UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.____)
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
ONE VOICE TECHNOLOGIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies: ____________
2) Aggregate number of securities to which transaction applies: _______________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): _______________________________
4) Proposed maximum aggregate value of transaction: ___________________________
5) Total fee paid: ____________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ____________________________________________________
2) Form, Schedule or Registration Statement No.: ______________________________
3) Filing Party: ______________________________________________________________
4) Date Filed: ________________________________________________________________
ONE VOICE TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON *, 2003
To the shareholders of One Voice Technologies, Inc.:
You are cordially invited to attend the Annual Meeting of Shareholders
of One Voice Technologies, Inc. (the "Company"), which will be held at *, on *,
*, 2003, at * Pacific time, to consider and act upon the following matters:
(1) To elect a board of three directors to hold office until the 2004
Annual Meeting of Shareholders and until their successors are
elected and qualified;
(2) To approve our Fourth Amended and Restated 1999 Stock Option Plan;
(3) To approve an amendment to our Articles of Incorporation to
increase the number of our authorized shares from 110,000,000
(100,000,000 of common stock and 10,000,000 of preferred stock) to
260,000,000 (250,000,000 of common stock and 10,000,000 of
preferred stock);
(4) To ratify the selection of Stonefield Josephson, Inc. as our
auditors for the fiscal year ending December 31, 2003; and
(5) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The foregoing matters are more fully described in the Proxy Statement
accompanying this Notice.
The Board of Directors has fixed * as the record date for this Annual
Meeting. Only shareholders of record at the close of business on * will be
entitled to notice of and to vote at this Annual Meeting and at any adjournments
thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE
MEETING IN PERSON, BUT WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ACCOMPANYING PROXY VIA FACSIMILE TO (303) 777-3094 OR IN THE
ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY, IF YOU PREFER, REVOKE
YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
By Order of the Board of Directors
Dean Weber
Chairman of the Board, President and Chief
Executive Officer
6333 Greenwich Drive, Suite 240
San Diego, California 92122
(858) 552-4466
*, 2003
ONE VOICE TECHNOLOGIES, INC.
6333 GREENWICH DRIVE, SUITE 240
SAN DIEGO, CALIFORNIA 92122
________________
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON *, 2003
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of One Voice Technologies, Inc., a Nevada
corporation (the "Company"), for use at the Annual Meeting of Shareholders to be
held at *, on *, *, 2003, at * Pacific time, and at any and all adjournments
thereof (the "Annual Meeting"), for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. Accompanying this Proxy Statement is
the Board of Directors' Proxy for the Annual Meeting, which you may use to
indicate your vote as to the proposals described in this Proxy Statement. This
Proxy Statement and the accompanying Proxy will be mailed on or about * to all
shareholders entitled to vote at the Annual Meeting.
SOLICITATION OF PROXIES
We will pay the expenses of soliciting proxies for the Annual Meeting,
including the cost of preparing, assembling and mailing the proxy materials. The
original solicitation of Proxies by mail may be supplemented by solicitation in
person, by mail, by telephone, by facsimile, or by telegram, by our regularly
employed officers and employees. Our officers and employees will not receive any
additional compensation for soliciting proxies.
VOTING RIGHTS AND OUTSTANDING SHARES
The Board of Directors has fixed the close of business on * as the
record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof. As of the record date, *
shares of our common stock, par value $.001 per share, were issued and
outstanding. You are entitled to one vote for each share of common stock you
hold. Except as described herein, no preemptive, subscription, or conversion
rights pertain to the common stock and no redemption or sinking fund provisions
exist for the benefit thereof.
The representation, in person or by proxy, of a majority of the
outstanding shares of our common stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. All Proxies that are returned will be
counted by the Inspector of Elections in determining the presence of a quorum
and on each issue to be voted on, except as noted below. An abstention from
voting or a broker non-vote will be used for the purpose of establishing a
quorum, but will not be counted in the voting process. All Proxies that are
properly completed, signed and returned to the Company before the Annual
Meeting, and that have not been revoked, will be voted in favor of the proposals
described in this Proxy Statement unless otherwise directed.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to approve each proposal. As of the record date, our officers and
directors held of record or beneficially * shares (not including options to buy
* shares that are currently exercisable at prices above the market price of the
shares) or * % of our issued and outstanding common stock. Our officers and
directors have indicated their intention to vote "for" each of the proposals
described in this Proxy Statement.
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REVOCATION OF PROXIES
You may revoke your Proxy at any time before it is voted either by
filing with the Secretary of the Company, at our principal executive offices, a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and expressing a desire to vote your shares in
person. Our principal executive offices are located at 6333 Greenwich Drive,
Suite 240, San Diego, California 92122.
SHAREHOLDER PROPOSALS
The deadline for submitting a shareholder proposal for inclusion in our
proxy statement and form of proxy for the 2004 Annual Meeting of Shareholders
pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended
("Exchange Act") is June 15, 2004. The deadline for submitting a shareholder
proposal that is not to be included in such proxy statement and proxy is also
June 15, 2004. If a shareholder proposal is received after June 15, 2004, we may
vote in our discretion as to that proposal all of the shares for which we have
received proxies for the 2004 Annual Meeting of Shareholders.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with our Bylaws, the Board of Directors has fixed the
number of our directors at three. All three directors are to be elected at the
Annual Meeting, to hold office until the next annual meeting of shareholders and
until their successors have been elected and qualified. The Board of Directors
proposes the election of the nominees named below, each of whom is currently a
member of our Board of Directors previously elected by shareholders. There is no
cumulative voting for the election of directors.
Unless authorization to do so is withheld, proxies received will be
voted FOR the three nominees named below. If any nominee should become
unavailable for election before the Annual Meeting, the proxies will be voted
for the election of such substitute nominee as the present Board of Directors
may propose. Each person nominated for election has agreed to serve if elected,
and the Board of Directors has no reason to believe that any nominee will be
unable to serve.
The Board of Directors proposes the election of the following nominees
as members of the Board of Directors:
NAME AGE POSITION AND OFFICES HELD WITH THE COMPANY
---- --- ------------------------------------------
Dean Weber 40 Chairman of the Board, President,
Chief Executive Officer
and Director
Rahoul Sharan 41 Director
Bradley J. Ammon* 39 Director
* Member of the Audit Committee and the Compensation Committee.
Officers are elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting of shareholders
and hold office until their respective successors are duly elected and
qualified, although Dean Weber has an employment agreement and Rahoul Sharan's
company has a personal service agreement with us. There are no family
relationships between any of our officers or directors.
PRINCIPAL OCCUPATIONS OF EACH DIRECTOR
DEAN WEBER holds a B.S. in Computer Science from the Central
Connecticut State University. With over 19 years of technology experience, Mr.
Weber has worked for top IT companies such as United Technologies, Northrop and
Xerox. From 1984 to 1987, Mr. Weber was an engineer for United Technologies in
Hartford, Connecticut, where he designed and developed real-time software
systems for NASA and U.S. Navy projects. Mr. Weber was then employed by Northrop
Corporation in Pico Rivera, California, from 1987 to 1989 where he led an
engineering team for the B2 Stealth Bomber project. From 1989 to 1991, Mr. Weber
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was an independent senior consultant to various companies including Xerox and
Rockwell Technologies. From 1991 to 1998, Mr. Weber founded and was President of
EditPro Corporation in San Diego, California. At EditPro, Mr. Weber developed
and marketed one of the original and first Microsoft Windows based development
environment tools for both the English and Japanese marketplaces. In 1996 and
1997, Mr. Weber began developing the origins of the current IVAN program. In
1998, Mr. Weber founded Conversational Systems, Inc., now One Voice
Technologies, Inc., in San Diego, California, where he has served as the
Company's President since that time. Recently, Mr. Weber was nominated as
chairperson and keynote speaker of the Voice-Based Commerce tradeshow held in
Chicago in September 2000, where participants included IBM, Lucent, Nuance and
Speechworks. Mr. Weber was elected to the Board of Directors in July of 1999 as
Chairman.
