in the Reverse Split will be the same as the shareholder’s aggregate
tax basis in the pre-Reverse Split shares. The shareholder’s holding period for
the post-Reverse Split shares will include the period during which the
shareholder held the pre-Reverse Split shares surrendered in the Reverse
Split.
Tax Consequences for the
Company
We should
not recognize any gain or loss as a result of the Reverse
Split.
The
procedure and requirements to affect the Reverse Split are set forth in Section
78.2055 of the NRS and provide that the proposed Reverse Split must first be
adopted by the Board and then submitted to stockholders for their consideration.
The Reverse Split must then be approved by a vote of stockholders holding a
majority of the voting power of the affected class or series.
Our Board
has adopted, ratified and approved of the Reverse Split and subsequently
submitted the proposed Reverse Split to our shareholders for their
approval. The securities that are entitled to vote to approve of the
Reverse Split consist of issued and outstanding shares of Common Stock
outstanding as at December 15, 2009, the Record Date for determining
shareholders who are entitled to notice of and to vote on the proposed Reverse
Split.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the Reverse Split have approved of the Reverse
Split.
FORWARD
SPLIT
The Board
has recommended that the shareholders grant authority to the Board to affect a
forward split of the Company’s Common Stock (the “Forward Split”). The
Forward Split fraction shall be determined by the Board at a later time and at
anytime until the next meeting of the Company’s shareholders which are entitled
to vote on such actions and shall be limited to one of the following fractional
Forward Split ratios (each a “Forward Ratio”): (i)
1-for-10 Forward Split; (ii) 1-for-20 Forward Split; (iii) 1-for-50 Forward
Split; (iv) 1-for-100 Forward Split; (v) 1-for-250 Forward Split; (vi) 1-for-500
Forward Split; (vii) 1-for-750 Forward Split; and (viii) 1-for-1000 Forward
Split. In the event the Board affects a Forward Split, the total
number of authorized shares will remain unchanged.
Following
the effectiveness, if any, of a Forward Split, current shareholders shall be
issued more shares of Common Stock, with such number of shares dependent on the
Forward Ratio ratified by the Board. For example, if the Board approves of a
1-for-10 Forward Split, a shareholder owning 100 shares of Common Stock prior to
such Forward Split would hold 1,000 shares of Common Stock following such
Forward Split. THE HIGHER THE
FORWARD RATIO (1-FOR-1000 BEING HIGHER THAN
1-FOR-100 FOR EXAMPLE), THE GREATER THE INCREASE OF RELATED SHARES
EACH EXISTING
SHAREHOLDER, POST FORWARD SPLIT, WILL
EXPERIENCE.
In
deciding whether to implement the Forward Split and Forward Ratio to be used,
the Board will consider, among other things, (i) the potential impact and
anticipated benefits as the Company moves toward profitability, (ii) the
market price of the Common Stock at such time, (iii) the number
of shares that will be outstanding after the Forward Split, (iv) the
shareholders’ equity at such time, (v) the shares of Common Stock available
for issuance in the future, (vi) the liquidity of the Common Stock in the
market, and (vii) the nature of the Company’s operations. The Board shall
maintain the right to elect not to proceed with the Forward Split if it
determines, in its sole discretion, that this proposal is no longer in the best
interests of the Company.
The
purpose of seeking shareholder approval of a range of exchange ratios (rather
than a fixed exchange ratio) is to provide the Company with the flexibility to
achieve the desired results of the Forward Split. Following the approval of this
corporate action, the Board will affect a Forward Split only upon the Board’s
determination that a Forward Split would be in the best interests of the Company
at that time. If the Board were to affect a Forward Split, the Board would set
the timing for such a split and select the specific ratio as set forth herein.
No further action on the part of shareholders will be required to either
implement or abandon the Forward Split. If the Board determines to implement the
Forward Split, we would communicate to the public, prior to the effective date
of the Forward Split, additional details regarding the Forward Split, including
the specific ratio the board selects. If the Board does not implement the
Forward Split by December 31, 2010, the authority granted in this proposal
to implement the Forward Split will terminate.
After the
effective date of the Forward Split, each shareholder will own more shares of
our Common Stock, but the per-share value of these shares may decrease
proportionately. The Forward Split would not change the number of authorized
shares of Common Stock designated by our Articles. Following the Effective Date
of a Forward Split and amendment to our Articles, we will have authorized
10,000,000,000 million shares of Common Stock. Thus, following a Forward Split,
because the number of issued and outstanding shares of Common Stock would
increase, the number of shares remaining available for issuance under our
Articles would effectively decrease.
All
outstanding options and warrants to purchase shares of our Common Stock,
including any held by our officers and directors, would be adjusted as a result
of the Forward Split. In particular, the number of shares issuable upon the
exercise of each instrument would be increased, and the exercise price per
share, if applicable, would be decreased, in accordance with the terms of each
instrument and based on the ratio of the Forward Split.
No
fractional shares of our Common Stock will be issued as a result of the Forward
Split. In the event the proposed Forward Split leaves a shareholder with a
fraction of a share, the number of shares due to the shareholder shall be
rounded up. For example, if the proposed Forward Split leaves an individual
shareholder with one and one half shares, the shareholder will be issued, post
proposed Forward Split, two whole shares.
In
connection with the approval of the Forward Split, shareholders of the Company
will not have a right to dissent and obtain payment for their shares under the
NRS, the Articles of Incorporation or bylaws.
Tax Consequences to Common
Shareholders
The
following discussion sets forth the material United States federal income tax
consequences that management believes will apply with respect to the Company and
the shareholders of the Company who are United States holders at the effective
time of the Forward Split. This discussion does not address the tax consequences
of transactions effectuated prior to or after the Forward Split, including,
without limitation, the tax consequences of the exercise of options, warrants or
similar rights to purchase stock. For this purpose, a United States holder is a
shareholder that is: (i) a citizen or resident of the United States,
(ii) a domestic corporation, (iii) an estate whose income is subject
to United States federal income tax regardless of its source, or (iv) a
trust if a United States court can exercise primary supervision over the trust’s
administration and one or more United States persons are authorized to control
all substantial decisions of the trust. This discussion does not describe all of
the tax consequences that may
be relevant to a holder in light of his particular
circumstances or to holders subject to special rules (such as dealers
in securities, financial institutions,
insurance companies, tax-exempt organizations,
foreign individuals and entities and persons who acquired their
Common Stock as compensation). In
addition, this summary is limited to shareholders who hold their Common Stock as
capital assets. This discussion also does not address any tax consequences
arising under the laws of any state, local or foreign jurisdiction. Accordingly,
each shareholder is strongly urged to consult with a tax adviser to determine
the particular federal, state, local or foreign income or other tax consequences
to such shareholder related to the reverse split.
No gain
or loss should be recognized by a shareholder upon his or her exchange of
pre-Forward Split shares for post-Forward Split shares except for those
associated with any additional shares the shareholder receives (i) as a result
of rounding up any post-Forward Split fractional shares or (ii) due to the
Forward Threshold. The aggregate tax basis of the post-Forward Split shares
received in the Forward Split will be the same as the shareholder’s aggregate
tax basis in the pre-Forward Split shares. The shareholder’s holding period for
the post-Forward Split shares will include the period during which the
shareholder held the pre-Forward Split shares surrendered in the Forward
Split.
Tax Consequences for the
Company
We should
not recognize any gain or loss as a result of the Forward
Split.
The
procedure and requirements to affect the Forward Split are set forth in Section
78.2055 of the NRS and provide that the proposed Forward Split must first be
adopted by the Board and then submitted to stockholders for their consideration.
The Forward Split must then be approved by a vote of stockholders holding a
majority of the voting power of the affected class or series.
Our Board
has adopted, ratified and approved of the Forward Split and subsequently
submitted the proposed Forward Split to our shareholders for their
approval. The securities that are entitled to vote to approve of the
Forward Split consist of issued and outstanding shares of Common Stock
outstanding as at December 15, 2009, the Record Date for determining
shareholders who are entitled to notice of and to vote on the proposed Forward
Split.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the Forward Split have approved of the Forward
Split.
