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As Of Filer Filing For·On·As Docs:Size 7/03/03 Dicut Inc DEF 14C 7/03/03 1:98K |
Document/Exhibit Description Pages Size 1: DEF 14C Definitive Proxy Information Statement HTML 126K
SCHEDULE 14C |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14c-5(d)(2)
[X] Definitive Information Statement
DICUT, INC.
(Name of Registrant as Specified in Its Charter)
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[ ] 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.
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DICUT, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Dicut, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Dicut, Inc. (the "Company") will be held at the Company's offices at 2150 Northwest Parkway, S.E., Suite H, Marietta, Georgia 30067, on Wednesday, July 23, 2003, at 10:00 a.m. Eastern Daylight Savings Time, for the following purposes:
(1) To elect three directors to the Board of Directors;
(2) To approve our 2002 Stock Option Plan (the "Stock Option Plan");
(3) To ratify the appointment of Tauber and Balser, P.C. as our independent accountants for the year ending December 31, 2003;
(4) To transact such other business as may properly come before the meeting.
Holders of the Common Stock of record at the close of business on May 31, 2003, will be entitled to notice of and to vote at the meeting.
We Are Not Asking You for a Proxy and You are Requested Not To Send Us a Proxy.
By Order of the Board of Directors,
/s/ Pierre Quilliam
Pierre Quilliam, President
Marietta, Georgia
DICUT, INC.
2150 Northwest Parkway, S.E.
Suite H
(770) 952-2654
INFORMATION STATEMENT
This information statement is furnished in connection with our annual meeting of our stockholders to be held on July 23, 2003, and any adjournment or adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. Our annual meeting of stockholders will be held at the Company's offices at 2150 Northwest Parkway, S.E., Suite H, Marietta, Georgia 30067, on July 23, 2003, at 10:00 a.m. Eastern Daylight Savings Time. The site of the meeting is accessible to people with disabilities. This information statement were first sent or given to our stockholders on or about June 27, 2003. Our transition report for the nine months ended December 31, 2002, is being sent to each stockholder of record along with this information statement.
ABOUT THE MEETING
What is the purpose of the annual meeting?
At our annual meeting, our stockholders will act upon the matters outlined in the accompanying notice of meeting, including the election of directors and the approval of our stock option plan.
Who is entitled to vote?
Only stockholders of record at the close of business on the record date, May 31, 2003, are entitled to receive notice of the annual meeting and to vote the shares of our common stock that they held on that date at the meeting, or any postponement or adjournment of the meeting. Each outstanding share entitles its holder to cast one vote on each matter to be voted upon.
Who can attend the meeting?
All stockholders as of the record date may attend the meeting. Seating, however, may be limited. Admission to the meeting will be on a first-come, first-served basis. Each stockholder may be asked to present valid picture identification, such as a driver's license or passport. Cameras, recording devices and other electronic devices will not be permitted at the meeting. Please note that if you hold your shares in "street name" (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date.
What constitutes a quorum?
The presence at the meeting, in person, of the holders of a majority of the shares of our common stock outstanding on the record date will constitute a quorum, permitting the meeting to conduct its business. As of the record date, we had 19,633,159 shares of common stock outstanding.
How do I vote?
If you attend the meeting, you will be provided with a ballot with which you may cast your vote.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes cast at the meeting is required for the election of directors; abstentions and broker non-votes are not counted.
Approval of Stock Option Plan and Ratification of Independent Accountants. The majority of all votes cast in person is required for approval of the Stock Option Plan or ratification of the appointment of Tauber and Balser, P.C. as our independent accountants for the year ending December 31, 2003; abstentions are counted but broker non-votes are not counted.
proposal one
Election of directors
Nominees
A board of three (3) directors is to be elected at the meeting. The board has nominated three individuals to serve as directors, all of whom are presently our directors and all of whom have agreed to serve as directors if elected. The term of office for each person elected as a director will continue until the next annual meeting of stockholders or until his successor has been elected and qualified.