RAHOUL SHARAN holds a Bachelor of Commerce degree from the University
of British Columbia and is a member of the Institute of Chartered Accountants of
British Columbia. Mr. Sharan was employed by Coopers & Lybrand (now
Pricewaterhouse Coopers) from 1984 to 1989. Since 1989, Mr. Sharan has been the
President and a Director of KJN Management Ltd., a private company that provides
a broad range of administrative, management and financial services to both
private and public companies. Mr. Sharan has been a partner in S & P Group, a
company that specializes in investment financing for venture capital projects
and real estate development and construction, since 1988. Mr. Sharan was also a
director of Pacific Northern Ventures, Ltd. from 1989 to 1995, and is President
and a Director of Bell Coast Capital Corp., an inactive public company to which
Mr. Sharan devotes less than 1% of his time. Mr. Sharan was elected to the Board
of Directors in 1999.
BRADLEY J. AMMON is a tax attorney in the San Diego law firm of Ernest
S. Ryder & Associates, Inc. Mr. Ammon specializes in international tax planning,
including restructuring of international operations, domestic mergers and
acquisitions, and developing business plans to minimize worldwide taxation.
Before joining the firm, Mr. Ammon was with SAIC as an International Tax
Manager. He previously was with KPMG, LLP in the International Corporate
Services Department. His principal practice consisted of clients in the
information, communications and entertainment ("ICE") industry. Before he joined
KPMG, LLP, Mr. Ammon worked from 1995 to 1998 at Deloitte & Touche, LLP in their
tax services department where he provided corporate, partnership, and personal
tax and business planning services to clients. Mr. Ammon also worked several
years as a staff accountant where his responsibilities included the compilation
and consolidation of monthly financial statements for multiple subsidiaries. Mr.
Ammon has a Juris Doctor and a Master's of Law in taxation (LL.M.) from the
University of San Diego, and received his undergraduate degree from the
University of California, San Diego. He is admitted to the California Bar. Mr.
Ammon is a member of the Audit and Compensation Committees and was appointed to
the Board of Directors in 2000.
MEETINGS
The Board of Directors has one regularly scheduled meeting each year,
immediately after and at the same place as the annual meeting of shareholders.
Additional meetings may be called as the need arises. During the 2002 fiscal
year, the Board of Directors held * meetings. All of the members of the Board of
Directors were present at each meeting.
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COMMITTEES
The Board of Directors has an Audit Committee and a Compensation
Committee, both of which were established on June 9, 2000. As set forth in the
Audit Committee Charter adopted by the Board of Directors, a copy of which is
included in the Company's Definitive Proxy Statement filed with the SEC on
November 29, 2001 as Exhibit A, the primary function of the Audit Committee is
to assist the Board of Directors in fulfilling its oversight responsibilities by
reviewing (1) the financial information provided to shareholders and others, (2)
systems of internal controls established by management and the Board of
Directors and (3) the audit process. The primary function of the Compensation
Committee is to establish and administer our executive compensation programs.
Mr. Bradley J. Ammon is a member of both committees and is "independent" as that
term is defined in Rule 4200(a)(14) of the National Association of Securities
Dealers' listing standards. During the 2002 fiscal year, each committee held *
meetings.
REPORT OF THE AUDIT COMMITTEE. The Audit Committee has reviewed the
Company's audited financial statements for fiscal 2002 and discussed them with
management.
The Company's independent auditors, Stonefield Josephson, Inc., have
discussed with the Audit Committee matters such as the auditors' role and
responsibility in connection with an audit of the Company's financial
statements, significant accounting policies, the reasonableness of significant
judgments and accounting estimates, significant audit adjustments, and such
other matters as are required to be discussed with the Audit Committee under
generally accepted auditing standards.
The Audit Committee has received from Stonefield Josephson, Inc.
written disclosures regarding all relationships between Stonefield Josephson,
Inc. and its related entities and the Company and its related entities that in
the professional judgment of Stonefield Josephson, Inc. may reasonably be
thought to bear on independence. Stonefield Josephson, Inc. has confirmed that,
in its professional judgment, it is independent of the Company within the
meaning of the Securities Act of 1933, as amended, and the Audit Committee has
discussed such matters with Stonefield Josephson, Inc.
The Audit Committee, based on the review and discussions above,
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2002 for filing with the Securities and Exchange Commission.
Director Bradley J. Ammon serves as the sole member of the Company's
Audit Committee. The Board of Directors believes that Mr. Ammon qualifies as an
"Audit Committee Financial Expert" as that term is defined by applicable SEC
rules.
Bradley J. Ammon
DIRECTOR COMPENSATION
We do not pay compensation for service as a director to persons
employed by us. Non-employee directors receive $1,000 for each meeting of the
Board of Directors they attend. We pay all out-of-pocket expenses of attendance
by directors at the meetings. In addition, each director may receive up to
50,000 options to buy shares of our common stock per year with a maximum holding
of 50,000 options per year, and the Chairman of the Board may receive an
additional 25,000 options per year. The exercise price and term of these options
are determined by the Compensation Committee at the time they are granted.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation we paid to our Chief
Executive Officer and other executive officers who served as such at the end of
fiscal 2002, 2001, and 2000 and received compensation over $100,000. For
information about compensation that we currently anticipate paying in fiscal
2003 to the individuals named in the table below, please see "Employment
Agreement" and "Personal Service Agreement" below.
Annual Compensation Long Term Compensation
------------------------------------ -------------------------------------------------
Securities
Other Underlying
Annual Restricted Options LTIP All Other
Name & Principal Salary Bonus Compensation Stock SARs Payouts Compensation
Position Year ($) ($) ($) Awards (#) ($) ($)
---------------------- ---- ---------- --------- --------------- ------------ ----------- ---------- -------------
Dean Weber, CEO 2002 252,000 0 0 0 0 0 0
2001 246,098 0 0 0 0 0 0
2000 252,000 75,000 0 0 0 0 0
Rahoul Sharan, CFO 2002 142,500 0 0 0 0 0 0
2001 137,654 0 0 0 0 0 0
2000 180,000 75,000(1) 0 0 0 0 0
(1) This payment was made through KJN Management Ltd.
AMENDED AND RESTATED 1999 STOCK OPTION PLAN
Our Amended and Restated 1999 Stock Option Plan (the 1999 Plan)
authorizes us to grant to our directors, employees, consultants and advisors
both incentive and non-qualified stock options to purchase shares of our Common
Stock. As of December 31, 2001, our Board of Directors had reserved 3,000,000
shares for issuance under the 1999 Plan, of which 2,078,625 shares were subject
to outstanding options and 921,375 shares remained available for future grants.