RATIFICATION
OF INDEPENDENT PUBLIC ACCOUNTANTS
Overview
The Board
has recommended that the shareholders grant authority to the Board to re-appoint
Chang G. Park, CPA as the Company’s independent public accountant during the
2010 fiscal year, to serve in the same capacity for the fiscal year ending
December 31, 2009 (the “Auditor
Appointment”). Although stockholder ratification of the Auditor
Appointment is not required, the Board considered it desirable for the
stockholders to pass upon the selection of the independent public accountants.
Even though the selection was ratified, the Company may, in its discretion,
direct the appointment of a different independent public accounting firm at any
time during the year if the Company believes that such a change would be in the
best interests of the Company and its stockholders.
As
reported in our Form 8-K originally filed with the SEC on July 28, 2009, in July
of 2009, our former accountant, Pollard-Kelley Auditing Services, Inc., (“Pollard-Kelley”)
resigned. Pollard-Kelley audited our financial statements as of and for the
years ended December 31, 2008 and 2007. The decision regarding the leave of
Pollard-Kelley was the sole decision of Pollard-Kelley and such resignation was
not recommended or approved of by the Board or any audit or similar committee.
On or about July 16, 2009, we retained Chang G. Park, CPA, our current auditor,
to review all interim period financial statements going forward and audit our
financial statements for the upcoming year ending December 31, 2009. Such change
in accountant was approved by the Board.
The
reports of our prior certifying accountant, Pollard-Kelley, on our financial
statements as of and for the years ended December 31, 2008 and 2007 contained an
adverse opinion or a disclaimer of opinion and were qualified or modified as to
uncertainty, audit scope, or accounting principles in that the auditor expressed
concerns that, in connection with the Company’s lack of significant revenues,
there existed a substantial doubt that the Company would be able to continue as
a going concern. Such uncertainty was discussed with the former auditor and the
Board has authorized Pollard-Kelley to respond fully to any inquiries regarding
such adverse opinion by the Company’s new accountant, Chang G. Park,
CPA.
Other
than as discussed above, in connection with the audits of our most recent two
years ended December 31, 2008 and 2007 and the subsequent interim periods, there
were no other disagreements between Pollard-Kelley and us on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures, that, if not resolved to the satisfaction of
Pollard-Kelley would have caused Pollard-Kelley to make reference to the subject
matter of the disagreement in connection with its reports on our financial
statements for such years.
Audit
Fees
The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by Pollard-Kelley for the audit of our annual financial
statement and review of financial statements included in our 10-Q reports and
services normally provided by the accountant in connection with statutory and
regulatory filings or engagements were approximately $8,000 for fiscal year
ended 2008 and $8,000 for fiscal year ended 2007.
Audit-Related
Fees
The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by Pollard-Kelley that are reasonably related to the
performance of the audit or review of our financial statements that are not
reported above were $0 for fiscal years ended 2008 and 2007.
Tax Fees
The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by Pollard-Kelley for tax compliance, tax advice, and tax
planning were approximately $0 for fiscal year ended 2008 and consisted of tax
compliance services and $0 for fiscal year ended 2007 and consisted of tax
compliance services.
All Other
Fees
There
were no other aggregate fees billed in either of the last two fiscal years for
products and services provided by Pollard-Kelley, other than the services
reported above.
Although
stockholder approval is not required, the Board considers it desirable for the
stockholders to pass upon the selection of the independent auditor. Our Board
has adopted, ratified and approved of the selection of the independent auditor
and submitted the action to our shareholders for their approval. The
securities that are entitled to vote to approve of the independent auditor
consist of the issued and outstanding shares of Common Stock outstanding as at
December 15, 2009, the Record Date for determining shareholders who are entitled
to notice of and to vote on the proposed action.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the appointment of Chang G. Park, CPA as independent auditor
have approved of such appointment.
ELECTION
OF DIRECTORS
Overview
The Board
has recommended that the shareholders ratify the prior appointment of Brad M.
Bingham, Esq. (“Mr.
Bingham”) as the Company’s Interim Chairman of the Board and approve of
the re-election of Mr. Bingham to serve on the Company’s Board for the 2010
fiscal year (the “Board Appointment”).
Mr. Bingham will hold office until the next annual meeting of stockholders and
thereafter until his successor is elected and qualified.
Brad
M. Bingham, Esq.
Brad M.
Bingham, Esq. maintains significant experience managing, advising and operating
small and microcap publicly traded companies. Mr. Bingham is a licensed attorney
and has provided clients with general corporate counsel services with a focus on
the public company business sector since 2006. Mr. Bingham maintains extensive
knowledge of corporate entity governance and management, public and private
company debt, equity and mezzanine financing and corporate restructuring,
recapitalization and M&A transactions. Prior to providing clients with legal
counsel, Mr. Bingham worked as a private independent consultant providing public
and private companies with various consulting services relating to public and
private company financing, corporate restructurings and recapitalizations and
various venture fundings since 2004. Mr. Bingham is a member of the California
State Bar and admitted to practice in California.
Although
stockholder approval is not required for the ratification of the prior
appointment of Mr. Bingham, the Board considers it desirable for the
stockholders to pass upon such Board Appointment, in addition to the re-election
of Mr. Bingham as described above. Our Board has adopted, ratified and approved
of the Board Appointment and subsequently submitted the Board Appointment to our
shareholders for their approval. The securities that are entitled to
vote on the Board Appointment consist of issued and outstanding shares of Common
Stock outstanding as at December 15, 2009, the Record Date for determining
shareholders who are entitled to notice of and to vote on the Board
Appointment.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the Board Appointment have approved of the Board
Appointment.
EMPLOYEE
STOCK OPTION PLAN
Overview
Purpose
The
purpose of the Plan is to assist in attracting and retaining highly competent
key employees, non-employee directors and consultants and to act as an incentive
in motivating selected key employees, non-employee directors and consultants of
the Company to achieve long-term corporate objectives.
Administration
of the Plan
The
Plan shall be administered by a committee of the Board (the “Committee”).
The Committee shall have exclusive and final authority in each determination,
interpretation or other action affecting the Plan and its Participants. The
Committee shall have the sole discretionary authority to interpret the Plan, to
establish, modify and amend administrative rules for the Plan, to impose such
conditions and restrictions on Awards as it determines appropriate, and to take
such steps in connection with the Plan and Awards granted hereunder as it may
deem necessary or advisable. The Committee may, subject to compliance with
applicable legal requirements, delegate such of its powers and authority under
the Plan as it deems appropriate to designated officers or employees of the
Company. In addition, the Board may exercise any of the authority
conferred upon the Committee hereunder. In the event of any such
delegation of authority or exercise of authority by the Board, references in the
Plan to the Committee shall be deemed to refer to the delegate of the Committee
or the Board, as the case may be.
Number
of Authorized Shares
Under the
Plan, the Board is authorized to sell or award up to 5,000,000 shares and/or
options of Common Stock; provided, however, if the
outstanding Common Stock shall be hereafter increased or decreased, or changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation, by reason of a recapitalization,
reclassification, reorganization, merger, consolidation, share exchange, or
other business combination in which the Company is the surviving parent
corporation, stock split-up, combination of shares, or dividend or other
distribution payable in capital stock or rights to acquire capital stock,
appropriate adjustment shall be made by the Board in the number and kind of
shares which may be granted under the Plan. For example, in the event the
Company effectuates a 1-for-10 forward split, the number of Shares that are
authorized by and may be sold under the Plan shall be 50,000,000.
Eligibility
Participants
in the Plan shall be such key employees, non-employee directors and consultants
of the Company, whether or not members of the Board, as the Committee, in its
sole discretion, may designate from time to time. The Committee’s designation of
a Participant in any year shall not require the Committee to designate such
person to receive Awards in any other year. The designation of a Participant to
receive an Award under one portion of the Plan does not require the Committee to
include such Participant under other portions of the Plan. The
Committee shall consider such factors as it deems pertinent in selecting
Participants and in determining the types and amounts of their respective
Awards.