The names of the nominees and certain information about them are set forth below (ages are as of March 31, 2003):
Name |
Age |
Position |
Director Since |
Raj Kalra |
39 |
Chairman and CEO |
2001 |
64 |
Director, President and CFO |
2001 |
|
Kerry Moody |
45 |
Director and Executive Vice President |
2002 |
Raj Kalra, Chairman and Chief Executive Officer - Mr. Kalra has been the Company's Chairman and chief executive officer since December 2001. From October 2000 to December 2001, Mr. Kalra was president of Acsys Biometrics USA Inc. From January 1997 to October 2000, Mr. Kalra was Chief Operating Officer of Investco Corp., a/ka/ Mark I Industries, Inc., a/k/a Foodvision.com, Inc. Mr. Kalra has a degree in Hotel and Restaurant Management from Hotel Consult, Switzerland. Mr. Kalra has also received certificates in accounting and retail operations with post degree courses in business management, finance and computer science.
Pierre Quilliam, Director, President and Chief Financial Officer - Mr. Quilliam has served as a director and president of the Company since September 19, 2001, and additionally served as chief executive officer of the Company from September 19, 2001 to December 12, 2001. In September 2000, Mr. Quilliam was elected to the Board of Directors, and also appointed President and Chief Executive Officer, of American Electric Automobile Company, Inc., which is publicly traded on the Pink Sheets under the symbol "AEAC." From 1975 to 1980, Mr. Quilliam established and operated Outico, Ltd., a reseller of industrial tools and equipment. From 1980 to the present, Mr. Quilliam has established and managed ten companies in various capacities, including finance, consulting, accounting and management. On November 19, 2001, a legal proceeding was commenced in United States District Court, Southern New York, against the Company and Pierre Quilliam, President of the Company by Deborah Donoghue for short swing profits allegedly realized by Mr. Quilliam. Mr. Quilliam has filed a motion to dismiss the action on the grounds that the court does not have jurisdiction over him. The Company is currently investigating the allegations.
Kerry Moody, Director and Executive Vice President - has been National Data, Inc.'s Vice President of Government Affairs since January 2002. From October 2000 to December 2001, Mr. Moody was Vice President of Government Affairs for Acsys Biometrics USA, Inc. From January 1999 to October 2000, Mr. Moody was Chief Executive Officer ASAP Connect, Inc. From January 1995 to December 1998, Mr. Moody was Executive Vice President of First Merchant Associates.
Board Meetings and Committees
During the nine months ended December 31, 2002, the board of directors held 43 meetings. Each of the directors attended all of the meetings of directors.
At this time, the board does not have any committees, including an audit, nominating or compensation committee, or any committee performing similar functions. In addition, the Company does not have any director who would qualify as an audit committee financial expert or who is independent. There are no family relationships among any of the officers or directors of the Company.
Compensation of Directors
The Company currently pays 200,000 shares of common stock per year for up to 24 meetings of directors, and would reimburse directors for any reasonable out-of-pocket expenses incurred in attendance at board meetings or any expenses generated in connection with the performance of services on the behalf of the Company. On December 20, 2002, the Company issued Messrs. Kalra and Quilliam 200,000 shares of common stock each as compensation for director services during 2002. Mr. Moody accepted his appointment as director on April 3, 2002, and Mr. Moody's accrued director compensation was 150,000 shares at December 31, 2002.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE NOMINEES SET FORTH HEREIN.
security OWNERSHIP
The following table sets forth certain information, as of April 15, 2003, as to the Company's common stock beneficially owned by (i) each executive officer and director of the Company, (ii) all directors and executive officers of the Company as a group, and (iii) any person who is known by the Company to be the beneficial owner of more than 5% of the outstanding shares of the Company's common stock.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class (1) |
Raj Kalra (2) 2150 Northwest Parkway, S.E., Suite H Marietta, Georgia 30067 |
5,467,000 |
27.8% |
Pierre Quilliam (3) 2150 Northwest Parkway, S.E., Suite H Marietta, Georgia 30067 |
5,321,000 |
27.1% |
Kerry Moody (4) 2150 Northwest Parkway, S.E., Suite H Marietta, Georgia 30067 |
1,717,000 |
8.3% |
Sam Galbraith (5) 2150 Northwest Parkway, S.E., Suite H Marietta, Georgia 30067 |
1,000,000 |
4.8% |
Don Yochum (6) 2150 Northwest Parkway, S.E., Suite H Marietta, Georgia 30067 |
1,250,000 |
6.1% |
All Officers and Directors as a Group |
14,755,000 |
65.1% |
(1) Based upon 19,633,159 common shares issued and outstanding as of April 15, 2003.