Our Board of Directors or a committee appointed by the Board (the Plan
Administrator) administers the 1999 Plan. The Plan Administrator selects the
recipients to whom options are granted and determines the number of shares to be
awarded. Options granted under the 1999 Plan are exercisable at a price
determined by the Plan Administrator at the time of the grant, but in no event
will the option price for any incentive stock option be lower than the fair
market value for our Common Stock on the date of the grant. Options become
exercisable at such times and in such installments as the Plan Administrator
provides in the terms of each individual option agreement. In general, the Plan
Administrator is given broad discretion to issue options and to accept a wide
variety of consideration (including shares of our Common Stock and promissory
notes) in payment for the exercise price of options. The 1999 Plan was
authorized by the Board of Directors and stockholders.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10% of a registered class of our equity
securities, to file with the SEC initial reports of ownership and changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater-than-ten-percent beneficial owners are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of copies of reports
furnished to us and certain written representations, during the fiscal year
ended December 31, 2002 and prior fiscal years ended December 31, all Section
16(a) filing requirements applicable to our directors, executive officers and
greater-than-ten-percent beneficial owners were complied with except as follows:
Form 3 filings for Dean Weber and Rahoul Sharan due on December 16, 1999, and
the Form 3 for Bradley J. Ammon due on June 19, 2000, were each filed on August
11, 2000.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF EACH NOMINEE AS A DIRECTOR OF THE COMPANY.
PROPOSAL 2
APPROVAL OF OUR FOURTH AMENDED AND RESTATED 1999 STOCK OPTION PLAN
On *, 2003, the Board of Directors adopted, subject to shareholder
approval and approval by the California Department of Corporations, the Fourth
Amended and Restated 1999 Stock Option Plan (the "1999 Plan") to increase the
maximum number of shares of common stock authorized for issuance over the term
of the 1999 Plan from 3,000,000 to 4,500,000. We do not currently have any
plans, proposals or arrangements to award any of the additional options that
would be authorized under the amended plan. Rather, we are seeking approval for
the increase at this time to provide us with the flexibility to issue additional
options if necessary or advisable, in the determination of the Board of
Directors and/or the Compensation Committee, to acquire and/or retain qualified
employees and management and to offer employees and management a competitive
compensation structure.
The following is a summary of the principal features of the 1999 Plan
that will become effective upon shareholder approval of this proposal and
approval of the amended 1999 Plan by the California Department of Corporations.
The summary, however, is not a complete description of all of the provisions of
the 1999 Plan. A copy of the 1999 Plan, as amended, is included with this Proxy
Statement as Exhibit A. We intend to file an amended Form S-8 with the SEC to
register the additional 1,500,000 shares under the Securities Act of 1933, as
amended, as soon as practicable after receiving shareholder approval of the
amended 1999 Plan.
ADMINISTRATION
The 1999 Plan is administered by the Board of Directors or a committee
of two or more members appointed by the Board of Directors who are non-employee
directors. The committee has the sole discretion and authority to grant options
under the 1999 Plan to eligible participants rendering services to the Company,
at such times, under such terms and in such amounts as it may decide.
ELIGIBILITY
All directors, officers, employees of and consultants to the Company,
relative to our management, operation or development, are eligible to receive
options under the 1999 Plan. The selection of recipients of options is within
the sole and absolute discretion of the committee. No employee shall be granted
more than 500,000 options in any one-year period.
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IDENTIFICATION OF STOCK
The stock subject to the options shall be shares of our authorized but
unissued or acquired or reacquired common stock. The aggregate number of shares
subject to outstanding options shall not exceed 4,500,000 shares (subject to
adjustment upon certain events including, but not limited to, a stock split,
reverse stock split, recapitalization or payment of a stock dividend).
Notwithstanding the above, at no time shall the total number of shares of common
stock issuable upon exercise of all outstanding options and the total number of
shares of stock provided for under any stock bonus or similar plan of the
Company exceed 30% as calculated in accordance with the conditions and
exclusions of Section 260.140.45 of Title 10, California Code of Regulations,
based on the shares of the Company outstanding at the time the calculation is
made.
TERMS
Options may be granted at an exercise price determined by the
committee, subject to certain limitations set forth in the 1999 Plan. No granted
option will have a term of more than 10 years. Upon cessation of service, the
optionee will generally have three months from the date of termination of
eligibility to exercise any vested options. Options granted shall generally be
exercisable or "vest" at the rate of at least 20% per year over the five-year
period beginning on the date the option is granted.
VALUATION
If our common stock is neither listed nor admitted to trading on any
stock exchange nor traded in the over-the-counter market, the fair market value
per share of common stock on any relevant date under the 1999 Plan will be
determined by the committee after taking into account such factors as the
committee deems appropriate. If the common stock is not listed or admitted to
trading on any stock exchange but is traded in the over-the-counter market, the
fair market value shall generally be the mean between the highest bid and lowest
asked prices (or, if such information is available, the closing selling price).
If the common stock is listed or admitted to trading on any stock exchange, the
fair market value shall be the closing selling price on the stock exchange
determined by the committee to be the primary market for the common stock. As of
*, 2003, the closing sale price of our common stock as quoted on the OTC
Bulletin Board was $* per share.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. An optionee recognizes no taxable income for
regular income tax purposes as the result of the grant or exercise of an
incentive stock option. Optionees who do not dispose of their shares for two
years following the date the incentive stock option was granted or within one
year following the exercise of the option will normally recognize a long-term
capital gain or loss equal to the difference, if any, between the sale price and
the purchase price of the shares. If an optionee satisfies both such holding
periods upon a sale of the shares, we will not be entitled to any deduction for
federal income tax purposes. If an optionee disposes of shares either within two
years after the date of grant or within one year from the date of exercise
(referred to as a "disqualifying disposition"), the difference between the fair
market value of the shares on the exercise date and the option exercise price
(not to exceed the gain realized on the sale if the disposition is a transaction
with respect to which a loss, if sustained, would be recognized) will be taxed
as ordinary income at the time of disposition. Any gain in excess of that amount
will be a capital gain. If a loss is recognized, there will be no ordinary
income, and such loss will be a capital loss. A capital gain or loss will be
long-term if the optionee's holding period is more than 12 months. Any ordinary
income recognized by the optionee upon the disqualifying disposition of the
shares generally should be deductible by the Company for federal income tax
purposes, except to the extent such deduction is limited by applicable
provisions of the Internal Revenue Code of 1986, as amended (the "Code") or the
regulations thereunder. The difference between the option exercise price and the
fair market value of the shares on the exercise date of an incentive stock
option is an adjustment in computing the optionee's alternative minimum taxable
income and may be subject to an alternative minimum tax that is paid if such tax
exceeds the regular tax for the year. Special rules may apply with respect to
certain subsequent sales of the shares in a disqualifying disposition, certain
basis adjustments for purposes of computing the alternative minimum taxable
income on a subsequent sale of the shares and certain tax credits that may arise
with respect to optionees subject to the alternative minimum tax.
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NONSTATUTORY STOCK OPTIONS. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options. Nonstatutory stock
options have no special tax status. An optionee generally does not recognize
taxable income as the result of the grant of such an option. Upon exercise of a
nonstatutory stock option, the optionee normally recognizes ordinary income in
an amount equal to the difference between the option exercise price and the fair
market value of the shares on the exercise date. If the optionee is an employee,
such ordinary income generally is subject to withholding of income and
employment taxes. Upon the sale of stock acquired by exercise of a nonstatutory
stock option, any gain or loss, based on the difference between the sale price
and the fair market value on the exercise date, will be taxed as capital gain or
loss. A capital gain or loss will be long-term if the optionee's holding period
is more than 12 months. We generally should be entitled to a deduction equal to
the amount of ordinary income recognized by the optionee as a result of the
exercise of a nonstatutory stock option, except to the extent such deduction is
limited by applicable provisions of the Code or the regulations thereunder. No
tax deduction is available to the Company with respect to the grant of a
nonstatutory stock option or the sale of the stock acquired pursuant to such
grant.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Code Section 162(m) denies
a deduction to the Company for compensation paid to certain employees in a
taxable year to the extent that compensation exceeds $1 million for a covered
employee. It is possible that compensation attributable to stock options, when
combined with all other types of compensation received by a covered employee
from the Company, may cause this limitation to be exceeded in any particular
year. Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with applicable regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation,
provided that: (a) either (i) the option plan contains a per-employee limitation
on the number of shares for which options may be granted during a specified
period, (ii) the per-employee limitation is approved by the shareholders, (iii)
the option is granted by a compensation committee comprised solely of outside
directors and is granted (or exercisable) only upon the achievement (as
certified in writing by the compensation committee) of an objective performance
goal established by the compensation committee while the outcome is
substantially uncertain and approved by the shareholders.