Tax
Withholding and Tax Offset Payments
The
Company shall be entitled to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under any Award, and the Company may defer payment of cash or
issuance of shares upon exercise or vesting of an Award unless indemnified to
its satisfaction against any liability for any such tax.
Our Board
has adopted, ratified and approved of the Plan and subsequently submitted the
Plan to our shareholders for their approval. The securities that are
entitled to vote to approve the Plan consist of issued and outstanding shares of
Common Stock outstanding as at December 15, 2009, the Record Date for
determining shareholders who are entitled to notice of and to vote on the
Plan.
As of the
Record Date, there were 323,483 shares of Common Stock issued and outstanding. A
majority of the Company’s shareholders representing 51.5% of the Common Stock
entitled to vote on the Plan have approved of the Plan.
ADDITIONAL CORPORATE
ACTIONS
Pursuant
to prior Board and shareholder approval as more fully described in our
Definitive Schedule 14C filed with the SEC on December 12, 2008 and effective on
December 22, 2008, the Company is authorized, by Board action and without
shareholder approval or vote, to amend the Company’s Articles to effect a
corporate name change. Pursuant to Board resolution and in connection with the
amendment to the Articles in order to effectuate the Corporate Actions described
herein, the Company may amend its Articles in order to change the corporate name
from CoConnect, Inc. to Endura Gold Corporation; provided however, the Board
reserves the right to either elect not to change the name of the Company or, in
the alternative, change the name of the Company to another name as the Board
sees fit.
Under
Section 14(c) of the Exchange Act and Rule 14c-2 promulgated thereunder, the
Corporate Actions cannot be affected until 20 days after the date this
Information Statement is sent to the Company’s stockholders. This Information
Statement will be sent on or about December ___, 2009 to the stockholders of the
Company as of the Record Date.
Pursuant
to the consent resolutions adopted by a majority of the stockholders,
notwithstanding the fact that the Corporate Actions have been approved by the
Company’s majority stockholders, the Company’s Board may, by resolution, abandon
the Corporate Actions at any time prior to the effective date of the Corporate
Actions without any further action by the Company’s stockholders.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of December 15, 2009 by the following
persons:
|
·
|
each
person who is known to be the beneficial owner of more than five percent
(5%) of our issued and outstanding shares of common
stock;
|
|
·
|
each
of our directors and executive officers;
and
|
|
·
|
all
of our directors and executive officers as a
group.
|
|
Name
And Address
|
Number
Of Shares Beneficially Owned
|
Percentage
Owned
|
|
|
|
|
|
Brad
M. Bingham, Esq. (1)
|
0
|
0%
|
|
Turnaround
Advisors, LLC(2)
|
166,666
|
51.5%
|
|
|
|
|
|
|
|
|
|
All
directors, officers and 5% shareholders as a group
|
166,666
|
51.5%
|
|
|
|
|
(1) The
address is 2038 Corte Del Nogal, Suite 110, Carlsbad, California
92011.
(2) The
address is 32 W. 200 South, Suite 360, Salt Lake City, Utah 84101.
Beneficial
ownership is determined in accordance with the rules and regulations of the
SEC. The number of shares and the percentage beneficially owned by
each individual listed above include shares that are subject to options held by
that individual that are immediately exercisable or exercisable within 60 days
from the date of this report and the number of shares and the percentage
beneficially owned by all officers and directors as a group includes shares
subject to options held by all officers and directors as a group that are
immediately exercisable or exercisable within 60 days from the date of this
report.
DISSENTER’S RIGHTS OF
APPRAISAL
The
Nevada Revised Statutes do not provide for dissenter’s rights in connection with
the proposed amendment to our Articles of Incorporation.
INTEREST OF CERTAIN PERSONS
IN MATTERS TO BE ACTED UPON
No
director, executive officer, nominee for election as a director, associate of
any director, executive officer or nominee or any other person has any
substantial interest, direct or indirect, by security holdings or otherwise, in
the proposed Corporate Actions which is not shared by all other
stockholders.
FORWARD-LOOKING
STATEMENTS
The
following is a "safe harbor" statement under the Private Securities Litigation
Reform Act of 1995: Statements contained in this document that are not based on
historical facts are "forward-looking statements". Terms such as
"anticipates", "believes", "estimates", "expects", "plans",
"predicts", "may", "should", "will", the negative thereof and similar
expressions are intended to identify forward-looking statements. Such
statements are by nature subject to uncertainties and risks,
including but not limited to: our reliance on certain major clients; the
successful combination of revenue growth with operating expense reduction to
result in improved profitability and cash flow; government regulation and tax
policy; economic conditions; competition and pricing; dependence on our labor
force; reliance on technology; telephone and internet service dependence; the
ability, means, and willingness of financial markets to finance our operations;
and other operational, financial or legal risks or uncertainties detailed in our
SEC filings from time to time. Should one or more of these uncertainties or
risks materialize, actual results may differ materially from those described in
the forward-looking statements. We disclaim any intention or obligation to
revise any forward-looking statements whether as a result of new expectations,
conditions or circumstances, or otherwise.
WHERE YOU CAN FIND MORE
INFORMATION
We file
annual, quarterly and current reports, proxy statements and other information
with the SEC. Our SEC filings are also available to the public at the Internet
site maintained by the SEC at http://www.sec.gov.
You
should rely only on the information contained in, or incorporated by reference
as an exhibit to, this Information Statement. We have not authorized anyone else
to provide you with different information. You should not assume that the
information in this Information Statement is accurate as of any date other than
December ___ 2009, or such earlier date as is expressly set forth
herein.
|
DATED:
December ___, 2009
|
BY
ORDER OF THE BOARD OF DIRECTORS
/S/
BRAD M. BINGHAM, ESQ.
_______________________________
BY:
BRAD M. BINGHAM, ESQ.
ITS:
INTERIM CHIEF EXECUTIVE OFFICER AND
DIRECTOR
|
EXHIBIT
A
CERTIFICATE
OF AMENDMENT
TO
THE
ARTICLES
OF INCORPORATION
OF
COCONNECT,
INC.
A
Nevada Corporation
COCONNECT,
INC., a Nevada corporation (the “Corporation”)
organized and existing under and by virtue of the provisions of the Nevada
Revised Statutes of the State of Nevada (the “NRS”)
DOES HEREBY CERTIFY:
Pursuant
to the NRS, the Board of Directors of the Corporation hereby file this
Certificate of Amendment to the Articles of Incorporation (the “Certificate”)
and amends Article Three as follows:
RESOLVED,
that the Articles of Incorporation of this corporation be amended as
follows:
ARTICLE
THREE. [SHARES].
3.1 Authorized
Capital Stock. The aggregate number of shares which this
Corporation shall have authority to issue is Ten Billion (10,000,000,000)
shares, consisting of (a) Nine Billion Nine Hundred Ninety Nine Million
(9,999,000,000) shares of common stock, par value $0.001 per share (the “Common
Stock”) and (b) One Million (1,000,000) shares of preferred stock, par
value $0.001 per share (the “Preferred
Stock”), issuable in one or more series as hereinafter provided. A
description of the classes of shares and a statement of the number of shares in
each class and the relative rights, voting power, and preferences granted to,
and restrictions imposed upon, the shares of each class are as
follows:
3.2 Common
Stock. Each outstanding share of Common Stock of the Corporation shall be
entitled to one vote and each fractional share of Common Stock shall be entitled
to a corresponding fractional vote on each matter submitted to a vote of the
shareholders. A majority of all shares of stock, both Common Stock and Preferred
Stock, entitled to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of shareholders. Except as otherwise provided by these
Articles of Incorporation or the NRS, if a quorum is present, the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the subject matter shall be the act of the shareholders.
3.3 Preferred
Stock. Shares of Preferred Stock may be issued in any number of series
from time to time by the Board of Directors, and the Board of Directors,
pursuant to the Corporation’s Articles of Incorporation and Bylaws, is expressly
authorized to fix by resolution or resolutions the designations and the voting
powers, preferences, rights and qualifications, limitations or restrictions
thereof, of the shares of each series of Preferred Stock.
EXHIBIT
B
CoConnect,
Inc.