(2) Mr. Kalra's shares include 5,450,000 shares that he owns, plus 17,000 shares that he has the right to acquire by virtue of his 50% ownership of Partners Group, which made a $34,000 loan to the Company that is convertible into shares of common stock at $1 per share.
(3) Mr. Quilliam's shares include 5,200,000 shares that he owns, plus 121,000 shares that are owned by a company that he controls.
(4) Mr. Moody's shares include 700,000 shares that he owns, plus 17,000 shares that he has the right to acquire by virtue of his 50% ownership of Partners Group, which made a $34,000 loan to the Company that is convertible into shares of common stock at $1 per share, and 1,000,000 shares that he has the right to acquire pursuant to a warrant to purchase shares of common stock at $0.10 per share (subject to the Company's amending its Certificate of Incorporation to increase the number of authorized shares).
(5) Mr. Galbraith's shares include 1,000,000 shares that he has the right to acquire pursuant to a warrant to purchase shares of common stock at $0.10 per share (subject to the Company's amending its Certificate of Incorporation to increase the number of authorized shares).
(6) Mr. Yochum's shares include 250,000 shares that he owns, plus 1,000,000 shares that he has the right to acquire pursuant to a warrant to purchase shares of common stock at $0.10 per share (subject to the Company's amending its Certificate of Incorporation to increase the number of authorized shares).
executive compensation
The following table sets forth the compensation earned by the Company's executive officers during the last three fiscal years and other officers who received compensation in excess of $100,000 during any of the last three fiscal years. In accordance with Item 402(a)(5), the Company has omitted certain columns from the table required by Item 402(b).
Summary Compensation Table
Annual Compensation (1) |
Long Term Compensation |
|||
Name and Principal Position |
Year |
Salary ($) |
Other Annual Compensation |
Securities Underlying Options/SARs (#) |
Fred McNorton, President and Director (2) |
December 31, 2002 March 31, 2002 March 31, 2001 March 31, 2000 |
0 0 0 0 |
0 0 0 0 |
0 0 0 0 |
Stephen Nemergut, President and Director (3) |
December 31, 2002 March 31, 2002 March 31, 2001 March 31, 2000 |
0 0 0 0 |
0 0 0 0 |
0 0 0 0 |
Pierre Quilliam, Chief Executive Officer, President and Director (4) |
December 31, 2002 March 31, 2002 March 31, 2001 March 31, 2000 |
131,250 51,042 0 0 |
60,000 0 0 0 |
0 0 0 0 |
Raj Kalra, Chief Executive Officer and Director (5) |
December 31, 2002 March 31, 2002 March 31, 2001 March 31, 2000 |
131,250 51,042 0 0 |
60,000 0 0 0 |
0 0 0 0 |
Don Yochum, Executive Vice President, Sales (6) |
December 31, 2002 March 31, 2002 March 31, 2001 March 31, 2000 |
98,653 31,154 0 0 |
75,000 0 0 0 |
1,000,000 0 0 0 |
(1) The Company recently changed its fiscal year end to December 31, and all compensation amounts for December 31, 2002 are for the nine months ended December 31, 2002. All compensation amounts for the period ended March 31, 2002 are for the period from November 28, 2001 to March 31, 2002.
(2) Mr. McNorton's served as President from inception of the Company to August 8, 2001.
(3) Mr. Nemergut served as President from August 8, 2001 to September 19, 2001.
(4) Mr. Quilliam served as Secretary/Treasurer of the Company from August 8, 2001 to September 19, 2001. He then served as Chief Executive Officer of the Company from September 19, 2001 to December 12, 2001, as President from September 19, 2001 to the present, and as Chief Financial Officer from August 2002 to the present. Mr. Quilliam's compensation is based on a three year employment agreement dated December 12, 2001 that provides for a base salary of $175,000 in the first year, $200,000 in the second year, and $225,000 in the third year. During the period ended December 31, 2002, Mr. Quilliam received 200,000 shares of common stock valued at $0.30 per share for director services.