For the aforementioned reasons, our 1999 Plan provides for an annual
per employee limitation as required under Section 162(m) and our compensation
committee is comprised solely of outside directors.
OTHER TAX CONSEQUENCES. The foregoing discussion is intended to be a
general summary only of the federal income tax aspects of options granted under
the 1999 Plan. Tax consequences may vary depending on the particular
circumstances at hand. In addition, administrative and judicial interpretations
of the application of federal income tax laws are subject to change.
Furthermore, no information is given with respect to state or local taxes that
may be applicable. Participants in the 1999 Plan who are residents of or are
employed in a country other than the United States may be subject to taxation in
accordance with the tax laws of that particular country in addition to or in
lieu of United States federal income taxes.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL 2.
PROPOSAL 3
APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE NUMBER OF
AUTHORIZED SHARES FROM 110,000,000 (100,000,000 OF COMMON STOCK AND
10,000,000 OF PREFERRED STOCK) TO 260,000,000 (250,000,000 OF COMMON STOCK
AND 10,000,000 OF PREFERRED STOCK)
On *, 2003, the Board of Directors authorized an amendment to our
Articles of Incorporation to increase the number of our authorized shares.
Subject to shareholder approval, Article Fourth, Section 1 would be amended to
read as follows and would be filed with the Nevada Secretary of State:
"FOURTH: Capital Stock
1. Classes and Number of Shares. The Corporation is authorized
to issue two classes of stock. One class of stock shall be
Common Stock, par value $0.001. The second class of stock
shall be Preferred Stock, par value $0.001. The Preferred
Stock, or any series thereof, shall have such designations,
preferences and relative, participating, optional or other
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special rights and qualifications, limitations or restrictions
thereof as shall be expressed in the resolution or resolutions
providing for the issue of such stock adopted by the Board of
Directors and may be made dependent upon facts ascertainable
outside such resolution or resolutions of the Board of
Directors, provided that the matter in which such facts shall
operate upon such designations, preferences, rights and
qualifications, limitations or restrictions of such class or
series of stock is clearly and expressly set forth in the
resolution or resolutions providing for the issuance of such
stock by the Board of Directors.
The total number of shares of stock of each class which the
Corporation shall have authority to issue and the par value of
each share of each class of stock are as follows:
Class Par Value Authorized Shares
----- --------- -----------------
Common $0.001 250,000,000
Preferred $0.001 10,000,000"
As of the Record Date, a total of * shares of the Company's currently
authorized 100,000,000 shares of Common Stock are issued and outstanding. The
terms of the additional shares of common stock will be identical to those of the
currently outstanding shares of common stock. However, because holders of common
stock have no preemptive rights to purchase or subscribe for any unissued stock
of the Company, the issuance of additional shares of common stock will reduce
the current stockholders' percentage ownership interest in the total outstanding
shares of common stock. This amendment will not alter the current number of
issued shares. The relative rights and limitations of the shares of common stock
would remain unchanged under this proposal.
The increase in the number of authorized but unissued shares of common
stock would enable the Company, without further stockholder approval, to issue
shares from time to time as may be required for proper business purposes, such
as raising additional capital for ongoing operations, business and asset
acquisitions, stock splits and dividends, present and future employee benefit
programs and other corporate purposes. If approved, the Company has no present
intentions to issue any of the newly authorized shares of common stock
If the shareholders approve the increase in authorized capital stock,
the ratio of issued-to-authorized shares would increase from approximately 1:2
to 1:5. The Company believes this dramatic increase is in the best interest of
the Company because it would be able to issue shares from time to time as may be
required for proper business purposes, such as raising additional capital for
ongoing operations, business and asset acquisitions, stock splits and dividends,
present and future employee benefit programs and other corporate purposes,
without the expense and time of obtaining stockholder approval.
In addition, one of the effects of proposed amendment might be to
enable the Board to render it more difficult to, or discourage an attempt to,
obtain control of the Company by means of a merger, tender offer, proxy contest
or otherwise, and thereby protect the continuity of present management. The
Board would, unless prohibited by applicable law, have additional shares of
common stock available to effect transactions (such as private placements) in
which the number of the Company's outstanding shares would be increased and
would thereby dilute the interest of any party attempting to gain control of the
Company. Such action could discourage an acquisition of the Company, which
stockholders might view as desirable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL 3.
PROPOSAL 4
RATIFICATION OF SELECTION OF AUDITORS
Our independent auditors for the year ended December 31, 2002 were
Stonefield Josephson, Inc., independent public accountants. The Board of
Directors has also selected Stonefield Josephson, Inc. to serve as our auditors
for the fiscal year ending December 31, 2003. Representatives of Stonefield
Josephson, Inc. are not expected to be present at the Annual Meeting.
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AUDIT FEES
The aggregate fees paid to Stonefield Josephson, Inc. for professional
services rendered for the audit of our annual financial statements for the
fiscal year ended December 31, 2002, review of the financial statements included
in our Form 10-QSBs for the fiscal year, the audit of our financial statements
included in registration statements on Form SB-2 and for the audit of our taxes
totaled $58,716.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During the fiscal year ended December 31, 2002, no fees were billed for
professional services related to financial information systems design and
implementation by Stonefield Josephson, Inc.
ALL OTHER FEES
During the fiscal year ended December 31, 2002, no fees were paid to
Stonefield Josephson, Inc., other than for audit services described above.
The Audit Committee has considered whether the provision of services
covered in the preceding paragraphs is compatible with maintaining Stonefield
Josephson, Inc.'s independence.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
PROPOSAL 4.
ANNUAL REPORT
Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2002, as amended and as filed with the SEC, excluding exhibits, is being mailed
to shareholders with this Proxy Statement. We will furnish any exhibit to our
Annual Report on Form 10-KSB free of charge to any shareholder upon written
request to the Company at 6333 Greenwich Drive, Suite 240, San Diego, California
92122. The Annual Report is not incorporated in, and is not a part of, this
Proxy Statement and is not proxy-soliciting material. You are encouraged to
review the Annual Report together with subsequent information filed by the
Company with the SEC and other publicly available information.
OTHER MATTERS
The Board of Directors does not know of any other matters that will be
presented for consideration at the Annual Meeting. If any other matters are
properly brought before the Annual Meeting or any adjournment thereof, the proxy
holders named in the accompanying Proxy will have discretionary authority to
vote all proxies in accordance with their best judgment with respect to such
matters.
San Diego, California By Order of the Board of Directors
*, 2003
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EXHIBIT "A"
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ONE VOICE TECHNOLOGIES, INC.
FOURTH AMENDED AND RESTATED
1999 STOCK OPTION PLAN
1. PURPOSE. This Stock Option Plan (the "Plan") is intended to serve as an
incentive to, and to encourage stock ownership by, certain eligible participants
rendering services to One Voice Technologies, Inc., a Nevada corporation (the
"Corporation"), and certain affiliates as set forth below, so that they may
acquire or increase their proprietary interest in the Corporation and to
encourage them to remain in the service of the Corporation. The Plan is a
restatement in the entirety of the Plan.
