SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by Registrant [x] Filed by a Party other than the Registrant [ ]
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Check the appropriate box: [ ] Definitive Additional Materials
[x] Preliminary Proxy Statement [ ] Soliciting Material Pursuant to
[ ] Definitive Proxy Statement ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
EXIGENT INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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:
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[LETTERHEAD OF EXIGENT INTERNATIONAL]
____________________, 1998
Dear Stockholder:
I am pleased to announce Exigent International, Inc.'s Annual Meeting of
Stockholders. The meeting is to be held at the Melbourne Airport Hilton, Grand
Ballroom, 200 Rialto Place, Melbourne, Florida, (407) 768-0200, on Tuesday, June
30, 1998, at 9:00 a.m. EDT.
Only stockholders of record at the close of business on May 8, 1998, shall
be entitled to notice of and to vote at this annual meeting. Whether or not you
plan to attend the meeting, please take the time to vote. Proxy ballots have
been sent to all such stockholders of record. As explained in the attached proxy
statement, you may withdraw your proxy at any time before it is actually voted
at this annual meeting.
If you plan to attend this annual meeting in person, please remember to
bring a form of personal identification with you and, if you are acting as a
proxy for another stockholder, please bring written confirmation from the record
owner that you are acting as a proxy. Detailed information about the meeting is
included in the attached proxy statement.
Respectfully,
/s/ Patricia A. Frank
--------------------------------------
Patricia A. Frank
Secretary
1225 Evans Road, Melbourne, Florida 32904-2314
Tel.: (407) 952-7550 Fax: (407) 952-7555
<PAGE>
EXIGENT INTERNATIONAL, INC.
1225 Evans Road
Melbourne, Florida 32904
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1998
Exigent International, Inc. (the "Company" or "Exigent") will hold its Annual
Meeting of Stockholders at Melbourne Airport Hilton, Grand Ballroom, 200 Rialto
Place, Melbourne, Florida on Tuesday, June 30, 1998, at 9:00 a.m., EDT. At this
Annual Meeting stockholders of the Company will vote upon the following:
1. A proposal to approve the adoption of the Second Amended and Restated
Certificate of Incorporation of the Company.
2. The election of seven (7) directors to serve on the Board of Directors
of the Company for the ensuing year and until their successors are
duly elected.
3. A proposal to approve the Incentive Stock Option Plan 1Q.
4. A proposal to approve the Incentive Stock Option Plan 3Q.
5. A proposal to approve the Incentive Stock Option Plan 4Q.
6. A proposal to approve the Independent Director Stock Option Plan 5NQ.
7. A proposal to approve Stock Option Plan 6NQ.
8. The ratification of the selection of the firm of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending
December 31, 1998.
9. Such other business as may properly come before the meeting or any
postponements or adjournments thereof.
Only stockholders of the Company of record at the close of business on May
8, 1998 are entitled to notice of and to vote at this Annual Meeting or any
postponements or adjournments of this Annual Meeting. A list of those
stockholders will be available for examination by any stockholder of the
Company, during ordinary business hours, for ten days prior to this Annual
Meeting at the principal offices of the Company at 1225 Evans Road, Melbourne,
Florida 32904.
ALL STOCKHOLDERS OF THE COMPANY ARE CORDIALLY INVITED TO ATTEND THIS ANNUAL
MEETING IN PERSON. TO ENSURE YOUR ATTENDANCE AT THIS ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE ACCOMPANYING PROXY CARD AS PROMPTLY
AS POSSIBLE IN THE POSTAGE PAID ENVELOPE PROVIDED. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON AT THIS ANNUAL MEETING SHOULD YOU SO DESIRE. AS EXPLAINED
IN THE PROXY STATEMENT, YOU MAY WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS
ACTUALLY VOTED AT THE MEETING.
Beneficial owners of stock held by banks, brokers or investment plans (in
"street name") will need proof of ownership to be admitted to this Annual
Meeting. A recent brokerage statement or letter from your broker or bank are
examples of proof of ownership.
A copy of the Company's Annual Report is enclosed. A copy of the Company`s
Form 10-K for its fiscal year ending on January 31, 1998 will be delivered,
without charge, to each of you who receives a proxy statement, upon your
request.
DATED at Melbourne, Florida this ___ day of _________, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Patricia A. Frank
-------------------------------------
Patricia A. Frank, Secretary
<PAGE>
EXIGENT INTERNATIONAL, INC.
1225 Evans Road
Melbourne, Florida 32904
PROXY STATEMENT
Annual Meeting of Stockholders
June 30, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
This Proxy Statement is solicited on behalf of the Board of Directors of
Exigent International, Inc., a Delaware corporation (the "Company" or
"Exigent"), for use at the Annual Meeting of Stockholders of the Company for the
Company's fiscal year ending January 31, 1998 (the "Annual Meeting"). The Annual
Meeting will be held at the Melbourne Airport Hilton, Grand Ballroom, 200 Rialto
Place, Melbourne, Florida, on Tuesday, June 30, 1998, at 9:00 a.m., EDT.
The Notice of Annual Meeting of Stockholders and this Proxy Statement are
dated ______, 1998. They were first mailed together with the accompanying proxy
card and the Company's Annual Report on or about __________, 1998 to each
stockholder of the Company entitled to vote at the Annual Meeting.
Proposals
At this Annual Meeting stockholders of the Company will vote upon the
following (the proposals in numbers 1 through 8 below are called the
"Proposals"):
1. A proposal to approve the adoption of the Second Amended and Restated
Certificate of Incorporation of the Company in the form attached as
Exhibit A (the "Amended Charter").
2. The election of seven (7) directors to serve on the Board of Directors
of the Company for the ensuing year and until their successors are
duly elected.
3. A proposal to approve the Incentive Stock Option Plan 1Q.
4. A proposal to approve the Incentive Stock Option Plan 3Q.
5. A proposal to approve the Incentive Stock Option Plan 4Q.
6. A proposal to approve the Independent Director Stock Option Plan 5NQ.
7. A proposal to approve the Stock Option Plan 6NQ.
8. The ratification of the selection of the firm of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending
December 31, 1998.
9. Such other business as may properly come before the meeting or any
postponements or adjournments thereof.
Your vote is important. The Board asks that you vote in favor of the director
nominees and each of the other Proposals. We encourage you to read this Proxy
Statement carefully.
Record Date
The Board of Directors of the Company (the "Board") has fixed May 8, 1998
as the record date for the Annual Meeting (the "Record Date"). Only stockholders
of record at the close of business on May 8, 1998 are entitled to notice of and
to vote the number of shares of the Company held by them on the Record Date at
the Annual Meeting or any and all postponements or adjournments for the meeting.
Outstanding Shares
The Company is authorized to issue 45,600,000 shares of which (a)
30,000,000 shares are designated as Common Shares, par value $0.01 per share
(the "Common Shares" or "Common Stock"), (b) 600,000 shares are designated as
Class B Common Shares, par value $0.01 per share (the "Class B Common Shares"),
and (c) 15,000,000 are designated as Preferred Shares, par value $0.01 per share
(the "Preferred Shares"), of which 5,000,000 shares are designated as Class A
Preferred Shares, par value $0.01 per share (the "Class A Preferred Shares"). As
of May 8, 1998, 627,509 Class A Preferred Shares and 4,080,209 Common Shares
were issued and outstanding. The Company had no other shares issued and
outstanding.
Quorum
The required quorum for the transaction of business at the Annual Meeting
is one-third of the votes eligible to be cast by holders of the issued and
outstanding shares of the Company as of the Record Date. Wherever a particular
class of shares of the Company votes separately as a class with respect to any
business, the required quorum, with respect to such class, is one-third of the
votes eligible to be cast by the holders of the issued and outstanding shares of
such class as of the Record Date.
Voting Rights and Voting of Proxies
Your vote is important. Because many stockholders cannot personally attend
the Annual Meeting, it is necessary that a large number be represented by proxy.
As described in more detail below, if you are a stockholder on the Record Date,
you may vote by attending the meeting or by marking, signing, dating and mailing
your enclosed proxy card in the postage-paid envelope provided. Stockholders may
revoke their proxy at any time before it is actually voted at the Annual Meeting
by (1) delivering a written notice of revocation to the Secretary of the
Company, (2) submitting a later-dated proxy, or (3) attending the meeting and
withdrawing the proxy. Attendance at the Annual Meeting will not, in itself,
constitute revocation of the proxy. You may also be represented by another
person present at the meeting by executing a proxy designating such person to
act on your behalf. Each stockholder is entitled to one vote for each share of
Common Shares and Class A Preferred Shares held by such stockholder as of the
Record Date for all matters to be voted upon at the Annual Meeting.
Except as provided in the next two sentences, the holders of all classes of
shares of the Company will vote together, as a single class, on all matters
properly brought at the Annual Meeting. Approval of the Amended Charter proposed
for adoption requires the affirmative vote of (a) a majority of the Common
Shares and Class A Preferred Shares issued and outstanding, voting as a single
class, and entitled to vote at the Annual Meeting, and (b) a majority of Class A
Preferred Shares issued and outstanding, voting as a separate class, and
entitled to vote at the Annual Meeting. If the Amended Charter is not adopted,
25% of the directors will be elected by the affirmative vote of a majority of
the Common Shares, voting as a separate class, represented in person or by proxy
and entitled to vote at the Annual Meeting and the remaining 75% of the
directors will be elected by the affirmative vote of a majority of the Class A
Preferred Shares, voting as a separate class, represented in person or by proxy
and entitled to vote at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of directors of the Company. See
"Proposal 1 Approval of Amended Charter".
With respect to the election of directors, you may (1) vote for all of the
director nominees as a group, (2) withhold your vote for all of the director
nominees as a group, or (3) vote for all director nominees as a group except
those nominees you identify. If you sign, date and mail your proxy card without
indicating how you want to vote, your vote will be counted as a vote in favor of
the director nominees.
With respect to the other Proposals, you may (1) vote for the Proposal, (2)
withhold your vote for a Proposal, or (3) abstain. If you sign, date and mail
your proxy card without indicating how you want to vote, your vote will be
counted as a vote in favor of each of such Proposals.
If you sign, date and mail your proxy card in time to be cast at the Annual
Meeting indicating how you want to vote, it will be voted in accordance with
your instructions. The persons named as proxy holders in the proxies are
officers of the Company. We encourage you to vote and to vote promptly. Voting
promptly may save the Company the expense of a second mailing.
Shares that are voted "FOR", "AGAINST" or "ABSTAIN" with respect to any
proposal brought at the Annual Meeting are treated as being present at the
Annual Meeting for purposes of establishing a quorum. With regard to the
election of directors, votes that are withheld will be excluded entirely from
the vote and will have no effect. Abstentions may be specified on all proposals
other than the election of directors and will have the same effect as voting
against a proposal. Shares of the Company represented by proxies which contain
one or more broker "non-votes" are counted as present for purposes of
determining whether a quorum is present for the Annual Meeting but are not
considered to have voted for a proposal. Accordingly, a broker non-vote will not
affect the outcome of the voting on a proposal. A "non-vote" occurs when a
broker or other nominee holding shares of the Company for a beneficial owner
votes on one proposal but does not vote on another proposal because such broker
or other nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
We encourage you to complete, sign, date and return the enclosed proxy card
by the date of the Annual Meeting to make sure that a quorum is present at the
Annual Meeting. If a quorum is not present at the Annual Meeting, the designated
proxy holder in the applicable proxy card will vote the returned proxy cards to
adjourn the Annual Meeting to a time and place to be announced.
Expenses of Solicitation
The Company will bear the expenses of soliciting the proxies. Proxies may
be solicited by mail, telephone or telegraph by the Company and its management
and employees but they will not receive any additional compensation for these
services. The Company will request brokers, nominees and other fiduciaries and
custodians who hold shares of stock of the Company in their names to provide a
copy of this Proxy Statement and any accompanying materials to the beneficial
owners of such shares. The Company will reimburse such persons, if requested,
for their reasonable fees and expenses incurred in completing the mailing of
such material to the beneficial owners.
<PAGE>
PROPOSAL 1
APPROVAL OF AMENDED CHARTER
Background
The Company was formed on March 25, 1996 by Software Technology, Inc.
("STI") as a holding company to acquire all of the issued and outstanding stock
of STI. On January 30, 1997, the Company issued Common Shares and Class A
Preferred Shares to STI's shareholders in exchange for all of the issued and
outstanding stock of STI. The Company issued Warrants to purchase Common Stock
(the "Warrants") in exchange for warrants for the purchase of STI stock. In
March 1997, the Company's Common Shares and Warrants were registered with the
Securities and Exchange Commission and public trading commenced.
The rights and privileges of the Class A Preferred Shares include super
voting rights for the election of approximately 75% of the members of the
Company's Board of Directors ("Class A Super Voting Rights") and a provision
prohibiting the transfer of any Class A Preferred Shares without the consent of
the holders of 100% of the Class A Preferred Shares ("100% Transfer
Restriction"). These provisions were implemented in part to ensure that the
original shareholders of STI would control the Company and as a takeover defense
to preclude any transfer of Class A Preferred Shares which did not have the
support of 100% of the holders of Class A Preferred Shares.
Since public trading has commenced, the Company has acquired FotoTag, Inc.,
a company which developed and markets a passenger/baggage reconciliation system
for use by airports and airlines. The Company's current long term business plan
is to seek opportunities for growth and diversification of its product and
service offerings through acquisitions and internal growth. To implement its
long term growth strategy, the Company may seek to raise capital through private
or public debt or equity financings. The Board has determined that the existing
capital structure including the Class A Super Voting Rights and the 100%
Transfer Restriction may inhibit efforts to access capital, through the sale of
Common Shares in a secondary public or private offering for example, because of
the disparity of voting rights for the election of directors represented by the
Class A Super Voting Rights and the unorthodox nature of the 100% Transfer
Restriction.
The Board has adopted Amended and Restated Bylaws (the "Amended Bylaws")
and has proposed adoption of the Amended Charter in order to eliminate the Class
A Super Voting Rights and 100% Transfer Restriction, and to implement customary
takeover defenses and specific procedures providing for advance notice for
stockholder proposals and nominations of directors. The changes in the Amended
Bylaws and the proposed changes to the Existing Charter are part of the overall
business plan of the Company to build value for its stockholders on a long term
basis through growth and diversification. The Board believes the Company may be
an attractive takeover candidate today primarily because of the number of its
highly skilled software engineers, defense industry consolidation, and the
Company's current market capitalization. As described below, the Board wants to
discourage potential changes in control of the Company that are unsolicited and
not negotiated with the Board. The Board believes it can maximize the potential
appreciation of value for its stockholders by implementation of its long term
business strategies and implementation of more traditional takeover defenses for
the purpose of encouraging a potential buyer to negotiate with the Board.
The Board has determined that it is in the best interests of the Company to
amend and restate its Existing Charter by adopting the Amended Charter. Among
other things, the Amended Charter addresses issues that are of concern to
reporting companies. This includes the adoption of certain measures to ensure
that all stockholders receive fair treatment in the event of a hostile or
unsolicited tender offer to acquire control of the Company. Certain provisions
of the Amended Charter, summarized in the following paragraphs, may be
considered, together or separately, to have an anti-takeover effect and may
delay, deter or prevent a tender offer, proxy contest or other takeover attempt
that a stockholder might consider to be in such stockholder's best interest.
This could also include an attempt that might result in the payment of a premium
over the market price for shares held by a stockholder. The overall effect of
such provisions is to make it more difficult for a stockholder to effect a
merger of or assume control of the Company. Such provisions do, however,
encourage persons attempting to take control of the Company to negotiate with
the Board. While the Board believes that adoption of the Amended Charter is in
the best interests of the stockholders, stockholders should be aware that such
measures may also make the removal of management of the Company difficult for
the reasons discussed below. As discussed above, the Existing Charter currently
contains provisions intended by the Company to have an anti-takeover effect.
Those provisions will be replaced in the Amended Charter, by provisions which
may also have an anti-takeover effect.
The provisions of the Amended Charter discussed below have the potential of
perpetuating present management. Takeover attempts may be preceded by an
accumulation of stock and an attempt by the person making the takeover attempt
to attain representation on the Board. Representation on the Board may be sought
in order to increase the likelihood that the takeover attempt, reorganization or
sale proposal by the purchaser will succeed. If the attempt to attain
representation on the Board fails, the purchaser may commence a proxy contest
(which would be costly to the Company) in order to attain such representation.
It is possible that such a contest could be designed to force the Company to
repurchase the stock owned by the purchaser at a premium in order to terminate
the takeover attempt or proxy contest. The Board is not presently aware of any
attempt by a third party to obtain control of the Company through a tender offer
or otherwise, nor have any such attempts occurred since the Company became
publicly held in March 1997. Since becoming a publicly held company, the Company
has not experienced any significant problems with respect to the continuity and
stability of the Board or corporate management and policies. Nonetheless, in
view of the use by companies of unsolicited takeovers as acquisition techniques,
the Board believes that this is an appropriate time to adopt measures which will
help to assure such continuity and stability in future periods.
The Board has unanimously voted to approve the Amended Charter, a copy of
which is attached as Exhibit A, in order, among other things, to discourage
changes in control of the Company which are unsolicited and not negotiated with
the Board. The Board has recommended submission of the Amended Charter to the
stockholders for their consideration and vote.
The Board has the authority to amend the Company's Bylaws. The Bylaws may
also be amended by vote of the stockholders. The Board has adopted the Amended
Bylaws to be effective at 9:00 a.m. on the date of the Annual Meeting of
Stockholders. A copy of the Amended Bylaws is attached at Exhibit B. The Bylaws
were amended to eliminate provisions relating to the election of directors in
accordance with the Class A Super Voting Rights. These specific changes are to
be implemented provided the Amended Charter is adopted. Other changes to the
Bylaws reflected in the Amended Bylaws will become effective whether or not the
Amended Charter is adopted by the stockholders. These changes include provisions
providing for: (a) advance notice procedures for calling of a meeting of
stockholders; (b) advance notice procedures for the submission by stockholders
of proposals or nominees for election to the Board for consideration at annual
meetings of stockholders; (c) a requirement that actions by written consent of
stockholders must be signed by holders of at least 60% of the outstanding shares
of stock entitled to vote; (d) a requirement that amendments to the Amended
Bylaws adopted by stockholders must be approved by holders of at least 60% of
the outstanding shares of stock entitled to vote; and (e) conforming changes
reflecting the changes in the proposed Amended Charter.
The foregoing is not a complete description of all the provisions of the
Amended Bylaws. Stockholders are urged to read and review carefully the Amended
Bylaws, a copy of which is attached as Exhibit B.
The following is a summary of the principal differences between the
Existing Charter and the Amended Charter. This summary is not a complete
description of all the provisions of the Amended Charter. Stockholders are urged
to read and review carefully the Amended Charter, a copy of which is attached
hereto as Exhibit A.
Blank Check Preferred Shares
Blank check preferred shares are shares of preferred stock authorized by
the Articles or Certificate of Incorporation of a corporation and available for
issuance by its board of directors without further action or authorization of
the stockholders, in such classes or series, and with such rights, preferences
and privileges, as a corporation's board of directors may designate.
The Existing Charter authorizes the Company to issue 45,600,000 shares of
which 30,000,000 are designated as Common Shares, 600,000 are designated as
Class B Common Shares and 15,000,000 are designated as Preferred Shares of which
5,000,000 are designated Class A Preferred Shares. The Amended Charter changes
the number of shares that the Company is authorized to issue. It also changes
certain rights relating to the existing Common Shares, Preferred Shares and
Class A Preferred Shares, as discussed below under the captions "Elimination of
Class B Common Shares", "Modification of Class A Preferred Shares", and
"Increase in Common Shares." The Amended Charter authorizes the Company to issue
45,700,000 shares of which (a) 40,000,000 shares are designated as Common
Shares, par value $0.01 per share, (b) 5,000,000 are designated as Preferred
Shares, par value $0.01 per share, and (c) 700,000 are designated as Class A
Preferred Shares, par value $0.01 per share. Under the Amended Charter the Class
A Preferred Shares are not part of and are distinct from the authorized
Preferred Shares. The principal reasons for this change in the authorized stock
of the Company are discussed below.
If the Common Shares and Preferred Shares are authorized as contemplated by
the Amended Charter, no further action or authorization by the stockholders
would be necessary for the issuance of such shares, unless required by
applicable laws or regulations. The Board would have the power to authorize the
issuance of Preferred Shares, from time to time, with such voting rights,
designations, preferences and relative rights, qualifications and limitations as
it deems appropriate. For example, a series of the Preferred Shares could, as
determined by the Board at the time of issuance, rank, in respect of dividends,
redemption and liquidation, senior to the Common Shares. The Board would also be
authorized to determine, among other things, with respect to each series that
may be issued: (i) the dividend rate and conditions and the dividend
preferences, if any, in respect of the Common Shares and among the various
series of Preferred Shares; (ii) whether dividends would be cumulative and, if
so, the date from which dividends on each such series would accumulate; (iii)
whether, and to what extent, the holders of one or more series of Preferred
Shares would enjoy voting rights, if any, in addition to those prescribed by
law; (iv) whether, and upon what terms, the Preferred Shares would be
convertible into or exchangeable for shares of any other class or other series
of the same class; (v) whether, and upon what terms, the Preferred Shares would
be redeemable and the preference, if any, to which the Preferred Shares would be
entitled in the event of voluntary or involuntary liquidation, dissolution or
winding up of the Company; and (vi) whether or not a sinking fund would be
provided for the redemption of the Preferred Shares and, if so, the terms and
conditions thereof. With regard to dividends, redemption and liquidation, any
particular series of Preferred Shares may rank junior to, on parity with or
senior to any other series of shares. The Board has the authority to issue up to
10,000,000 Preferred Shares under the Existing Charter on the same terms and
conditions as the Preferred Shares contemplated by the Amended Charter with the
exception that the Existing Charter provides that the voting rights, if any, on
one Preferred Share cannot exceed the voting rights of one Common Share.
The Board is also considering adopting, in the future, other defensive
takeover measures which do not require stockholder approval, such as a
shareholder rights plan which would provide for the issuance of shares of
capital stock of the Company. The authorized but unissued Preferred Shares
provided for in the Amended Charter could be issued by the Board for this
purpose. If adopted, a rights plan would have the effect of making an
unsolicited takeover of the Company more difficult and more costly to any
potential acquiror in circumstances in which the Board determines that such an
unsolicited takeover is not in the best interests of the stockholders. A rights
plan may have the effect of making the accomplishment of a given transaction
more difficult even if it is favorable to the interests of stockholders because,
among other things, it gives the stockholders the opportunity to realize a
premium over the prevailing market price of the capital stock of the Company.
The Board is considering alternatives for the structure of a shareholder rights
plan, but has not yet approved the form or adoption of a rights plan.
Disadvantages of Blank Check Preferred
As discussed below under "Classification of the Board--Disadvantages of a
Classified Board," the power to issue Preferred Shares could enable the Board to
make it more difficult to replace incumbent directors. If the Amended Charter is
approved by the stockholders, it is not the present intention of the Board to
seek stockholder approval prior to any issuance of the authorized Preferred
Shares unless otherwise required by law or regulation. Opportunities may arise
that require prompt action and the Board believes that the delay necessitated by
stockholder approval of a specific issuance of Preferred Shares could be to the
detriment of the Company and the stockholders.
It is not possible to state the actual effect of the authorization of the
Preferred Shares upon the rights of holders of Common Shares until the Board
determines the rights of the holders of a class or series of the Preferred
Shares. However, such effects might include (a) restrictions on dividends on
Common Shares if dividends on Preferred Shares have not been paid; (b) dilution
of the voting power of the Common Shares to the extent that the Preferred Shares
have voting rights; (c) dilution of the equity interest of the Common Shares
unless the Preferred Shares are redeemed by the Company and are not convertible
by its holders; or (d) not being entitled to share in the Company's assets upon
liquidation until satisfaction of any liquidation preference granted the
Preferred Shares.
Advantages of Blank Check Preferred
The Board believes that the complexity of modern business financing
requires greater flexibility in the Company's capital structure than now exists.
The Board believes that the proposed change in the capitalization of the Company
will make it easier for the Company to achieve its long-term financing and
acquisition objectives. The Preferred Shares authorized by the Amended Charter
would be available for issuance from time to time for any proper corporate
purpose, including, as appropriate, stock splits, stock dividends, acquisitions
and public or private sales for cash as a means of obtaining capital for use in
the Company's business. The authorization of blank check Preferred Shares will
enable the Board to establish, from time to time, one or more series of
preferred shares with such relative preferences, voting and special rights and
limitations as the Board may deem necessary in order to make an equity
investment in the Company attractive to potential investors. In addition, the
increase in the authorized Common Shares also adds to the Board's ability to
offer attractive investment opportunities to potential investors.
Although the Board has not approved issuance of any Preferred Shares at
this time, the Board could authorize the Company to issue Preferred Shares, in
the context of a shareholder rights plan or otherwise. Issuance of Preferred
Shares could, depending on the terms of such issue, preclude or make difficult
and costly merger or takeover attempts or dilute the stock ownership of persons
attempting to take control of the Company. The provisions of the Amended Charter
authorizing the Preferred Shares would enhance the ability of the Company to
deter potential acquirors and restrict their ability to obtain control of the
Company. Although the Board would make such a determination based on its
judgment as to the best interests of the Company and its stockholders, the
Board's action could discourage an acquisition attempt or other transaction
viewed favorably by the holders of a majority of the outstanding voting stock of
the Company. On balance, however, the Board believes that the advantages of
increasing its flexibility to act in the face of an unfavorable proposed
transaction outweigh any resulting disadvantages to the stockholders.
The Company does not have any present agreement, understanding or
arrangement that would result in the issuance of any of the Preferred Shares,
except that the Board is evaluating alternatives for possible adoption of a
shareholder rights plan.