(5) Mr. Kalra served as Chief Executive Officer of the Company from December 12, 2001 to the present. Mr. Kalra's compensation is based on a three year employment agreement dated December 12, 2001 that provides for a base salary of $175,000 in the first year, $200,000 in the second year, and $225,000 in the third year. During the period ended December 31, 2002, Mr. Kalra received 200,000 shares of common stock valued at $0.30 per share for director services.
(6) Mr. Yochum served as Executive Vice President, Sales since January 1, 2002 to the present. Mr. Yochum's compensation is based on an employment agreement that provides for a base salary of $135,000 per year. During the nine months ended December 31, 2002, Mr. Yochum received 250,000 shares of common stock valued at $0.30 per share as a bonus. In addition, Mr. Yochum received warrants to purchase 1,000,000 shares of common stock at $0.10 per share.
On March 14, 2002, the Company's board of directors approved a resolution to issue Messrs. Kalra and Quilliam stock purchase warrants upon the completion of each acquisition by the Company. Under the resolution, the value of the stock purchase warrants would be equal to fifty percent (50%) of the value of the consideration paid for each such acquisition. However, the resolution contains no method for determining the value of noncash consideration paid for an acquisition, the terms of the stock purchase warrants that are to be issued to Messrs. Kalra and Quilliam, or the method of valuing those warrants. To date, no stock purchase warrants have been issued to Messrs. Kalra and Quilliam under the resolution.
The Company did not re-price any options or stock appreciation rights during the nine months ended December 31, 2002. The Company did not have outstanding any options or stock appreciation rights as of March 31, 2002 and December 31, 2002. During the nine months ended December 31, 2002, no options or stock appreciation rights were exercised by any of the named executive officers.
Employment and Deferred Compensation Agreements
On December 12, 2001, the Company entered into identical Employment Agreements with Raj Kalra and Pierre Quilliam. The Employment Agreements provide that Messrs. Kalra and Quilliam shall be employed by the Company for a term of three years, and are entitled to a base salary of $175,000 in the first year, $200,000 in the second year, and $225,000 in the third year. Messrs. Kalra and Quilliam are also entitled to a commission on sales generated by them consistent with the Company's commission policy for all sales personnel. In addition, they are each entitled to an incentive bonus equal to 10% of the Company's adjusted net profits for the fiscal year beginning in 2002. Further, they are each entitled to 8 weeks paid holiday and 14 personal days, sick leave, medical and group insurance, participation in pension or profit sharing plans of the Company, and a car allowance of up to $2,000 per month. In the event of a termination of the Employment Agreement without cause by the Company, they will be entitled to severance equal to 75% of their remaining base salary under the Employment Agreements. The Employment Agreements contain provisions prohibiting them from competing with the Company or soliciting customers or employees from the Company for a period of one year following the termination of their employment.
On January 15, 2003, the Company's board of directors approved an amendment to the Employment Agreements of Messrs. Kalra and Quilliam approving an increase in their salary from $200,000 per year to $225,000 per year for the second year of the Employment Agreements.
Option/SAR Grants in Last Fiscal Year
Name |
Number of Securities Underlying Options/SARs Granted (#) |
% of Total Options/SARs Granted to Employees in Fiscal Year (1) |
Exercise Price or Base Price ($/Sh) |
Expiration Date |
Don Yochum |
1,000,000 |
15.4% |
$0.10 |
(1) The Company issued warrants to purchase 6,500,000 shares of Common Stock to employees other than Mr. Yochum. In addition, during 2002, the Company issued warrants to purchase Common Stock to outside consultants, advisors and investors who were not employees of the Company, and therefore such warrants are not included in the calculations.
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year End Option/SAR Values
Name |
Shares Acquired on Exercise (#) |
Value Realized ($) |
Number of Securities Underlying Options/SARs at Fiscal Year End (1) |
Value of Unexercised In-the-Money Options/SARs at Fiscal Year End ($) (1)(2) |
Don Yochum (3) |
-- |
-- |
1,000,000 |
$320,000 |
(1) All of the warrants held by Mr. Yochum are currently exercisable.
(2) Based on the closing price of $0.42 per share on December 31, 2002.
(3) Mr. Yochum holds 1,000,000 warrants to purchase Common Stock at $0.10 per share.
The Company did not reprice any options or stock appreciation rights during the last fiscal year. The Company does not have any compensatory plan or arrangement with any executive officer under which the Company would be obligated to pay any amount upon the resignation, retirement, termination of employment or change-in-control of the Company.