2. ADMINISTRATION.
2.1. COMMITTEE. The Plan shall be administered by the Board of
Directors of the Corporation (the "Board of Directors") or a committee of two or
more members appointed by the Board of Directors (the "Committee") who are
Non-Employee Directors as defined in Rule 16b-3 promulgated under Section 16 of
the Securities Exchange Act of 1934 and outside directors as defined in Treasury
Regulation ss. 1.162-27(e)(3). The Committee shall select one of its members as
Chairman and shall appoint a Secretary, who need not be a member of the
Committee. The Committee shall hold meetings at such times and places as it may
determine and minutes of such meetings shall be recorded. Acts by a majority of
the Committee in a meeting at which a quorum is present and acts approved in
writing by a majority of the members of the Committee shall be valid acts of the
Committee.
2.2. TERM. If the Board of Directors selects a Committee, the members
of the Committee shall serve on the Committee for the period of time determined
by the Board of Directors and shall be subject to removal by the Board of
Directors at any time. The Board of Directors may terminate the function of the
Committee at any time and resume all powers and authority previously delegated
to the Committee.
2.3. AUTHORITY. The Committee shall have sole discretion and authority
to grant options under the Plan to eligible participants rendering services to
the Corporation or any "parent" or "subsidiary" of the Corporation, as defined
in Section 424 of the Internal Revenue Code of 1986, as amended (the "Code")
("Parent or Subsidiary"), at such times, under such terms and in such amounts as
it may decide. For purposes of this Plan and any Stock Option Agreement (as
defined below), the term "Corporation" shall include any Parent or Subsidiary,
if applicable. Subject to the express provisions of the Plan, the Committee
shall have complete discretion and authority to interpret the Plan, to
prescribe, amend and rescind the rules and regulations relating to the Plan, to
determine the details and provisions of any Stock Option Agreement, to
accelerate any options granted under the Plan and to make all other
determinations necessary or advisable for the administration of the Plan.
2.4. TYPE OF OPTION. The Committee shall have full authority and
discretion to determine, and shall specify, whether the eligible individual will
be granted options intended to qualify as incentive options under Section 422 of
the Code ("Incentive Options") or options which are not intended to qualify
under Section 422 of the Code ("Non-Qualified Options"); provided, however, that
Incentive Options shall only be granted to employees of the Corporation, or a
Parent or Subsidiary thereof, and shall be subject to the special limitations
set forth herein attributable to Incentive Options.
2.5. INTERPRETATION. The interpretation and construction by the
Committee of any provisions of the Plan or of any option granted under the Plan
shall be final and binding on all parties having an interest in this Plan or any
option granted hereunder. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted under the Plan.
3. ELIGIBILITY.
3.1. GENERAL. All directors, officers, employees of and consultants to
the Corporation, or any Parent or Subsidiary, relative to the Corporation's, or
any Parent's or Subsidiaries', management, operation or development shall be
eligible to receive options under the Plan. The selection of recipients of
options shall be within the sole and absolute discretion of the Committee. No
person shall be granted an option under this Plan unless such person has
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executed the grant representation letter set forth on Exhibit "A," as such
Exhibit may be amended by the Committee from time to time and no person shall be
granted an Incentive Option under this Plan unless such person is an employee of
the Corporation, or a Parent or Subsidiary, on the date of grant. No employee
shall be granted more than 500,000 options in any one-year period.
3.2. TERMINATION OF ELIGIBILITY.
3.2.1. If an optionee ceases to be employed by the Corporation, or
its Parent or Subsidiary, is no longer an officer or member of the Board of
Directors of the Corporation or no longer performs services for the Corporation,
or its Parent or Subsidiary for any reason (other than for "cause," as
hereinafter defined, or such optionee's death), any option granted hereunder to
such optionee shall expire three months after the date of the occurrence giving
rise to such termination of eligibility (or 1 year in the event an optionee is
"disabled," as defined in Section 22(e)(3) of the Code) or upon the date it
expires by its terms, whichever is earlier. Any option that has not vested in
the optionee as of the date of such termination shall immediately expire and
shall be null and void. The Committee shall, in its sole and absolute
discretion, decide, utilizing the provisions set forth in Treasury Regulations
ss. 1.421-7(h), whether an authorized leave of absence or absence for military
or governmental service, or absence for any other reason, shall constitute
termination of eligibility for purposes of this Section.
3.2.2. If an optionee ceases to be employed by the Corporation, or
its Parent or Subsidiary, is no longer an officer or member of the Board of
Directors of the Corporation, or no longer performs services for the
Corporation, or its Parent or Subsidiary and such termination is as a result of
"cause," as hereinafter defined, then all options granted hereunder to such
optionee shall expire on the date of the occurrence giving rise to such
termination of eligibility or upon the date it expires by its terms, whichever
is earlier, and such optionee shall have no rights with respect to any
unexercised options. For purposes of this Plan, "cause" shall mean an optionee's
personal dishonesty, misconduct, breach of fiduciary duty, incompetence,
intentional failure to perform stated obligations, willful violation of any law,
rule, regulation or final cease and desist order, or any material breach of any
provision of this Plan, any Stock Option Agreement or any employment agreement.
The Board of Directors shall have complete discretion and authority to determine
whether the termination of the option is for cause.
3.3. DEATH OF OPTIONEE AND TRANSFER OF OPTION. In the event an optionee
shall die, an option may be exercised (subject to the condition that no option
shall be exercisable after its expiration and only to the extent that the
optionee's right to exercise such option had accrued at the time of the
optionee's death) at any time within six months after the optionee's death by
the executors or administrators of the optionee or by any person or persons who
shall have acquired the option directly from the optionee by bequest or
inheritance but not later than the expiration of the option by its terms. Any
option that has not vested in the optionee as of the date of death or
termination of employment, whichever is earlier, shall immediately expire and
shall be null and void. No option shall be transferable by the optionee other
than by will or the laws of descent and distribution.
3.4. LIMITATION ON INCENTIVE OPTIONS. No person shall be granted any
Incentive Option to the extent that the aggregate fair market value of the Stock
(as defined below) to which such options are exercisable for the first time by
the optionee during any calendar year (under all plans of the Corporation as
determined under Section 422(d) of the Code) exceeds $100,000.
4. IDENTIFICATION OF STOCK. The Stock, as defined herein, subject to the options
shall be shares of the Corporation's authorized but unissued or acquired or
reacquired common stock (the "Stock"). The aggregate number of shares subject to
outstanding options shall not exceed 4,500,000 shares of Stock (subject to
adjustment as provided in Section 6). If any option granted hereunder shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of this
Plan. Notwithstanding the above, at no time shall the total number of shares of
Stock issuable upon exercise of all outstanding options and the total number of
shares of Stock provided for under any stock bonus or similar plan of the
Corporation exceed 30% as calculated in accordance with the conditions and
exclusions of ss. 260.140.45 of Title 10, California Code of Regulations, based
on the shares of the issuer which are outstanding at the time the calculation is
made.
5. TERMS AND CONDITIONS OF OPTIONS. Any option granted pursuant to the Plan
shall be evidenced by an agreement ("Stock Option Agreement") in such form as
the Committee shall from time to time determine, which agreement shall comply
with and be subject to the following terms and conditions:
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5.1. NUMBER OF SHARES. Each option shall state the number of shares of
Stock to which it pertains.