Classification of The Board
Article Nine of the Amended Charter provides for the classification of the
Board into three classes of directors with staggered terms of office, commencing
with the 1999 annual meeting of stockholders. The classification of the Board
will tend to moderate the pace of any sudden change in control of the Company in
the event of an unsolicited takeover attempt by a third party, by extending the
time required to change a majority of the Board. Under the Existing Charter (a)
approximately 25% of the directors are elected by holders of Common Shares, (b)
approximately 75% of the directors are elected by holders of Class A Preferred
Shares, and (c) all directors are elected to serve until the next annual meeting
of stockholders and until their successors are elected and qualified. If the
Amended Charter is adopted, directors will be elected at the 1998 annual meeting
of stockholders to serve for the ensuing year until the 1999 annual meeting of
stockholders and until their successors are elected and qualified.
If the Amended Charter is adopted, Article Nine will provide that subject
to the rights of the holders of any class or series of Preferred Shares,
commencing with the annual meeting of stockholders following the Company's
fiscal year ending December 31, 1998, the directors of the Company will be
divided into three classes, as nearly equal in number as possible, with the term
of office of the first class to expire at the annual meeting of the stockholders
following the Company's fiscal year ending December 31, 1999, the term of office
of the second class to expire at the annual meeting of the stockholders
following the Company's fiscal year ending December 31, 2000 and the term of
office of the third class to expire at the annual meeting of the stockholders
following the Company's fiscal year ending December 31, 2001, with each director
to hold office until his or her successor shall have been duly elected and
qualified. After this transition period, each class of directors will be elected
for approximately three-year terms on a staggered basis. At each annual meeting
of stockholders, commencing with the annual meeting of the stockholders
following the Company's fiscal year ending December 31, 1999, directors elected
to succeed the class whose terms then expire will be elected for a term of
office to expire at the third succeeding annual meeting of stockholders after
their election. If authorized by a resolution of the Board, directors may be
elected to fill any vacancy on the Board regardless of how the vacancy is
created. Subject to the rights of the holders of any class or series of
Preferred Shares, directors will be elected to the classified Board by vote of
the holders of Common Shares and Class A Preferred Shares, voting as a single
class, entitled to vote at each annual meeting of stockholders.
Section 9.5 of the Amended Charter provides that subject to the rights of
the holders of any class or series of Preferred Shares, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancies on the Board may be filled only by a majority of the directors
remaining in office, even if the number of such directors is less than a quorum.
Any director elected to fill a vacancy will hold office for a term expiring at
the annual meeting of stockholders at which the term of office of the class to
which such director has been elected expires and until his or her successor is
duly elected and qualified.
Disadvantages of a Classified Board
While the Board believes that a classified Board is in the best interests
of the stockholders, it will tend to moderate the pace of any change in control
of the Company since it affects every election of directors and is not triggered
by a particular event such as a hostile takeover. It will be more difficult for
the stockholders to change a majority of the Board even if the only reason for
the change is the performance of the present directors and is unrelated to a
takeover attempt. It would generally take the holder or holders of a majority of
the outstanding voting stock of the Company at least two annual meetings to
elect a majority of the Board unless the Amended Charter is subsequently amended
to eliminate the provisions for a classified Board. Furthermore, since the
Amended Charter provides that the directors can fill any vacancies in the Board
resulting from an increase in the number of directors, a change in control could
be thwarted by incumbent directors by increasing the size of the Board, electing
new directors favorable to management and apportioning such new directors among
the three classes. Consequently, the proposed Amended Charter will tend to
perpetuate present management.
The classification of the Board could also have the effect of discouraging
unsolicited acquisitions of the Company, takeover bids or open market purchases
by potential acquirors since it makes it difficult for a stockholder to gain
control of the Board. As a result, stockholders may be deprived of opportunities
to sell some or all of their shares in a tender offer which might involve a
purchase price higher than the current market price and may involve a bidding
contest between competing bidders. To the extent Article Nine of the Amended
Charter discourages open market purchases, stockholders will be deprived of the
temporary increases in the market price of the capital stock of the Company
caused by open market purchases of large blocks of stock.
As discussed below under "60% Vote to Amend Charter," subject to the rights
of the holders of any class of series of Preferred Shares, the provisions of the
Amended Charter relating to a classified Board cannot be altered, amended or
repealed without the affirmative vote of the holders of at least 60% of the then
outstanding Common Shares and Class A Preferred Shares, voting together as a
single class. In addition, the Board could issue a series of Preferred Shares
providing that the holders of Preferred Shares must consent to any alteration,
amendment or repeal of the Amended Charter. See "Blank Check Preferred Shares"
above.
Advantages of a Classified Board
A classified Board will extend the time it would take for a majority
stockholder to obtain control of the Board. This will limit abusive or coercive
unannounced, non-negotiated takeover attempts. With a classified Board, it would
generally take two annual meetings of stockholders to replace a majority of the
directors of the Company. The time required to remove a majority of the
directors would give the Board time to (a) adequately study a majority
stockholder's or other purchaser's proposal to reorganize the Company or sell
its stock or assets and to ensure that such proposal is in the best interests of
the stockholders, (b) evaluate alternatives to such proposals, and (c) ensure
that the best possible price and terms are obtained with respect to any such
proposal. Although a change in the Board or a takeover of the Company would not
necessarily be detrimental to the Company, the Board believes that the
provisions in the Amended Charter relating to a classified Board will encourage
potential purchasers to negotiate with the Board concerning their proposals. If
the Board has adequate time to consider the terms of a proposed takeover and
whether such terms are in the best interests of the Company and the
stockholders, this would result either in a more reasoned determination that
such a transaction is not in the best interest of the stockholders or in a
better planned and more efficiently executed transaction.
The Board believes that a classified Board will help assure continuity and
stability of the Company's management and policies, since a majority of the
directors at any given time will have prior experience as directors of the
Company. In addition, since directors will be serving for longer terms which
expire at different times and may be removed only for cause by a supermajority
vote (see "Removal of Directors"), the Board believes that a classified Board
will promote continuity of management and, therefore, enhance the ability of the
Company to carry out long-term plans and goals for the benefit of the Company
and the stockholders. The anti-takeover effects of a classified Board will not
only deter unsolicited takeover attempts but will also protect the value of each
stockholder's investment in the Company.
Removal of Directors
The Existing Charter provides that directors elected by a particular class
of stockholders may be removed, with or without cause, by such stockholders.
Section 9.6 of the Amended Charter will replace this provision and provide that
subject to the rights of the holders of any class or series of Preferred Shares,
any director may be removed from office at any time, with or without cause, by
the affirmative vote of the holders of at least sixty percent (60%) of the then
outstanding Common Shares and Class A Preferred Shares, voting together as a
single class; provided, however, if a classified Board is in effect, directors
may be removed only for cause. This percentage is higher than that required by
the Delaware General Corporation Laws (the "DGCL"). The DGCL requires only the
vote of a majority of the outstanding stock entitled to vote in order to remove
a director. This provision of the Amended Charter will preclude a third party
from removing incumbent directors and simultaneously gaining control of the
Board by filling the vacancies created with its own nominees unless such party
has the required voting control. Since the Amended Charter provides that only
the Board may increase or decrease the number of directors and that
newly-created directorships are to be filled only by the Board, a third party
would be prevented from obtaining majority representation on the Board simply by
enlarging the Board and filling new directorships with its own nominees. This
provision makes it more difficult for the stockholders to change a majority of
the Board for reasons unrelated to a takeover attempt. On the other hand, this
provision of the Amended Charter will help to assure continuity and stability of
the Company's management and policies, since a majority of the directors at any
given time will have prior experience as directors of the Company.
As discussed below under "60% Vote to Amend Charter," subject to the rights
of the holders of any class or series of Preferred Shares, the provisions of the
Amended Charter relating to removal of a director cannot be altered, amended or
repealed without the affirmative vote of the holders of at least 60% of the then
outstanding Common Shares and Class A Preferred Shares, voting together as a
single class.
Elimination of Class B Common Shares
The Company has not issued, and does not intend to issue, shares of Class B
Common Shares. The Amended Charter provides that all Common Shares shall be
identical and entitle the holders to the same rights and privileges. If the
Board determines in the future that it needs to issue shares with rights and
privileges similar to the Class B Common Shares provided for in the Existing
Charter, it could do so by issuing a series of Preferred Shares. As such,
designating Common Shares as Class B Common Shares no longer serves any purpose
and no stockholder is adversely affected by the removal of such class since none
of such shares has been issued.
Modification of Class A Preferred Shares
The issued and outstanding Class A Preferred Shares are entitled to the
following rights and subject to the following restrictions under the Existing
Charter, all of which have been omitted from the Amended Charter: (i) the right
to elect 75% of the directors and replace them with or without cause; (ii) the
requirement of prior approval of the holders of a majority of issued and
outstanding Class A Preferred Shares before the Company can issue, sell, or
offer to sell any additional Class A Preferred Shares; (iii) a restriction on
transfer of Class A Preferred Shares without the prior written consent of all of
the holders of Class A Preferred Shares; (iv) the automatic deemed conversion of
Class A Preferred Shares into Common Shares if transferred without the consent
of all holders of Class A Preferred Shares; (v) the right to be the only
stockholders entitled to receive Class A Shares as a dividend payment; (vi)
pre-emptive rights with respect to the issuance of Class A Preferred Shares;
(vii) the right to vote together with other classes of shares for the election
of directors if the aggregate of such shares constitutes less than 10% of the
aggregate voting stock; and (viii) a statement that Class A Preferred Shares are
noncallable. The only special rights currently provided for in the Existing
Charter with respect to the Class A Preferred Shares that are included in the
Amended Charter are (a) the right of each holder to voluntarily convert all or
any part of his Class A Preferred Shares into Common Shares as provided in
Section 6(e) of the Existing Charter, (b) the liquidation preference rights set
forth in Section 6(f) of the Existing Charter, and (c) the right to receive
dividends if dividends are declared with respect to the Common Shares.
The Board believes, based on discussions with members of the investment
community, that the rights and preferences presently applicable to the Class A
Preferred Shares are an obstacle to the Company's obtaining financing on
suitable terms. For this reason and in order to make the capital structure of
the Company more consistent with that of other public companies, the Board
believes that the proposed modifications to the Class A Preferred Shares are in
the best interests of the Company.
Adoption of the Amended Charter will eliminate the Class A Super Voting
Rights and accordingly remove the right of the holders of Class A Preferred
Shares to control the Board of Directors by electing approximately 75% of the
directors. It will also eliminate the right of any and all holders of Class A
Preferred Shares to control who may transfer or acquire shares of Class A
Preferred Shares. A transfer of Class A Preferred Shares without the consent of
all holders of Class A Preferred Shares will no longer be deemed to result in
conversion of such shares into Common Shares. The Amended Charter does not
change the liquidation preference or the conversion rights of Class A Preferred
Shares.
The Amended Charter reflects a decrease in the number of authorized Class A
Preferred Shares from 5,000,000 to 700,000. There are less than 700,000 Class A
Preferred Shares issued and outstanding and the Board does not anticipate
issuance of any additional Class A Preferred Shares in the future.
Increase in Common Shares
The Amended Charter reflects an increase in the number of authorized Common
Shares from 30,000,000 to 40,000,000. The additional authorized Common Shares,
along with other authorized and unissued Common Shares, will be available for
issuance upon exercise of the Warrants and stock options granted under the
Company's stock option plans, conversion of Class A Preferred Shares and in
connection with any future private or public offerings to raise capital, for
potential acquisitions, and for other legitimate corporate purposes. The
increase will give the Board greater flexibility in implementing the Company's
business plan. There are no current plans for issuing Common Shares other than
upon exercise of the Warrants and stock options, and upon conversion of Class
Preferred Shares.
Delaware Law Anti-Takeover Provisions
Section 203 of the DGCL, summarized in the following paragraph, may be
considered to have an anti-takeover effect and may delay, deter or prevent a
tender offer, proxy contest or other takeover attempt that a stockholder might
consider to be in such stockholder's best interest, including such an attempt
that might result in payment of a premium over the market price for shares held
by stockholders. Although Section 203 of the DGCL permits a corporation to elect
not to be governed by such Section, the Company to date has not made this
election.
The Company is subject to Section 203 of the DGCL which, with certain
exceptions, prohibits a Delaware corporation from engaging in any of a broad
range of business combinations with any "interested stockholder" for a period of
three years following the date that such stockholder became an interested
stockholder, unless (i) prior to such date, the Board approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (a) by persons
who are directors and officers, and (b) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
or (iii) on or after such date, the business combination is approved by the
Board of Directors of such corporation and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. An
"interested stockholder" is defined as any person that is (a) the owner of 15%
or more of the outstanding voting stock of the corporation, or (b) an affiliate
or associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.
60% Vote to Amend the Charter
The Amended Charter provides that subject to the rights of the holders of
any class or series of Preferred Shares, the affirmative vote of 60% of the then
outstanding Common Shares and Class A Preferred Shares, voting together as a
single class, is required to alter, amend or repeal any provision of the Amended
Charter. This percentage is higher than that required by the Delaware General
Corporation Laws (the "DGCL"). The DGCL requires only the vote of a majority of
the outstanding stock entitled to vote in order to approve such an amendment to
the Amended Charter.
As of May 8, 1998, directors and officers of the Company, together with
stockholders who beneficially own 10% or more of the voting stock of the Company
(the "Principal Stockholders") beneficially own an aggregate of 2,049,934 shares
or 44.2% of the voting stock of the Company. If all or substantially all of the
directors, officers and Principal Stockholders vote against a proposal to alter,
amend or repeal the Amended Charter, they may obtain a veto power over such
proposal (regardless of whether the proposal to amend, alter or repeal such
Amended Charter is desired by or is beneficial to a majority of the
stockholders) and thereby assist management in retaining their present
positions. In addition, the Board could issue a series of Preferred Shares
providing that the holders of such shares must consent to any amendment to the
Amended Charter. However, as discussed above under "Blank Check Preferred
Shares," the Existing Charter also provides for the issuance of up to 10,000,000
Preferred Shares which can be issued by the Board on the same terms and
conditions as the Preferred Shares contemplated by the Amended Charter with the
exception that in the Existing Charter the voting rights of one Preferred Share
cannot exceed the voting rights of one Common Share. Although the Board
currently has no intention of doing so, Preferred Shares with such rights and
privileges could (within the limits imposed by applicable law) be issued to a
holder so that the holder could prevent any proposed alteration, amendment or
repeal of the provisions of the Amended Charter.
The supermajority vote required to alter, amend or repeal the Amended
Charter will make it more difficult for a stockholder or stockholders to change
the takeover defenses included in the Amended Charter, including the provisions
providing for a classified Board, removal of Directors and the requirement
itself for a supermajority vote to alter, amend or repeal provisions of the
Amended Charter.
No present plan, arrangement, commitment or understanding with respect to
opposing a proposal to amend, alter or repeal any provision of the Amended
Charter, if the Amended Charter is adopted, exists by and among management, the
officers or directors of the Company or the Principal Stockholders.
Other Changes to the Existing Charter
The Amended Charter also contains provisions that (i) clarify dividend
rights of Class A Preferred and Common Shares, (ii) modify the voting rights of
the holders of Common Shares and Class A Preferred Shares for election of
directors, (iii) modify the right of stockholders to fill vacancies on the
Board, (iv) modify the right of the Board to increase or decrease the number of
directors, (v) modify the indemnification by the Company of its officers and
directors, and (vi) modify the number of stockholders required to be present, in
person or by proxy, at a meeting of stockholders in order to constitute a
quorum. These provisions are discussed below.
Dividends
Both the Existing Charter and the Amended Charter provide that the Common
Shares and Class A Preferred Shares have equal dividend rights and that the
Company shall not declare or pay dividends on one of such classes unless an
equal amount is paid or declared, as the case may be, on the other class, on a
per share basis. The Existing Charter provides that Common Shares shall be
distributed only as stock dividends on Common Shares, Class A Preferred Shares
shall be distributed only as stock dividends on Class A Preferred Shares and
that stock dividends can only be declared with respect to Common Shares or Class
A Preferred Shares if a stock dividend of the same number of shares is declared
with respect to both such classes. The Amended Charter does not contain a
parallel provision but instead provides that stock dividends will be paid only
in the form of Common Shares.
Voting
The voting provisions of the Existing Charter have been significantly
modified in the Amended Charter. The Existing Charter gives holders of Common
Shares and voting Preferred Shares (other than Class A Preferred Shares) the
right to designate approximately 25% of the Board and gives the holders of Class
A Preferred Shares the right to designate approximately 75% of the Board. The
Amended Charter does not give any class of stockholders the right to designate
any directors, however, such right could be given to the holders of Preferred
Shares if the Board so desired. See "Blank Check Preferred Shares" above. The
Existing Charter provides that the holders of Common Shares and voting Preferred
Shares (other than Class A Preferred Shares) shall not have the right to elect
25% of the directors if, on the applicable record date, the number of such
issued and outstanding shares is less than 10% of the aggregate issued and
outstanding voting shares of all classes of stock of the Company. In such event
all of the directors are to be elected by the holders of all voting stock of the
Company voting together as a single class. In the Amended Charter, except as may
be granted to holders of Preferred Shares, the holders of Common Shares and
Class A Preferred Shares, voting as a single class, are entitled to elect seven
directors at the 1998 Annual Meeting of Stockholders for the ensuing year and
commencing with the 1999 Annual Meeting of Stockholders, they will elect
directors to a classified Board. See "Classification of the Board" above.
Vacancies on the Board
The Existing Charter provides that (a) any vacancy in the office of a
director elected by one or more classes of stockholders (other than Class A
Preferred Shares) may be filled by a vote of those holders, voting together as a
separate class, and in the absence of such a vote, the vacancy may be filled by
the remaining directors, and (b) any vacancy in the office of a director elected
by holders of Class A Preferred Shares may be filled by a vote of those holders,
voting as a separate class, and in the absence of such a vote, the vacancy may
be filled by the remaining directors. The Amended Charter provides that
vacancies on the Board are to be filled by a majority vote of the directors then
in office, even if they constitute less than a quorum, subject to the rights of
any holder of Preferred Shares granted in the future. As discussed above under
"Removal of Directors," this provision makes it more difficult for the
stockholders to change a majority of the Board.
Number of Directors
The Existing Charter and Bylaws permit the Board of Directors to increase
or decrease the number of directors. The Existing Charter provides that if the
number of directors is increased, the 25% Board seats reserved for election by
the holders of Common Shares and voting Preferred Shares (other than Class A
Preferred Shares) shall be maintained. Since the Class A Super Voting Rights are
no longer included in the Amended Charter, there is no parallel provision in the
Amended Charter. Under the Amended Charter and Amended Bylaws, the number of
directors may be increased or decreased by the Board of Directors.
Indemnification
The Existing Charter provides for the indemnification of any officer or
director of the Company including those who serve at its request as a director
or officer of any corporation of which the Company owns shares of capital stock
or is a creditor and further provides that such indemnification does not extend
to matters as to which any officer or director of the Company is adjudged to be
liable for negligence or misconduct in the performance of his duty. The Amended
Charter includes a broader provision which provides indemnification to officers
and directors including those who serve at the Company's request as officers or
directors of any corporation, partnership, joint venture, or other entity to the
fullest extent permitted under Delaware law.
Quorum
The Existing Charter provides that in order to constitute a quorum,
one-third of the shares entitled to vote must be present in person or by proxy
at a stockholders' meeting. The Amended Bylaws, however, provide that in order
to constitute a quorum, holders of record of a majority of the shares entitled
to vote must be present in person or by proxy at a stockholders' meeting.
Amendment of Bylaws
The Amended Charter and the Amended Bylaws provide that the Amended Bylaws
can be altered, amended or repealed by the affirmative vote of the holders of at
least sixty percent (60%) of the then outstanding Common Shares and Class A
Preferred Shares, voting together as a single class. At present the Bylaws can
be altered, amended or repealed by a majority vote of the stockholders. Both the
Existing Charter and the Amended Charter provide that the Bylaws are subject to
alterations, amendments and repeals by the Board.
The Bylaws of a corporation set forth the rules and regulations governing
certain processes and procedures relating to its governance. Requiring a
supermajority vote of the stockholders to amend the Amended Bylaws will make it
more difficult for stockholders to change the internal operating procedures of
the Company and will also make it more difficult for a majority stockholder to
undermine or limit the Board's ability to manage the affairs of the Company on
behalf of the stockholders. Although this provision of the Amended Charter may
have an anti-takeover effect, the Board believes it is in the best interests of
the Company.
THE FOREGOING SUMMARY DESCRIPTIONS OF THE AMENDED CHARTER ARE NOT INTENDED
TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE COMPLETE
TEXT OF THE AMENDED CHARTER ATTACHED HERETO AS EXHIBIT A.
Required Vote
Approval of the Amended Charter for adoption requires the affirmative vote
of (a) a majority of the Class A Preferred Shares issued and outstanding, voting
as a separate class, and entitled to vote at the Annual Meeting, and (b) a
majority of the Common Shares and Class A Preferred Shares issued and
outstanding, voting together as a single class, and entitled to vote at the
Annual Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE AMENDED CHARTER.
<PAGE>
PROPOSAL 2
ELECTION OF DIRECTORS
Number of Directors
The number of directors authorized by the Bylaws is a maximum of nine, with
the exact number currently fixed by the Board at seven. Each director is elected
at the Annual Meeting to hold office until the next succeeding annual meeting or
until his successor is elected and qualified. The Board proposes that the
following seven (7) nominees, all of whom are currently serving as directors of
the Company and were nominated by the Board, be elected for the ensuing year and
until their successors are duly elected and qualified. Each nominee has
consented to be named in this Proxy Statement and to serve as a director of the
Company if elected. The Board has no reason to believe that any of the nominees
listed below will not be available to serve but if any nominee should be or
become unable or unwilling to serve, the shares represented by the proxies
received by the Company will be voted for the election of some other person as
director, as the Board shall recommend.
Director Nominees
Set forth below is information regarding the nominees for director:
<TABLE>
<CAPTION>
Has Served As
Name Age Position at Company Director Since
<S> <C> <C>
Arthur H. Collier 56 Director 1998
Scott B. Helm 33 Director 1998
Robert M. Janowiak 62 Director 1997
William K. Presley 51 Director and Chief Technical Officer 1997
Don F. Riordan, Jr. 51 Director, Treasurer and Chief Financial 1996
Officer
B.R. "Bernie" Smedley 61 Director, Chairman of the Board, 1997
President, Chief Executive Officer and
Chief Operating Officer
Daniel J. Stark 54 Director 1997
</TABLE>
Mr. Collier became a director of Exigent on February 6, 1998. After
beginning his career in 1974 as a junior officer and naval aviator, he became
the Space Acquisition Division Director in the Special Systems Program Office,
Washington D.C. in 1978, and in 1980 became the Program Director, Aircraft
Systems Development, Naval Air Development Center, Warminster, Pennsylvania. In
1983, Mr. Collier returned to the Special Systems Program Office, Washington,
D.C., and became the overall program manager responsible for the acquisition,
operation and replenishment of a constellation of satellites and the worldwide
infrastructure of mission ground stations supporting them. After retirement from
full-time service in the U.S. Navy in 1993, Mr. Collier provided Systems
Engineers support to the Naval Center for Space Technology, Naval Research
Laboratory. Mr. Collier obtained a BS in Engineering from the U.S. Naval
Academy, and an MS in Management and an MS in Aeronautical Engineering both from
the U.S. Naval Post Graduate School.
Mr. Helm became a Director of Exigent on May 7, 1998. He is a private
investor based in New York. From 1987 through 1998, he was employed by Goldman,
Sachs & Co., the New York based investment banking firm where he served as a
Vice President in the investment banking division from May of 1994 through
January 1998, primarily involved in providing corporate finance advice and
underwriting services to corporate clients. Mr. Helm received his BS degree in
Business Administration from Washington University in St. Louis, Missouri in
1987.
Mr. Janowiak became a director on September 30, 1997. He began his career
with the IIT Research Institute and then with IITRI's Computer and Management
Sciences division. He assumed responsibility for organizing an entrepreneurial
program for Rockwell International as Vice President/General Manager of
Information Products Division and later was promoted to Vice President of
worldwide marketing of Rockwell International's Graphic Group. Subsequently, Mr.
Janowiak joined Federal Signal Corporation as President of the Signal Group. He
is currently Executive Director of the International Engineering Consortium. Mr.
Janowiak has authored and collaborated on many research reports including 2021
AD: Visions of the Future and the Telecom Outlook Report, as well as a professor
of marketing and business policy at the Harold Stuart School of Business
Administration, Illinois Institute of Technology. He serves on the Board of
Trustees/and Directors of several universities and corporations. Mr. Janowiak
holds a BSEE from University of Illinois, an MSEE from Illinois Institute of
Technology, an MBA from University of Chicago, and has completed the Stanford
University's Executive Program.
Mr. Presley has held positions with STI as Chairman of the Board and Vice
President and President since 1987. He is currently serving as a Director and
Chief Technical Officer of Exigent. He has been employed by STI since July,
1983. He serves in a senior software management role for the Naval Research Lab
and the MATT program. He reviews technical issues and provides technical and
management assistance to NRL and has coordinated interface activities between
multiple government and contractor agencies responsible for MATT software. He
has provided technical leadership to both Motorola Sat Comm for the Iridium,
Inc. project and to the STI OS/COMET(TM) development team for this project.
Before coming to STI, Mr. Presley was involved in all phases of real-time
software development of embedded microprocessor applications in tactical
communications systems for the U.S. defense community. He assisted the Harris
Satellite Division in developing the NBC Satellite Network Control System. As a
work package leader for the /Control Modem, Network Terminal, he received an
outstanding engineering award for his achievement. He served in various
capacities at Industrial Nucleonics: systems design, field service, hardware and
applications engineering. He received a B.S. in Electrical Engineering from
Auburn University in 1969 and is a member of the Tau Beta Pi, the National
Engineering Honorary Society.