2010
Stock Incentive Plan
ARTICLE
I
PURPOSE
AND ADOPTION OF THE PLAN
1.1 Purpose. The
purpose of the CoConnect, Inc. 2010 Stock Incentive Plan (hereinafter referred
to as the “Plan”) is to assist
in attracting and retaining highly competent key employees, non-employee
directors and consultants and to act as an incentive in motivating selected key
employees, non-employee directors and consultants of CoConnect, Inc. and its
Subsidiaries (as defined below) to achieve long-term corporate
objectives.
1.2 Adoption
and Term. The
Plan has been approved by the Board of Directors (hereinafter referred to as the
“Board”) of
CoConnect, Inc. (hereinafter referred to as the “Company”), to be
effective as of the date the Plan is approved by the Board (the
“Effective
Date”), subject to
the approval of the stockholders of the Company. The Plan shall
remain in effect until terminated by action of the Board; provided,
however, that no
Incentive Stock Option (as defined below) may be granted hereunder after the
tenth anniversary of the Effective Date. The Company intends that any grant,
award or other acquisition of the Company’s securities pursuant to the Plan to
any officer and/or director of the Company shall be exempt from
Section 16(b) of the Exchange Act.
ARTICLE
II
DEFINITIONS
2.1 For
the purposes of this Plan, capitalized terms shall have the following
meanings:
“Award”
means any grant to a Participant of one or a combination of Non-Qualified Stock
Options or Incentive Stock Options, and Stock Appreciation Rights, Restricted
Shares and Performance Awards described herein.
“Award
Agreement” means a written agreement between the Company and a
Participant or a written notice from the Company to a Participant specifically
setting forth the terms and conditions of an Award granted under the
Plan.
“Award
Period” means, with respect to an Award, the period of time set forth in
the Award Agreement during which specified target performance goals must be
achieved or other conditions set forth in the Award Agreement must be
satisfied.
“Beneficiary”
means an individual, trust or estate who or which, by a written designation of
the Participant filed with the Company or by operation of law, succeeds to the
rights and obligations of the Participant under the Plan and an Award Agreement
upon the Participant’s death.
“Board”
means the Board of Directors of the Company.
“Change
in Control” means, and shall be deemed to have occurred upon the
occurrence of, any one of the following events:
(a) Consummation
by the Company of a reorganization, merger, consolidation or similar transaction
(a “Reorganization
Transaction”), in each case, unless, immediately following such
Reorganization Transaction, more than 50% of, respectively, the outstanding
shares of common stock (or similar equity security) of the corporation or other
entity resulting from or surviving such Reorganization Transaction and the
combined voting power of the securities of such corporation or other entity
entitled to vote generally in the election of directors, is then beneficially
owned, directly or indirectly, by the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and the Company
Voting Securities immediately prior to such Reorganization Transaction in
substantially the same proportions as their ownership of the Outstanding Common
Stock and Company Voting Securities immediately prior to such Reorganization
Transaction; or
(b) Consummation
by the Company of (i) a complete liquidation or dissolution of the Company
or (ii) the sale or other disposition of all or substantially all of the
assets of the Company to a corporation or other entity, unless, with respect to
such corporation or other entity, immediately following such sale or other
disposition more than 50% of, respectively, the outstanding shares of common
stock (or similar equity security) of such corporation or other entity and the
combined voting power of the securities of such corporation or other entity
entitled to vote generally in the election of directors, is then beneficially
owned, directly or indirectly, by the individuals and entities who were the
respective beneficial owners of the Outstanding Common Stock and the Company
Voting Securities immediately prior to such sale or disposition in substantially
the same proportions as their ownership of the Outstanding Common Stock and
Company Voting Securities immediately prior to such sale or
disposition.
“Code”
means the Internal Revenue Code of 1986, as amended. References to a
section of the Code include that section and any comparable section or sections
of any future legislation that amends, supplements or supersedes said
section.
“Committee”
means the committee established in accordance with
Section 3.1.
“Company”
means CoConnect, Inc., a Nevada Corporation, and its successors.
“Common
Stock” means the Company’s common Stock, par value $.001 per
share.
“Company
Voting Securities” means the combined voting power of all outstanding
securities of the Company entitled to vote generally in the election of
directors of the Company.
“Date
of Grant” means the date designated by the Committee as the date as of
which it grants an Award, which shall not be earlier than the date on which the
Committee approves the granting of such Award.
“Effective
Date” shall have the meaning given to such term in Section
1.2.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Exercise
Price” means, with respect to a Stock Appreciation Right, the amount
established by the Committee in the related Award Agreement as the amount to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.2(b).
"Fair
Market Value" means, as of any date, the value of Common Stock determined
as follows:
(i) if
the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the NYSE Archipelago Exchange, the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
the Fair Market Value of a Share of Common Stock shall be the closing sales
price of a Share of Common Stock (or the closing bid, if no such sales were
reported) as quoted on such exchange or system for the last market trading day
prior to the time of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(ii) if
the Common Stock is listed on the OTC Bulletin Board or on the Pink Sheets
trading market or is otherwise regularly quoted by a recognized securities
dealer but is not listed in the manner contemplated by clause (i) above, the
Fair Market Value of a Share of Common Stock shall be the mean between the high
bid and low asked prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or
(iii) if
neither clause (i) above nor clause (ii) above applies, the Fair Market Value
shall be determined in good faith by the Administrator.
“Incentive
Stock Option” means a stock option within the meaning of Section 422
of the Code.
“Merger”
means any merger, reorganization, consolidation, share exchange, transfer of
assets or other transaction having similar effect involving the
Company.
“Non-Employee
Director” means a member of the Board who (i) is not currently an officer
or otherwise employed by the Company or a parent or a subsidiary of the Company,
(ii) does not receive compensation directly or indirectly from the Company or a
parent or a subsidiary of the Company for services rendered as a consultant or
in any capacity other than as a director, except for an amount for which
disclosure would not be required pursuant to Item 404(a) of Regulation S-K,
(iii) does not possess an interest in any other transaction for which disclosure
would be required pursuant to Item 404(a) of Regulation S-K, (iv) is not engaged
in a business relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K, and (v) qualifies as “Outside Director”
pursuant to Section 162(m) of the Code.
“Non-Employee
Director Option” means a stock option granted to a Non-Employee Director
in accordance with Section 6.1(a).
“Non-Qualified
Stock Option” means a stock option which is not an Incentive Stock
Option.
“Options”
means all Non-Qualified Stock Options and Incentive Stock Options granted at any
time under the Plan.
“Outstanding
Common Stock” means, at any time, the issued and outstanding shares of
Common Stock.
“Participant”
means a person designated to receive an Award under the Plan in accordance with
Section 5.1.
“Performance
Awards” means Awards granted in accordance with
Article VIII.
“Plan”
means the CoConnect, Inc. 2010 Stock Incentive Plan as described herein, as the
same may be amended from time to time.
“Purchase
Price”, with respect to Options, shall have the meaning set forth in
Section 6.1(b).
“Restricted
Shares” means Common Stock subject to restrictions imposed in connection
with Awards granted under Article VII.
“Retirement”
means early or normal retirement under a pension plan or arrangement of the
Company or one of its Subsidiaries in which the Participant
participates.
“Stock
Appreciation Rights” means Awards granted in accordance with
Article VI.
“Subsidiary”
means a subsidiary of the Company within the meaning of Section 424(f) of
the Code.
“Termination
of Employment” means the voluntary or involuntary termination of a
Participant’s employment with the Company or a Subsidiary for any reason,
including death, disability, retirement or as the result of the divestiture of
the Participant’s employer or any similar transaction in which the Participant’s
employer ceases to be the Company or one of its Subsidiaries. Whether
entering military or other government service shall constitute Termination of
Employment, or whether a Termination of Employment shall occur as a result of
disability, shall be determined in each case by the Committee in its sole
discretion. In the case of a consultant who is not an employee of the
Company or a Subsidiary, Termination of Employment shall mean voluntary or
involuntary termination of the consulting relationship for any
reason. In the case of a Non-Employee Director, Termination of
Employment shall mean voluntary or involuntary termination, non-election,
removal or other act which results in such Non-Employee Director no longer
serving in such capacity.