5.2. OPTION EXERCISE PRICE. Each option shall state the option exercise
price, which shall be determined by the Committee; provided, however, that (i)
the exercise price of any Incentive Option shall not be less than the fair
market value of the Stock, as determined by the Committee, on the date of grant
of such option, (ii) the exercise price of any option granted to an employee who
owns more than 10% of the total combined voting power of all classes of the
Corporation's stock, as determined for purposes of Section 422 of the Code,
shall not be less than 110% of the fair market value of the Stock, as determined
by the Committee, on the date of grant of such option, and (iii) the exercise
price of any Non-Qualified Option shall not be less than 85% of the fair market
value of the Stock, as determined by the Committee, on the date of grant of such
option.
5.3. TERM OF OPTION. The term of an option granted hereunder shall be
determined by the Committee at the time of grant, but shall not exceed ten years
from the date of the grant. The term of any Incentive Option granted to an
employee who owns more than 10% of the total combined voting power of all
classes of the Corporation's stock, as determined for purposes of Section 422 of
the Code, shall in no event exceed five years from the date of grant. All
options shall be subject to early termination as set forth in this Plan. In no
event shall any option be exercisable after the expiration of its term.
5.4. METHOD OF EXERCISE. An option shall be exercised by written notice
to the Corporation by the optionee (or successor in the event of death) and
execution by the optionee of an exercise representation letter in the form set
forth on Exhibit "B," as such Exhibit may be amended by the Committee from time
to time. Such written notice shall state the number of shares with respect to
which the option is being exercised and designate a time, during normal business
hours of the Corporation, for the delivery thereof ("Exercise Date"), which time
shall be at least 30 days after the giving of such notice unless an earlier date
shall have been mutually agreed upon. At the time specified in the written
notice, the Corporation shall deliver to the optionee at the principal office of
the Corporation, or such other appropriate place as may be determined by the
Committee, a certificate or certificates for such shares. Notwithstanding the
foregoing, the Corporation may postpone delivery of any certificate or
certificates after notice of exercise for such reasonable period as may be
required to comply with any applicable listing requirements of any securities
exchange. In the event an option shall be exercisable by any person other than
the optionee, the required notice under this Section shall be accompanied by
appropriate proof of the right of such person to exercise the option.
5.5. MEDIUM AND TIME OF PAYMENT. The option exercise price shall be
payable in full on or before the option Exercise Date in any one of the
following alternative forms:
5.5.1. Full payment in cash or certified bank or cashier's check;
5.5.2. A Promissory Note (as defined below), in the discretion of
the Committee;
5.5.3. Full payment in shares of Stock or other securities of the
Corporation having a fair market value on the Exercise Date in the amount equal
to the option exercise price;
5.5.4. Through a special sale and remittance procedure pursuant to
which the optionee shall concurrently provide irrevocable written instruction to
(a) a Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.
5.5.5. A combination of the consideration set forth in Sections
5.5.1, 5.5.2, 5.5.3 and 5.5.4 equal to the option exercise price; or
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5.5.6. Any other method of payment complying with the provisions
of Section 422 of the Code with respect to Incentive Options, provided the terms
of payment are established by the Committee at the time of grant, and any other
method of payment established by the Committee with respect to Non-Qualified
Options.
5.6. FAIR MARKET VALUE. The fair market value of a share of Stock on
any relevant date shall be determined in accordance with the following
provisions:
5.6.1. If the Stock at the time is neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market, then
the fair market value shall be determined by the Committee after taking into
account the factors found in ss. 260.140.50 of Title 10, California Code of
Regulations and such other factors as the Committee shall deem appropriate.
5.6.2. If the Stock is not at the time listed or admitted to
trading on any stock exchange but is traded in the over-the-counter market, the
fair market value shall be the mean between the highest bid and lowest asked
prices (or, if such information is available, the closing selling price) of one
share of Stock on the date in question in the over-the-counter market, as such
prices are reported by the National Association of Securities Dealers through
its NASDAQ system or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Stock on the date in question,
then the mean between the highest bid price and lowest asked price (or the
closing selling price) on the last preceding date for which such quotations
exist shall be determinative of fair market value.
5.6.3. If the Stock is at the time listed or admitted to trading
on any stock exchange, then the fair market value shall be the closing selling
price of one share of Stock on the date in question on the stock exchange
determined by the Committee to be the primary market for the Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Stock on such exchange on
the date in question, then the fair market value shall be the closing selling
price on the exchange on the last preceding date for which such quotation
exists.
5.7. PROMISSORY NOTE. Subject to the requirements of applicable state
or Federal law or margin requirements, payment of all or part of the purchase
price of the Stock may be made by delivery of a full recourse promissory note
("Promissory Note"). The Promissory Note shall be executed by the optionee, made
payable to the Corporation and bear interest at such rate as the Committee shall
determine, but in no case less than the minimum rate which will not cause under
the Code (i) interest to be imputed, (ii) original issue discount to exist, or
(iii) any other similar results to occur. Unless otherwise determined by the
Committee, interest on the Note shall be payable in quarterly installments on
March 31, June 30, September 30 and December 31 of each year. A Promissory Note
shall contain such other terms and conditions as may be determined by the
Committee; provided, however, that the full principal amount of the Promissory
Note and all unpaid interest accrued thereon shall be due not later than five
years from the date of exercise. The Corporation may obtain from the optionee a
security interest in all shares of Stock issued to the optionee under the Plan
for the purpose of securing payment under the Promissory Note and shall retain
possession of the stock certificates representing such shares in order to
perfect its security interest.
5.8. RIGHTS AS A SHAREHOLDER. An optionee or successor shall have no
rights as a shareholder with respect to any Stock underlying any option until
the date of the issuance to such optionee of a certificate for such Stock. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such Stock certificate is issued, except as
provided in Section 6.
5.9. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions of the Plan, the Committee may modify, extend or renew
outstanding options granted under the Plan, or accept the surrender of
outstanding options (to the extent not exercised) and authorize the granting of
new options in substitution therefor.
5.10. VESTING AND RESTRICTIONS. The Committee shall have complete
authority and discretion to set the terms, conditions, restrictions, vesting
schedules and other provisions of any option in the applicable Stock Option
Agreement and shall have complete authority to require conditions and
restrictions on any Stock issued pursuant to this Plan; provided, however, that
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except with respect to options granted to officers or directors of the
Corporation, options granted pursuant to this Plan shall be exercisable or
"vest" at the rate of at least 20% per year over the 5-year period beginning on
the date the option is granted. Options granted to officers and directors shall
become exercisable or "vest," subject to the condition of continued employment
and/or continued service on the Board of Directors, as appropriate. The maximum
vesting period for options granted to officers or directors will be five years
from the date of grant.
5.11. OTHER PROVISIONS. The Stock Option Agreements shall contain such
other provisions, including without limitation, restrictions or conditions upon
the exercise of options, as the Committee shall deem advisable.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
6.1. SUBDIVISION OR CONSOLIDATION. Subject to any required action by
shareholders of the Corporation, the number of shares of Stock covered by each
outstanding option, and the exercise price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Stock of
the Corporation resulting from a subdivision or consolidation of shares,
including, but not limited to, a stock split, reverse stock split,
recapitalization, continuation or reclassification, or the payment of a stock
dividend (but only on the Stock) or any other increase or decrease in the number
of such shares effected without receipt of consideration by the Corporation. Any
fraction of a share subject to option that would otherwise result from an
adjustment pursuant to this Section shall be rounded downward to the next full
number of shares without other compensation or consideration to the holder of
such option.