Mr. Riordan has been a Director of STI since 1980 and Secretary/Treasurer
and Chief Financial Officer since 1991, as well as holding the offices of
Chairman of the Board, Vice President, Secretary and Treasurer at various times
prior to 1991. Mr. Riordan is currently a Director and Treasurer and Chief
Financial Officer of Exigent, and is a Director and Secretary/Treasurer of STI.
He has been employed by STI since 1979 and, in addition to administrative
duties, has provided software engineering support for Process Control Commercial
Contracts. Prior to joining STI, Mr. Riordan was project leader on several
projects for the Air Force Eastern Test Range at Cape Canaveral as well as an
on-site programmer for several Air Force ETR Missile Tracking Stations
supporting computer controlled radar systems. He received a B.S. in Mathematics
from Wake Forest University in 1968. Prior to joining the Company in January
1979, Mr. Riordan was employed for 11 years with RCA at the Air Force Cape
Canaveral Missile Test Range.
Mr. Smedley became a director of Exigent on February 7, 1997. In 1994, he
took early retirement from Motorola, Inc. to become President and Chief
Executive Officer of AirNet, an infrastructure products company for Wireless
Local Loop cellular and PCS markets. Mr. Smedley started his career at Goodyear
Aerospace in 1962, and in 1969 became engineering manager for Xerox Data
Systems. He joined Motorola, Inc. in 1976, where he led the Company's entry in
wireless RF data systems, resulting in the successful effort to develop and
supply a nationwide wireless computer data communications system for IBM and
subsequently the Motorola/IBM joint venture ARDIS. In 1980, he was put in charge
of Motorola's Improved Mobile Telephone System (IMTS) business which included
the fledgling cellular systems operations. Concurrently with cellular, he helped
develop other businesses in the field of wireless communications, i.e., cellular
service company joint ventures in Asia, the Middle East and Latin America, also
Altair, which is a broadband wireless in-building Ethernet product which
connects desk top P.C. and workstation devices as a Local Area Network. In 1991,
he was appointed General Manager of the newly formed Wireless Enterprise Systems
(WES). Mr. Smedley initiated several start-up businesses centered around
broadband technology for application, such as wireless PBXs and local loop
access with capabilities of high capacity data, video and toll quality voice
systems. WES also included other Motorola narrowband initiatives in the
hand-held computing and communication service business such as the Motorola
Network Interface and General Magic participation and The Envoy hand-held data
terminal. In his position as Director of Advanced Radio Networking, Mr. Smedley
had the responsibility as a director of Satellite Communications, Inc. for the
IRIDIUM project and as Vice-Chairman of the corporate-wide Wireless RF Data
Advisory Board, which coordinates all of Motorola's data communications
businesses' activities and priorities. Mr. Smedley has a B.A. degree in
Engineering from Washington and Jefferson College and a BSEE degree from
Carnegie-Mellon University, both of Pennsylvania. He also has attended advanced
studies in engineering and marketing at several universities.
Mr. Stark was one of the founders of STI. He has been a Director since 1978
and Vice President since 1983. He has also held the offices of President,
Chairman of the Board, Secretary and Treasurer as well as Vice President in
certain years prior to 1983. Mr. Stark is currently a Director of Exigent. He
has been an employee of STI from 1993 to the present and from 1978 to 1989. From
1989 to 1993, he was a software engineer with, and an owner of, Sysgen
International Inc., where he developed the interface command and telemetry CTRUS
box to the COMET operating system as well as other projects, many of which were
related to the COMET operating system. Mr. Stark was a system programmer with
the RCA Service Corporation from 1976 to 1978. Mr. Stark received a B.A. in
Mathematics from Bellarmine College in 1965 and an M.S. in Mathematics from the
Florida Institute of Technology in 1971.
For more information on the Committees of the Board and Board Compensation,
see "Compensation of Directors", "Certain Relationships and Related
Transactions", "Board Meetings and Committees" and "Compensation Committee
Interlocks and Insider Participation".
Required Vote
If the Amended Charter is approved by the stockholders, election of the
above nominees as directors requires the affirmative vote of a majority of the
Common Shares and Class A Preferred Shares, voting together as a single class,
represented in person or by proxy and entitled to vote at the Annual Meeting.
If the Amended Charter is not approved by the stockholders, election of the
above nominees as directors shall be as follows: (a) holders of a majority of
the Common Shares present at the Annual Meeting and entitled to vote, whether in
person or by proxy, shall have the right, voting as a separate class, to elect 2
directors, and (b) holders of a majority of the Class A Preferred Shares present
at the Annual Meeting and entitled to vote, whether in person or by proxy,
voting as a separate class, shall have the right to elect 5 directors. A
plurality of votes cast at the Annual Meeting, in person or by proxy, by holders
of Common Shares is required to elect 2 of the directors. A plurality of votes
cast at the Annual Meeting, in person or by proxy, by holders of Class A
Preferred Shares, is required to elect 5 of the directors.
With respect to the 2 directors to be elected by holders of Common Shares,
the two nominees who receive the greatest number of votes of holders of Common
Shares will be designated the directors elected by the holders of Common Shares.
If more than two nominees receive the same number of votes (which is also the
greatest number), Mr. Riordan and Mr. Smedley (if included in that number) will
be designated the directors elected by the holders of Common Shares. If neither
Mr. Riordan nor Mr. Smedley receives the greatest number of votes of holders of
Common Shares, the holders of Common Shares present at the meeting, whether in
person or by proxy, will vote on the designation of the two directors from among
those nominees receiving the greatest number of votes from the holders of Common
Shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED ABOVE.
<PAGE>
PROPOSAL 3
APPROVAL OF INCENTIVE STOCK OPTION PLAN 1Q
Summary Description of the Plan
On June 11, 1997, the Company's Board of Directors adopted the Incentive
Stock Option Plan 1Q ("Plan 1Q"), a copy of which is attached as Exhibit C. Plan
1Q must be approved by the stockholders of the Company pursuant to the NASDAQ
and Chicago Stock Exchange listing requirements. All employees of STI are
eligible for option awards under Plan 1Q. The Company believes that option
awards under Plan 1Q provide employees with a proprietary interest in the growth
and performance of the Company, thereby contributing to the Company's success. A
total of 600,000 shares of Common Stock have been reserved under Plan 1Q. The
shares of the Company's Common Stock subject to options granted under Plan 1Q
have been registered on Form S-8, which was filed with the Securities and
Exchange Commission on October 22, 1997. Options under Plan 1Q are not qualified
as incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
The following table sets forth information as to the most highly
compensated executive officers (the "Named Officers") and all other officers as
a group with respect to stock options granted during the period commencing June
11, 1997 and ending May 14, 1998, consisting of (i) the aggregate number of
shares of Common Stock subject to options granted during the specified period,
(ii) the average per share option exercise price thereof, and (iii) the net
value of shares of Common Stock acquired during the specified period.
<TABLE>
<CAPTION>
Options Granted between June Options Exercised between June
11, 1997 and 11, 1997 and
May 14, 1998 May 14, 1998
-------------------------------- ----------------------------------
Net Value
Average Realized Upon
Number Per Share Number Exercise of
of Exercise Price of Options (1)
Name and Position Shares Shares
<S> <C> <C> <C> <C>
Bernard R. Smedley, President, 125,000
CEO, Director $2.25 -- --
Don F. Riordan, Jr., CFO, 50,000
Treasurer, Director $2.25 -- --
William K. Presley, CTO, Director 50,000 $2.25 -- --
All Other Officers as a Group 370,000 (2) $2.25 130,500 $153,313
Non-Officer Employee Group -- -- -- --
- ----------------------------
(1) The net value realized is the closing price of the Common Stock on the day
on which the options were exercised less the exercise price of the options.
(2) Includes options for 25,000 shares of Common Stock which were terminated
in connection with an officer's termination of employment.
</TABLE>
No directors who are not executive officers of the Company and no employees
other than officers of the Company received options under Plan 1Q. Messrs.
Smedley, Riordan, Presley, Clift, Jack D. Daily, Stuart P. Dawley, Gavin C.
Ridge and James A. Traficant (each as officers of the Company) received five
percent or more of the total options under Plan 1Q.
The Chief Executive Officer (the "CEO") of Exigent administers Plan 1Q and
has authority to select the employees to whom options are to be granted.
However, all option awards must be authorized by the Board of Directors of
Exigent, including awards to the CEO. Option awards are based on the employee's
title and his or her anticipated responsibilities as an employee of STI.
Optionees enter into stock option agreements setting forth the period for
which options are granted. All options granted under Plan 1Q are exercisable
within three years from the date of grant and expire three years after the date
of such option grant. All options are granted at an exercise price that is not
less than 100% of the fair market value of the Company's Common Stock at the
date of grant. The calculation of fair market value is based on the average
trading price of the Company's Common Stock. On the date of exercise, optionees
may make full payment of the exercise price in cash or by tendering previously
acquired shares of stock or by a combination of both methods of payment. No
option shall be transferable by the optionee other than by will or the laws of
descent and distribution. If an optionee's employment with STI is terminated for
due cause, all options terminate simultaneously with such optionee's
termination. If an optionee ceases to be an employee for any reason other than
due cause or death or disability, each option will terminate within three months
of the date following such optionee's termination as an employee.
In the event of any change in the outstanding stock of the Company by
reason of stock dividends, recapitalizations, reorganizations, mergers,
consolidations or other transactions involving an increase or decrease in the
number of outstanding shares of Common Stock, certain adjustments will be made
in the number and kind of shares which may thereafter be optioned under Plan 1Q.
The Board of Directors of the Company may terminate, amend or modify Plan
1Q at any time, except that the Board of Directors may not amend, modify or
terminate the plan in a manner that may affect any option granted to an employee
without such employee's consent. Plan 1Q shall terminate on June 11 , 2007 or on
such earlier date as may be determined by the Board of Directors.
Plan 1Q also authorizes the CEO to award stock appreciation rights ("SARs")
to optionees. A SAR consists of a right to receive a payment, in cash or stock
of the Company, equal to the excess of the fair market value of the optioned
stock on the date of the exercise of an option and the exercise price of the
option. An optionee who has been granted SARs may elect to exercise his SARs in
lieu of receipt of the optioned stock. SARs under Plan 1Q expire no later than
the expiration date of the option. SARs are only transferable when the
underlying option is transferable. Upon exercise of SARs, the underlying option
is canceled. As of May 14, 1998, no SARs have been granted under Plan 1Q.
Certain Federal Income Tax Consequences
For a summary of certain federal income tax aspects of awards made under
Plan 1Q, see "Certain Federal Income Tax Consequences of Stock Option Plans
Proposed for Stockholder Approval" on page 29 of this Proxy Statement.
Required Vote
Approval of the adoption of Plan 1Q requires the affirmative vote of the
Common Shares and Class A Preferred Shares issued and outstanding, voting
together as a single class, represented in person or by proxy and entitled to
vote at the Annual Meeting. The Board of Directors believes that approval of
Plan 1Q is in the Company's best interests since it will facilitate the
Company's ability to attract, motivate and retain key employees and directors,
while aligning their interests with those of the stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE ADOPTION OF THE INCENTIVE STOCK OPTION PLAN 1Q.
<PAGE>
PROPOSAL 4
APPROVAL OF INCENTIVE STOCK OPTION PLAN 3Q
Summary Description of the Plan
On July 30, 1997, the Company's Board of Directors adopted, subject to
stockholder approval, the Incentive Stock Option Plan 3Q ("Plan 3Q"), a copy of
which is attached as Exhibit D. All employees of the Company and its
subsidiaries are eligible for option awards under Plan 3Q. The Company believes
that option awards under Plan 3Q provide employees with a proprietary interest
in the growth and performance of the Company, thereby contributing to the
Company's success. A total of 240,000 shares of Common Stock have been reserved
under Plan 3Q. The shares of the Company's Common Stock subject to options
granted under Plan 3Q have been registered on Form S-8, which was filed with the
Securities and Exchange Commission on January 2, 1998. Options under Plan 3Q are
intended to be incentive stock options ("ISOs") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended. However, options which
have been granted under Plan 3Q are not deemed ISOs until the plan is approved
by the stockholders.
No options were granted under Plan 3Q to any of the Named Officers or any
directors of the Company. The following table sets forth information as to all
other officers as a group and all employees as a group with respect to stock
options granted during the period commencing January 22, 1998 (the date of the
first grant) and ending May 14, 1998, consisting of (i) the aggregate number of
shares of Common Stock subject to options granted during the specified period,
and (ii) the average per share option exercise price thereof. No options have
been exercised during the specified period and thus, the dollar value of such
options is not determinable.
<TABLE>
<CAPTION>
Options Granted between
January 22, 1998 and
May 14, 1998
-----------------------------------
Number Weighted Average
of Per Share
Name and Position Shares Exercise Price
<S> <C> <C>
All Officers (other than Named Officers) as a 24,600 $3.08
Group
Non-Officer Employee Group 57,300 $3.23
</TABLE>
Mr. Dennis A. Lunder as an officer of the Company and two employees of the
Company each were granted five percent or more of the total options under Plan
3Q.
The Chief Executive Officer (the "CEO") of the Company administers Plan 3Q
and has authority to select the employees to whom options are to be granted.
However, all option awards (as well as any cashless exercise or tax withholding
rights and any awards to the CEO) must be approved in advance by the Board of
Directors of the Company or a committee of the Board composed solely of two or
more "non-employee directors" as such term is defined under Section 16 of the
Securities Exchange Act of 1934. Option awards are based on the employee's title
and his or her anticipated responsibilities as an employee of the Company. Fifty
percent (50%) of the total number of shares reserved for options under Plan 3Q
are allocated to newly hired employees and the remaining fifty percent (50%) are
allocated to other employees, including executive officers, as the CEO shall
select in his discretion.
Optionees shall enter into stock option agreements setting forth the period
for which options are granted. All options granted under Plan 3Q are exercisable
one year from the date of grant and expire three years after the date of such
option grant, provided that no option is exercisable while the optionee holds
any other incentive stock option which was granted to such employee prior to the
grant of the Plan 3Q option. All options are granted at an exercise price that
is not less than 100% of the fair market value of the Company's Common Stock at
the date of grant. The calculation of fair market value is based on the average
trading price of the Company's Common Stock. The exercise price will be at least
110% of the fair market value of the Company's Common Stock on the date of the
grant if the optionee holds more than 10% of the total combined voting power of
all classes of stock of the Company. On the date of exercise, optionees may make
full payment of the exercise price in cash or by tendering previously acquired
shares of stock or by a combination of both methods of payment. No option shall
be transferable by the optionee other than by will or the laws of descent and
distribution. If an optionee's employment with the Company is terminated for due
cause, all options terminate simultaneously with such optionee's termination. If
an optionee ceases to be an employee for any reason other than due cause or
death or disability, each option will terminate within three months of the date
following such optionee's termination as an employee.
In the event of any change in the outstanding stock of the Company by
reason of stock dividends, recapitalizations, reorganizations, mergers,
consolidations or other transactions involving an increase or decrease in the
number of outstanding shares of Common Stock, certain adjustments will be made
in the number and kind of shares which may thereafter be optioned under Plan 3Q.
The Board of Directors of the Company may terminate, amend or modify Plan
3Q at any time, except that the Board of Directors may not, without stockholder
approval, (a) increase the total number of shares of stock reserved under Plan
3Q, (b) permit the granting of options to anyone other than an employee of the
Company or its subsidiaries, (c) decrease the minimum option price, (d) increase
the maximum option periods, (e) increase the maximum number of options per
optionee, or (f) withdraw the administration of Plan 3Q from the CEO. Plan 3Q
shall terminate on July 29, 2007 or on such earlier date as may be determined by
the Board of Directors.
Plan 3Q also authorizes the CEO to award stock appreciation rights ("SARs")
to optionees. A SAR consists of a right to receive a payment, in cash or stock
of the Company, equal to the excess of the fair market value of the optioned
stock on the date of the exercise of an option and the exercise price of the
option. An optionee who has been granted SARs may elect to exercise his SARs in
lieu of receipt of the optioned stock. SARs under Plan 3Q expire no later than
the expiration date of the option. SARs are only transferable when the
underlying option is transferable. Upon exercise of SARs, the underlying option
is canceled. As of May 14, 1998, no SARs have been granted under Plan 3Q.
Certain Federal Income Tax Consequences
For a summary of certain federal income tax aspects of awards made under
Plan 3Q, see "Certain Federal Income Tax Consequences of Stock Option Plans
Proposed for Stockholder Approval" on page 29 of this Proxy Statement.
Required Vote
Approval of the adoption of Plan 3Q requires the affirmative vote of the
Common Shares and Class A Preferred Shares issued and outstanding, voting
together as a single class, represented in person or by proxy and entitled to
vote at the Annual Meeting. The Board of Directors believes that approval of
Plan 3Q is in the Company's best interests since it will facilitate the
Company's ability to attract, motivate and retain key employees, while aligning
their interests with those of the stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE ADOPTION OF THE INCENTIVE STOCK OPTION PLAN 3Q.
<PAGE>
PROPOSAL 5
APPROVAL OF INCENTIVE STOCK OPTION PLAN 4Q
Summary Description of the Plan
On September 30, 1997, the Company's Board of Directors adopted, subject to
stockholder approval, the Incentive Stock Option Plan 4Q ("Plan 4Q"), a copy of
which is attached as Exhibit E. All employees of the Company and its
subsidiaries are eligible for option awards under Plan 4Q. The Company believes
that option awards under Plan 4Q provide employees with a proprietary interest
in the growth and performance of the Company, thereby contributing to the
Company's success. A total of 250,000 shares of Common Stock have been reserved
under Plan 4Q. The shares of the Company's Common Stock subject to options
granted under Plan 4Q have been registered on Form S-8, which was filed with the
Securities and Exchange Commission on April 20, 1998. Assuming stockholder
approval of Plan 4Q, the plan is effective as of April 21, 1998. Options under
Plan 4Q are intended to be incentive stock options ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended. However,
options which have been granted under Plan 4Q are not deemed ISOs until the plan
is approved by the stockholders.
The following table sets forth information as to all officers of the
Company (other than the Named Officers), the directors who are not officers as a
group and all employees as a group with respect to stock options granted during
the period commencing April 21, 1998 and ending May 14, 1998, consisting of (i)
the aggregate number of shares of Common Stock subject to options granted during
the specified period, (ii) the average per share option exercise price thereof,
and (iii) the net value of shares of Common Stock acquired during the specified
period. No options were granted under Plan 4Q to any of the Named Officers or
other officers of the Company.
<TABLE>
<CAPTION>
Options Granted between April Options Exercised between April
21, 1998 and 21, 1998 and
May 14, 1998 May 14, 1998
-------------------------------- ---------------------------------
Net Value
Average Realized Upon
Number Per Share Number Exercise of
of Exercise Price of Options (1)
Name and Position Shares Shares
All Officers (other than Named Officers)
<S> <C> <C> <C> <C>
as a Group 7,500 $3.88 -- --
Non-Officer Director Group 500 $4.26 -- --
Non-Officer Employee Group 215,450 $3.88 200 $37.50
- -----------------------------
(1) The net value realized is the closing price of the Common Stock on the day
on which the options were exercised less the exercise price of the options.
</TABLE>
The Chief Executive Officer (the "CEO") of the Company administers Plan 4Q
and has authority to select the employees to whom options are to be granted.
However, all option awards (as well as any cashless exercise or tax withholding
rights and any awards to the CEO) are approved in advance by the Board of
Directors of the Company or a committee of the Board composed of two or more
"non-employee directors" as such term is defined under Section 16 of the
Securities Exchange Act of 1934. Individual option grants are based, in part, on
the corporate financial performance goals established by the CEO for the
officers and the employees under their supervision.
Optionees shall enter into stock option agreements setting forth the period
for which options are granted. All options granted under Plan 4Q are exercisable
one year from the date of grant and expire three years after the date of such
option grant. Options must be exercised in increments of at least one hundred
(100) shares of Common Stock, unless the optionee holds options to purchase less
than one hundred (100) shares of Common Stock in which case all remaining
options held by the optionee must be exercised. All options are granted at an
exercise price that is not less than 100% of the fair market value of the
Company's Common Stock at the date of grant. The calculation of fair market
value is based on the average trading price of the Company's Common Stock. The
exercise price will be at least 110% of the fair market value of the Company's
Common Stock on the date of the grant if the optionee holds more than 10% of the
total combined voting power of all classes of stock of the Company. On the date
of exercise, optionees may make full payment of the exercise price in cash or by
tendering previously acquired shares of stock or by a combination of both
methods of payment. No option shall be transferable by the optionee other than
by will or the laws of descent and distribution. If an optionee's employment
with the Company is terminated for due cause, all options terminate
simultaneously with such optionee's termination. If an optionee ceases to be an
employee for any reason other than due cause or death or disability, each option
will terminate within three months of the date following such optionee's
termination as an employee.
In the event of any change in the outstanding stock of the Company by
reason of stock dividends, recapitalizations, reorganizations, mergers,
consolidations or other transactions involving an increase or decrease in the
number of outstanding shares of Common Stock, certain adjustments will be made
in the number and kind of shares which may thereafter be optioned under Plan 4Q.
In the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation of the Company, (c) the sale of substantially all of the assets of
the Company, or (d) the sale of more than 50% of the outstanding shares of the
Company, all the outstanding options under Plan 4Q may be assumed, converted or
replaced by the successor corporation, if any. The successor corporation, if
any, may substitute equivalent options or provide substantially similar
consideration to optionees as may be provided to the Company's stockholders. In
the event the successor corporation refuses to assume or substitute options
under Plan 4Q, such options will expire on such transaction unless the CEO, in
his discretion, provides that the vesting of such options will accelerate and be
exercisable upon such transaction. The CEO may also determine that any options
not exercised prior to the consummation of the transaction may terminate.
The Board of Directors of the Company may terminate, amend or modify Plan
4Q at any time, except that the Board of Directors may not, without stockholder
approval, (a) increase the total number of shares of stock reserved under Plan
4Q, (b) permit the granting of options to anyone other than an employee of the
Company or its subsidiaries, (c) decrease the minimum option price, (d) increase
the maximum option periods, (e) increase the maximum number of options per
optionee, or (f) withdraw the administration of Plan 4Q from the CEO. Plan 4Q
shall terminate on April 20, 2008 or on such earlier date as may be determined
by the Board of Directors.
Plan 4Q also authorizes the CEO to award stock appreciation rights ("SARs")
to optionees. A SAR consists of a right to receive a payment, in cash or stock
of the Company, equal to the excess of the fair market value of the optioned
stock on the date of the exercise of an option and the exercise price of the
option. An optionee who has been granted SARs may elect to exercise his SARs in
lieu of receipt of the optioned stock. SARs under Plan 4Q expire no later than
the expiration date of the option. SARs are only transferable when the
underlying option is transferable. Upon exercise of SARs, the underlying option
is canceled. As of May 14, 1998, no SARs have been granted under Plan 4Q.
Certain Federal Income Tax Consequences
For a summary of certain federal income tax aspects of awards made under
Plan 4Q, see "Certain Federal Income Tax Consequences of Stock Option Plans
Proposed for Stockholder Approval" on page 29 of this Proxy Statement.
Required Vote
Approval of the adoption of Plan 4Q requires the affirmative vote of the
Common Shares and Class A Preferred Shares issued and outstanding, voting
together as a single class, represented in person or by proxy and entitled to
vote at the Annual Meeting. The Board of Directors believes that approval of
Plan 4Q is in the Company's best interests since it will facilitate the
Company's ability to attract, motivate and retain key employees, while aligning
their interests with those of the stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE ADOPTION OF THE INCENTIVE STOCK OPTION PLAN 4Q.
<PAGE>
PROPOSAL 6
APPROVAL OF INDEPENDENT DIRECTOR STOCK OPTION PLAN 5NQ
Summary Description of the Plan
On September 30, 1997, the Company's Board of Directors adopted the
Independent Director Stock Option Plan 5NQ ("Plan 5NQ"), a copy of which is
attached as Exhibit F. Plan 5NQ must be approved by the stockholders of the
Company pursuant to the NASDAQ and Chicago Stock Exchange listing requirements.
All members of the Board of Directors of the Company who are not employees,
officers or paid consultants of the Company ("independent directors") are
eligible for option awards under Plan 5NQ. The Company believes that option
awards under Plan 5NQ provide inducements to obtain and retain the services of
qualified persons to serve as members of the Board of Directors, thereby
contributing to the Company's success. A total of 120,000 shares of Common Stock
have been reserved under Plan 5NQ. The shares of the Company's Common Stock
subject to options granted under Plan 5NQ have been registered on Form S-8,
which was filed with the Securities and Exchange Commission on March 30, 1998.
Options under Plan 5NQ are not intended to qualify as incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
The following table sets forth information as to the independent directors
as a group during the period commencing September 30, 1997 and ending May 14,
1998, consisting of (i) the aggregate number of shares of Common Stock subject
to options granted during the specified period, and (ii) the average per share
option exercise price thereof. All of the independent directors, Messrs.
Janowiak, Collier and Helm, received options in excess of 5% of the total
options under Plan 5NQ. No options have been exercised during the specified
period and thus, the dollar value of such options is not determinable.
Options Granted between September
30, 1997 and
May 14, 1998
-----------------------------------
Number Weighted Average
of Per Share Exercise
Name and Position Shares Price
Independent Director Group 120,000 $3.52
The Compensation Committee of the Company administers Plan 5NQ, provided
the committee is composed solely of two or more "non-employee directors" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. If no such
committee is appointed, then the Board of Directors administers Plan 5NQ.