ARTICLE
III
ADMINISTRATION
3.1 Committee. The
Plan shall be administered by a committee of the Board (the “Committee”). The
Committee shall have exclusive and final authority in each determination,
interpretation or other action affecting the Plan and its
Participants. The Committee shall have the sole discretionary
authority to interpret the Plan, to establish, modify and amend administrative
rules for the Plan, to impose such conditions and restrictions on Awards as it
determines appropriate, and to take such steps in connection with the Plan and
Awards granted hereunder as it may deem necessary or advisable. The
Committee may, subject to compliance with applicable legal requirements,
delegate such of its powers and authority under the Plan as it deems appropriate
to designated officers or employees of the Company. In addition, the
Board may exercise any of the authority conferred upon the Committee
hereunder. In the event of any such delegation of authority or
exercise of authority by the Board, references in the Plan to the Committee
shall be deemed to refer to the delegate of the Committee or the Board, as the
case may be.
ARTICLE
IV
SHARES
4.1 Number of Shares
Issuable. The
total number of shares initially authorized to be issued under the Plan shall be
five million (5,000,000) shares of Common Stock. The number of shares available
for issuance under the Plan shall be subject to adjustment in accordance with
the terms herein. The shares to be offered under the Plan shall be
authorized and unissued shares of Common Stock, or issued shares of Common Stock
which will have been reacquired by the Company.
4.2 Shares Subject to
Terminated Awards. Shares
of Common Stock covered by any unexercised portions of terminated Options
(including canceled Options) granted under Article VI, shares of Common
Stock forfeited as provided in Section 7.2(a) and shares of Common Stock
subject to any Award that are otherwise surrendered by a Participant may be
subject to new Awards under the Plan. Shares of Common Stock subject
to Options, or portions thereof, that have been surrendered in connection with
the exercise of Stock Appreciation Rights shall not be available for subsequent
Awards under the Plan, but shares of Common Stock issued in payment of such
Stock Appreciation Rights shall not be charged against the number of shares of
Common Stock available for the grant of Awards
hereunder.
ARTICLE
V
PARTICIPATION
5.1 Eligible
Participants. Participants
in the Plan shall be such key employees, non-employee directors and consultants
of the Company and its Subsidiaries, whether or not members of the Board, as the
Committee, in its sole discretion, may designate from time to
time. The Committee’s designation of a Participant in any year shall
not require the Committee to designate such person to receive Awards in any
other year. The designation of a Participant to receive an Award
under one portion of the Plan does not require the Committee to include such
Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the types and amounts of their respective
Awards.
ARTICLE
VI
STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS
6.1 Option Awards.
(a) Grant
of Options. The Committee may grant, to such Participants as
the Committee may select, Options entitling the Participants to purchase shares
of Common Stock from the Company in such numbers, at such prices, and on such
terms and subject to such conditions, not inconsistent with the terms of the
Plan, as may be established by the Committee and are subject to adjustment as
described herein. Non-Qualified Stock Options granted after the
Effective Date shall have an exercise price of not less than 100% of the Fair
Market Value on the Date of Grant. Other Incentive Stock Options may
be granted at such prices and in such quantities as determined by the Committee.
Except as provided in Sections 6.3(c), or 6.5, Non-Employee Director Options
shall not be exercisable prior to the first anniversary of the Date of Grant, at
which time they will be immediately exercisable, in whole or in part, and shall
remain exercisable until the tenth anniversary of the Date of
Grant.
(b) Purchase
Price of Options. The Purchase Price of each share of Common
Stock which may be purchased upon exercise of any Option granted under the Plan
shall be determined by the Committee.
(c) Designation
of Options. Except as otherwise expressly provided in the
Plan, the Committee may designate, at the time of the grant of an Option, such
Option as an Incentive Stock Option or a Non-Qualified Stock Option; provided,
however, that an Option may be designated as an Incentive Stock Option
only if the applicable Participant is an employee of the Company or a Subsidiary
on the Date of Grant.
(d) Incentive
Stock Option Share Limitation. No Participant may be granted
Incentive Stock Options under the Plan (or any other plans of the Company and
its Subsidiaries) that would result in Incentive Stock Options to purchase
shares of Common Stock with an aggregate Fair Market Value (measured on the Date
of Grant) of more than $100,000 first becoming exercisable by such Participant
in any one calendar year.
(e) Rights
as a Stockholder. A Participant or a transferee of an Option
pursuant to Section 9.4 shall have no rights as a stockholder with respect
to the shares of Common Stock covered by an Option until that Participant or
transferee shall have become the holder of record of any such shares, and no
adjustment shall be made with respect to any such shares of Common Stock for
dividends in cash or other property or distributions of other rights on the
Common Stock for which the record date is prior to the date on which that
Participant or transferee shall have become the holder of record of any shares
covered by such Option; provided, however, that Participants are entitled to
share adjustments to reflect capital changes under
Section 9.7.
6.2 Stock Appreciation
Rights.
(a) Stock
Appreciation Right Awards. The Committee is authorized to
grant to any Participant one or more Stock Appreciation Rights. Such
Stock Appreciation Rights may be granted either independent of or in tandem with
Options granted to the same Participant. Stock Appreciation Rights
granted in tandem with Options may be granted simultaneously with, or, in the
case of Non-Qualified Stock Options, subsequent to, the grant to such
Participant of the related Options; provided, however,
that: (i) any Option covering any share of Common Stock shall
expire and not be exercisable upon the exercise of any Stock Appreciation Right
with respect to the same share, (ii) any Stock Appreciation Right covering
any share of Common Stock shall expire and not be exercisable upon the exercise
of any Option with respect to the same share, and (iii) an Option and a
Stock Appreciation Right covering the same share of Common Stock may not be
exercised simultaneously. Upon exercise of a Stock Appreciation Right
with respect to a share of Common Stock, the Participant shall be entitled to
receive an amount equal to the excess, if any, of (A) the Fair Market Value
of a share of Common Stock on the date of exercise over (B) the Exercise
Price of such Stock Appreciation Right established in the Award Agreement, which
amount shall be payable as provided in Section 6.2(c).
(b) Exercise
Price. The Exercise Price established for any Stock
Appreciation Right granted under this Plan shall be determined by the Committee,
but in the case of Stock Appreciation Rights granted in tandem with Options
shall not be less than the Purchase Price of the related
Options. Upon exercise of Stock Appreciation Rights, the number of
shares issuable upon exercise under any related Options shall automatically be
reduced by the number of shares of Common Stock represented by such Options
which are surrendered as a result of the exercise of such Stock Appreciation
Rights.
(c) Payment
of Incremental Value. Any payment that may become due from the
Company by reason of a Participant’s exercise of a Stock Appreciation Right may
be paid to the Participant as determined by the Committee (i) all in cash,
(ii) all in Common Stock, or (iii) in any combination of cash and
Common Stock. In the event that all or a portion of the payment is to
be made in Common Stock, the number of shares of Common Stock to be delivered in
satisfaction of such payment shall be determined by dividing the amount of such
payment or portion thereof by the Fair Market Value on the date of
exercise. No fractional share of Common Stock shall be issued to make
any payment in respect of Stock Appreciation Rights; if any fractional share
would otherwise be issuable, the combination of cash and Common Stock payable to
a Participant shall be adjusted as directed by the Committee to avoid the
issuance of any fractional share.
6.3 Terms of Stock Options and
Stock Appreciation Rights.
(a) Conditions
on Exercise. An Award Agreement with respect to Options and/or
Stock Appreciation Rights may contain such waiting periods, exercise dates and
restrictions on exercise (including, but not limited to, periodic installments)
as may be determined by the Committee at the time of grant.
(b) Duration
of Options and Stock Appreciation Rights. Options and Stock
Appreciation Rights shall terminate after the first to occur of the following
events:
(i) Expiration
of the Option or Stock Appreciation Right as provided in the related Award
Agreement; or
(ii) Termination
of the Award as provided in Section 6.3(e), following the applicable
Participant’s Termination of Employment; or
(iii) In
the case of an Incentive Stock Option, ten years from the Date of Grant;
or
(iv) Solely
in the case of a Stock Appreciation Right granted in tandem with an Option, upon
the expiration of the related Option.