6.2. CAPITAL TRANSACTIONS. Upon a sale or exchange of all or
substantially all of the assets of the Corporation, a merger or consolidation in
which the Corporation is not the surviving corporation, a merger, reorganization
or consolidation in which the Corporation is the surviving corporation and
shareholders of the Corporation exchange their stock for securities or property,
a liquidation of the Corporation or similar transaction as determined by the
Committee ("Capital Transaction"), this Plan and each option issued under this
Plan, whether vested or unvested, shall terminate, unless such options are
assumed by a successor corporation in a merger or consolidation, immediately
prior to such Capital Transaction; provided, however, that unless the
outstanding options are assumed by a successor corporation in a merger or
consolidation, subject to terms approved by the Committee, all optionees will
have the right, during the 15 days prior to such Capital Transaction, to
exercise all vested options. The Corporation shall, subject to any applicable
nondisclosure agreements binding the Corporation, attempt to provide optionees
at least 15 days notice of the option termination date under this Section 6.2.
The Committee may (but shall not be obligated to) (i) accelerate the vesting of
any option or (ii) apply the foregoing provisions, including but not limited to
termination of this Plan and any options granted pursuant to the Plan, in the
event there is a sale of 51% or more of the stock of the Corporation in any
two-year period or a transaction similar to a Capital Transaction.
6.3. ADJUSTMENTS. To the extent that the foregoing adjustments relate
to stock or securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.
6.4. ABILITY TO ADJUST. The grant of an option pursuant to the Plan
shall not affect in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any part of its business or assets.
6.5. NOTICE OF ADJUSTMENT. Whenever the Corporation shall take any
action resulting in any adjustment provided for in this Section, the Corporation
shall forthwith deliver notice of such action to each optionee, which notice
shall set forth the number of shares subject to the option and the exercise
price thereof resulting from such adjustment.
6.6. LIMITATION ON ADJUSTMENTS. Any adjustment, assumption or
substitution of an Incentive Option shall comply with Section 425 of the Code,
if applicable.
7. NONASSIGNABILITY. Options granted under this Plan may not be sold, pledged,
assigned or transferred in any manner other than by will or by the laws of
descent and distribution, and may be exercised during the lifetime of an
optionee only by such optionee. Any transfer in violation of this Section shall
void such option and any Stock Option Agreement entered into by the optionee and
the Corporation regarding such transferred option shall be void and have no
further force or effect. No option shall be pledged or hypothecated in any way,
nor shall any option be subject to execution, attachment or similar process.
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8. NO RIGHT OF EMPLOYMENT. Neither the grant nor exercise of any option nor
anything in this Plan shall impose upon the Corporation or any other corporation
any obligation to employ or continue to employ any optionee. The right of the
Corporation and any other corporation to terminate any employee shall not be
diminished or affected because an option has been granted to such employee.
9. TERM OF PLAN. This Plan is effective on the date the Plan is adopted by the
Board of Directors and options may be granted pursuant to the Plan from time to
time within a period of ten (10) years from such date, or the date of any
required shareholder approval required under the Plan, if earlier. Termination
of the Plan shall not affect any option theretofore granted.
10. AMENDMENT OF THE PLAN. The Board of Directors of the Corporation may,
subject to any required shareholder approval, suspend, discontinue or terminate
the Plan, or revise or amend it in any respect whatsoever with respect to any
shares of Stock at that time not subject to options.
11. APPLICATION OF FUNDS. The proceeds received by the Corporation from the sale
of Stock pursuant to options may be used for general corporate purposes.
12. RESERVATION OF SHARES. The Corporation, during the term of this Plan, shall
at all times reserve and keep available such number of shares of Stock as shall
be sufficient to satisfy the requirements of the Plan.
13. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall not impose
any obligation upon the optionee to exercise such option.
14. APPROVAL OF BOARD OF DIRECTORS AND SHAREHOLDERS. The Plan shall not take
effect until approved by the Board of Directors of the Corporation. This Plan
shall be approved by a vote of the shareholders within 12 months from the date
of approval by the Board of Directors. In the event such shareholder vote is not
obtained, all options granted hereunder, whether vested or unvested, shall be
null and void. Further, any stock acquired pursuant to the exercise of any
options under this Agreement may not count for purposes of determining whether
shareholder approval has been obtained.
15. WITHHOLDING TAXES. Notwithstanding anything else to the contrary in this
Plan or any Stock Option Agreement, the exercise of any option shall be
conditioned upon payment by such optionee in cash, or other provisions
satisfactory to the Committee, of all local, state, federal or other withholding
taxes applicable, in the Committee's judgment, to the exercise or to later
disposition of shares acquired upon exercise of an option.
16. PARACHUTE PAYMENTS. Any outstanding option under the Plan may not be
accelerated to the extent any such acceleration of such option would, when added
to the present value of other payments in the nature of compensation which
becomes due and payable to the optionee would result in the payment to such
optionee of an excess parachute payment under Section 280G of the Code. The
existence of any such excess parachute payment shall be determined in the sole
and absolute discretion of the Committee.
17. SECURITIES LAWS COMPLIANCE. Notwithstanding anything contained herein, the
Corporation shall not be obligated to grant any option under this Plan or to
sell, issue or effect any transfer of any Stock unless such grant, sale,
issuance or transfer is at such time effectively (i) registered or exempt from
registration under the Securities Act of 1933, as amended (the "Act"), and (ii)
qualified or exempt from qualification under the California Corporate Securities
Law of 1968 and any other applicable state securities laws. As a condition to
exercise of any option, each optionee shall make such representations as may be
deemed appropriate by counsel to the Corporation for the Corporation to use any
available exemption from registration under the Act or registration or
qualification under any applicable state securities law.
18. RESTRICTIVE LEGENDS. The certificates representing the Stock issued upon
exercise of options granted pursuant to this Plan will bear any legends required
by applicable securities laws as determined by the Committee.
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19. NOTICES. Any notice to be given under the terms of the Plan shall be
addressed to the Corporation in care of its Secretary at its principal office,
and any notice to be given to an optionee shall be addressed to such optionee at
the address maintained by the Corporation for such person or at such other
address as the optionee may specify in writing to the Corporation.
20. INFORMATION TO PARTICIPANTS. The Corporation shall make available to all
holders of options the information required pursuant to ss. 260.140.46 of the
California Code of Regulations.
As originally adopted by the Board of Directors as of July 14, 1999, amended on
July 11, 2000, amended and restated on September 22, 2000, further amended and
restated on November 22, 2000, further amended on January 4, 2001, further
amended and restated on December 20, 2001, and as further amended and restated
on [_________________________], 2003.
ONE VOICE TECHNOLOGIES, INC.,
a Nevada corporation
By: /S/ DEAN WEBER
-------------------------------------
Dean Weber, President
A-7
EXHIBIT "A"
____________, 20__
One Voice Technologies, Inc.
6333 Greenwich Drive, Suite 240
San Diego, CA 92122
Re: Fourth Amended and Restated 1999 Stock Option Plan
--------------------------------------------------
To Whom It May Concern:
This letter is delivered to One Voice Technologies, Inc., a Nevada corporation
(the "Corporation"), in connection with the grant to (the "Optionee") of an
option (the "Option") to purchase __________ shares of common stock of the
Corporation (the "Stock") pursuant to the Fourth Amended and Restated One Voice
Technologies, Inc. 1999 Stock Option Plan dated July 14, 1999, as amended on
July 11, 2000, amended and restated on September 22, 2000, further amended and
restated on November 22, 2000, further amended on January 4, 2001, further
amended and restated on December 20, 2001, and as further amended and restated
on [_________________________], 2003 (the "Plan"). The Optionee understands that
the Corporation's receipt of this letter executed by the Optionee is a condition
to the Corporation's willingness to grant the Option to the Optionee.