Each optionee who is granted options under Plan 5NQ shall enter into a
separate option agreement and receive options to purchase forty thousand
(40,000) shares of Common Stock of the Company. Options shall vest and become
exercisable by optionees at a rate of 2,500 share per calendar quarter for the 4
years following the grant date. However, optionees must continue to serve as
directors through each vesting date and must have attended at least seventy-five
percent (75%) of the Board of Director meetings held during the 12 month period
preceding the respective vesting date. An optionee who no longer serves as a
director may exercise any vested options within three (3) months after his or
her termination as a director. All options are granted at an exercise price that
is not less than 100% of the fair market value of the Company's Common Stock at
the date of grant. The calculation of fair market value is based on the average
trading price of the Company's Common Stock. On the date of exercise, optionees
may make full payment of the exercise price in cash, by tendering previously
acquired shares of stock, by a personal recourse promissory note or by a
combination of all such methods of payment, in the discretion of the
Compensation Committee. No option shall be transferable by the optionee other
than by will or the laws of descent and distribution.
In the event of any increase or decrease in the outstanding stock of the
Company by reason of a stock dividends, recapitalizations, reorganizations,
mergers, consolidations or other similar transactions, certain adjustments will
be made in the number and kind of shares which may thereafter be optioned under
Plan 5NQ. If the Company is a party to any merger or consolidation, options
under Plan 5NQ shall pertain to securities to which a holder, immediately prior
to such event, of Common Stock would have been entitled upon such merger or
consolidation. In the event of a dissolution or liquidation of the Company, each
option under Plan 5NQ shall immediately terminate.
The Board of Directors of the Company may terminate, amend or modify Plan
5NQ at any time, except that the Board of Directors generally may not (a)
increase the maximum number of shares for which options may be granted under
Plan 5NQ, (b) change the manner of determining the minimum exercise price of an
option, (c) extend the period during which an option may be granted, or (d)
amend the requirement as to the class of person eligible to receive options.
Plan 5NQ shall terminate on September 30, 2007 or on such earlier date as may be
determined by the Board of Directors.
Certain Federal Income Tax Consequences
For a summary of certain federal income tax aspects of awards made under
Plan 5NQ, see "Certain Federal Income Tax Consequences of Stock Option Plans
Proposed for stockholder Approval" on page 29 of this Proxy Statement.
Required Vote
Approval of the adoption of Plan 5NQ requires the affirmative vote of the
Common Shares and Class A Preferred Shares issued and outstanding, voting
together as a single class, represented in person or by proxy and entitled to
vote at the Annual Meeting. The Board of Directors believes that approval of
Plan 5NQ is in the Company's best interests since it will facilitate the
Company's ability to attract, motivate and retain independent directors, while
aligning their interests with those of the stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE ADOPTION OF THE INDEPENDENT DIRECTOR STOCK OPTION PLAN (5NQ).
<PAGE>
PROPOSAL 7
APPROVAL OF STOCK OPTION PLAN 6NQ
Summary Description of the Plan
On May 8, 1998, the Company's Board of Directors adopted the Stock Option
Plan 6NQ ("Plan 6NQ"), a copy of which is attached as Exhibit G. Plan 6NQ must
be approved by the stockholders of the Company pursuant to the NASDAQ and
Chicago Stock Exchange listing rules. Although all employees of the Company or
its subsidiaries are eligible for option awards under Plan 6NQ, the plan was
established primarily as a bonus program for management personnel. The Company
believes that option awards under Plan 6NQ will provide inducements to retain
key management employees and thereby contribute to the Company's success. A
total of 500,000 shares of Common Stock have been reserved under Plan 6NQ. The
shares of the Company's Common Stock subject to options granted under Plan 6NQ
have been registered on Form S-8, which was filed with the Securities and
Exchange Commission on May 8, 1998. Options under Plan 6NQ are not intended to
qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
No option grants have been made under Plan 6NQ and the amount of any
benefits cannot be determined at this time.
The Chief Executive Officer (the "CEO") of the Company administers Plan 6NQ
and has the authority to select the employees to whom options are to be granted.
However, all option awards (as well as any cashless exercise or tax withholding
rights and awards to the CEO) must be approved in advance by a committee of the
Board of Directors composed solely of two or more "non-employee directors"
within the meaning of Rule 16b-3 of the Securities Exchange Act. If no such
committee is appointed, then the Board of Directors administers Plan 6NQ.
Optionees shall enter into stock option agreements setting forth the period
for which options are granted, which shall not exceed three years from the date
of the option grant. The exercise price of the options is $2.25 per share of
Common Stock. Options must be exercised in increments of one hundred (100)
shares of Common Stock, unless the optionee holds options to purchase less than
one hundred (100) shares of Common Stock in which case all remaining options
held by the optionee must be exercised. On the date of exercise, optionees may
make full payment of the exercise price in cash or by tendering previously
acquired shares of stock or by a combination of both methods of payment, in the
discretion of the CEO. Stock that is tendered as payment of the option exercise
price is valued at fair market value, which is based on the average trading
price of the Company's Common Stock. No option shall be transferable by the
optionee other than by will or the laws of descent and distribution.
In the event of any change in the outstanding stock of the Company by
reason of stock dividends, recapitalizations, reorganizations, mergers,
consolidations or other transactions involving an increase or decrease in the
number of outstanding shares of Common Stock, certain adjustments will be made
in the number and kind of shares which may thereafter be optioned under Plan
6NQ. In the event of (a) a dissolution or liquidation of the Company, (b) a
merger or consolidation of the Company, (c) the sale of substantially all of the
assets of the Company, or (d) the sale of more than 50% of the outstanding
shares of the Company, all the outstanding options under Plan 6NQ may be
assumed, converted or replaced by the successor corporation, if any. The
successor corporation, if any, may substitute equivalent options or provide
substantially similar consideration to optionees as may be provided to the
Company's stockholders. In the even the successor corporation refuses to assume
or substitute options under Plan 6NQ, such options will expire on the
consummation of such transaction unless the CEO, in his discretion, provides
that the vesting of such options will accelerate and be exercisable upon such
transaction. The CEO may also determine that any options not exercised prior to
the consummation of the transaction may terminate.
The Board of Directors of the Company may increase or decrease (to the
extent options have not been granted or have not expired) the number of shares
subject to Plan 6NQ and terminate, amend or modify Plan 6NQ at any time, except
to the extent any change would affect an option granted to an employee and such
employee has not consented to such change. Plan 6NQ shall terminate on May 7,
2008 or on such earlier date as may be determined by the Board of Directors.
Plan 6NQ also authorizes the CEO to award stock appreciation rights
("SARs") to optionees. A SAR consists of a right to receive a payment, in cash
or stock of the Company, equal to the excess of the fair market value of the
optioned stock on the date of the exercise of an option and the exercise price
of the option. An optionee who has been granted SARs may elect to exercise his
SARs in lieu of receipt of the optioned stock. SARs under Plan 6NQ expire no
later than the expiration date of the option. SARs are only transferable when
the underlying option is transferable. Upon exercise of SARs, the underlying
option is canceled. As of May 14, 1998, no SARs have been granted under Plan
6NQ.
Certain Federal Income Tax Consequences
For a summary of certain federal income tax aspects of awards made under
Plan 6NQ, see "Certain Federal Income Tax Consequences of Stock Option Plans
Proposed for Stockholder Approval" on page 29 of this Proxy Statement.
Required Vote
Approval of the adoption of Plan 6NQ requires the affirmative vote of the
Common Shares and Class A Preferred Shares issued and outstanding, voting
together as a single class, represented in person or by proxy and entitled to
vote at the Annual Meeting. The Board of Directors believes that approval of
Plan 6NQ is in the Company's best interests since it will facilitate the
Company's ability to attract, motivate and retain key management employees while
aligning their interests with those of the stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE ADOPTION OF THE STOCK OPTION PLAN 6NQ.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTION PLANS
PROPOSED FOR STOCKHOLDER APPROVAL
Federal Income Tax Treatment of Incentive Stock Options
No income is recognized by an optionee when an incentive stock option is
granted or exercised. If the stock obtained upon exercise is sold more than one
year after exercise and two years after grant, the difference between the option
price and the amount realized on the sale is taxable to the optionee as
long-term capital gain. The Company is not entitled to a deduction as a result
of the grant or exercise of an incentive stock option or the sale of the stock
acquired upon exercise if the stock is held by the optionee for the requisite
periods.
If, however, the stock acquired upon exercise of an incentive stock option
is sold less than one year after exercise or less than two years after grant,
the lesser of (i) the difference between the fair market value on the date of
exercise and the option price or (ii) the difference between the amount realized
on the sale and the option price is taxable to the optionee as ordinary income
and the Company is entitled to a corresponding deduction. The excess of the
amount realized on the sale over the fair market value on the date of exercise,
if any, is taxable as long-term or short-term capital gain, depending on the
length of time the stock is held.
The excess of the fair market value of the stock over the option price on
the date of exercise of an incentive stock option will increase the optionee's
alternative minimum taxable income, which, in certain instances, may result in
the optionee's being subject to the alternative minimum tax.
Federal Income Tax Treatment of Non-Qualified Stock Options
There will be no federal income tax consequences to either the optionee or
the Company on the grant of a non-qualified option. Upon the exercise of a
non-qualified option, the optionee has taxable ordinary income equal to the
excess of the fair market value of the shares of Common Stock received on the
exercise date (or the date on which any substantial risk of forfeiture lapses)
over the option price of the shares. If the optionee is an employee of the
Company at the time of exercise, this income is subject to tax withholding. The
Company will be entitled to a corresponding federal income tax deduction.
Upon a subsequent sale or taxable exchange of shares acquired upon exercise
of an option or purchase right, an optionee will recognize long-term or
short-term capital gain or loss equal to the difference between the amount
realized on the sale and the tax basis of such shares. If the exercise price was
paid entirely in cash, the tax basis is the amount of cash paid plus any
additional ordinary income realized upon exercise. If part or all of the
exercise price was paid by surrendering shares of Common Stock that were
already-owned, the tax basis (and capital gains holding period) in the
surrendered shares carries over to an equivalent number of shares purchased in
connection with the Option exercise. Any additional shares purchased in
connection with the Option exercise have a tax basis equal to any cash paid,
plus any ordinary income realized upon exercise.
<PAGE>
PROPOSAL 8
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS FOR CURRENT YEAR
The Board of Directors voted unanimously on April 8, 1998 to change the
last day of the Company's fiscal year from January 31 to December 31. Ernst &
Young LLP has been approved by the Board as the Company's independent auditors
for the Company's fiscal year ending December 31, 1998, subject to ratification
of such appointment by the stockholders. Representatives from Ernst & Young LLP
are expected to be present at the Annual Meeting with the opportunity to make a
statement if they so desire, and will be available to respond to appropriate
questions from stockholders.
On March 18, 1998, the Board adopted resolutions changing the Company's
independent auditors from Hoyman, Dobson & Co., P.A. to Ernst & Young LLP. The
change will be effective as of June 30, 1998, the date of the Annual Meeting.
The reports of Hoyman, Dobson & Co., P.A. on the Company's financial statements
for the past two years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles. In connection with the audits of the Company's financial
statements for each of the two years ended January 31, 1998, there were no
disagreements with Hoyman, Dobson & Co., P.A. on any matters of accounting
principles or practices, financial statement disclosure or auditing scope and
procedures which, if not resolved to the satisfaction of Hoyman, Dobson & Co.,
P.A., would have caused Hoyman, Dobson & Co., P.A. to make reference to the
matter in its report.
Required Vote
Ratification of the Company's independent auditors is not required by the
Bylaws or otherwise, but the Board has decided to seek such ratification as a
matter of good corporate practice. Ratification of Ernst & Young LLP as the
Company's independent auditors for the Company's fiscal year ending December 31,
1998 requires the affirmative vote of a majority of the Common Shares and Class
A Preferred Shares, voting together as a single class, represented in person or
by proxy and entitled to vote at the Annual Meeting. If the stockholders do not
ratify this appointment, other certified public accountants will be considered
by the Board upon recommendations of the Audit Committee.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE COMPANY'S FISCAL YEAR ENDING DECEMBER 31, 1998.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Shares and Class A
Preferred Shares as of the Record Date by (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Shares and Class A Preferred Shares (each a "Principal Stockholder"), (ii) each
of the Company's directors and each nominee for director, (iii) the executive
officers named in the Summary Compensation Table below, and (iv) all Named
Officers and directors of the Company as a group. Except as otherwise indicated,
all owners have sole voting power and investment power over all shares listed.
<TABLE>
<CAPTION>
Common Shares Class A Preferred Shares
Name and Address Amount and Nature of Percent of Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Class Beneficial Ownership of Class
<S> <C> <C> <C> <C> <C>
Dean W. Boley 636,410 (1) 14% 110,632 17%
832 Palmetto Terrace
Oviedo, Florida
Jeffrey C. Clift 58,157 1% 1,781 *
571 Wethersfield Place (2)
Melbourne, Florida
Rudiger D. Lichti (9) 346,887 (3) 7% 50,694 8%
William K. Presley (9) 119,907 (4) 3% 2,329 *
Don F. Riordan, Jr. (9) 431,263 (5) 9% 51,558 8%
Daniel J. Stark (9) 702,262 (6) 15% 110,486 17%
Bernard R. Smedley (9) 130,589 (7) 3% 0 0%
STI ESOP (9) 1,854,391 (8) 40% 272,502 41%
Total Number of Shares owned by 1,384,021 (9) 28% 164,373 25%
Directors and Named Officers as a
Group
</TABLE>
*Less than 1%
- -------------------------
(1) Includes 110,632 Common Shares issuable upon conversion of the Class A
Preferred Shares, 78,378 Common Shares issuable upon exercise of the
Warrants to Purchase Common Stock, 5,595 Common Shares issuable upon
conversion of the Class A Preferred Shares held in trust by the STI ESOP,
and 25,345 Common Shares held in trust by the STI ESOP.
(2) Includes 1,781 Common Shares issuable upon conversion of the Class A
Preferred Shares, 5,856 Common Shares issuable upon exercise of the
Warrants to Purchase Common Stock, 100 Common Shares issuable upon exercise
of the Options held by Mr. Clift, 6,907 Common Shares issuable upon
conversion of the Class A Preferred Shares held in trust by the STI ESOP
for Mr. Clift's benefit, and 36,834 Common Shares held in trust by the STI
ESOP. Mr. Clift resigned as a Director and President on December 11, 1997.
(3) Includes 50,694 Common Shares issuable upon conversion of the Class A
Preferred Shares, 38,364 Common Shares issuable upon exercise of the
Warrants to Purchase Common Stock, 600 Common Shares issuable upon exercise
of the Options held by Mr. Lichti, 6,200 Common Shares issuable upon
conversion of the Class A Preferred Shares held in trust by the STI ESOP,
and 32,459 Common Shares held in trust by the STI ESOP
(4) Includes 2,329 Common Shares issuable upon conversion of the Class A
Preferred, 6,840 Common Shares issuable upon exercise of the Warrants to
Purchase Common Stock, 50,000 Common Shares issuable upon exercise of the
Options held by Mr. Presley, 7,817 Common Shares issuable upon conversion
of the Class A Preferred Shares held in trust by the STI ESOP, and 41,176
Common Shares held in trust by the STI ESOP.
(5) Includes 51,558 Common Shares issuable upon conversion of the Class A
Preferred Shares, 39,420 Common Shares issuable upon exercise of the
Warrants to Purchase Common Stock, 50,000 Common Shares issuable upon
exercise of the Options held by Mr. Riordan, 6,901 Common Shares issuable
upon conversion of the Class A Preferred Shares held in trust by the STI
ESOP, and 35,994 Common Shares held in trust by the STI ESOP.
(6) Includes 110,486 Common Shares issuable upon conversion of the Class A
Preferred Shares, 78,210 Common Shares issuable upon exercise of the
Warrants to Purchase Common Stock, 600 Common Shares issuable upon exercise
of the Options held by Mr. Stark, 5,485 Common Shares issuable upon
conversion of the Class A Preferred Shares held in trust by the STI ESOP,
and 28,951 Common Shares held in trust by the STI ESOP.
(7) Includes 125,000 Common Shares issuable upon exercise of the Options held
by Mr. Smedley, and 489 Common Shares held in trust by the STI ESOP.
(8) Includes 272,502 Common Shares issuable upon conversion of the Class A
Preferred Shares held by the STI ESOP, and 714 Common Shares issuable upon
exercise of the Warrants to Purchase Common Stock held by the STI ESOP.
(9) The business address is in care of Exigent International, Inc., 1225 Evans
Road, Melbourne, Florida.
For more information on certain transactions between the Company and any
director, any nominee director, any executive officer or any Principal
Stockholder, see "Certain Relationships and Related Transactions".
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation paid to Named Officers for
all services rendered to the Company and STI for each of the last two completed
fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
----------------------- -----------------
Name and Year Salary Bonus Other Annual Restricted Stock
Principal Position Ending 1/31 ($) ($) Compensation (1) ($) Awards (2) ($)
- ---------------------------- ------------- ----------- -------- --------------------- -----------------
<S> <C> <C> <C> <C> <C>
Bernard R. Smedley 1998 159,626 0 3,500 0
Chairman, Chief Executive 1997 -- -- -- --
Officer, President
Chief Operating Officer 1996 -- -- -- --
------- ----------- --------- ---------- -------------
William K. Presley 1998 138,718 0 3,500 0
Chief Technical Officer 1997 111,168 2,503 3,500 7,085
Executive Vice President 1996 103,219 0 3,500 0
------- ----------- --------- ---------- -------------
Don F. Riordan, Jr. (3) 1998 94,530 0 5,250 0
Chief Financial Officer 1997 88,530 0 3,500 0
Treasurer 1996 82,212 0 3,500 110,556
------- ----------- ---------- -------------
Executive Vice President
Jeffrey C. Clift (4) 1998 167,460 0 3.500 0
1997 126,186 0 3.500 0
1996 116,928 25,013 3.500 24,987
------- ----------- --------- ---------- -------------
</TABLE>
- ----------------------------
(1) All directors received $3,500 per year in director's fees.
(2) STI issued a total of 18,552 shares in restricted stock bonuses in April
1996 valued at $260,285. Of these, 10,166 shares valued at $142,629 were
issued to the persons listed in this table. The value of all of STI's
shares as of January 31, 1996 was $10,068,000. All restricted stock was
vested upon grant. All shares of Stock of STI were exchanged for Common and
Class A Preferred Shares as of January 30, 1997.
(3) Mr. Riordan is the trustee for the Company's three qualified retirement
plans including the Software Technology, Inc. Restated Employee Stock
Ownership Plan (ESOP). Mr. Riordan received an additional $1,750 for
serving as a Director of STI.
(4) Mr. Clift resigned as Director and President on December 11, 1997.
<PAGE>
COMPENSATION OF DIRECTORS
The Company's current policy is to pay each outside director who is neither
an employee, officer or directly or indirectly a paid consultant to the Company
a fee of $1,500 for each regular or special Board of Directors meeting. The
directors currently eligible to receive such compensation are Messrs. Collier,
Helm and Janowiak. The Company reimburses all directors for authorized
out-of-pocket expenses.
On March 10, 1997, the Board of Directors adopted an incentive stock option
plan ("Plan 2Q") which generally authorizes the grant of options to employees of
the Company and its subsidiaries. Plan 2Q is intended as an incentive to
encourage stock ownership in the Company by employees, including directors who
are employees. Options granted under Plan 2Q constitute incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended. A total of 200,000 shares of the Company's Common Stock are reserved
for issuance under Plan 2Q. Options to purchase an aggregate of 198,300 shares
have been granted as of January 31, 1998. Plan 2Q is administered by the
President of the Company, who has broad authority to interpret the plan,
including the authority to select the individuals to be granted options and the
particular form and conditions of each option granted. Options granted under
Plan 2Q are exercisable on the date of grant and expire three years after the
date the options were granted. The exercise price of options under Plan 2Q may
not be less than 100% of the fair market value of the Common Stock on the date
of grant. If an optionee's employment with the Company is terminated for due
cause, all options terminate simultaneously with such optionee's termination. If
an optionee ceases to be an employee for any reason other than due cause or
death, disability or retirement, each option will terminate within three months
of the date following such optionee's termination as an employee. Plan 2Q
terminates on March 9, 2007 or on such earlier date as may be terminated by the
Board of Directors in its sole discretion.
In addition to Plan 2Q, directors of the Company are eligible to
participate in Plans 1Q and 6NQ if they are also employees of the Company or its
subsidiaries and in Plan 5NQ if they are not employees, officers or paid
consultants of the Company. See Proposals 3, 6 and 7 in this Proxy Statement for
a summary of benefits under Plans 1Q, 5NQ and 6NQ.
EMPLOYMENT CONTRACTS
Employment Agreements
The Company has entered into employment agreements, dated June 11, 1997,
with Messrs. Smedley, Presley, and Riordan. Under their employment agreements,
Messrs. Smedley, Presley, and Riordan are entitled to annual salaries of
$250,000, $131,000, and $92,000, respectively. In the event the Company
generates annual revenues equal to or greater than that specified in an approved
three-year plan, Mr. Smedley's annual salary is subject to increase by the
Company's Board of Directors, and Messrs. Presley and Riordan's annual salaries
are subject to increase as determined by the Company's management and approved
by the Board of Directors.
Pursuant to the employment agreements the Company granted to Messrs.
Smedley, Presley, and Riordan options to purchase 125,000, 50,000, and 50,000
shares, respectively, of the Company's Common Stock, at an exercise price of
$2.25 per share and on the terms and conditions described in their incentive
stock option agreements with the Company.
The employment agreements, as amended, provide that so long as the employee
has not been terminated for due cause, the Company shall grant to Messrs.
Smedley, Presley, and Riordan options to purchase 125,000, 65,500, and 46,000
additional shares of the Company's Common Stock, respectively, at an exercise
price of $2.25 per share if the Company received on or prior to February 1,
1998: (a) earnings of at least $2.9 million or prorated in accordance with the
approved executive management plan for 1998, or (b) new funding for the Company
of at least $5,000,000, including long term (at least 5 years) subordinated debt
or equity or a combination of both. The Board of Directors could, in its sole
discretion, award part or all of these additional options to Messrs. Smedley,
Presley, and Riordan even if none of the foregoing goals had been achieved on or
prior to February 1, 1998. Since the Company met the earnings goal, the Board
has approved grant of the options. The Company plans to grant these options
under Stock Option Plan 6NQ.
Under Mr. Smedley's employment agreement, the Company provides at its
expense a life insurance policy in the amount of $600,000 with the beneficiary
designated by Mr. Smedley. Up to $10,000 of otherwise nonreimbursable medical
expenses incurred by Mr. Smedley or his wife, 75% of Mr. Smedley's annual dues
at a local country club, and all of his business expenses associated with his
employment by the Company shall be reimbursed by the Company.
The employment agreements entitle Messrs. Smedley, Presley, and Riordan to
long-term disability insurance and to any other benefits that the Board of
Directors, in its sole discretion, may make available. Messrs. Smedley, Presley,
and Riordan are also entitled to participate in the insurance and other fringe
benefit plans generally available to the Company's other employees.
Each of the employment agreements is for a term of three years from the
commencement date, unless extended by mutual written agreement of the Company
and the employee in writing at least three months prior to expiration of the
term.
In the event of termination of the employment of Messrs. Smedley, Presley
and Riordan without due cause during the first year, second year, third year or
thereafter, they are entitled to receive severance in an amount equal to 18, 12,
6 and 3 months salary, respectively, based on the then current salary of the
employee on the date of termination, payable in equal installments in accordance
with the Company's normal pay periods. If terminated without due cause they are
also eligible to receive group medical insurance benefits during any applicable
severance payment period plus any additional extension of the applicable
noncompete period.
Severance Arrangement
The Company has a severance arrangement with Jeffrey C. Clift, the
Company's former President and Chief Operating Officer, pursuant to the
termination provisions of an employment agreement dated June 11, 1997 between
the Company and Mr. Clift. The employment agreement entitles Mr. Clift to
receive an amount equal to eighteen months' salary based on his annual salary of
$145,000 as of the effective date of his termination on December 31, 1997, and
is payable in equal installments in accordance with the Company's normal pay
periods.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Brad Walker, a director of STI from March of 1996 to January of 1997 and a
director of the Company since May of 1996, provided consulting services to the
Company and STI through Joseph Walker & Sons, Inc. ("JWSI") which received
$48,485 in consulting fees from the Company during the past year. On January 31,
1998, Mr. Walker's consulting services were terminated, and on March 23, 1998 he
resigned from the Board.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year ending January 31, 1998, the Compensation Committee
consisted of Mr. Walker and Mr. Smedley. Mr. Janowiak joined the committee later
in the year. There were no committee interlocks with other companies in fiscal
year ending January 31, 1998 within the meaning of the Securities and Exchange
Commission's proxy rules.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
performance graph set forth herein shall not be incorporated by reference into
any such filings and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In mid-1997, the Company formed a Compensation Committee consisting of a
non-employee director and the CEO. Currently, the Compensation Committee
includes three independent directors (Mr. Collier, Mr. Helm and Mr. Janowiak)
and the CEO (Mr. Smedley). The Company's compensation plans, as a whole, are
reviewed on a regular basis to ensure competitiveness. The Committee implemented
and approved Employment Agreements for management and established stock option
plans to reward employees for past performance. The CEO voted on the
compensation plans for employees and abstained from voting on matters relating
to his compensation.
The Company's executive compensation plans are designed to attract, retain,
motivate and appropriately reward individuals who are responsible for the
Company's long-term profitability, growth and return to shareholders.
Compensation for executive officers consists of:
Base salary;
Annual incentive award based upon performance; and Long-term incentive
awards, typically in the form of stock options.
CEO Compensation
Under the three year employment agreement dated June 11, 1997, Mr.
Smedley's base salary is $250,000. Mr. Smedley's base salary may be increased by
the Company's Board of Directors if the Company's annual revenues equal or
exceed revenues specified in an approved three-year plan. Mr. Smedley received
options to purchase 125,000 shares of Common Stock at an exercise price of $2.25
per share.