Transactions with Management
As of December 31, 2002, the Company was indebted to Raj Kalra, the Company's CEO, director and shareholder, in the aggregate amount of $156,701, consisting of accrued but unpaid salary, a note payable to Mr. Kalra for the purchase of furniture in the carrying amount of $90,915, and advances of $30,498, less payments.
As of December 31, 2002, the Company was indebted to Pierre Quilliam, the Company's president, director and shareholder, in the aggregate amount of $176,992, consisting of accrued but unpaid salary and advances of $115,167, less payments and credits.
During the nine months ended December 31, 2002, the Company and Mr. Quilliam, who is an officer and director of the Company, settled a certain liability that arose as a result of a violation under Section 16 of the Securities Exchange Act of 1934 by canceling $83,467 of indebtedness due Mr. Quilliam by the Company.
As of December 31, 2002, the Company is indebted to A.J. Galiano, a former officer of the Company, in the amount of $10,000 (exclusive of amounts owed for salary and out-of-pocket expenses). Mr. Galiano has agreed to receive 100,000 shares of common stock in satisfaction of this obligation.
On March 14, 2002, the Company's board of directors approved a resolution to issue Messrs. Kalra and Quilliam stock purchase warrants upon the completion of each acquisition by the Company. Under the resolution, the value of the stock purchase warrants would be equal to fifty percent (50%) of the value of the consideration paid for each such acquisition. However, the resolution contains no method for determining the value of noncash consideration paid for an acquisition, the terms of the stock purchase warrants that are to be issued to Messrs. Kalra and Quilliam, or the method of valuing those warrants. To date, no stock purchase warrants have been issued to Messrs. Kalra and Quilliam under the resolution.
At December 31, 2002, the Company had outstanding a note payable in the amount of $34,000 to a company that is jointly owned by Mr. Kalra, the Company's Chairman and Chief Executive Officer and Kerry Moody, an officer and director of the Company. The loan was for working capital purposes. Part of the loan proceeds were originally obtained from a $25,000 loan by an unrelated financial institution to Mr. Moody, which loan was guaranteed by the Company in October 2002.
At December 31, 2002, the Company was indebted to a company that is owned by the daughter of the Company's President, who is also a director of the Company, for $43,800, plus interest. The loan was for working capital purposes.
In December 2002, the Company issued 400,000 shares of its common stock, valued at $120,000, to Messr. Kalra and Quilliam for director services. During the nine months ended December 31, 2002, the Company paid Kerry Moody $23,000 in cash for consulting services. The Company also accrued $45,000 at December 31, 2002 for unpaid director compensation, which will be paid in 2003 by the issuance of shares of the Company's common stock.
During the nine months ended December 31, 2002, the Company issued 250,000 shares of its common stock to Don Yochum, an officer of the Company, as additional compensation.
During the nine months ended December 31, 2002, the Company granted certain officers for employee services stock warrants to purchase 3,000,000 shares of its common stock at an exercise price of $0.10 per share, expiring in February 2005.
The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
Section 16(A) beneficial ownership reporting compliance
Based on the Company's review of filings received by it through February 13, 2003, the Company believes that certain officers and directors may not have filed certain forms required by Section 16 of the Securities Exchange Act of 1934, as follows:
PROPOSAL TWO
APPROVAL OF 2002 STOCK OPTION PLAN
Our 2002 Stock Option Plan (the "Option Plan") was adopted by the Board of Directors and approved by the stockholders in February 2002. A copy of the Option Plan is attached hereto as Exhibit A. A total of 5,000,000 shares of common stock had been reserved for issuance under the Option Plan. As of December 31, 2002, there were no options to purchase shares of common stock outstanding under the Option Plan. The Board believes that increasing the number of shares available under the Option Plan is in the best interests of the Company and its stockholders, as the availability of an adequate number of shares for issuance under the Option Plan and the ability to grant stock options is an important factor in attracting, motivating and retaining qualified personnel essential to our success.
The essential provisions of the Option Plan are outlined below.
Purpose
The purpose of the Option Plan is to attract and retain the best available personnel for positions of substantial responsibility with the Company, to provide additional incentive to our employees and consultants and to promote the success of our business. Options and stock purchase rights may be granted under the Option Plan. Options granted under the Option Plan may be either "incentive stock options," as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock options.