(b) Acceleration
of Exercise Time. The Committee, in its sole discretion, shall
have the right (but shall not in any case be obligated), exercisable at any time
after the Date of Grant, to permit the exercise of any Option or Stock
Appreciation Right prior to the time such Option or Stock Appreciation Right
would otherwise become exercisable under the terms of the related Award
Agreement.
(c) Extension
of Exercise Time. The Committee, in its sole discretion, shall
have the right (but shall not in any case be obligated), exercisable on or at
any time after the Date of Grant, to permit the exercise of any Option or Stock
Appreciation Right after its expiration date described in
Section 6(b).
6.4 Termination.
(a) Termination. In
the event of Termination of Employment of a Participant other than by reason of
death, disability or Retirement, the right of the Participant to exercise any
Option or Stock Appreciation Right shall terminate 90 days after the date of
such Termination of Employment, unless the exercise period is extended by the
Committee in accordance with Section 6.3(d).
(b) Disability
or Retirement. In the event of a Participant’s Termination of
Employment by reason of disability or Retirement, the right of the Participant
to exercise any Option or Stock Appreciation Right which he or she was entitled
to exercise upon Termination of Employment (or which became exercisable at a
later date pursuant to Section 6.3(e)(ii)) shall terminate one year after
the date of such Termination of Employment, unless the exercise period is
extended by the Committee in accordance with Section 6.3(d). In no
event, however, may any Option or Stock Appreciation Right be exercised later
than the date of expiration of the Option determined pursuant to
Section 6.3(b)(i), (iii) or (iv).
(c) Death. In
the event of the death of a Participant while employed by the Company or a
Subsidiary or within any additional period of time from the date of the
Participant’s Termination of Employment and prior to the expiration of any
Option or Stock Appreciation Right as provided pursuant to Section 6.3(e)(i)(B)
or Section 6.3(d) above, to the extent the right to exercise the Option or Stock
Appreciation Right was accrued as of the date of such Termination of Employment
and had not expired during such additional period, the right of the
Participant’s Beneficiary to exercise the Option or Stock Appreciation Right
shall terminate one year after the date of the Participant’s death (but in no
event more than one year from the date of the Participant’s Termination of
Employment by reason of disability or Retirement), unless the exercise period is
extended by the Committee in accordance with Section 6.3(d). In no
event, however, may any Option or Stock Appreciation Right be exercised later
than the date of expiration of the Option determined pursuant to Section
6.3(b)(i), (iii) or (iv).
(d) Termination
of Unvested Options or Stock Appreciation Rights. Upon Termination of
Employment. Subject to Section 6.3(c), to the extent the right to
exercise an Option or a Stock Appreciation Right, or any portion thereof, has
not accrued as of the date of Termination of Employment, such right shall expire
at the date of such Termination of Employment. Notwithstanding the
foregoing, the Committee, in its sole discretion and under such terms as it
deems appropriate, may permit, for a Participant who terminates employment by
reason of Retirement and who will continue to render significant services to the
Company or one of its Subsidiaries after his or her Termination of Employment,
the continued vesting of his or her Options and Stock Appreciation Rights during
the period in which that individual continues to render such
services.
6.5 Exercise
Procedures. Each
Option and Stock Appreciation Right granted under the Plan shall be exercised by
written notice to the Company which must be received by the officer or employee
of the Company designated in the Award Agreement at or before the close of
business on the termination date of the Award. The Purchase Price of
shares purchased upon exercise of an Option granted under the Plan shall be paid
in full in cash by the Participant pursuant to the Award Agreement; provided,
however, that the Committee may (but shall not be required to) permit payment to
be made by delivery to the Company of either (a) shares of Common Stock
(which may include Restricted Shares or shares otherwise issuable in connection
with the exercise of the Option, subject to such rules as the Committee deems
appropriate) or (b) any combination of cash and Common Stock or
(c) such other consideration as the Committee deems appropriate and in
compliance with applicable law (including payment in accordance with a cashless
exercise program under which, if so instructed by a Participant, shares of
Common Stock may be issued directly to the Participant’s broker or dealer upon
receipt of an irrevocable written notice of exercise from the
Participant). In the event that any shares of Common Stock shall be
transferred to the Company to satisfy all or any part of the Purchase Price, the
part of the Purchase Price deemed to have been satisfied by such transfer of
shares of Common Stock shall be equal to the product derived by multiplying the
Fair Market Value as of the date of exercise times the number of shares of
Common Stock transferred to the Company. The Participant may not
transfer to the Company in satisfaction of the Purchase Price any fractional
share of Common Stock. Any part of the Purchase Price paid in cash
upon the exercise of any Option shall be added to the general funds of the
Company and may be used for any proper corporate purpose. Unless the
Committee shall otherwise determine, any shares of Common Stock transferred to
the Company as payment of all or part of the Purchase Price upon the exercise of
any Option shall be held as treasury shares.
6.6 Adjustments upon Changes
in Capitalization, dissolution, Merger or Sale of Assets.
(a) Changes
in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
(b) Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation
of the Company, the Committee shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The
Committee in its discretion may provide for a Participant to have the right to
exercise his or her Option until ten (10) days prior to such transaction as to
all of the Options covered thereby, including Shares as to which the Option
would not otherwise be exercisable. In addition, the Committee may provide that
any Company repurchase option applicable to any Shares purchased upon exercise
of an Option shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Option will
terminate immediately prior to the consummation of such proposed
action.
(c) Merger
or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Participant shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Committee shall notify the
Participant in writing or electronically that the Option shall be fully vested
and exercisable for a period of fifteen (15) days from the date of such notice,
and the Option shall terminate upon the expiration of such period. For the
purposes of this paragraph, the Option shall be considered assumed if, following
the merger or sale of assets, the option or right confers the right to purchase
or receive, for each Share of Optioned Stock, immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Committee may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.
6.7 Change in
Control. Unless
otherwise provided by the Committee in the applicable Award Agreement, in the
event of a Change in Control, all Options and Stock Appreciation Rights
outstanding on the date of such Change in Control shall become immediately and
fully exercisable. The provisions of this Section 6.7 shall not
be applicable to any Options or Stock Appreciation Rights granted to a
Participant if any Change in Control results from such Participant’s beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Common
Stock or Company Voting Securities.
ARTICLE
VII
RESTRICTED
SHARES
7.1 Restricted Share
Awards. The
Committee may grant to any Participant an Award of such number of shares of
Common Stock on such terms, conditions and restrictions, whether based on
performance standards, periods of service, retention by the Participant of
ownership of purchased or designated shares of Common Stock or other criteria,
as the Committee shall establish. With respect to performance-based
Awards of Restricted Shares intended to qualify for deductibility under Section
162(m) of the Code, performance targets will include specified levels of one or
more of operating income, return or investment, return on stockholders’ equity,
earnings before interest, taxes, depreciation and amortization and/or earnings
per share. The terms of any Restricted Share Award granted under this
Plan may be set forth in an Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with this
Plan.
(a) Issuance
of Restricted Shares. As soon as practicable after the Date of
Grant of a Restricted Share Award by the Committee, the Company shall cause to
be transferred on the books of the Company or its agent, shares of Common Stock,
registered on behalf of the Participant, evidencing the Restricted Shares
covered by the Award. All shares of Common Stock covered by Awards
under this Article VII shall be subject to the restrictions, terms and
conditions contained in the Plan. Until the lapse or release of all
restrictions applicable to an Award of Restricted Shares the share certificates
representing such Restricted Shares may be held in custody by the Company, its
designee, or, if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with
respect to an Award as described in Section 7.1(d), one or more share
certificates, registered in the name of the Participant, for an appropriate
number of shares as provided in Section 7.1(d), free of any restrictions
set forth in the Plan (however subject to any restrictions that may be imposed
by law) shall be delivered to the Participant.