Pursuant to the employment agreement, as amended, Mr. Smedley is eligible
to receive options to purchase 125,000 additional shares of the Company's Common
Shares at an exercise price of $2.25 per share on the condition that certain
Company goals were achieved by February 1, 1998. The condition was met and stock
options will be given to Mr. Smedley as part of Employee Stock Option Plan 6NQ.
COMPENSATION COMMITTEE
Arthur H. Collier
Scott B. Helm
Robert M. Janowiak
Bernard R. Smedley
<PAGE>
PERFORMANCE GRAPH
[OBJECT OMITTED]
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (as amended, the
"Exchange Act") requires the Company's directors, officers and persons who
beneficially own more than ten percent (10%) of the Common Shares (each, a
"Reporting Person") to file reports of ownership and changes of ownership with
the Securities and Exchange Commission. Copies of all filed reports are required
to be furnished to the Company pursuant to Section 16(a) of the Exchange Act.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company pursuant to Rule 16a-3(e) of the Exchange Act during fiscal year
ending January 31, 1998 and on written representations from Reporting Persons,
the Company believes that each Reporting Person complied with all applicable
filing requirements during its fiscal year ended January 31, 1998.
BOARD MEETINGS AND COMMITTEES
The Board met seven times during fiscal year ended January 31, 1998. All
directors attended at least 75% of the meetings held. Scott Helm was added as a
member of the Board on May 7, 1998 to fill the vacancy created by Brad Walker's
resignation.
Committees of the Board of Directors
The Board has standing audit, nominating, intellectual property rights,
investment and compensation committees. That Board also forms ad hoc committees
from time to time.
Audit Committee. The Audit Committee's principal functions include reviews
of: the audit plans, scope of audit and audit findings of the independent
auditors, significant tax and legal matters, and internal controls. Further, it
is the responsibility of the Audit Committee to recommend to the Board the
annual appointment of the independent auditors, to review the findings of
independent auditors, financial controllers and external regulatory agencies and
to review the accounting policies used in preparing the financial statements of
the Company. The current members include Mr. Helm (Chairman), Mr. Janowiak, Mr.
Riordan and Mr. Smedley. The Audit Committee met one time in the fiscal year
ended January 31, 1998.
Nominating Committee. The Nominating Committee's principal function is to
make recommendations to the Board as to the persons who should be considered for
Board membership. The current committee members are Mr. Stark (Chairman), Mr.
Collier, and Mr. Smedley. The Committee was recently formed in 1998.
Accordingly, no meetings were held in the fiscal year ended January 31, 1998.
Intellectual Property Rights Committee. The Intellectual Property Rights
Committee's principal functions include establishing the criteria necessary from
time to time for the Company's internal Patent Disclosure Selection Process,
overseeing the Company's IPR Incentive Program, reporting to the Board on the
status of patents and fostering an atmosphere in the Company to stimulate the
creation and presentation of intellectual property. The current members are Mr.
Collier, (Chairman), Mr. Presley, Mr. Stuart Dawley, Executive Vice President
and General Counsel, (adjunct member), Mr. Dean Oswald, Executive Vice
President, (adjunct member) and Mr. Smedley. The Intellectual Property Rights
Committee met two times during the fiscal year ended January 31, 1998.
Investment Committee. The Investment Committee's principal functions
include making recommendations to the Board, in concert with the Company's
management, as to the strategic alignment of the Company, financial advisability
of any potential acquisition or merger, and approval and selection of investment
bankers to represent the Company. The current members are Mr. Helm, Mr.
Janowiak, Mr. Riordan and Mr. Smedley. The Investment Committee was created in
1998. Accordingly, no meetings were held in the fiscal year ended January 31,
1998.
Compensation Committee. The Compensation Committee's principal function and
responsibility is to make recommendations to the Board as to the Company's
compensation plans and programs. The current members are Mr. Janowiak
(Chairman), Mr. Collier, Mr. Helm, and Mr. Smedley. Mr. Smedley participates in
recommendations to the Board for compensation matters relating to all other
employees. The Compensation Committee recommends any compensation matters for
Mr. Smedley to the full Board of Directors. The Compensation Committee met three
times and held several telephonic conferences during the fiscal year ended
January 31, 1998.
<PAGE>
OPTION GRANTS IN FISCAL YEAR ENDING JANUARY 31, 1998
<TABLE>
<CAPTION>
Potential Realizable Value At
Assumed Annual Rates Of
Stock Price Appreciation For
Option Term (4)
% of Total
----------------------------
Options/SARs Shares Expiration
Name Granted (1) (2) Granted Option Price Date (3) 5% 10%
- ---- --------------- ------- ------------ -------- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard R. Smedley 125,000 (1) 12.2% $2.25 6/11/00 $44,332 $93,094
100 (2) .0% $2.30 6/24/00 $36 $76
Don R. Riordan, Jr. 50,000 (1) 4.9% $2.25 6/11/00 $17,733 $37,238
100 (2) .0% $2.30 6/24/00 $36 $76
William K. Presley 50,000 (1) 4.9% $2.25 6/11/00 $17,733 $37,238
100 (2) .0% $2.30 6/24/00 $36 $76
</TABLE>
(1) These are options granted under the Plan 1Q.
(2) These are options granted under the Plan 2Q.
(3) These options could expire earlier in certain situations.
(4) The potential realizable value of the options granted for each of the Named
Officers was calculated by multiplying those options by the excess of the
assumed market value of Common Stock if the market value were to increase
5% or 10% in each year of the option's 3-year term over the option price
shown. This calculation does not take into account any taxes or other
expenses which might be owed.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth for each of the Named Officers certain
information concerning the number of options exercised by each of them in Fiscal
1998 and the value of such Named Officers' unexercised options as of January 31,
1998:
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options at In-the-Money Options
January 31, 1998 (#) at January 31, 1998($)(1)
Shares
Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Bernard R. Smedley 100 $163.75 125,000 0 125,000.00 0
Don R. Riordan, Jr. 100 182.50 50,000 0 50,000.00 0
William K. Presley 0 0 50,100 0 50,095.00 0
</TABLE>
(1) Calculated by determining the difference between the exercise price of the
options and $3.25, the closing price of the Company's Common Stock on
January 30, 1998, the last trading day of the fiscal year.
PROPOSALS OF STOCKHOLDERS FOR THE NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Company at its principal
executive offices located at 1225 Evans Road, Melbourne, Florida 32904-2314, on
or before March 30, 1999 and must otherwise be in compliance with the Company's
Certificate of Incorporation and Amended Bylaws and applicable laws, rules and
regulations in order to be eligible for consideration for inclusion in such
Annual Meeting proxy or accompanying proxy statement or for consideration at the
next Annual Meeting. If you wish to submit a proposal to be included in such
Annual Meeting proxy or proxy statement, please send your proposal via
registered or certified mail, return receipt requested, to the Secretary of the
Company at the Company's principal executive offices as set forth above.
FINANCIAL INFORMATION
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosures
On March 18, 1998, the Board of Directors of the Company adopted
resolutions changing the Company's certifying accountant to Ernst & Young LLP.
The engagement letter was executed on March 20, 1998. The change will be
effective after the audit for the fiscal year ended January 31, 1998. The
certifying accountant for the previous years and the fiscal year ended January
31, 1998, Hoyman, Dobson & Company, P.A., will continue to provide various
accounting services to the Company and its subsidiaries. The change was made
because the new certifying accountant has greater national name recognition.
The principal accountant's report on the financial statements for the
previous two years has not contained an adverse opinion or disclaimer of opinion
nor were such reports qualified or modified as to uncertainty, audit scope or
accounting principles. The Company has not had any disagreements with its
principle accountants on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure during its two
most recent fiscal years or since then. During its two most recent fiscal years
or since then, the Company has not been advised by its principal accountant: (i)
that the internal controls necessary for the Company to develop reliable
financial information do not exist; (ii) that information has come to the
accountant's attention that has led the accountant to no longer be able to rely
on management's representations or that have made the accountant unwilling to be
associated with the financial statements prepared by management; (iii) of the
need to expand significantly the scope of its audit, or that information has
come to the accountant's attention that if further investigated may materially
impact the fairness or reliability of either a previously issued audit report or
the underlying financial statements, or the financial statements covering a
period subsequent to the date of the most recent financial statements covered by
an audit report or cause the accountant to be unwilling to rely on management's
representations or be associated with the Company's financial statements; or
(iv) that information has come to the accountant's attention that the accountant
has concluded materially impacts the fairness or reliability of either a
previously issued audit report or the underlying financial statements, or the
financial statements issued or to be issued covering the fiscal periods
subsequent to the date of the most recent financial statements covered by an
audit report.
By letter dated March 27, 1998, Hoyman, Dobson & Company, P.A. confirmed
its agreement with the foregoing, as disclosed in Item 4 of the Company's filing
on Form 8-K on March 30, 1998, which letter is attached as Exhibit 16 to such
Form 8-K.
Information Incorporated by Reference
The Company's consolidated balance sheets as of January 31, 1998 and 1997,
and the consolidated statements of income, changes in stockholders' equity and
cash flows for the years ended January 31, 1998, 1997 and 1996, as included in
the Company's Report on Form 10-K for its fiscal year ended January 31, 1998
filed with the Securities and Exchange Commission on April 30, 1998, along with
the "Management's Discussion and Analysis of Financial Condition and Results of
Operations" are included in the Company's Annual Report delivered with this
Proxy Statement and are incorporated herein by reference.
OTHER MATTERS
The Board knows of no other matter to be presented at the Annual Meeting.
If any other matter should be presented at the Annual Meeting upon which a vote
properly may be taken, shares represented by all proxies received by the Board
will be voted with respect thereto in accordance with the judgment of the
persons named as attorneys in the proxies.
By Order of the Board of Directors
Patricia A. Frank
Secretary
Dated: _________, 1998
<PAGE>
Exigent International, Inc.
PROXY
The undersigned, being a stockholder of Exigent International, Inc., a
Delaware corporation (the "Company"), entitled to vote at the Annual Meeting of
Stockholders and revoking all prior proxies, hereby constitutes and appoints Don
F. Riordan and Stuart P. Dawley, and each of them, attorneys and proxies, with
full power of substitution, to vote all of the Common Shares and Class A
Preferred Shares of the Company held of record in the name of the undersigned at
the close of business on May 8, 1998 which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of the Company
to be held at the Melbourne Airport Hilton, Grand Ballroom, 200 Rialto Place,
Melbourne, Florida, on Tuesday, June 30, 1998, at 9:00 a.m. EDT or at any
postponement or adjournment thereof, in accordance with and upon the matters set
forth in the Notice of Annual Meeting of Stockholders and the Proxy Statement
dated ____, 1998, a copy of which I received (the "Proxy Statement").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed thereto in the Proxy Statement.
The undersigned hereby ratifies and confirms any and all acts and things
that said Proxy may do and cause to be done in the premises, whether at said
meeting or at any change, adjournment, and continuation thereof, and hereby
revokes all prior proxies heretofore executed.
SEE REVERSE SIDE
<PAGE>
[x] Please mark votes as in this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS.
1. Approve the adoption of the Amended Charter:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Elect the following as Directors of the Company:
[ ] FOR all nominees listed below (except as indicated to the
contrary below*)
[ ] WITHHOLD all nominees below
[ ] Arthur H. Collier
[ ] Scott B. Helm
[ ] Robert M. Janowiak
[ ] William K. Presley
[ ] Don F. Riordan, Jr.
[ ] B. R. "Bernie" Smedley
[ ] Daniel J. Stark
*Instructions: To withhold authority to vote for any individual nominee, place a
check by the [ ] beside the nominee's name.
3. Approve the adoption of Incentive Stock Option Plan 1Q:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approve the adoption of Incentive Stock Option Plan 3Q:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Approve the adoption of Incentive Stock Option Plan 4Q:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Approve the adoption of Independent Director Stock Option Plan 5NQ:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. Approve the adoption of Stock Option Plan 6NQ:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
8. Ratification of the selection of the firm of Ernst & Young LLP as independent
auditors of the Company for its fiscal year ending December 31, 1998:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
9. Approval of such other business as may properly come before the meeting or
any postponements or adjournments thereof.**
**If any other matter should be presented at the Annual Meeting upon which a
vote properly may be taken, shares represented by this proxy will be voted with
respect thereto in accordance with the judgment of the persons named as
attorneys and proxies herein.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. The Secretary knows of no other business to be
brought before the meeting.
[ ] MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW
Please sign exactly as name appears below. Joint owners must both sign.
Attorney, executor, administrator, trustee or guardian must give full title as
such. A corporation, partnership or other legal entity must sign its full name
by authorized person.
- ------------------------------------
Signature of Stockholder
Date: , 1998
- ------------------------------------
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
I/We will attend the meeting. [ ] YES [ ] NO
Note:This proxy must be signed exactly as the name or names appearing on the
following label.
Stockholder Signature:
(LABEL)
EXHIBIT A
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EXIGENT INTERNATIONAL, INC.
1. The original name of this corporation is Exigent International, Inc.
(the "Corporation") and the date of filing of the original Certificate of
Incorporation of the Corporation with the Secretary of State of the State of
Delaware is March 25, 1996, which Certificate of Incorporation was amended and
restated by the Amended and Restated Certificate of Incorporation of the
Corporation filed with the Secretary of the State of Delaware on October 28,
1996.
2. This Second Amended and Restated Certificate of Incorporation was
proposed for adoption by the Board of Directors and adopted by vote of the
stockholders of the Corporation pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
3. Accordingly, the Certificate of Incorporation of the Corporation, as
previously amended, is hereby deleted in its entirety and is amended and
restated to read as follows:
ARTICLE ONE
NAME
1.1 The name of the Corporation is Exigent International, Inc. (the
"Corporation").
ARTICLE TWO
REGISTERED OFFICE
2.1 The address of the registered office of the Corporation in the County
of New Castle of the State of Delaware is Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801, and the name of the registered agent at such
address is The Corporation Trust Company.
ARTICLE THREE
PURPOSE AND DURATION
3.1 The nature of the business or purposes of the Corporation is to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware, and by such statement all
lawful acts and activities shall be within the purposes of the Corporation,
except for express limitations, if any. The Corporation shall possess and
exercise all the powers and privileges granted by the General Corporation Law of
the State of Delaware, by any other law or by this Certificate, together with
any powers incidental thereto as far as such powers and privileges are necessary
or convenient to the conduct, promotion, or attainment of the purposes of the
Corporation. The period of duration of the Corporation shall be perpetual.
ARTICLE FOUR
CAPITAL STRUCTURE
4.1 The total number of shares which the Corporation is authorized to issue
is 45,700,000 shares of which 40,000,000 shares shall be designated Common
Shares par value $0.01 per share ("Common Shares"), 5,000,000 shall be
designated Preferred Shares par value $0.01 per share ("Preferred Shares") and
700,000 shall be designated Class A Preferred Shares par value $0.01 per share
("Class A Preferred Shares"). For purposes of this Second Amended and Restated
Certificate of Incorporation, "Class A Preferred Shares" are not part of and are
distinct from the "Preferred Shares." No holder of shares of any class of stock
of the Corporation now or hereafter authorized shall be entitled to cumulative
voting or shall have any preferential or preemptive right to subscribe for,
purchase or receive any shares of the Corporation of any class now or hereafter
authorized, or any portions or warrants for such shares, or any securities
convertible into or exchangeable for such shares, which may at any time be
issued, sold or offered for sale by the Corporation.
4.2 The designations, preferences, powers, qualifications and special or
relative rights or privileges of the capital stock of the Corporation shall be
as set forth in ARTICLES FIVE, SIX and SEVEN below.
ARTICLE FIVE
COMMON SHARES
5.1 Except as herein otherwise expressly provided in this ARTICLE FIVE, all
Common Shares shall be identical and shall entitle the holders thereof to the
same rights and privileges.
5.2 (a) When, as and if dividends on Common Shares are declared by the
Corporation's Board of Directors, whether payable in cash, in property or in
securities of the Corporation, the holders of Common Shares shall be entitled to
share equally in and to receive, in accordance with the number of Common Shares
held by each such holder, all such dividends.
(b) Dividends payable under this Paragraph 5.2 shall be paid to the
holders of record of the outstanding Common Shares as their names shall appear
on the stock register of the Corporation on the record date fixed by the Board
of Directors of the Corporation in advance of declaration and payment of each
dividend. Any dividends paid in shares shall be paid in Common Shares. Any
Common Shares issued as a dividend pursuant to this Paragraph 5.2 shall, when so
issued, be duly authorized, validly issued, fully paid and non-assessable and
free of all liens and charges. The Corporation shall not issue fractions of
Common Shares on payment of such dividend but shall issue a whole number of
shares to such holder of Common Shares rounded up or down in the Corporation's
sole discretion to the nearest whole number, without compensation to the
stockholder whose fractional share has been rounded down or from any stockholder
whose fractional share has been rounded up.
(c) Notwithstanding anything contained herein to the contrary, no
dividends on Common Shares shall be declared by the Corporation's Board of
Directors or paid or set apart for payment by the Corporation at any time that
such declaration, payment, or setting apart is prohibited by applicable law.
5.3 The Corporation shall not in any manner subdivide (by any stock split,
reclassification, stock dividend, recapitalization or otherwise) or combine the
outstanding shares of one class of Common Shares unless the outstanding shares
of all classes of Common Shares shall be proportionately subdivided or combined.
5.4 Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the Corporation, after payment shall have been made
to holders of outstanding Preferred Shares and Class A Preferred Shares, if any,
of the full amount of which they are entitled pursuant to this Second Amended
and Restated Certificate of Incorporation and any resolutions that may be
adopted from time to time by the Corporation's Board of Directors, in accordance
with ARTICLE SIX below (for the purpose of fixing the voting rights,
designations, preferences and relative participating, optional or other special
rights of any class or series of Preferred Shares), the holders of Common Shares
shall be entitled, to the exclusion of the holders of Preferred Shares and Class
A Preferred Shares, if any, to share ratably, in accordance with the number of
Common Shares held by each such holder, in all remaining assets of the
Corporation available for distribution among the holders of Common Shares,
whether such assets are capital, surplus, or earnings. For the purposes of this
Paragraph 5.4, neither the consolidation or merger of the Corporation with or
into any other corporation or corporations in which the stockholders of the
Corporation receive capital stock and/or other securities (including debt
securities) of the acquiring corporation (or of the direct or indirect parent
corporation of the acquiring corporation), nor the sale, lease or transfer by
the Corporation of all or any part of its assets, nor the reduction of the
capital stock of the Corporation, shall be deemed to be a voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation as those
terms are used in this Paragraph 5.4.
5.5 Each holder of Common Shares shall be entitled to one vote for each
share of such stock issued and outstanding and registered in such holder's name
and shall be entitled to vote upon such matters and in such manner as may be
provided by Delaware law and this Second Amended and Restated Certificate of
Incorporation.
ARTICLE SIX
PREFERRED SHARES
6.1 Shares of Preferred Shares may be issued from time to time in one or
more series as may be determined by the Board of Directors of the Corporation.
Subject to the provisions of this Second Amended and Restated Certificate of
Incorporation and this ARTICLE SIX, the Board of Directors of the Corporation is
authorized to determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued class or series of
Preferred Shares and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors of the Corporation
originally fixing the number of shares constituting any such additional series,
to increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any such additional series subsequent to
the issue of shares of that series.
6.2 Authorized and unissued shares of Preferred Shares may be issued with
such designations, voting powers, preferences and relative participating
optional or other special rights, and qualifications, limitations and
restrictions on such rights, as the Board of Directors of the Corporation may
authorize by resolutions duly adopted prior to the issuance of any shares of any
class or series of Preferred Shares, including, but not limited to: (i) the
distinctive designation of each series and the number of shares that will
constitute such series; (ii) the voting rights, if any, of shares of such series
and whether the shares of any such series having voting rights shall have
multiple votes per share; (iii) the dividend rate on the shares of such series,
any restriction, limitation or condition upon the payment of such dividends,
whether dividends shall be cumulative and the dates on which dividends are
payable; (iv) the prices at which, and the terms and conditions on which, the
shares of such series may be redeemed, if such shares are redeemable; (v) the
purchase or sinking fund provisions, if any, for the purchase or redemption of
shares of such series; (vi) any preferential amount payable upon shares of such
series in the event of the liquidation, dissolution or winding-up of the Company
or the distribution of its assets; and (vii) the prices or rates of conversion
at which, and the terms and conditions on which, the shares are convertible.
6.3 Any and all shares issued and for which full consideration has been
paid or delivered shall be deemed fully paid stock and the holder thereof shall
not be liable for any further payment thereon.
ARTICLE SEVEN
CLASS A PREFERRED SHARES
7.1 Class A Preferred Shares shall have a stated value of $2.50 per share
and shall be identical in all respects and have equal rights and privileges with
Common Shares, except as otherwise provided herein.
7.2 (a) The Common Shares and Class A Preferred Shares shall have equal
dividend rights and the Corporation shall not declare or pay dividends on shares
of one of such classes unless an equal amount is declared and paid on shares of
the other class on a per share basis.
(b) Dividends payable under this Paragraph 7.2 shall be paid to the
holders of record of the outstanding Class A Preferred Shares as their names
shall appear on the stock register of the Corporation on the record date fixed
by the Board of Directors of the Corporation in advance of declaration and
payment of each dividend.
(c) Notwithstanding anything contained herein to the contrary, no
dividends on Class A Preferred Shares shall be declared by the Corporation's
Board of Directors or paid or set apart for payment by the Corporation at any
time that such declaration, payment, or setting apart is prohibited by
applicable law.
7.3 The Corporation shall not in any manner subdivide (by any stock split,
reclassification, stock dividend, recapitalization or otherwise) or combine the
outstanding shares of either Common Shares or Class A Preferred Shares without
at the same time making a proportionate subdivision or combination of shares of
both such classes.
7.4 Each holder of Class A Preferred Shares shall be entitled to one vote
for each share of such stock issued and outstanding and registered in such
holder's name and shall vote with the holders of Common Shares, as a single
class, and shall be entitled to vote upon such matters and in such manner as may
be provided by Delaware law and this Second Amended and Restated Certificate of
Incorporation.
7.5 (a) Each holder of record of Class A Preferred Shares may at any time
or from time to time, in such holder's sole discretion and at such holder's
option, convert any whole number or all of such holder's Class A Preferred
Shares into fully paid and non-assessable Common Shares at the rate (subject to
adjustment as hereinafter provided) of one Common Share for each Class A
Preferred Share surrendered for conversion. Any such conversion may be effected
by surrendering the certificate or certificates for the Class A Preferred Shares
to be converted, duly endorsed, at the office of the Corporation, or the
transfer agent, if any, together with a written notice to the Corporation that
such holder elects to convert all or a specified number of Class A Preferred
Shares and stating the name or names in which the certificate or certificates
for such Common Shares are to be issued. The conversion shall be deemed to have
been made at the close of business on the date of surrender and the person or
persons entitled to receive the Common Shares issuable on conversion shall be
treated for all purposes as the record holder or holders of such Common Shares
on that date.
(b) The Corporation shall hold in reserve the number of authorized but
unissued Common Shares as may be necessary to convert all issued and outstanding
Class A Preferred Shares to Common Shares.
(c) No fraction of a Common Share shall be issued on conversion of any
Class A Preferred Share. In lieu thereof, the Corporation shall pay the holder
the fair market value of any such fraction in cash. The fair market value shall
be based, in the case of publicly traded securities, on the last sale price for
such securities on the business day next prior to the date such fair market
value is to be determined (or, in the event no sale is made on that day, the
average of the closing bid and asked prices for that day on the principal stock
exchange on which Common Shares are traded or, if the Common Shares are not then
listed on any national securities exchange, the average of the closing bid and
asked prices for the day quoted by the NASDAQ System), or, in the case of
non-publicly traded securities, the fair market value on such day determined by
a qualified independent appraiser appointed by the board of directors of the
Corporation. Any such determination of fair market value shall be conclusive and
binding on the Corporation and on each holder of Class A Preferred Shares and
Common Shares.
7.6 Holders of issued and outstanding Class A Preferred Shares shall have
preference over the Common Shares upon the voluntary or involuntary liquidation
of the Corporation, but only to the extent that the holders of Class A Preferred
Shares shall be paid the stated value of $2.50 per share prior to any
distribution being made to the holders of Common Shares. In such case, after
receiving the stated value of their shares, the holders of Class A Preferred
Shares shall receive no further distribution.
ARTICLE EIGHT
MANAGEMENT OF THE CORPORATION
8.1 The following provisions relate to the management of the business and
the conduct of the affairs of the Corporation and are inserted for the purpose
of creating, defining, limiting and regulating the powers of the Corporation and
its directors and stockholders:
(i) The business and affairs of the Corporation shall be managed by and
under the direction of the Board of Directors of the Corporation.
(ii) The Board of Directors of the Corporation shall have the power to
make, alter, amend or repeal the By-Laws of the Corporation, except to the
extent that the By-Laws of the Corporation otherwise provide.
(iii) All corporate powers and authority of the Corporation (except as at
the time otherwise provided by statute, this Second Amended and Restated
Certificate of Incorporation or the By-Laws of the Corporation) shall be vested
in and exercised by the Board of Directors of the Corporation.
(iv) The stockholders and directors shall have the power, if the By-Laws of
the Corporation so provide, to hold their respective meetings within or without
the State of Delaware and may (except as otherwise required by statute) keep the
Corporation's books outside the State of Delaware, at such places as from time
to time may be designated by the By-Laws of the Corporation or the Board of
Directors of the Corporation.
ARTICLE NINE
NUMBER, ELECTION AND TERMS OF DIRECTORS
9.1 Elections of directors need not be by written ballot unless the By-Laws
of the Corporation shall so provide.
9.2 The number of directors which will constitute the whole Board of
Directors of the Corporation shall be fixed exclusively by one or more
resolutions adopted by the Board of Directors of the Corporation or as otherwise
provided in the By-Laws of the Corporation.