Administration
The Option Plan generally may be administered by the Board or the Committee appointed by the Board. However, with respect to grants of options to employees who are also our officers or directors ("Insiders"), the Option Plan shall be administered by: (i) the Board if the Board may administer the Option Plan in a manner complying with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or any successor rule thereto ("Rule 16b-3") with respect to a plan under which discretionary grants and awards of equity securities are to be made to Insiders; or (ii) a committee designated by the Board to administer the Option Plan, which committee shall be constituted to comply with the rules under Rule 16b-3 governing a plan under which discretionary grants and awards of equity securities are to be made to Insiders. The administrators of the Option Plan are referred to herein as the "Administrator."
Plan Activity
To date, no options have been issued under the Option Plan. We cannot now determine the number of options to be received in the future by the executive officers, all current executive officers as a group, all non-employee directors as a group or all employees (including current officers who are not executive officers) as a group.
Eligibility; Limitations
Nonstatutory stock options and stock purchase rights may be granted under the Option Plan to our employees and consultants. Incentive stock options may be granted only to employees. The Administrator, in its discretion, selects the employees and consultants to whom options and stock purchase rights may be granted, the time or times at which such options and stock purchase rights shall be granted, and the number of shares subject to each such grant.
Terms And Conditions of Options
Each option is evidenced by a stock option agreement with the optionee, and is subject to the following additional terms and conditions:
Exercise Price. The Administrator determines the exercise price of options at the time the options are granted. The exercise price of an incentive stock option may not be less than 100% of the fair market value of the common stock on the date such option is granted; provided, however, the exercise price of an incentive stock option granted to a 10% stockholder may not be less than 110% of the fair market value of the common stock on the date such option is granted. The fair market value of the common stock is generally determined with reference to the closing sale price for the common stock (or the closing bid if no sales were reported) on the last market trading day prior to the date the option is granted.
Exercise of Option; Form of Consideration. The Administrator determines when options become exercisable, and may in its discretion, accelerate the vesting of any outstanding option. The means of payment for shares issued upon exercise of an option is specified in each option agreement. The Option Plan permits payment to be made by cash, check, promissory note, other shares of our common stock (with some restrictions), cashless exercises, a reduction in the amount of liability to the optionee, any other form of consideration permitted by applicable law, or any combination thereof.
Term of Option. The term of an incentive stock option may be no more than ten (10) years from the date of grant; provided that in the case of an incentive stock option granted to a 10% stockholder, the term of the option may be no more than five (5) years from the date of grant. No option may be exercised after the expiration of its term.
Termination of Employment. If an optionee's employment or consulting relationship terminates for any reason (other than death or disability), then all options held by the optionee under the Option Plan expire on the earlier of: (i) the date set forth in his or her notice of grant (typically three months after termination) or (ii) the expiration date of such option. To the extent the option is exercisable at the time of such termination, the optionee may exercise all or part of his or her option at any time before such expiration.
Death or Disability. If an optionee's employment or consulting relationship terminates as a result of death or disability, then all options held by such optionee under the Option Plan expire on the earlier of: (i) 12 months from the date of such termination or (ii) the expiration date of such option. The optionee (or the optionee's estate or the person who acquires the right to exercise the option by bequest or inheritance), may exercise all or part of the option at any time before such expiration to the extent that the option was exercisable at the time of such termination.
Nontransferability of Options. Options granted under the Option Plan are not transferable other than by will or the laws of descent and distribution, and may be exercisable during the optionee's lifetime only by the optionee.
Other Provisions. The stock option agreement may contain other terms, provisions and conditions not inconsistent with the Option Plan as may be determined by the Administrator.
Stock Purchase Rights
A stock purchase right gives the purchaser the right to buy shares of common stock, provided that the time within which a purchaser must accept such right may be limited by the Administrator. A stock purchase right is accepted by the execution of a restricted stock purchase agreement with the purchaser, accompanied by the payment of the purchase price for the shares. Unless the Administrator determines otherwise, the restricted stock purchase agreement shall give us a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser's employment or consulting relationship with us for any reason (including death and disability). The purchase price for any shares repurchased by us shall be the original price paid by the purchaser. The repurchase option lapses at a rate determined by the Administrator. A stock purchase right is nontransferable other than by will or the laws of descent and distribution, and may be exercisable during the optionee's lifetime only by the optionee.