The Optionee acknowledges that the grant of the Option by the
Corporation is in lieu of any and all other promises of the Corporation to the
Optionee, whether written or oral, express or implied, regarding the grant of
options or other rights to acquire Stock. Accordingly, in anticipation of the
grant of the Option, the Optionee hereby relinquishes all rights to such other
rights, if any, to acquire stock of the Corporation.
In addition, the Optionee makes the following representations and
warranties with the understanding that the Corporation will rely upon them.
1. The Optionee acknowledges receipt of a copy of the Plan and
Agreement. The Optionee has carefully reviewed the Plan and Agreement.
2. The Optionee acknowledges receipt of a prospectus regarding the Plan
which includes the information required by Section (a)(1) of Rule 428 under the
Securities Act of 1933.
3. The Optionee understands and acknowledges that the Option and the
Stock are subject to the terms and conditions of the Plan.
4. The Optionee understands and agrees that, at the time of exercise of
any part of the Option for Stock, the Optionee may be required to provide the
Corporation with additional representations, warranties and/or covenants similar
to those contained in this letter.
5. The Optionee is a resident of the State of ____________________.
6. The Optionee will notify the Corporation immediately of any change
in the above information which occurs before the Option is exercised in full by
the Optionee.
The foregoing representations and warranties are given on
__________________, 20__ at ___________ _________________.
OPTIONEE:
------------------------------------
A-8
EXHIBIT "B"
____________, 20__
One Voice Technologies, Inc.
6333 Greenwich Drive, Suite 240
San Diego, CA 92122
Re: Fourth Amended and Restated 1999 Stock Option Plan
--------------------------------------------------
To Whom It May Concern:
I (the "Optionee") hereby exercise my right to purchase shares of
common stock (the "Stock") of One Voice Technologies, Inc., a Nevada corporation
(the "Corporation"), pursuant to the Fourth Amended and Restated One Voice
Technologies, Inc. 1999 Stock Option Plan dated July 14, 1999, as amended on
July 11, 2000, amended and restated on September 22, 2000, further amended and
restated on November 22, 2000, further amended on January 4, 2001, further
amended on December 20, 2003, and as further amended and restated on
[_________________________], 2003 (the "Plan"), and the Stock Option Agreement
(the "Agreement") dated ______________, 20__. As provided in such Plan, I
deliver herewith payment as set forth in the Plan in the amount of the aggregate
option exercise price. Please deliver to me at my address as set forth above
stock certificates representing the subject shares registered in my name (and
(spouse) , as (style of vesting) ).
The Optionee hereby represents as follows:
1. The Optionee acknowledges receipt of a copy of the Plan and
Agreement. The Optionee has carefully reviewed the Plan and Agreement.
2. The Optionee is a resident of the State of ____________________.
3. The Optionee represents and agrees that if the Optionee is an
"affiliate" (as defined in Rule 144 under the Securities Act of 1933) of the
Corporation at the time the Optionee desires to sell any of the Stock, the
Optionee will be subject to certain restrictions under, and will comply with all
of the requirements of, applicable federal and state securities laws.
The foregoing representations and warranties are given on
__________________, 20__ at ___________ _________________.
OPTIONEE:
------------------------------------
A-9
EXHIBIT "B"
-----------
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
ONE VOICE TECHNOLOGIES, INC.
The undersigned, being the President of One Voice Technologies, Inc. a
corporation existing under the laws of the State of Nevada, does hereby certify
under the seal of the said corporation as follows:
1. The certificate of incorporation of the Corporation is hereby
amended by replacing Article Fourth, Section 1, in its entirety, with the
following:
"FOURTH: Capital Stock
1. Classes and Number of Shares. The Corporation is authorized
to issue two classes of stock. One class of stock shall be
Common Stock, par value $0.001. The second class of stock
shall be Preferred Stock, par value $0.001. The Preferred
Stock, or any series thereof, shall have such designations,
preferences and relative, participating, optional or other
special rights and qualifications, limitations or restrictions
thereof as shall be expressed in the resolution or resolutions
providing for the issue of such stock adopted by the Board of
Directors and may be made dependent upon facts ascertainable
outside such resolution or resolutions of the Board of
Directors, provided that the matter in which such facts shall
operate upon such designations, preferences, rights and
qualifications, limitations or restrictions of such class or
series of stock is clearly and expressly set forth in the
resolution or resolutions providing for the issuance of such
stock by the Board of Directors.
The total number of shares of stock of each class which the
Corporation shall have authority to issue and the par value of
each share of each class of stock are as follows:
Class Par Value Authorized Shares
----- --------- -----------------
Common $0.001 250,000,000
Preferred $0.001 10,000,000"
2. The officers of the Corporation are authorized and directed to take
such actions as are necessary in their discretion to effectuate the purposes of
each of the above resolutions, including but not limited to the execution,
delivery and filing of all necessary certificates, applications and other
documents and the payment of all necessary fees in connection therewith.
3. The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is * and the foregoing
change and amendment has been consented to and approved by the vote of the
shareholders of the Corporation holding at least a majority of each class of
stock outstanding and entitled to vote thereon
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment of the Corporation's
Certificate of Incorporation, as amended, to be signed by Dean Weber, its
President, this __ day of ________ 2003.
ONE VOICE TECHNOLOGIES, INC.
By:
--------------------------------
Dean Weber, President
B-1
[Form of Proxy]
ONE VOICE TECHNOLOGIES, INC.
6333 GREENWICH DRIVE, SUITE 240
SAN DIEGO, CALIFORNIA 92122
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, as a shareholder of common stock of One Voice
Technologies, Inc., a Nevada corporation (the "Company"), hereby acknowledges
receipt of the Proxy Statement and the notice of the shareholders meeting to be
held on *, 2003, at * Pacific time, at *, and hereby further revokes all
previous proxies and appoints Dean Weber as proxy of the undersigned at said
meeting and any adjournments thereof with the same effect as if the undersigned
were present and voting the shares.
(1) For the election of the following persons as directors of the Company
to hold office until the 2004 Annual Meeting of Shareholders and until
their respective successors are elected and qualified:
Dean Weber
Rahoul Sharan
Bradley J. Ammon
[ ] AUTHORITY GRANTED to vote for [ ] AUTHORITY WITHHELD to
nominees listed above, except as vote for all nominees
indicated to the contrary below. listed above.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
___________________________________________
(2) The approval of the Company's Fourth Amended and Restated 1999 Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To approve an amendment to our Articles of Incorporation to increase
the number of our authorized shares from 110,000,000 (100,000,000 of
common stock and 10,000,000 of preferred stock) to 260,000,000
(250,000,000 of common stock and 10,000,000 of preferred stock).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) The ratification of the selection of Stonefield Josephson, Inc. as the
Company's auditors for the fiscal year ending December 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(5) In their discretion upon such other matters as may properly come before
the meeting and any adjournments thereof.
B-1
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE
INDICATED ABOVE. IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE ABOVE NOMINEES AND IN FAVOR OF SUCH PROPOSALS, AND
AS SAID PROXY DEEMS ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THIS MEETING.
Dated: __________________________, 2003
------------------------------------------------
(Signature)
------------------------------------------------
(Signature of joint owner or additional trustee)
Sign exactly as your name appears on your share
certificate. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title. If more than one trustee, all should
sign. All joint owners should sign. If a
corporation, sign in full corporation name by
president or other authorized officer. If a
partnership, sign in partnership name by
authorized person. Persons signing in a
fiduciary capacity should indicate their full
title in such capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY VIA FASCIMILE AT
(303) 777-3094 OR BY USING THE ENCLOSED ENVELOPE.
B-2