9.3 (a) With respect to the annual meeting of stockholders of the
Corporation following the Corporation's fiscal year ended January 31, 1998, the
persons, not exceeding the authorized number of directors, receiving the
greatest number of votes of the holders of Common Shares and Class A Preferred
Shares, voting as a single class, entitled to vote thereon, present in person or
by proxy, shall be the directors of the Corporation. Each such director shall
hold office until the annual meeting of the stockholders of the Corporation next
following his election and until his successor shall have been duly elected and
qualified, or until his death or resignation or until he shall have been removed
in the manner provided herein.
(b) Commencing with the annual meeting of stockholders of the
Corporation following the Corporation's fiscal year ending December 31, 1998,
the directors of the Corporation, other than those who may be elected by holders
of any class of series of Preferred Shares, shall be divided, with respect to
the time for which they severally hold office, into three classes, as nearly
equal in number as possible, with the term of office of the first class to
expire at the annual meeting of the stockholders of the Corporation following
the Corporation's fiscal year ending December 31, 1999, the term of office of
the second class to expire at the annual meeting of the stockholders of the
Corporation following the Corporation's fiscal year ending December 31, 2000 and
the term of office of the third class to expire at the annual meeting of the
stockholders of the Corporation following the Corporation's fiscal year ending
December 31, 2001, with each director to hold office until his successor shall
have been duly elected and qualified, or until his death or resignation or until
he shall have been removed in the manner provided herein. At each annual meeting
of stockholders of the Corporation, commencing with the annual meeting of
stockholders of the Corporation following the Corporation's fiscal year ending
December 31, 1999 (i) directors elected to succeed those directors whose terms
then expire shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders of the Corporation after their
election unless, by reason of any intervening changes in the authorized number
of directors, the Board of Directors of the Corporation shall designate one or
more of the then expiring directorships as directorships of another class in
order more nearly to achieve equality of number of directors among the classes,
and (ii) if authorized by a resolution of the Board of Directors of the
Corporation, directors may be elected to fill any vacancy on the Board of
Directors of the Corporation regardless of how such vacancy shall have been
created. Subject to the rights of the holders of any class or series of
Preferred Shares, commencing with the annual meeting of stockholders of the
Corporation following the Corporation's fiscal year ended December 31, 1998, the
persons, not exceeding the authorized number of directors to be elected at each
such annual meeting, receiving the greatest number of votes of the holders of
Common Shares and Class A Preferred Shares, voting together as a single class,
entitled to vote thereon, present in person or by proxy, shall be the directors
elected at such meeting.
9.4 Advance notice of stockholder nominations for the election of directors
and of business to be brought by stockholders before any meeting of the
stockholders of the Corporation shall be given in the manner provided in the
By-Laws of the Corporation.
9.5 Subject to the rights of the holders of any class or series of
Preferred Shares, and unless the Board of Directors of the Corporation otherwise
determines, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies of the Board of Directors of the
Corporation resulting from death, resignation, retirement, disqualification,
removal from office or other cause shall be filled only by a majority vote of
the directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been elected expires
and until such director's successor shall have been duly elected and qualified.
No decrease in the numbers of authorized directors constituting the entire Board
of Directors of the Corporation shall shorten the term of any incumbent
director.
9.6 Subject to the rights of the holders of any class or series of
Preferred Shares, any director may be removed from office at any time, with or
without cause, by the affirmative vote of the holders of at least sixty percent
(60%) of the then-outstanding Common Shares and Class A Preferred Shares, voting
together as a single class; provided, however, that such removal may only be for
cause if at such time the Corporation has a classified Board of Directors, as
provided in Paragraph 9.3 above.
ARTICLE TEN
AMENDMENTS
10.1 The Corporation reserves the right to amend or repeal any provisions
contained in this Second Amended and Restated Certificate of Incorporation from
time to time and at any time in the manner now or hereafter prescribed in this
Second Amended and Restated Certificate of Incorporation and by the laws of the
State of Delaware, and all rights herein conferred upon stockholders are granted
subject to such reservation; provided that with respect to the powers of holders
of capital stock of the Corporation to alter, amend or repeal this Second
Amended and Restated Certificate of Incorporation, notwithstanding any other
provision of this Second Amended and Restated Certificate of Incorporation or
any provision of law which might otherwise permit a lesser vote or no vote, in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law, this Second
Amended and Restated Certificate of Incorporation or any designation relating to
any class or series of Preferred Shares, the affirmative vote of the holders of
at least sixty percent (60%) of the then-outstanding Common Shares and Class A
Preferred Shares, voting together as a single class, shall be required to alter,
amend or repeal any provision of this Second Amended and Restated Certificate of
Incorporation.
ARTICLE ELEVEN
LIMITATION OF LIABILITY OF DIRECTORS
11.1 No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided that the foregoing clause shall not apply to any
liability of a director (i) for any breach of the director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of the State of Delaware,
or (iv) for any transaction from which the director derived an improper personal
benefit. This ARTICLE ELEVEN shall not eliminate or limit the liability of a
director for any act or omission occurring prior to the time this ARTICLE ELEVEN
became effective.
ARTICLE TWELVE
INDEMNIFICATION
12.1 The Corporation shall indemnify and hold harmless any director or
officer of the Corporation from and against any and all expenses and liabilities
that may be imposed upon or incurred by him in connection with, or as a result
of, any proceeding in which he may become involved, as a party or otherwise, by
reason of the fact that he is or was such a director or officer of the
Corporation or any subsidiary or parent of the Corporation, or, at the request
of the Corporation, of any other corporation, joint venture, trust or other
enterprise, whether or not he continues to be such at the time such expense and
liabilities shall have been imposed or incurred. It is the intention of this
ARTICLE TWELVE to provide indemnification to the fullest extent permitted by the
laws of the State of Delaware, as they may be amended from time to time.
ARTICLE THIRTEEN
AMENDMENT OF BY-LAWS
13.1 In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation is expressly authorized to make,
alter, amend and repeal the By-Laws of the Corporation, subject to the power of
the holders of the capital stock of the Corporation to alter, amend or repeal
the By-Laws of the Corporation; provided, however, that, with respect to the
powers of holders of capital stock of the Corporation to alter, amend and repeal
By-Laws of the Corporation, notwithstanding any other provision of this Second
Amended and Restated Certificate of Incorporation or any provision of law which
might otherwise permit a lesser vote or no vote, in addition to any affirmative
vote of the holders of any particular class or series of the capital stock of
the Corporation required by law, this Second Amended and Restated Certificate of
Incorporation or any designation relating to any class or series of Preferred
Shares, the affirmative vote of the holders of at least sixty percent (60%) of
the then-outstanding Common Shares and Class A Preferred Shares, voting together
as a single class, shall be required to alter, amend or repeal any provision of
the By-Laws of the Corporation.
ARTICLE FOURTEEN
CLASS VOTES
14.1 The holders of each class of capital stock of the Corporation shall be
entitled to vote as a separate class only when required to do so under
applicable law or when required or expressly permitted to do so by the terms and
provisions of this Second Amended and Restated Certificate of Incorporation or
any designation relating to the Preferred Shares. Notwithstanding the foregoing,
the holders of each class of capital stock of the Corporation shall not be
entitled to vote as a separate class, but shall vote together as a single class,
with respect to any amendment to this Second Amended and Restated Certificate of
Incorporation in order to increase or decrease the aggregate number of
authorized shares of any class or series of shares of the Corporation.
ARTICLE FIFTEEN
COMPROMISE OR ARRANGEMENT BETWEEN
CORPORATION AND CREDITORS OR STOCKHOLDERS
15.1 Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or if the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
I, THE UNDERSIGNED, being the President of the Corporation, hereby declare
and certify that this is my act and deed and the facts herein stated are true,
and accordingly, I have executed this Second Amended and Restated Certificate of
Incorporation the ____ day of ________, 1998.
EXIGENT INTERNATIONAL, INC.
By:___________________________
Bernard R. Smedley, President
ATTESTED:
By:________________________________
Patricia A. Frank, Secretary
EXHIBIT B
EXIGENT INTERNATIONAL, INC.
AMENDED AND RESTATED BYLAWS
Effective June ___, 1998
ARTICLE 1.
OFFICES
SECTION 1.01. Registered Office. The address of the registered office of
the Corporation in the County of New Castle of the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, and
the name of the registered agent at such address is The Corporation Trust
Company.
SECTION 1.02. Other Offices. The Corporation may also have an office in the
State of Florida and at such other place or places either within or without the
State of Delaware as the Board of Directors of the Corporation may from time to
time determine or the business of the Corporation may require.
ARTICLE 2.
MEETINGS OF STOCKHOLDERS
SECTION 2.01. Place of Meetings. All meetings of the stockholders of the
Corporation shall be held at such place either within or without the State of
Delaware as shall be fixed by the Board of Directors of the Corporation and
specified in the respective notices or waivers of notice of said meetings.
SECTION 2.02. Annual Meetings.
(a) The annual meeting of the stockholders of the Corporation for the
election of directors of the Corporation and for the transaction of such other
business as may come before the meeting shall be held at such time and place and
on such date as the Board of Directors of the Corporation may designate and
state in the notice of such annual meeting.
(b) At an annual meeting of the stockholders of the Corporation, only such
business shall be conducted as shall have been properly brought before such
meeting. To be properly brought before an annual meeting, business must be (i)
specified in the notice of such meeting (or any supplement thereto) given by or
at the direction of the Board of Directors of the Corporation, (ii) otherwise
properly brought before such meeting by or at the direction of the Board of
Directors of the Corporation in accordance with these Bylaws, the Certificate of
Incorporation of the Corporation as in effect from time to time (the "Charter"
or the "Certificate of Incorporation") and applicable laws, rules and
regulations, or (iii) otherwise properly brought before such meeting by a
stockholder of the Corporation in accordance with these Bylaws, the Charter and
applicable laws, rules and regulations. Without limiting the foregoing, for
business to be properly brought before an annual meeting by a stockholder of the
Corporation, such stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, such stockholder's notice
must be delivered in writing either by personal delivery or by registered or
certified mail, return receipt requested, to the principal executive offices of
the Corporation (addressed to the Secretary) not less than one hundred twenty
(120) calendar days prior to the anniversary date of the release of the
Corporation's proxy statement to its stockholders in connection with the
preceding year's annual meeting of its stockholders, except that if no annual
meeting of its stockholders was held in the previous year or the date of the
annual meeting of its stockholders has been changed by more than sixty (60)
calendar days from the anniversary of the annual meeting of its stockholders
stated in the previous year's proxy statement, a proposal of a stockholder of
the Corporation shall be received by the Corporation a reasonable time before
the solicitation is made. Such stockholder's notice shall set forth, as to each
matter such stockholder proposes to bring before an annual meeting, (i) a brief
description of the business desired to be brought before such annual meeting and
the reasons for conducting such business at the annual meeting, (ii) a
representation that such stockholder is a holder of record of stock of the
Corporation entitled to vote with respect to such business and that such
stockholder intends to appear in person or by proxy at the annual meeting to
move the consideration of such business, (iii) the name and address, as they
appear on the Corporation's books, of the stockholder proposing such business,
(iv) the class and number of shares of stock of the Corporation which are
beneficially owned by such stockholder, and (v) any interest of such stockholder
in such business. Notwithstanding anything in the Bylaws of the Corporation to
the contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section 2.02. The Chairman of
an annual meeting may refuse to acknowledge a motion to consider any business
that he/she determines was not made in compliance with the foregoing procedures
and if he/she should so determine and declare to such meeting, then any such
business not properly brought before such meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the procedures set
forth in this Section 2.02, the Charter and applicable laws, rules and
regulations shall be eligible for election as directors of the Corporation.
Without limiting the foregoing, nomination of persons for election to the Board
of Directors of the Corporation may be made at a meeting of stockholders of the
Corporation (i) by or at the direction of the Board of Directors of the
Corporation or any nominating or similar committee thereof, or (ii) by any
stockholder of the Corporation entitled to vote for the election of directors of
the Corporation at such meeting who complies with the notice procedures set
forth in this Section 2.02. Such nominations, other than those made by or at the
direction of the Board of Directors of the Corporation or any nominating or
similar committee thereof, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered in writing either by personal delivery or by registered or certified
mail, return receipt requested, to the principal executive offices of the
Corporation (addressed to the Secretary) not less than one hundred twenty (120)
calendar days prior to the anniversary date of the release of the Corporation's
proxy statement to its stockholders in connection with the preceding year's
annual meeting of its stockholders, except that if no annual meeting of its
stockholders was held in the previous year or the date of the annual meeting of
its stockholders has been changed by more than sixty (60) calendar days from the
anniversary of the annual meeting of its stockholders stated in the previous
year's proxy statement, a proposal of a stockholder of the Corporation shall be
received by the Corporation a reasonable time before the solicitation is made.
Such stockholder's notice shall set forth (i) as to each person whom such
stockholder proposes to nominate for election or re-election as a director of
the Corporation (A) the name, age, business address and residence address of
such nominee, (B) the principal occupation or employment of such nominee, (C)
the class and number of shares of the Corporation, if any, which are
beneficially owned by such nominee, (D) a description of all arrangements or
understandings between such stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which such nomination is
made by such stockholder, and (E) any other information relating to such nominee
that is required to be disclosed in solicitations of proxies for election of
directors, or as otherwise required, in each case, pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including, without
limitation, such nominee's written consent to being named in the proxy statement
as a nominee and to serving as a director of the Corporation if elected); and
(ii) as to such stockholder (A) the name and address, as they appear on the
Corporation's books, of such stockholder, (B) a representation that such
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and that such stockholder intends to appear in person or by
proxy at such meeting to nominate the person or persons specified in such
notice, and (C) the class and number of shares of stock of the Corporation which
are beneficially owned by such stockholder. At the request of the Board of
Directors of the Corporation, any person nominated by the Board of Directors of
the Corporation for election as a director of the Corporation shall furnish to
the Secretary of the Corporation that information required to be set forth in a
stockholder's notice of nomination, as provided above in this clause (c), which
pertains to such nominee. No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set forth
in this Section 2.02. The chairman of the meeting may refuse to acknowledge a
motion to consider any nominee as a director of the Corporation that he/she
determines was not made in compliance with the foregoing procedures and if
he/she should so determine and declare to such meeting, then the defective
nomination shall be disregarded.
SECTION 2.03. Special Meetings. Special meetings of stockholders of the
Corporation may be called only by the Chairman of the Board or by the Board of
Directors of the Corporation pursuant to a resolution adopted by a majority of
the Board of Directors of the Corporation and must be called by the Secretary of
the Corporation upon the written request of stockholders of the Corporation
having not less than sixty percent (60%) of the votes that would be necessary to
authorize or take the action proposed to be taken at such special meeting if all
stockholders of the Corporation having the right to vote thereon were present
and voted. The business transacted at a special meeting of stockholders of the
Corporation shall be limited to the purpose or purposes for which such meeting
is called, except as otherwise determined by the Board of Directors of the
Corporation or the chairman of the meeting.
SECTION 2.04. Notice of Meetings.
(a) Except as otherwise required by statute, notice of each annual or
special meeting of the stockholders of the Corporation shall be given to each
stockholder of the Corporation of record entitled to vote at such meeting not
less than ten days nor more than sixty days before the day on which such meeting
is to be held by delivering written notice thereof to him or her personally or
by mailing such notice, postage prepaid, addressed to him or her at his or her
address last shown in the records of the Corporation or by transmitting notice
thereof to him or her at such address by telegraph, facsimile, cable or any
other available method. Each such notice shall state the time and place of the
applicable meeting and, in case of a special meeting, shall state briefly the
purposes thereof.
(b) Notice of any meeting of stockholders of the Corporation shall not be
required to be given to any stockholder of the Corporation who shall attend such
meeting in person (except where such person attends the meeting for the express
purpose of objecting at the beginning of such meeting to the transaction of
business because such meeting was not lawfully called or convened) or by proxy
or who shall, in person or by attorney thereunto authorized, waive such notice
in writing or by telegraph, cable or any other available method either before or
after such meeting. Notice of any adjourned meeting of the stockholders of the
Corporation shall not be required to be given except when expressly required by
law. At the adjourned meeting, the Corporation may transact any business which
could have been transacted at the original meeting.
SECTION 2.05. Quorum.
(a) At each meeting of the stockholders of the Corporation, except where
otherwise provided by statute, the Corporation's Certificate of Incorporation or
these Bylaws, the holders of record of a majority of the issued and outstanding
shares of stock of the Corporation entitled to vote at such meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business.
(b) In the absence of a quorum, a majority in interest of the stockholders
of the Corporation entitled to vote at, present in person or represented by
proxy, or, in the absence of all such stockholders, any officer entitled to
preside at, or act as secretary of, such meeting shall have the power to adjourn
such meeting from time to time until stockholders of the Corporation holding the
requisite amount of stock of the Corporation shall be present or represented. At
any such adjourned meeting at which a quorum shall be present any business may
be transacted which might have been transacted at the meeting as originally
called.
SECTION 2.06. Organization. At each meeting of the stockholders of the
Corporation, the Chairman of the Board or, in his or her absence, the President,
any Vice President or any other officer designated by the Board of Directors of
the Corporation, shall act as chairman of such meeting. The Secretary or an
Assistant Secretary of the Corporation or, in the absence of the Secretary and
all Assistant Secretaries, a person whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
SECTION 2.07. Voting.
(a) Except as otherwise provided by law, the Charter or these Bylaws, at
every meeting of the stockholders of the Corporation each such stockholder shall
be entitled to one vote, in person or by proxy, for each share of capital stock
of the Corporation registered in his or her name on the books of the
Corporation:
(i) on the date fixed pursuant to Section 9.03 of these Bylaws as the
record date for the determination of stockholders entitled to vote at such
meeting; or
(ii) if no such record date shall have been fixed, then the record
date shall be at the close of business on the day next preceding the day on
which notice of such meeting is given.
(b) Persons holding stock of the Corporation in a fiduciary capacity shall
be entitled to vote the shares so held. In the case of stock held jointly by two
or more executors, administrators, guardians, conservators, trustees or other
fiduciaries, such fiduciaries may designate, in writing, one or more of their
number to represent such stock and vote the shares so held, unless there is a
provision to the contrary in the instrument, if any, defining their powers and
duties and if any one of them votes, such act binds all of them and if more than
one of them votes, the act of the majority binds all of them.
(c) Persons whose stock of the Corporation is pledged shall be entitled to
vote thereon until such stock is transferred on the books of the Corporation to
the pledgee and thereafter only the pledgee shall be entitled to vote.
(d) Any stockholder of the Corporation entitled to vote may do so in person
or by his or her proxy appointed by an instrument in writing subscribed by such
stockholder or by his or her attorney thereunto authorized or by a telegram,
facsimile, cable or any other available method delivered to the secretary of the
meeting before or at the time of such meeting; provided, however, that no proxy
shall be voted after three years from its date unless said proxy provides for a
longer period.
(e) At all meetings of the stockholders of the Corporation at which a
quorum is present, all matters (except where other provision is made by law, the
Charter or these Bylaws) shall be decided by the affirmative vote of a majority
of the shares of stock of the Corporation represented at such meeting and
entitled to vote thereon, present in person or by proxy. The vote upon any
matter, including the election of directors of the Corporation, need not be by
written ballot.
SECTION 2.08. Inspectors. The chairman of the meeting shall, in advance of
any meeting of stockholders of the Corporation, appoint one or more inspectors
to serve at such meeting. Such inspectors shall decide upon the qualifications
of voters, the validity of all proxies and ballots, accept and count the votes
for and against the questions presented, report the results of such votes and
subscribe and deliver to the secretary of the meeting a certificate stating the
number of shares of stock of the Corporation issued and outstanding and entitled
to vote thereon and the number of shares voted for and against the questions
presented. The inspectors shall determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors. An inspector need not be a stockholder of the Corporation and any
director or officer of the Corporation may be an inspector on any question other
than a vote for or against his or her election to any position with the
Corporation or on any other question in which he or she may be directly
interested. The inspectors may appoint or retain other persons or entities to
assist them in the performance of their duties as inspectors. Before acting as
herein provided, each inspector shall subscribe an oath to execute faithfully
the duties of an inspector with strict impartiality and according to the best of
his or her ability.
SECTION 2.09. List of Stockholders.
(a) It shall be the duty of the Secretary or other officer of the
Corporation who shall have charge of its stock ledger to prepare and make, or
cause to be prepared and made, at least ten days before every meeting of the
stockholders of the Corporation, a complete list of such stockholders entitled
to vote thereat arranged in alphabetical order and showing the name and address
of each stockholder of the Corporation and the number and class of shares of
stock of the Corporation registered in the name of such stockholder. Such list
shall be open during ordinary business hours to the examination of any
stockholder of the Corporation for any purpose germane to such meeting for a
period of at least ten days prior to the meeting, either at a place within the
city where such meeting is to be held, which place shall be specified in the
notice of such meeting or, if not so specified, at the place where such meeting
is to be held.
(b) Such list shall be produced and kept at the time and place of such
meeting during the whole time thereof and may be inspected by any stockholder of
the Corporation who is present.
(c) The stock ledger of the Corporation shall be conclusive evidence as to
who are the stockholders of the Corporation entitled to examine the stock ledger
and the list of stockholders required by this Section 2.09 on the books of the
Corporation or to vote in person or by proxy at any meeting of stockholders of
the Corporation.
(d) As used in this clause (d), "stockholder" means a stockholder of record
of the Corporation. Any stockholder in person or by attorney or other agent,
upon written demand under oath stating the purpose thereof, has the right during
the Corporation's ordinary business hours to inspect for any proper purpose the
Corporation's stock ledger, a list of its stockholders and its other books and
records, and, at such stockholder's expense, to make copies of extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath must be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the Corporation at its registered
office in Delaware or at its principal place of business.
ARTICLE 3.
BOARD OF DIRECTORS OF THE CORPORATION
SECTION 3.01. General Powers. The business, property and affairs of the
Corporation shall be managed by the Board of Directors of the Corporation.
SECTION 3.02. Number, Qualifications, Terms and Removal from Office.
(a) The number of directors of the Corporation on the date of adoption of
these Bylaws shall be seven (7). The number of directors of the Corporation may
be increased or decreased by resolution of the Board of Directors of the
Corporation. All directors of the Corporation shall hold office for the term for
which they are elected or until their successors shall have been elected and
qualified, whichever period is longer. The directors of the Corporation need not
be residents of the State of Delaware.
(b) A director of the Corporation need not be a stockholder of the
Corporation.
(c) Directors of the Corporation may be removed from office as provided in
the Charter.
(d) Vacancies and newly created directorships of the Corporation resulting
from any increase in the authorized number of directors of the Corporation shall
be filled as provided in the Charter. If there are no directors of the
Corporation in office, then an election of directors may be held in the manner
provided by statute. Except as otherwise contemplated by written agreement among
the stockholders of the Corporation or the Charter, whenever the holders of any
class or classes of stock or series thereof are entitled to elect one or more
directors of the Corporation by the provisions of the Charter or any designation
of any class or series of preferred shares, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the directors elected by such class or classes or series thereof then in office
or by a sole remaining director so elected.
SECTION 3.03. Quorum and Manner of Acting.
(a) Except as otherwise provided by statute or by the Charter, a majority
of the directors of the Corporation at the time in office shall constitute a
quorum for the transaction of business at any meeting and the affirmative action
of a majority of the directors of the Corporation present at any meeting at
which a quorum is present shall be required for the taking of any action by the
Board of Directors of the Corporation.
(b) In the event one or more of the directors of the Corporation shall be
disqualified to vote at such meeting then the required quorum shall be reduced
by one for each such director so disqualified; provided, however, that in no
event shall the quorum as adjusted be less than one third of the total number of
directors of the Corporation. A director who is present at a meeting of the
Board of Directors of the Corporation, or a committee of the Board of Directors,
when corporate action is taken, shall be deemed to have assented to the action
taken unless such director:
(i) objects at the beginning of such meeting (or promptly upon
arrival) to holding such meeting or transacting business at such
meeting;
(ii) dissents or abstains from the action taken and such dissent or
abstention is entered in the minutes of such meeting; or
(iii)delivers written notice of dissent or abstention to the
presiding officer of such meeting before its adjournment or to
the Corporation immediately after adjournment of such meeting.
The right of dissent or abstention shall not be available to a
director who votes in favor of the action taken.
(c) In the absence of a quorum at any meeting of the Board of Directors of
the Corporation such meeting need not be held or a majority of the directors of
the Corporation present thereat or, if no director of the Corporation be
present, the Secretary of the Corporation, may adjourn such meeting from time to
time until a quorum shall be present. Notice of any adjourned meeting need not
be given.
SECTION 3.04. Offices, Place of Meeting and Records. The Board of Directors
of the Corporation may hold meetings, have an office or offices and keep the
books and records of the Corporation at such place or places within or without
the State of Delaware as the Board may from time to time determine. The place of
meeting shall be specified or fixed in the respective notices or waivers of
notice thereof except where otherwise provided by statute, the Charter or these
Bylaws. Any director of the Corporation shall have the right to examine the
Corporation's stock ledger, list of stockholders and its other books and records
for any purpose reasonably related to such person's position as a director.
SECTION 3.05. Annual Meeting. The Board of Directors of the Corporation
shall meet for the purpose of organization, the election of officers and the
transaction of other business as soon as practicable following each annual
election of directors of the Corporation. Such meeting shall be called and held
at the place and time specified in the notice or waiver of notice thereof as in
the case of a special meeting of the Board of Directors of the Corporation.
SECTION 3.06. Regular Meetings. Regular meetings of the Board of Directors
of the Corporation shall be held at such places and at such times as such Board
shall from time to time by resolution determine. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be held
then the meeting which would otherwise be held on that day shall be held at said
place at the same hour on the next succeeding business day. Notice of regular
meetings need not be given.