Adjustments Upon Changes in Capitalization
In the event that our stock changes by reason of any stock split, reverse stock split, stock dividend, combination, reclassification or other similar change in our capital structure effected without the receipt of consideration, appropriate adjustments shall be made in the number and class of shares of stock subject to the Option Plan, the number and class of shares of stock subject to any option or stock purchase right outstanding under the Option Plan, and the exercise price of any such outstanding option or stock purchase right.
In connection with any liquidation, dissolution, merger, consolidation, acquisition of assets or like occurrence involving us (a "Corporate Transaction"), each outstanding option or stock purchase right may be assumed or an equivalent option or right substituted by the successor corporation. If the successor corporation refuses to assume the options and stock purchase rights or to substitute substantially equivalent options and stock purchase rights, then all outstanding options or stock purchase rights shall terminate to the extent they are not exercised by the date of Corporate Transactions. The Administrator shall have the right, but not the obligation, to waive any vesting schedule in some or all of the options or stock purchase rights, such that the vesting of any such options and stock purchase rights shall be accelerated so that all or part of the previously unvested portion of such options or stock purchase rights are exercisable prior to the consummation of such Corporate Transaction. In addition, the Administrator shall have the right, but not the obligation, to grant optionees the right to receive a cash payment equal to the difference between the exercise price of the option or stock purchase right and the price per share of the common stock paid in connection with the Corporate Transaction.
Amendment and Termination of the Option Plan
The Board may amend, alter, suspend or terminate the Option Plan, or any part thereof, at any time and for any reason. However, we shall obtain stockholder approval of any Option Plan amendment to the extent necessary and desirable to comply with our obligations. No such action by the Board or stockholders may alter or impair any option or stock purchase right previously granted under the Option Plan without the written consent of the optionee. Unless terminated earlier, the Option Plan shall terminate ten years from the date of its original approval by the stockholders or the Board, whichever is earlier.
Federal Income Tax Consequences
Incentive Stock Options. An optionee who is granted an incentive stock option does not recognize taxable income at the time the option is granted or upon its exercise, although the exercise may subject the optionee to the alternative minimum tax. Upon a disposition of the shares more than two years after grant of the option and one year after exercise of the option, any gain or loss is treated as long-term capital gain or loss. If these holding periods are not satisfied, the optionee recognizes ordinary income at the time of disposition equal to the difference between the exercise price and the lower of: (i) the fair market value of the shares at the date of the option exercise or (ii) the sale price of the shares. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income is treated as long-term or short-term capital gain or loss, depending on the holding period. A different rule for measuring ordinary income upon such a premature disposition may apply if the optionee is also an officer, director, or 10% stockholder. We are entitled to a deduction in the same amount as the ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable income at the time he or she is granted a nonstatutory stock option. Upon exercise, the optionee recognizes taxable income generally measured by the excess of the then fair market value of the shares over the exercise price. Any taxable income recognized in connection with an option exercise by an employee is subject to tax withholding by us. We are entitled to a deduction in the same amount as the ordinary income recognized by the optionee. Upon a disposition of such shares by the optionee, any difference between the sale price and the optionee's exercise price, to the extent not recognized as taxable income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period.
Stock Purchase Rights. Stock purchase rights will generally be taxed in the same manner as nonstatutory stock options. However, restricted stock is generally purchased upon the exercise of a stock purchase right. At the time of purchase, restricted stock is subject to a "substantial risk of forfeiture" within the meaning of Section 83 of the Code. As a result, the purchaser will not recognize ordinary income at the time of purchase. Instead, the purchaser will recognize ordinary income on the dates when the stock ceases to be subject to a substantial risk of forfeiture. The stock will generally cease to be subject to a substantial risk of forfeiture when it is no longer subject to our right to repurchase the stock upon the purchaser's termination of employment with us. At such times, the purchaser will recognize ordinary income measured as the difference between the purchase price and the fair market value of the stock on the date the stock is no longer subject to a substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition of ordinary income, if any, and the beginning of any capital gain holding period by timely filing an election pursuant to Section 83(b) of the Code. In such event, the ordinary income recognized, if any, is measured as the difference between the purchase price and the fair market value of the stock on the date of purchase, and the capital gain holding period commences on such date. The ordinary income recognized by a purchaser who is an employee will be subject to tax withholding by us. Different rules may apply if the purchaser is also an officer, director, or 10% stockholder.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS AND US WITH RESPECT TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE Option Plan. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE AMENDMENT OF THE OPTION PLAN.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Tauber and Balser, P.C., independent accountants, to audit our consolidated financial statements for the year ending December 31, 2003. Tauber and Balser, P.C. has audited our financial statements since the nine months ended December 31, 2002.