(b) Stockholder
Rights. Beginning on the Date of Grant of a Restricted Share
Award, the Participant shall become a stockholder of the Company with respect to
all shares and shall have all of the rights of a stockholder, including, but not
limited to, the right to vote such shares and the right to receive dividends;
provided, however, that any shares of Common Stock distributed as a dividend or
otherwise with respect to any Restricted Shares as to which the restrictions
have not yet lapsed, shall be subject to the same restrictions as such
Restricted Shares and held or restricted as provided in
Section 7.1(a).
(c) Restriction
on Transferability. None of the Restricted Shares may be
assigned or transferred (other than by will or the laws of descent and
distribution or to an inter vivos trust with respect to which the Participant is
treated as the owner under Sections 671 through 677 of the Code), pledged or
sold prior to the lapse of the restrictions applicable thereto without prior
Company approval.
(d) Delivery
of Shares Upon Vesting. Upon expiration or earlier termination
of the forfeiture period without a forfeiture and the satisfaction of or release
from any other conditions prescribed by the Committee, or at such earlier time
as provided under the provisions of Section 7.3, the restrictions
applicable to the Restricted Shares shall lapse. As promptly as
administratively feasible thereafter, subject to the requirements of
Section 9.5, the Company shall deliver to the Participant or, in case of
the Participant’s death, to the Participant’s Beneficiary, one or more share
certificates for the appropriate number of shares of Common Stock, free of all
such restrictions, except for any restrictions that may be imposed by
law.
7.2 Terms of Restricted
Shares.
(a) Change
in Control. Unless otherwise provided by the Committee in the
applicable Award Agreement, in the event of a Change in Control, all
restrictions applicable to the Restricted Share Award shall terminate fully and
the Participant shall immediately have the right to the delivery of share
certificates for such shares in accordance with
Section 7.1(d).
ARTICLE
VIII
PERFORMANCE
AWARDS
8.1 Performance
Awards.
(a) Award
Periods and Calculations of Potential Incentive Amounts. The
Committee may grant Performance Awards to Participants. A Performance
Award shall consist of the right to receive a payment (measured by the Fair
Market Value of a specified number of shares of Common Stock, increases in such
Fair Market Value during the Award Period and/or a fixed cash amount) contingent
upon the extent to which certain predetermined performance targets have been met
during an Award Period. Performance Awards may be made in conjunction
with, or in addition to, Restricted Share Awards made under
Article VII. The Award Period shall be two or more fiscal or
calendar years as determined by the Committee. The Committee, in its discretion
and under such terms as it deems appropriate, may permit newly eligible
employees, such as those who are promoted or newly hired, to receive Performance
Awards after an Award Period has commenced.
(b) Performance
Targets. The performance targets may include such goals
related to the performance of the Company and/or the performance of a
Participant as may be established by the Committee in its
discretion. In the case of Performance Awards intended to qualify for
deductibility under Section 162(m) of the Code, the targets will include
specified levels of one or more of operating income, return on investment,
return on stockholders’ equity, earnings before interest, taxes, depreciation
and amortization and/or earnings per share. The performance targets
established by the Committee may vary for different Award Periods and need not
be the same for each Participant receiving a Performance Award in an Award
Period. Except to the extent inconsistent with the performance-based
compensation exception under Section 162(m) of the Code, in the case of
Performance Awards granted to employees to whom such section is applicable, the
Committee, in its discretion, but only under extraordinary circumstances as
determined by the Committee, may change any prior determination of performance
targets for any Award Period at any time prior to the final determination of the
value of a related Performance Award when events or transactions occur to cause
such performance targets to be an inappropriate measure of
achievement.
(c) Earning
Performance Awards. The Committee, on or as soon as
practicable after the Date of Grant, shall prescribe a formula to determine the
percentage of the applicable Performance Award to be earned based upon the
degree of attainment of performance targets.
(d) Payment
of Earned Performance Awards. Payments of earned Performance
Awards shall be made in cash or shares of Common Stock or a combination of cash
and shares of Common Stock, in the discretion of the Committee. The
Committee, in its sole discretion, may provide such terms and conditions with
respect to the payment of earned Performance Awards as it may deem
desirable.
8.2 Terms of Performance
Awards.
(a) Termination
of Employment. Unless otherwise provided below or in
Section 8.3, in the case of a Participant’s Termination of Employment prior
to the end of an Award Period, the Participant will not have earned any
Performance Awards for that Award Period.
(b) Retirement. If
a Participant’s Termination of Employment is because of Retirement prior to the
end of an Award Period, the Participant will not be paid any Performance Award,
unless the Committee, in its sole and exclusive discretion, determines that an
Award should be paid. In such a case, the Participant shall be
entitled to receive a pro-rata portion of his or her Award as determined under
subsection (d) of this Section 8.2.
(c) Death
or Disability. If a Participant’s Termination of Employment is
due to death or to disability (as determined in the sole and exclusive
discretion of the Committee) prior to the end of an Award Period, the
Participant or the Participant’s personal representative shall be entitled to
receive a pro-rata share of his or her Award as determined under subsection (d)
of this Section 8.2.
(d) Pro-Rata
Payment. The amount of any payment to be made to a Participant
whose employment is terminated by Retirement, death or disability (under the
circumstances described in subsections (b) and (c)) will be the amount
determined by multiplying (i) the amount of the Performance Award that
would have been earned through the end of the Award Period had such employment
not been terminated by (ii) a fraction, the numerator of which is the
number of whole months such Participant was employed during the Award Period,
and the denominator of which is the total number of months of the Award
Period. Any such payment made to a Participant whose employment is
terminated prior to the end of an Award Period shall be made at the end of such
Award Period, unless otherwise determined by the Committee in its sole
discretion. Any partial payment previously made or credited to a
deferred account for the benefit of a Participant in accordance with
Section 8.1(d) of the Plan shall be subtracted from the amount otherwise
determined as payable as provided in this Section 8.2(d).
(e) Other
Events. Notwithstanding anything to the contrary in this
Article VIII, the Committee may, in its sole and exclusive discretion,
determine to pay all or any portion of a Performance Award to a Participant who
has terminated employment prior to the end of an Award Period under certain
circumstances (including the death, disability or Retirement of the Participant
or a material change in circumstances arising after the Date of Grant), subject
to such terms and conditions as the Committee shall deem
appropriate.
8.3 Change in
Control. Unless
otherwise provided by the Committee in the applicable Award Agreement, in the
event of a Change in Control, all Performance Awards for all Award Periods shall
immediately become fully payable to all Participants and shall be paid to
Participants within thirty (30) days after such Change in
Control.
ARTICLE
IX
TERMS
APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN
9.1 Plan Provisions Control
Award Terms. The
terms of the Plan shall govern all Awards granted under the Plan, and in no
event shall the Committee have the power to grant any Award under the Plan the
terms of which are contrary to any of the provisions of the Plan. In
the event any provision of any Award granted under the Plan shall conflict with
any term in the Plan as constituted on the Date of Grant of such Award, the term
in the Plan as constituted on the Date of Grant of such Award shall
control. Except as provided in Section 9.3 and Section 9.7, the
terms of any Award granted under the Plan may not be changed after the Date of
Grant of such Award so as to materially decrease the value of the Award without
the express written approval of the holder. The Committee
may make or enforce limitations so that the number of shares of Stock underlying
the Plan and the total amount of Common Stock available for issuance under Plan
does not exceed the applicable percentage as calculated in accordance with
Section 260.140.45 of the California Code, or in accordance with such other
securities laws of any State, the compliance with which the Committee in its
sole discretion believes is the in the best interest of the
Company.
9.2 Award
Agreement. No
person shall have any rights under any Award granted under the Plan unless and
until the Company and the Participant to whom such Award shall have been granted
shall have executed and delivered an Award Agreement or the Participant shall
have received and acknowledged notice of the Award authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.
9.3 Modification of Award
After Grant. No
Award granted under the Plan to a Participant may be modified (unless such
modification does not materially decrease the value of that Award) after its
Date of Grant except by express written agreement between the Company and such
Participant, provided that any such change (a) may not be inconsistent with
the terms of the Plan, and (b) shall be approved by the
Committee.