SECTION 3.07. Special Meetings; Notice. Special meetings of the Board of
Directors of the Corporation shall be held whenever called by the Chairman of
the Board, the President or by any two (2) of the directors of the Corporation.
Notice of each such meeting (i) shall be mailed to each director of the
Corporation, addressed to him or her at his or her residence or usual place of
business, at least two days before the day on which such meeting is to be held,
(ii) shall be sent to him or her at his or her residence or at such place of
business by facsimile, telegraph, cable or other available means at least two
days before the day on which such meeting is to be held, or (iii) shall be
delivered personally or by telephone not later than one day before the day on
which the meeting is to be held. Each such notice shall state the date, time and
place of the meeting but need not state the purposes thereof except as otherwise
herein expressly provided. Oral or telephonic notice shall be effective when
communicated provided that it is promptly confirmed in writing. Notice of any
such meeting need not be given to any director of the Corporation, however, if
waived by him or her in writing or by facsimile, telegraph, cable or otherwise,
whether before or after such meeting shall be held or if he or she shall be
present at such meeting (except where such person attends the meeting for the
express purpose of objecting at the beginning of such meeting to the transaction
of business because such meeting was not lawfully called or convened). Written
notice is effective at the earliest of the following:
(a) when received;
(b) five (5) days after deposit in the United States mail as
evidenced by the postmark, if mailed postpaid and correctly
addressed; or
(c) on the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, and the receipt is
signed by, or on behalf of, the addressee.
SECTION 3.08. Organization. At each meeting of the Board of Directors of
the Corporation, the Chairman of the Board or, in his or her absence, the
President or, in his or her absence, a director of the Corporation chosen by a
majority of the directors of the Corporation present, shall act as chairman. The
Secretary or, in his or her absence, an Assistant Secretary or, in the absence
of the Secretary and all Assistant Secretaries, a person whom the chairman of
such meeting shall appoint, shall act as secretary of such meeting and keep the
minutes thereof.
SECTION 3.09. Order of Business. At all meetings of the Board of Directors
of the Corporation business shall be transacted in the order determined by the
Board.
SECTION 3.10. Resignation. Any director of the Corporation may resign at
any time by giving written notice of his or her resignation to the Board of
Directors of the Corporation, the Chairman of the Board, the President, any Vice
President or the Secretary of the Corporation. Such resignation shall take
effect at the date of receipt of such notice or at any later time specified
therein; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 3.11. Compensation. Each director of the Corporation, in
consideration of serving as such, who is neither an employee of, nor a
compensated consultant to, the Corporation, shall be entitled to receive from
the Corporation such amount per annum or such fees for attendance at directors'
meetings, or both, as the Board of Directors of the Corporation shall from time
to time determine. Each director of the Corporation shall be entitled to
reimbursement for the reasonable expenses incurred by him or her in connection
with the performance of his or her duties; provided that nothing herein
contained shall be construed to preclude any director of the Corporation from
serving the Corporation or its subsidiaries in any other capacity and receiving
proper compensation therefor.
SECTION 3.12. Telephonic Meetings. Members of the Board of Directors of the
Corporation or a committee of the Board may participate in a meeting by means of
a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at the meeting.
ARTICLE 4.
COMMITTEES
SECTION 4.01. Executive Committee.
(a) The Board of Directors of the Corporation may, by resolution or
resolutions passed by a majority of the whole Board, appoint an Executive
Committee to consist of two or more members of the Board of Directors of the
Corporation, including the President if the President is then a director, and
shall designate one of the members as its chairman.
(b) The chairman of the Executive Committee or, in his or her absence, a
member of the Executive Committee chosen by a majority of the members present
shall preside at meetings of the Executive Committee and the Secretary or an
Assistant Secretary of the Corporation, or such other person as the Executive
Committee shall from time to time determine, shall act as secretary of the
Executive Committee.
(c) The Board of Directors of the Corporation, by action of the majority of
the whole Board, shall fill vacancies in the Executive Committee.
(d) Any member of the Executive Committee may be removed, either with or
without cause, by the vote of a majority of the whole Board of Directors of the
Corporation.
SECTION 4.02. Powers. During the intervals between the meetings of the
Board of Directors of the Corporation, the Executive Committee shall have and
may exercise all of the powers of the Board of Directors of the Corporation in
all cases in which specific directions shall not have been given by the Board of
Directors of the Corporation.
SECTION 4.03. Procedure; Meetings; Quorum. The Executive Committee shall
fix its own rules of procedure, subject to the approval of the Board of
Directors of the Corporation, and shall meet at such times and at such place or
places as may be provided by such rules. At every meeting of the Executive
Committee the presence of a majority of all the members thereof shall be
necessary to constitute a quorum and the affirmative vote of a majority of the
members present shall be necessary for the adoption by it of any resolution. In
the absence of a quorum at any meeting of the Executive Committee such meeting
need not be held or a majority of the members present thereat or, if no members
be present, the secretary of the meeting may adjourn such meeting from time to
time until a quorum be present.
SECTION 4.04. Compensation. Each member of the Executive Committee shall be
entitled to receive from the Corporation reimbursement for the reasonable
expenses incurred by him or her in connection with the performance of his or her
duties and, with respect to any member of the Executive Committee who is neither
an employee of nor compensated consultant to the Corporation, such fee, if any,
as shall be fixed from time to time by the Board of Directors of the
Corporation.
SECTION 4.05. Nominating Committee.
(a) The Board of Directors of the Corporation may, by resolution or
resolutions passed by a majority of the whole Board, appoint a Nominating
Committee to consist of two or more members of the Board of Directors of the
Corporation, including the President if the President is then a director, and
shall designate one of the members as its chairman.
(b) The chairman of the Nominating Committee or, in his or her absence, a
member of the Nominating Committee chosen by a majority of the members present
shall preside at meetings of the Nominating Committee and the Secretary or an
Assistant Secretary of the Corporation, or such other person as the Nominating
Committee shall from time to time determine, shall act as secretary of the
Nominating Committee.
(c) The Board of Directors of the Corporation, by action of the majority of
the whole Board, shall fill vacancies in the Nominating Committee.
(d) Any member of the Nominating Committee may be removed, either with or
without cause, by the vote of a majority of the whole Board of Directors of the
Corporation.
SECTION 4.06. Powers. The Nominating Committee shall have the power to
nominate such persons as it may determine to stand for election to the Board of
Directors of the Corporation, all in accordance with the Charter and these
Bylaws.
SECTION 4.07. Procedure; Meetings; Quorum. The Nominating Committee shall
fix its own rules of procedure, subject to the approval of the Board of
Directors of the Corporation, and shall meet at such times and at such place or
places as may be provided by such rules. At every meeting of the Nominating
Committee the presence of a majority of all the members shall be necessary to
constitute a quorum and the affirmative vote of a majority of the members
present shall be necessary for the adoption by it of any resolution. In the
absence of a quorum at any meeting of the Nominating Committee such meeting need
not be held or a majority of the members present thereat or, if no members be
present, the secretary of the meeting may adjourn such meeting from time to time
until a quorum be present.
SECTION 4.08. Compensation. Each member of the Nominating Committee shall
be entitled to receive from the Corporation reimbursement for the reasonable
expenses incurred by him or her in connection with the performance of his or her
duties and, with respect to any member of the Nominating Committee who is
neither an employee of nor compensated consultant to the Corporation, such fee,
if any, as shall be fixed from time to time by the Board of Directors of the
Corporation.
SECTION 4.09. Other Board Committees.
(a) The Board of Directors of the Corporation may from time to time, by
resolution passed by a majority of the whole Board, designate one or more
committees in addition to the Executive Committee and the Nominating Committee.
Each such additional committee shall consist of two or more of the directors of
the Corporation. Any such additional committee, to the extent provided in the
resolution or in these Bylaws, shall have and may exercise the powers of the
Board of Directors of the Corporation in the management of the business and
affairs of the Corporation, including the power or authority to authorize the
issuance of stock, and may authorize the seal of the Corporation to be affixed
to all papers which may require it but no such committee shall have the power or
authority in reference to amending the Charter, adopting an agreement of merger
or consolidation under Section 251 or 252 of the Delaware General Corporation
Law ("DGCL"), recommending to the stockholders of the Corporation the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders of the Corporation a dissolution of the
Corporation or a revocation of a dissolution, amending the Bylaws of the
Corporation, declaring a dividend or adopting a certificate of ownership and
merger pursuant to Section 253 of the DGCL. Such additional committee or
committees shall have such name or names as may be determined from time to time
by resolution adopted by the Board of Directors of the Corporation. Each
additional committee so formed shall keep regular minutes of its meetings and
report the same to the Board of Directors of the Corporation when required.
(b) A majority of all the members of any such committee may determine its
action and fix the time and place of its meetings unless the Board of Directors
of the Corporation shall otherwise provide. The Board of Directors of the
Corporation shall have power to change the members of any committee at any time,
to fill vacancies and to discharge any such committee, either with or without
cause, at any time.
SECTION 4.10. Alternates. The Chairman of the Board or the President of the
Corporation may designate one or more directors of the Corporation as alternate
members of any committee who may act in the place and stead of members who
temporarily cannot attend any such meeting.
SECTION 4.11. Additional Committees.
(a) The Board of Directors of the Corporation may from time to time create
such additional committees of directors, officers, employees or other persons
designated by it (or any combination of such persons) for the purpose of
advising the Board, the Executive Committee and the officers and employees of
the Corporation in all such matters as the Board shall deem advisable and with
such functions and duties as the Board shall by resolutions prescribe.
(b) A majority of all the members of any such committee may determine its
action and fix the time and place of its meetings, unless the Board of Directors
of the Corporation shall otherwise provide. The Board of Directors of the
Corporation shall have the power to change the members of any committee at any
time, to fill vacancies and to discharge any such committee, either with or
without cause, at any time.
ARTICLE 5.
ACTION BY CONSENT
SECTION 5.01. Consent by Directors. Any action required or permitted to be
taken at any meeting of the Board of Directors of the Corporation or of any
committee thereof may be taken without a meeting if prior to such action a
written consent thereto is signed by all members of the Board or of such
committee, as the case may be, and such written consent is filed with the
minutes of the proceedings of the Board or such committee.
SECTION 5.02. Consent of Stockholders.
(a) Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by stockholders of the Corporation
having not less than sixty percent (60%) of the votes that would be necessary to
authorize or take such action at a meeting at which all stockholders of the
Corporation having the right to vote thereon were present and voted. Every
written consent shall bear the date of signature of each stockholder of the
Corporation who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless written consents signed by
a sufficient number of holders to take action are delivered to the Corporation
by certified or registered mail, return receipt requested, to its registered
office in Delaware, its principal place of business or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders of the Corporation are recorded within sixty days of the earliest
dated consent so delivered to the Corporation. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders of the Corporation who have not consented
in writing, by a stockholder who signed the consent, or by the Corporation, at
its option, pursuant to Section 5.02(b).
(b) With respect to any written consent submitted for execution and
delivery by the requisite number of stockholders of the Corporation pursuant to
this Section 5.02, such stockholder(s) may request that the Corporation provide
such stockholder(s), at the sole cost and expense of such stockholder(s), with a
list of the names and addresses of the other stockholders of the Corporation and
the number and class of shares of the Corporation held of record by such other
stockholders. The Corporation may, at its option, either provide such list or,
at the sole cost and expense of such stockholder(s), mail such written consent
on behalf of such stockholder(s). The Corporation may in its sole discretion
advance such stockholder(s) for the costs and expenses of the preparation and
mailing of such written consent. If the Corporation provides such list, such
requesting stockholder(s) must undertake, in writing, that such stockholder(s)
(a) will not use the information set forth in such list for any purpose other
than the mailing or other delivery of such written consent or the solicitation
of stockholders of the Corporation with respect to the subject matter thereof,
and (b) will return such list to the Secretary of the Corporation after such
mailing, other delivery or solicitation without retaining any copies thereof.
ARTICLE 6.
OFFICERS
SECTION 6.01. Number. The principal officers of the Corporation shall be a
President, a Secretary and a Treasurer. The Board of Directors of the
Corporation may also elect a Chairman of the Board and one or more Vice
Presidents (the number thereof and variations in title to be determined by the
Board of Directors of the Corporation). In addition, there may be such other or
subordinate officers, agents and employees as may be appointed in accordance
with the provisions of Section 6.03. Any two or more offices may be held by the
same person.
SECTION 6.02. Election, Qualifications and Term of Office. Each officer of
the Corporation, except such officers as may be appointed in accordance with the
provisions of Section 6.03, shall be elected annually by the Board of Directors
of the Corporation and shall hold office until a successor shall have been duly
elected and qualified, or until death, or until he or she shall have resigned or
shall have been removed in the manner herein provided.
SECTION 6.03. Other Officers. The Corporation may have such other officers,
agents, and employees as the Board of Directors of the Corporation may deem
necessary, including a Controller, one or more Assistant Controllers, one or
more Assistant Treasurers and one or more Assistant Secretaries, each of whom
shall hold office for such period, have such authority and perform such duties
as the Board of Directors of the Corporation may from time to time determine.
The Board of Directors of the Corporation may delegate to any principal officer
the power to appoint or remove any such subordinate officers, agents or
employees.
SECTION 6.04. Removal. Any officer of the Corporation may be removed,
either with or without cause, by the vote of a majority of the whole Board of
Directors of the Corporation or, except in case of any officer appointed by the
Board of Directors of the Corporation, by any committee of officers upon whom
the power of removal may be conferred by the Board of Directors of the
Corporation, but such removal shall be without prejudice to the contract rights,
if any, of the officer so removed.
SECTION 6.05. Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors of the Corporation or the President.
Any such resignation shall take effect as of the date of receipt of such notice
or at any later time specified therein and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 6.06. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these Bylaws for
regular election or appointment to such office.
SECTION 6.07. Powers of Officers. The Board of Directors of the Corporation
shall have the authority to fix or limit the powers and authority of the
officers of the Corporation to conduct transactions between the Corporation and
other parties, to enter into contracts proposed to be entered into by or on
behalf of the Corporation and with respect to all other areas of business
operation in which the officers of the Corporation may engage.
SECTION 6.08. Chairman of the Board. The Chairman of the Board, if one is
elected, shall be a director of the Corporation and shall preside at all
meetings of the Board of Directors of the Corporation and shareholders of the
Corporation. The Chairman shall have such specific powers and duties as from
time to time may be conferred or assigned by the Board of Directors of the
Corporation.
SECTION 6.09. President. Subject to determination by the Board of Directors
of the Corporation, the President shall be the chief executive officer of the
Corporation, shall have general executive powers and shall have such specific
powers and duties as from time to time may be conferred upon or assigned to him
or her by the Board of Directors of the Corporation.
SECTION 6.10. Vice President. Each Vice President shall have such powers
and perform such duties as the Board of Directors of the Corporation or the
Executive Committee may from time to time prescribe or as shall be assigned by
the President.
SECTION 6.11. Treasurer. The Treasurer shall have charge and custody of,
and be responsible for, all funds and securities of the Corporation, and shall
deposit all such funds to the credit of the Corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
provisions of these Bylaws. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors of the Corporation or
the Executive Committee, making proper vouchers for such disbursements, and
shall render to the Board of Directors of the Corporation or the stockholders of
the Corporation, whenever the Board may so require, a statement of all
transactions as Treasurer or the financial condition of the Corporation and, in
general, the Treasurer shall perform all the duties as from time to time may be
assigned by the Board of Directors of the Corporation, any committee of the
Board designated by it so to act or the President.
SECTION 6.12. Secretary. The Secretary shall record or cause to be recorded
in books provided for the purpose the minutes of the meetings of the
stockholders of the Corporation, the Board of Directors of the Corporation and
all committees of which a secretary shall not have been appointed. The Secretary
(i) shall see that all notices are duly given in accordance with the provisions
of these Bylaws and as required by law, (ii) shall be custodian of all corporate
records (other than financial) and of the seal of the Corporation, (iii) shall
see that the seal is affixed to all documents the execution of which on behalf
of the Corporation under its seal is duly authorized in accordance with the
provisions of these Bylaws, (iv) shall keep, or cause to be kept, the list of
stockholders of the Corporation as required by Section 2.09, which include the
post-office addresses of the stockholders of the Corporation and the number of
shares held by them, respectively, and shall make or cause to be made, all
proper changes therein, (v) shall see that the books, reports, statements,
certificates and all other documents and records required by law are properly
kept and filed, and (vi) shall, in general, perform all duties incident to the
office of Secretary and such other duties as may from time to time be assigned
by the Board of Directors of the Corporation, the Executive Committee or the
President.
SECTION 6.13. Salaries. The salaries of the principal officers of the
Corporation shall be fixed from time to time by the Board of Directors of the
Corporation or a special committee thereof, and none of such officers shall be
prevented from receiving a salary by reason of the fact that he or she is a
director of the Corporation.
ARTICLE 7.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND
OTHER AUTHORIZED REPRESENTATIVES
SECTION 7.01. Indemnification of Authorized Representatives in Third Party
Proceedings. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party, or is
threatened to be made a party, to any third party proceeding by reason of the
fact that such person was or is an authorized representative of the Corporation,
against expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such third
party proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
Corporation and, with respect to any criminal third party proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination of any
third party proceeding by judgment, order, settlement, indictment, conviction or
upon a plea of nolo contendere or its equivalent shall not of itself create a
presumption that the authorized representative did not act in good faith and in
a manner which such person reasonably believed to be in or not opposed to, the
best interests of the Corporation, and, with respect to any criminal third party
proceeding, had reasonable cause to believe that such conduct was unlawful.
SECTION 7.02. Indemnification of Authorized Representatives in Corporate
Proceedings. The Corporation shall indemnify any person who was or is an
authorized representative of the Corporation and who was or is a party, or is
threatened to be made a party, to any corporate proceeding by reason of the fact
that such person was or is an authorized representative of the Corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such corporate action if such person acted in
good faith and in a manner reasonably believed to be in, or not opposed to, the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless, and only to the extent that,
the Court of Chancery or the court in which such corporate proceeding was
pending shall determine upon application that, despite the adjudication or
liability but in view of all the circumstances of the case, such authorized
representative is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
SECTION 7.03. Mandatory Indemnification of Authorized Representatives. To
the extent that an authorized representative of the Corporation has been
successful on the merits or otherwise in defense of any third party or corporate
proceeding or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses actually and reasonably incurred by such
person in connection therewith.
SECTION 7.04. Determination of Entitlement to Indemnification. Any
indemnification under Section 7.01, 7.02 or 7.03 of this Article (unless ordered
by a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the authorized representative
is proper in the circumstances because such person has either met the applicable
standard of conduct set forth in Section 7.01 or 7.02 or has been successful on
the merits or otherwise as set forth in Section 7.03 and that the amount
requested has been actually and reasonably incurred. Such determination shall be
made:
(a) By the Board of Directors of the Corporation by a majority of a quorum
consisting of directors of the Corporation who were not parties to such third
party or corporate proceeding, or
(b) If such a quorum is not obtainable or, even if obtainable, a majority
vote of such a quorum so directs, by independent legal counsel in a written
opinion, or
(c) By the stockholders of the Corporation.
SECTION 7.05. Advancing Expenses. Expenses actually and reasonably incurred
in defending a third party or corporate proceeding may be paid on behalf of an
authorized representative by the Corporation in advance of the final disposition
of such third party or corporate proceeding upon receipt of an undertaking by or
on behalf of such authorized representative to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation as authorized in this Article. The financial ability of such
authorized representative to make such repayment shall not be a prerequisite to
the making of an advance.
SECTION 7.06. Definitions. For purposes of this Article:
(a) "authorized representative" shall mean a director or officer of the
Corporation or a person serving at the request of the Corporation as a director,
officer or trustee of another Corporation, partnership, joint venture, trust or
other enterprise;
(b) "Corporation" shall include, in addition to the resulting corporation,
any constituent Corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent Corporation, or is or was serving
at the request of such constituent Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued.
(c) "corporate proceeding" shall mean any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor or investigative proceeding by the Corporation;
(d) "criminal third party proceeding" shall include any action or
investigation which could or does lead to a criminal third party proceeding;
(e) "expenses" shall include attorneys' fees and disbursements;
(f) "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan;
(g) "not opposed to the best interest of the Corporation" shall include
actions taken in good faith and in a manner the authorized representative
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan;
(h) "other enterprises" shall include employee benefit plans;
(i) "party" shall include the giving of testimony or similar involvement;
(j) "serving at the request of the Corporation" shall include any service
as a director, officer or employee of the Corporation which imposes duties on,
or involves services by, such director, officer or employee with respect to an
employee benefit plan, its participants or beneficiaries; and
(k) "third party proceeding" shall mean any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, other than an action by or in the right of the Corporation.
SECTION 7.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power or the obligation to
indemnify such person against such liability under the provisions of this
Article.
SECTION 7.08. Scope of Article. The indemnification of authorized
representatives and advancement of expenses, as authorized by the preceding
provisions of this Article, shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any statute, agreement, vote of stockholders of the Corporation or
disinterested directors of the Corporation or otherwise, both as to action in an
official capacity and as to action in another capacity. The indemnification and
advancement of expenses provided by or granted pursuant to this Article shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be an authorized representative and shall insure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 7.09. Reliance on Provisions. Each person who shall act as an
authorized representative of the Corporation shall be deemed to be doing so in
reliance upon the rights of indemnification provided by this Article.
ARTICLE 8.
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
SECTION 8.01. Execution of Contracts. Unless the Board of Directors of the
Corporation or the Executive Committee shall otherwise determine, (a) the
Chairman of the Board, the President, any Vice President or the Treasurer, and
(b) the Secretary or any Assistant Secretary, may enter into any contract or
execute any contract or other instrument, the execution of which is not
otherwise specifically provided for, in the name and on behalf of the
Corporation. The Board of Directors of the Corporation, or any committee
designated thereby with power so to act, except as otherwise provided in these
Bylaws, may authorize any other or additional officer or officers or agent or
agents of the Corporation, and such authority may be general or confined to
specific instances. Unless authorized so to do by these Bylaws or by the Board
of Directors of the Corporation or by any such committee, no officer, agent or
employee shall have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or to render it liable
pecuniarily for any purpose or to any amount.
SECTION 8.02. Loans. No loan shall be contracted on behalf of the
Corporation, and no evidence of indebtedness shall be issued, endorsed or
accepted in its name, unless authorized by the Board of Directors of the
Corporation or Executive Committee or other committee designated by the Board to
act. Such authority may be general or confined to specific instances. When so
authorized, the officer or officers thereunto authorized may effect loans and
advances at any time for the Corporation from any bank, trust company or other
institution, or from any firm, corporation or individual, and for such loans and
advances may make, execute and deliver promissory notes or other evidences of
indebtedness of the Corporation, and, when authorized as aforesaid, as security
for the payment of any and all loans, advances, indebtedness and liabilities of
the Corporation, may mortgage, pledge, hypothecate or transfer any real or
personal property at any time owned or held by the Corporation, and to that end
execute instruments of mortgage or pledge or otherwise transfer such property.
SECTION 8.03. Checks, Drafts, etc. All checks, drafts, bills or exchange or
other orders for the payment of money, obligations, notes, or other evidence of
indebtedness, bills of lading, warehouse receipts and insurance certificates of
the Corporation shall be signed or endorsed by such officer or officers, agent
or agents, attorney or attorneys, employee or employees, of the Corporation as
shall from time to time be determined by resolution of the Board of Directors of
the Corporation or Executive Committee or other committee designated by the
Board so to act.
SECTION 8.04. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board of Directors of the
Corporation or Executive Committee or other committee designated by the Board so
to act may from time to time designate, or as may be designated by any officer
or officers or agent or agents of the Corporation to whom such power may be
delegated by the Board of Directors of the Corporation or Executive Committee or
other committee designated by the Board so to act and, for the purpose of such
deposit and for the purposes of collection for the account of the Corporation
may be endorsed, assigned and delivered by any officer, agent or employee of the
Corporation or in such other manner as may from time to time be designated or
determined by resolution of the Board of Directors of the Corporation or
Executive Committee or other committee designated by the Board so to act.
SECTION 8.05. Proxies in Respect of Securities of Other Corporations.
Unless otherwise provided by resolution adopted by the Board of Directors of the
Corporation or the Executive Committee or other committee so designated to act
by the Board, the President may from time to time appoint an attorney or
attorneys or agent or agents of the Corporation, in the name and on behalf of
the Corporation, to cast the votes that the Corporation may be entitled to cast
as the holder of stock or other securities in any other corporation, association
or trust any of whose stock or other securities may be held by the Corporation,
at meetings of the holders of the stock or other securities of such other
corporation, association or trust, or to consent in writing, in the name of the
Corporation as such holder, to any action by such other corporation, association
or trust, and may instruct the person or persons so appointed as to the manner
of casting such votes or giving such consent, and may execute or cause to be
executed in the name and on behalf of the Corporation and under its corporate
seal, or otherwise, all such written proxies or other instruments as he or she
may deem necessary or proper in the premises.
ARTICLE 9.
BOOKS AND RECORDS
SECTION 9.01. Place. The books and records of the Corporation may be kept
at such places within or without the State of Delaware as the Board of Directors
of the Corporation may from time to time determine. The stock record books and
the blank stock certificate books shall be kept by the Secretary or by any other
officer or agent designated by the Board of Directors of the Corporation.
SECTION 9.02 Addresses of Stockholders. Each stockholder of the Corporation
shall furnish to the Secretary of the Corporation or to the transfer agent of
the Corporation an address at which notices of meetings and all other corporate
notices may be served upon or mailed to him and if any such stockholder shall
fail to designate such address, corporate notices may be served upon him or her
by mail, postage prepaid, to him or her at his or her post-office address last
known to the Secretary or to the transfer agent of the Corporation or by
transmitting a notice thereof to him or her at such address by telegraph, cable
or other available method.