Representatives of Tauber and Balser, P.C. are expected to be present at the meeting and will have an opportunity to make a statement if they so desire. The representatives are also expected to be available to respond to appropriate questions from the stockholders.
Ratification of Appointment of Tauber and Balser, P.C.
Stockholder ratification of the selection of Tauber and Balser, P.C. as the Company's independent public accountants is not required by the Company's bylaws or other applicable legal requirement. However, our Board is submitting the selection of Tauber and Balser, P.C. to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Board at its discretion may direct the appointment of a different independent accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Audit Fees
Audit fees billed to the Company by Tauber and Balser, P.C. for the audit for the nine months ended December 31, 2002 are estimated to total $57,000. The Company has not retained Tauber and Balser, P.C. to perform any non-audit services, including any services relating to the design or implementation of financial information systems.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" RATIFICATION OF THE APPOINTMENT OF TAUBER AND BALSER, P.C. AS INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2003. IN THE EVENT OF A NEGATIVE VOTE ON SUCH RATIFICATION, THE BOARD OF DIRECTORS WILL RECONSIDER ITS SELECTION.
OTHER MATTERS
Stockholders' Proposals for Annual Meeting to be held in 2004
We plan to hold our 2004 annual meeting of stockholders during the month of May. Any proposal of a stockholder intended to be presented at the 2004 annual meeting of stockholders must be received by us for inclusion in the proxy statement and form of proxy, or information statement, for that meeting no later than December 31, 2003. If any proposal is submitted after that date, we are not required to include it in our proxy materials or information statement.
Action on Other Matters at the Annual Meeting
At this time, we do not know of any other matters to be presented for action at the annual meeting other than those mentioned in the Notice of Annual Meeting of Stockholders and referred to in this information statement.
BY ORDER OF THE BOARD OF DIRECTORS,
By Order of the Board of Directors,
/s/ Pierre Quilliam
Pierre Quilliam, President
EXHIBIT A
DICUT, INC.
2002 STOCK OPTION PLAN
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment allowable under Section 8(b) of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.
The Company shall be under no obligation to any person receiving an Award under the Plan to register for offering or resale or to qualify for exemption under the Securities Act, or to register or qualify under state securities laws, any shares of Common Stock, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made. The Company may issue certificates for shares with such legends and subject to such restrictions or transfer and stop-transfer instructions as counsel for the Company deems necessary or desirable for compliance by the Company with federal and state securities laws.
The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
This ‘DEF 14C’ Filing | Date | Other Filings | ||
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3/13/05 | ||||
12/31/03 | NT 10-K | |||
7/23/03 | ||||
Filed on / Effective on / For Period End: | 7/3/03 | 10KSB/A | ||
6/27/03 | ||||
6/26/03 | ||||
5/31/03 | ||||
4/15/03 | ||||
3/31/03 | 10QSB, 10QSB/A, NT 10-K | |||
2/13/03 | ||||
1/15/03 | ||||
12/31/02 | 10KSB, 10KSB/A, 5, 5/A, NT 10-K | |||
12/20/02 | ||||
11/18/02 | 8-K, 8-K/A | |||
6/19/02 | 3 | |||
4/3/02 | ||||
3/31/02 | 10KSB, 10KSB/A, NT 10-K | |||
3/14/02 | ||||
1/1/02 | ||||
12/12/01 | 3, 8-K/A | |||
11/28/01 | ||||
11/19/01 | ||||
9/19/01 | 8-K | |||
8/8/01 | 8-K | |||
3/31/01 | 10KSB40 | |||
3/31/00 | 10KSB40 | |||
List all Filings |