9.4 Limitation on
Transfer. Except
as provided in Section 7.1(c) in the case of Restricted Shares, a
Participant’s rights and interest under the Plan may not be assigned or
transferred other than by will or the laws of descent and distribution and,
during the lifetime of a Participant, only the Participant personally (or the
Participant’s personal representative) may exercise rights under the
Plan. The Participant’s Beneficiary may exercise the Participant’s
rights to the extent they are exercisable under the Plan following the death of
the Participant. Notwithstanding the foregoing, the Committee may
grant Non-Qualified Stock Options that are transferable, without payment of
consideration, to immediate family members of the Participant or to trusts or
partnerships for such family members, and the Committee may also amend
outstanding Non-Qualified Stock Options to provide for such
transferability.
9.5 Taxes. The
Company shall be entitled, if the Committee deems it necessary or desirable, to
withhold (or secure payment from the Participant in lieu of withholding) the
amount of any withholding or other tax required by law to be withheld or paid by
the Company with respect to any amount payable and/or shares issuable under such
Participant’s Award or with respect to any income recognized upon a
disqualifying disposition of shares received pursuant to the exercise of an
Incentive Stock Option, and the Company may defer payment of cash or issuance of
shares upon exercise or vesting of an Award unless indemnified to its
satisfaction against any liability for any such tax. The amount of
such withholding or tax payment shall be determined by the Committee and shall
be payable by the Participant at such time as the Committee determines in
accordance with the following rules:
(a) The
Participant shall have the right to elect to meet his or her withholding
requirement (i) by having withheld from such Award at the appropriate time
that number of shares of Common Stock, rounded up to the next whole share, the
Fair Market Value of which is equal to the amount of withholding taxes due,
(ii) by direct payment to the Company in cash of the amount of any taxes
required to be withheld with respect to such Award or (iii) by a
combination of withholding such shares and paying cash.
(b) The
Committee shall have the discretion as to any Award to cause the Company to pay
to tax authorities for the benefit of the applicable Participant, or to
reimburse such Participant for, the individual taxes which are due on the grant,
exercise or vesting of any Award or the lapse of any restriction on any Award
(whether by reason of such Participant’s filing of an election under
Section 83(b) of the Code or otherwise), including, but not limited to,
Federal income tax, state income tax, local income tax and excise tax under
Section 4999 of the Code, as well as for any such taxes as may be imposed
upon such tax payment or reimbursement.
(c) In
the case of Participants who are subject to Section 16 of the Exchange Act, the
Committee may impose such limitations and restrictions as it deems necessary or
appropriate with respect to the delivery or withholding of shares of Common
Stock to meet tax withholding obligations.
9.6 Surrender of
Awards. Any
Award granted under the Plan may be surrendered to the Company for cancellation
on such terms as the Committee and the Participant
approve.
9.7 Adjustments to Reflect
Capital Changes.
(a) Recapitalization. The
number and kind of shares subject to outstanding Awards, the Purchase Price or
Exercise Price for such shares, the number and kind of shares available for
Awards subsequently granted under the Plan and the maximum number of shares in
respect of which Awards can be made to any Participant in any calendar year
shall be appropriately adjusted to reflect any stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan or the Awards
granted under the Plan. The Committee shall have the power and sole
discretion to determine the amount of the adjustment to be made in each
case.
(b) Merger. After
any Merger in which the Company is the surviving corporation, each Participant
shall, at no additional cost, be entitled upon any exercise of an Option or
receipt of any other Award to receive (subject to any required action by
stockholders), in lieu of the number of shares of Common Stock receivable or
exercisable pursuant to such Award prior to such Merger, the number and class of
shares or other securities to which such Participant would have been entitled
pursuant to the terms of the Merger if, at the time of the Merger, such
Participant had been the holder of record of a number of shares of Common Stock
equal to the number of shares of Common Stock receivable or exercisable pursuant
to such Award. Comparable rights shall accrue to each Participant in
the event of successive Mergers of the character described above. In
the event of a Merger in which the Company is not the surviving corporation, the
surviving, continuing, successor or purchasing corporation, as the case may be
(the “Acquiring
Corporation”), will either assume the Company’s rights and obligations
under outstanding Award Agreements or substitute awards in respect of the
Acquiring Corporation’s stock for outstanding Awards, provided, however, that if
the Acquiring Corporation does not assume or substitute for such outstanding
Awards, the Board shall provide prior to the Merger that any unexercisable
and/or unvested portion of the outstanding Awards shall be immediately
exercisable and vested as of a date prior to such merger or consolidation, as
the Board so determines. The exercise and/or vesting of any Award
that was permissible solely by reason of this Section 9.7(b) shall be
conditioned upon the consummation of the Merger. Any Options which
are neither assumed by the Acquiring Corporation not exercised as of the date of
the Merger shall terminate effective as of the effective date of the
Merger.
(c) Options
to Purchase Shares or Stock of Acquired Companies. After any
merger in which the Company or a Subsidiary shall be a surviving corporation,
the Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a
plan of another party to the merger whose shares of stock subject to the old
options may no longer be issued following the merger. The manner of
application of the foregoing provisions to such options and any appropriate
adjustments shall be determined by the Committee in its sole
discretion. Any such adjustments may provide for the elimination of
any fractional shares which might otherwise become subject to any
Options.
9.8 No Right to
Employment. No
employee or other person shall have any claim of right to be granted an Award
under the Plan. Neither the Plan nor any action taken hereunder shall
be construed as giving any employee any right to be retained in the employ of
the Company or any of its Subsidiaries.
9.9 Awards Not Includable for
Benefit Purposes. Payments
received by a Participant pursuant to the provisions of the Plan shall not be
included in the determination of benefits under any pension, group insurance or
other benefit plan applicable to the Participant which is maintained by the
Company or any of its Subsidiaries, except as may be provided under the terms of
such plans or determined by the Board.
9.10 Governing
Law. All
determinations made and actions taken pursuant to the Plan shall be governed by
the laws of the State of Nevada, other than the conflict of law provisions
thereof, and construed in accordance therewith.
9.11 No Strict
Construction. No
rule of strict construction shall be implied against the Company, the Committee
or any other person in the interpretation of any of the terms of the Plan, any
Award granted under the Plan or any rule or procedure established by the
Committee.
9.12 Captions. The
captions (i.e., all Section headings) used in the Plan are for convenience only,
do not constitute a part of the Plan, and shall not be deemed to limit,
characterize or affect in any way any provisions of the Plan, and all provisions
of the Plan shall be construed as if no captions had been used in the
Plan.
9.13 Severability. Whenever
possible, each provision in the Plan and every Award at any time granted under
the Plan shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Plan or any Award at any time
granted under the Plan shall be held to be prohibited by or invalid under
applicable law, then (a) such provision shall be deemed amended to
accomplish the objectives of the provision as originally written to the fullest
extent permitted by law and (b) all other provisions of the Plan, such
Award and every other Award at any time granted under the Plan shall remain in
full force and effect.
9.14 Amendment and
Termination.
(a) Amendment. The
Board shall have complete power and authority to amend the Plan at any time
without the authorization or approval of the Company’s
stockholders. No termination or amendment of the Plan may, without
the consent of the Participant to whom any Award shall theretofore have been
granted under the Plan, materially adversely affect the right of such individual
under such Award.
(b) Termination. The
Board shall have the right and the power to terminate the Plan at any
time. No Award shall be granted under the Plan after the termination
of the Plan, but the termination of the Plan shall not have any other effect and
any Award outstanding at the time of the termination of the Plan may be
exercised after termination of the Plan at any time prior to the expiration date
of such Award to the same extent such Award would have been exercisable had the
Plan not been terminated.
9.15 Registration of
Shares.
To
the extent legally available, the Committee shall maintain the right, pursuant
to appropriate authorization of the Company and the Company’s Board and with no
further approval of the Company’s shareholders, to register any shares issuable
pursuant to the Plan in any applicable registration statement with the United
States Securities and Exchange Commission, including, but not limited to, a
registration statement filed under a Form S-8 Registration
Statement.