SECTION 9.03. Record Dates. The Board of Directors of the Corporation may
fix in advance a date, not less than ten days nor more than sixty days prior to
the date of any meeting of stockholders of the Corporation, or the date for the
payment of any dividend, or the date for the allotment of any rights, or the
date when any change or conversion or exchange of capital stock of the
Corporation shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders of the
Corporation entitled to notice of, and to vote at, any such meeting or any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any
change, conversion or exchange of capital stock of the Corporation, or to give
such consent, and in each such case such stockholders and only such stockholders
as shall be stockholders of record on the date so fixed shall be entitled to
notice of, or to vote at, such meeting and any adjournment thereof, or to
receive payment of such dividend, or to receive such allotment of rights, or to
exercise such rights or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
SECTION 9.04. Audit of Books and Accounts. The books and accounts of the
Corporation shall be audited at least once in each fiscal year by certified
public accountants of good standing selected by the Board of Directors of the
Corporation.
ARTICLE 10.
SHARES AND THEIR TRANSFER
SECTION 10.01. Certificates of Stock. Every owner of stock of the
Corporation shall be entitled to have a certificate certifying the number of
shares owned by him or her in the Corporation and designating the class of stock
to which such shares belong, which shall otherwise be in such form as the Board
of Directors of the Corporation shall prescribe. Every such certificate shall be
signed by the President or a Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary of the
Corporation; provided, however, that where such certificate is signed or
countersigned by a transfer agent or registrar the signatures of such officers
of the Corporation and the seal of the Corporation may be in facsimile form. In
case any officer or officers who shall have signed, or whose facsimile signature
or signatures shall have been used on, any such certificate or certificates
shall cease to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates
shall have been delivered by the Corporation, such certificate or certificates
may nevertheless be issued and delivered by the Corporation as though the person
or persons who signed such certificate or whose facsimile signature or
signatures shall have been used thereof had not ceased to be such officer or
officers of the Corporation.
SECTION 10.02 Record. A record shall be kept of the name of the person,
firm or corporation owning the stock represented by each certificate for stock
of the Corporation issued, the number of shares represented by each such
certificate, and the date of issuance thereof and, in case of cancellation, the
date of cancellation. The person in whose name shares of stock of the
Corporation stand on the books of the Corporation shall be deemed the owner
thereof for all purposes as regards the Corporation.
SECTION 10.03. Transfer of Stock. Transfers of shares of the stock of the
Corporation shall be made only on the books of the Corporation by the registered
holder thereof, or by his or her attorney thereunto authorized, and on the
surrender of the certificate or certificates for such shares properly endorsed.
All certificates surrendered to the Corporation or its agent for transfer shall
be canceled.
SECTION 10.04. Transfer Agent and Registrar; Regulations. The Corporation
shall, if and whenever the Board of Directors of the Corporation or Executive
Committee shall so determine, maintain one or more transfer offices or agencies,
each in charge of a transfer agent designated by the Board of Directors of the
Corporation, where the shares of the capital stock of the Corporation shall be
directly transferable and also, if and whenever the Board of Directors of the
Corporation shall so determine, maintain one or more offices, each in charge of
a registrar designated by the Board of Directors of the Corporation, where such
shares of stock shall be registered. The Board of Directors of the Corporation
may make such rules and regulations as it may deem expedient, not inconsistent
with these Bylaws, concerning the issue, transfer and registration of
certificates for shares of the capital stock of the Corporation.
SECTION 10.05. Lost, Destroyed or Mutilated Certificates. In case of the
alleged loss or destruction or the mutilation of a certificate representing
capital stock of the Corporation, a new certificate may be issued in place
thereof, in the manner and upon such terms as the Board of Directors of the
Corporation may prescribe.
ARTICLE 11.
SEAL
The Board of Directors of the Corporation shall provide a corporate seal,
which shall be in the form of a circle and shall bear the name of the
Corporation and the state and year of incorporation.
ARTICLE 12.
FISCAL YEAR
The fiscal year of the Corporation shall commence on the first day of
January and shall end on the last day of December in each year, except as
otherwise provided from time to time by the Board of Directors of the
Corporation.
ARTICLE 13.
WAIVER OF NOTICE
Whenever any notice is required to be given by statute, these Bylaws or the
Charter, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE 14.
AMENDMENTS
Subject to the terms and provisions of the Charter, these Bylaws may be
altered, amended or repealed or new Bylaws may be adopted by the stockholders of
the Corporation or by the Board of Directors of the Corporation, when such power
is conferred upon the Board of Directors of the Corporation by the Charter, at
any regular meeting of the stockholders of the Corporation or of the Board of
Directors of the Corporation or at any special meeting of the stockholders or of
the Board of Directors of the Corporation if notice of such alteration,
amendment, repeal or adoption of new Bylaws is contained in the notice of such
special meeting; provided that notwithstanding any other provisions of these
Bylaws, the Charter as in effect from time to time or any provision of law which
might otherwise permit a lesser vote or no vote, but in addition to any
affirmative vote of the holders of any particular class or series of the capital
stock required by law, these Bylaws or the Charter, the affirmative vote of the
holders of at least sixty percent (60%) of the then-outstanding "Common Shares"
and "Class A Preferred Shares" (as defined in the Charter) entitled to vote,
voting together as a single class, shall be required to alter, amend or repeal
any provision of these Bylaws.
Exhibit C
INCENTIVE STOCK OPTION PLAN lQ
(Non-Qualified)
1. PURPOSE. The Plan 1Q (the "Plan") is intended as an incentive and to
encourage stock ownership by key employees of SOFTWARE TECHNOLOGY, INC.
(the "Company") by the granting of stock options as provided herein. The
options issued pursuant to the Plan will not constitute incentive stock
options within the meaning of Section 422 of the Internal Revenue Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Chief Executive Officer of
Exigent International, Inc. (the "CEO").
(b) The CEO is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it may deem appropriate for
the proper administration of the Plan, and to make such determinations
under, and such interpretations of, and to take such steps in
connection with, the Plan or the options granted thereunder as it may
deem necessary or advisable, which actions shall be binding and
conclusive.
3. ELIGIBILITY. Options may be granted to such employees of the Company or its
subsidiaries as the CEO shall select from time to time.
4. STOCK. The stock to be subject to options under the Plan shall be shares of
the Exigent International, Inc. ("Exigent") common shares (30,000,000
authorized) par value $.01 per share, either authorized and unissued or
treasury shares. The aggregate number of shares of stock for which options
may be granted under the Plan shall not exceed six hundred thousand
(600,000) common shares, subject to adjustment in accordance with the terms
of paragraph 8 hereof. The shares subject to the unexercised portion of any
terminated or expired options under the Plan may again be subjected to
options under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. All options granted pursuant to the Plan
shall be authorized by the ExigentBoard of Directors (the "Board") and
shall be evidenced by stock option agreements in writing in such form as
the Board shall determine. The terms and conditions set forth in such stock
option agreements shall include the following provisions.
(a) Grant Date. The CEO shall determine the date on which such option
shall be given; however, any options granted under this Plan shall be
granted within ten (10) years from the date this Plan is adopted.
(b) Fair Market Value. The fair market value shall be (i) if the Common
Shares are listed on a national exchange, the simple average of the
high and low prices in trading of the Common Shares, as reported by
sources deemed reliable by the CEO, on such exchange on the date on
which the Option is granted (or if there is no trading on such date,
then on the first previous date on which there has been trading); (ii)
if the Common Shares are not listed on a national exchange but are
traded in the over-the-counter market, the average of the high and low
prices on the date on which the Option is granted (or if there is no
trading on such date, then on the first previous date on which there
has been trading); or (iii) if the Common Shares are neither listed on
a national exchange nor traded in the over-the-counter market, as
determined in good faith by the CEO based upon an appraisal, or in
accordance with the applicable provisions of Section 20.2031-2 of the
Federal Estate Tax Regulations, or in any other manner consistent with
the Internal Revenue Code and accompanying regulations.
(c) Option Period. Each stock option agreement shall set forth the period
for which such option is granted, which shall not exceed three (3)
years from the date such option is granted (the "option period").
(d) Option Price. The option price per share of each option granted under
the Plan shall be not less than one hundred percent (100%) of the fair
market value, as determined by the CEO, of a share of stock on the
date of grant of such option. An option shall be considered granted on
the date the CEO acts to grant the option or such later date as the
CEO shall specify.
(e) Transfer of Option. No option shall be transferable by the Optionee
other than by will or the laws of descent and distribution.
(f) Exercise of Options. Each option may be exercised at any time during
its option period, subject to the restrictions in this paragraph and
in the stock option agreement under which it is issued.
(g) Payment for Options. On the date of exercise, the Optionee shall make
full payment of the option price (i) in cash; (ii) with the consent of
the CEO, by tendering previously acquired shares of stock (valued at
their fair market value, as determined by the CEO, as of the date of
exercise); or (iii) with the consent of the CEO, any combination of
(i) and (ii).
(h) No Obligation to Exercise. The granting of an option shall impose no
obligation upon the Optionee to exercise such option.
(i) Term of Employment. If the Optionee's employment with Exigent or any
subsidiary of Exigent is terminated for due cause, all stock options
shall terminate simultaneously therewith and Optionee shall have no
further right to exercise an option thereafter. For purposes of this
subparagraph (h) due cause shall be determined by the Optionee's
employment agreement with the Company or any subsidiary of the
Company, or, in the absence of an employment agreement, by the CEO of
the Company in his sole and absolute discretion. If the Optionee
ceases to be an employee of the Company or any subsidiary of the
Company for any reason other than due cause or death or disability (as
hereinafter defined), the term of all options shall expire on a date
not later than three (3) months after termination. If the Optionee
ceases to be an employee of the Company or any subsidiary of the
Company by reason of death or disability (as determined by the CEO),
the term of all options shall expire on a date which is not later than
twelve (12) months following the date of death or disability.
6. STOCK APPRECIATION RIGHTS. The CEO, in his discretion, may grant any
Optionee with a stock option under this Plan , the right to recover
appreciation of the optioned stock in the form of a taxable payment of cash
and/or other property, including stock of the Company, in exchange for the
cancellation or surrender of the optioned stock on which the appreciation
is measured ("underlying stock option"). The appreciation of the optioned
stock shall be measured by the difference between the fair market value of
the optioned stock on the date of exercise and the option price. The rights
described in this paragraph shall be referred to hereafter as "stock
appreciation rights."
7. RESTRICTIONS ON EXERCISE OF STOCK APPRECIATION RIGHTS. An Optionee may
choose to exercise his or her stock appreciation rights in lieu of receipt
of the optioned stock as set forth above, but only under the following
terms and conditions.
(a) The stock appreciation rights shall expire no later than the
expiration date of the stock option as set forth in paragraph 5(b) and
the Optionee's stock option agreement.
(b) The amount of cash or the fair market value of property received
through stock appreciation rights shall not exceed the difference
between the fair market value of the option on the date of exercise
and the option price (hereinafter referred to as appreciation ).
(c) The stock appreciation rights shall be transferable only when the
underlying stock option is transferable, and only under the same
conditions, as set forth in paragraph 5(d) and the Optionee's stock
option agreement.
(d) The stock appreciation rights shall be exercised only when the
underlying stock option is eligible to be exercised as set forth in
paragraphs 5(b) and 5(e), and the Optionee's stock option agreement.
(e) The stock appreciation rights shall be exercised only when there is a
positive appreciation, (i.e. when the fair market value of the
underlying stock exceeds the exercise price of the option).
(f) The exercise of the right has the same tax consequences as the
exercise of the option followed by the immediate sale of the stock.
(g) The Optionee shall notify the CEO thirty (30) days prior to his or her
exercise of stock appreciation rights of the Optionee's intent to
elect to exercise such rights.
(h) The form of payment and the fair market value of any property paid
upon exercise of stock appreciation rights shall be within the sole
and reasonable discretion of the CEO. Such determination shall be
final, binding, and conclusive.
(I) Upon exercise of an Optionee's right to receive the stock appreciation
value in cash and/or property, the underlying options shall be
canceled.
8. WITHHOLDING. A recipient of shares pursuant to the exercise of an Option,
or on the surrender of any Option, shall pay Exigent in cash the amount of
any tax or other amount required by any governmental authority to be
withheld and paid over by Exigent or any subsidiary to such authority for
the account of the recipient. Notwithstanding the foregoing, the CEO, in
his discretion, may allow the recipient to satisfy such obligation in whole
or in part, and any other local, state or federal income tax obligations
resulting from the exercise of an Option, by electing to deliver to Exigent
shares owned by the Optionee at the time of exercise or surrender, or to
have Exigent withhold from the shares to which the recipient is entitled.
The number of shares to be delivered or withheld shall have a fair market
value as of the date that the amount of tax to be withheld is determined as
nearly as equal as possible to the amount of such obligation (but not
exceeding such amount). Any election to deliver Exigent shares or have
Exigent shares withheld to satisfy withholding obligations must be made in
writing to the CEO prior to the date the amount to be withheld is
determined. The CEO may reject any such election or suspend or terminate
the right to make an election. An election which has been made and accepted
by the CEO is irrevocable.
9. ADJUSTMENT IN THE EVENT OF CHANGE OF STOCK. In the event of any change in
the outstanding stock by reason of stock dividends, recapitalizations,
reorganizations, mergers, consolidations, split-ups, changes in its capital
or business structure, or combinations or exchanges of shares and the like,
the number and kind of shares which thereafter may be optioned and sold
under the Plan , the number and kind of shares under option in outstanding
stock option agreements and the purchase price per share thereof shall be
approximately adjusted consistent with such change. The determination of
the CEO as to any adjustment shall be final and conclusive.
10. GENDER. As used in this Plan , the masculine, feminine or neuter gender and
the singular or plural number shall be deemed to include the others
whenever the context so indicates or requires.
11. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN . The Board of
Directors of the Exigent may terminate, amend, or modify the Plan, at any
time. No amendment, modification, or termination of the Plan shall in any
manner affect any option heretofore granted to an Optionee under the Plan
without the consent of the Optionee.
12. TERM OF THE PLAN . The Plan is effective as of the 11th day of June , 1997.
The Plan was approved by the Board on the 11th day of June, 1997. The Plan
shall terminate on the 11th day of June, 2007, or on such earlier date as
may be determined by the Board. Termination of the Plan, however, shall not
affect the rights of Optionee under options theretofore granted to them,
and all unexpired options shall continue in force and operation after
termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.
EXHIBIT D
INCENTIVE STOCK OPTION PLAN 3Q
1. PURPOSE. This plan (the "Plan 3Q") is intended as an incentive and to
encourage stock ownership by employees of SOFTWARE TECHNOLOGY, INC. and
subsidiaries of Exigent International, Inc. (the "Company") by the granting of
stock options as provided herein. It is intended that all of the options issued
pursuant to the Plan 3Q will constitute incentive stock options within the
meaning of Section 422 of the Internal Revenue Code ("incentive stock options").
2. ADMINISTRATION.
(a) The Plan 3Q shall be administered by the CEO of the Company (the
"CEO").
(b) The CEO is authorized, subject to the provisions of the Plan 3Q, to
establish such rules and regulations as it may deem appropriate for the proper
administration of the Plan 3Q, and to make such determinations under, and such
interpretations of, and to take such steps in connection with, the Plan 3Q or
the options granted thereunder as it may deem necessary or advisable, which
actions shall be binding and conclusive.
3. ELIGIBILITY. Options may be granted to such employees of the Company or
its subsidiaries as the CEO shall select from time to time, but, in any event,
the aggregate number of shares of stock for which options may be granted shall
be allocated in the amount of fifty percent (50%) of said aggregate number to
new hire employees and the remaining fifty percent (50%) of the aggregate number
will be granted to such employees as the CEO of the company shall select from
time to time, in his discretion.
4. STOCK. The stock to be subject to options under the Plan 3Q shall be
shares of the Company's parent corporation's (Exigent International, Inc.)
Common Shares (30,000,000 authorized) par value $.01 per share, either
authorized and unissued or treasury shares. The aggregate number of shares of
stock for which options may be granted under the Plan 3Q shall not exceed two
hundred forty thousand (240,000) shares, subject to adjustment in accordance
with the terms of paragraph 8 hereof. The shares subject to the unexercised
portion of any terminated or expired options under the Plan 3Q may again be
subjected to options under the Plan 3Q.
5. TERMS AND CONDITIONS OF OPTIONS. All options granted pursuant to the
Plan 3Q shall be authorized by the CEO and shall be evidenced by stock option
agreements in writing in such form as the CEO shall determine. The terms and
conditions set forth in such option agreements shall include:
(a) GRANT DATE. The CEO shall determine the date on which such option shall
be given; however, any options granted under this Plan 3Q shall be granted
within ten (10) years from the date this Plan 3Q is adopted or the date this
Plan 3Q is approved by the shareholders, whichever is earlier.
(b) OPTION PERIOD. Each stock option agreement shall set forth the period
for which such option is granted, which shall not exceed two (2) years from the
date such option vests pursuant to subsection (c) below (the "option period").
(c) VESTING. A vesting period of twelve (12) months from the date the
option is granted.
(d) OPTION PRICE. The option price per share of each option granted under
the Plan 3Q shall be not less than one hundred percent (100%) of the fair market
value, as determined by the CEO, of a share of stock on the date of grant of
such option. The purchase price shall be at least one hundred ten percent (110%)
of the fair market value if such optionee owns more than ten percent (10%) of
the total combined voting power of all the classes of stock of the Company or of
its parents or subsidiaries. An option shall be considered granted on the date
the CEO acts to grant the option or such later date as the CEO shall specify.
(e) TRANSFER OF OPTION. No option shall be transferable by the optionee
other than by will or the laws of descent and distribution.
(f) EXERCISE OF OPTIONS. Each option may be exercised at any time during
its option period, subject to the restrictions in this paragraph and in the
stock option agreement under which it is issued. Notwithstanding any other
provision of the Plan 3Q, no incentive stock option shall be exercisable while
there is still outstanding any other incentive stock option which was granted
before the granting of such new incentive stock option, to the optionee to
purchase shares of the Company or of any other corporation which, on the date of
grant of the option, was a parent or subsidiary of the Company, or of any
predecessor of such parent or subsidiary.
(g) PAYMENT FOR OPTIONS. On the date of exercise, the optionee shall make
full payment of the option price (i) in cash; (ii) with the consent of the CEO,
by tendering previously acquired shares of stock (valued at their fair market
value, as determined by the CEO, as of the date of exercise); or (iii) with the
consent of the CEO, any combination of (i) and (ii).
(h) MAXIMUM VALUE PER OPTIONEE. The aggregate fair market value, as
determined by the CEO at the time of grant, of the stock for which an Optionee
may exercise in any one (1) calendar year pursuant to options granted under this
Plan 3Q and any other plans of the Company or its parent or subsidiaries shall
not exceed one hundred thousand dollars ($100,000.00).
(i) NO OBLIGATION TO EXERCISE. The granting of an option shall impose no
obligation upon the optionee to exercise such option.
(j) TERM OF EMPLOYMENT. If the optionee's employment with the Company or
any subsidiary of the Company is terminated for good cause, all stock options
shall terminate simultaneously therewith and optionee shall have no further
right to exercise an option thereafter. For purposes of this paragraph (i) "good
cause" shall be determined by the board of directors of the Company and any such
determination shall be final, binding and conclusive. If the optionee ceases to
be an employee of the company or any subsidiary of the company for any reason
other than good cause or death or disability (as hereinafter defined), the term
of all options shall expire on a date not later than three (3) months after
termination. If the optionee ceases to be an employee of the Company or any
subsidiary of the Company by reason of death or disability (within the meaning
of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended), the term
of all options shall expire on a date which is not later than twelve (12) months
following the date of death or disability.
6. STOCK APPRECIATION RIGHTS. The CEO, in his discretion, may grant any
optionee with a stock option under this Plan 3Q, the right to recover
appreciation of the optioned stock in the form of a taxable payment of cash
and/or other property, including stock of the corporation granting the option,
in exchange for the cancellation or surrender of the optioned stock on which the
appreciation is measured ("underlying stock option"). The appreciation of the
optioned stock shall be measured by the difference between the fair market value
of the optioned stock on the date of exercise and the option price. The rights
described in this paragraph shall be referred to hereafter as "stock
appreciation rights."
7. RESTRICTIONS ON EXERCISE OF STOCK APPRECIATION RIGHTS. An optionee may
choose to exercise his or her stock appreciation rights in lieu of receipt of
the optioned stock as set forth above, but only under the following terms and
conditions:
(a) The stock appreciation rights shall expire no later than the expiration
date of the stock option as set forth in paragraph 5(b) and the optionee's stock
option agreement;
(b) The amount of cash or the fair market value of property received
through stock appreciation rights shall not exceed the difference between the
fair market value of the option on the date of exercise and the option price
(hereinafter referred to as "appreciation");
(c) The stock appreciation rights shall be transferable only when the
underlying stock option is transferable, and only under the same conditions, as
set forth in paragraph 5(d) and the optionee's stock option agreement;
(d) The stock appreciation rights shall be exercised only when the
underlying stock option is eligible to be exercised as set forth in paragraphs
5(b) and 5(e), and the optionee's stock option agreement;
(e) The stock appreciation rights shall be exercised only when there is a
positive appreciation, i.e. when the market price of the underlying stock
exceeds the exercise price of the option;
(f) The exercise of the right has the same tax consequences as the exercise
of the option followed by the immediate sale of the stock;
(g) The optionee shall notify the CEO thirty (30) days prior to his or her
exercise of stock appreciation rights of the optionee's intent to elect to
exercise such rights;
(h) The form of payment a nd the fair market value of any property paid
upon exercise of stock appreciation rights shall be within the sole and
reasonable discretion of the CEO. Such determination shall be final, binding,
and conclusive; and
(i) Upon exercise of an optionee's right to receive the stock appreciation
value in cash and/or property, the underlying options shall be canceled.
8. ADJUSTMENT IN THE EVENT OF CHANGE OF STOCK. In the event of any change
in the outstanding stock by reason of stock dividends, recapitalizations,
reorganizations, mergers, consolidations, split-ups, changes in its capital or
business structure, or combinations or exchanges of shares and the like, the
number and kind of shares which thereafter may be optioned and sold under the
Plan 3Q, the number and kind of shares under option in outstanding stock option
agreements and the purchase price per share thereof shall be approximately
adjusted consistent with such change. The determination of the CEO as to any
adjustment shall be final and conclusive.
9. GENDER. As used in this Plan 3Q, the masculine, feminine or neuter
gender and the singular or plural number shall be deemed to include the others
whenever the context so indicates or requires.
10. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN 3Q. The board of
directors of the Company may terminate, amend, or modify the Plan 3Q, at any
time; provided, however, that no such action of the board of directors, without
approval of the shareholders, may (a) increase the total number of shares of
stock for which options may be granted under the Plan 3Q, except as contemplated
in paragraph 8; (b) permit the granting of options to anyone other than an
employee of the Company; (c) decrease the minimum option price; (d) increase the
maximum option periods; (e) increase the maximum per optionee as set forth in
paragraph 5(g); or (f) withdraw the administration of the Plan 3Q from the CEO.
No amendment, modification, or termination of the Plan 3Q shall in any manner
affect any option heretofore granted to an optionee under the Plan 3Q without
the consent of the optionee.
Exhibit E
INCENTIVE STOCK OPTION PLAN 4Q
1. PURPOSE. This Incentive Stock Option Plan 4Q (the "Plan") is intended as
an incentive and to encourage stock ownership by salaried employees of Exigent
International, Inc. (the "Company") and its subsidiaries by granting stock
options as provided herein. It is intended that all of the options issued
pursuant to the Plan (except as otherwise provided under paragraph 5(i)) will
constitute incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and all mandatory
requirements therein are herein incorporated by reference.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Chief Executive Officer of
the Company (the "CEO"). Notwithstanding anything to the contrary contained
herein, each grant of an option (as well as any cashless exercise or tax
withholding rights) pursuant to this Plan when determined by the CEO shall be
approved in advance of issuance by a committee of the board of directors of the
Company composed solely of two or more non-employee directors (as defined in
paragraph 2(b) below) or, if no such committee exists, by the board of directors
of the Company. If a grant is not approved as described above, it shall not be
made under this Plan. No member of the board of directors of the Company or the
CEO shall be liable for any action taken, or determination made, hereunder in
good faith. Service by the CEO as the administrator of the Plan shall constitute
service as a director of the Company so that the CEO shall be entitled to
indemnification and reimbursement as a director of the Company pursuant to its
Bylaws and Delaware law.
(b) A person will qualify as a "non-employee director" if such person
(while a member of the committee): (i) is not an officer or employee of the
Company or a parent or subsidiary of the Company (collectively, "Affiliates");
(ii) does not directly or indirectly receive more than sixty thousand dollars
($60,000) in compensation in any fiscal year from the Company and its Affiliates
in any capacity (including services rendered as a consultant); (iii) does not
possess an interest in any transaction or series of similar transactions in any
fiscal year to which the Company or an Affiliate is a party in which the amount
involved exceeds sixty thousand dollars ($60,000); (iv) is not and has not been
during the last fiscal year an executive officer or greater than ten percent
(10%) beneficial or record equity holder of an entity that has made during the
Company's last fiscal year or proposes to make during the Company's current
fiscal year payments to, or receive payments from, the Company and its
Affiliates for property or services in excess of five percent (5%) of (1) the
Company's consolidated gross revenues for its last full fiscal year or (2) the
other entity's consolidated gross revenues for its last full fiscal year; (v) is
not and has not been during the last fiscal year an executive officer or greater
than ten percent (10%) beneficial or record equity holder of an entity to which
the Company or its subsidiaries were indebted at the end of the Company's last
full fiscal year in an aggregate amount in excess of five percent (5%) of the
Company's total consolidated assets at the end of such fiscal year; (vi) is not
or during the Company's last fiscal year has not been a member of or counsel to
a law firm that the issuer has retained during the last fiscal year or proposes
to retain during the current fiscal year; (vii) is not or during the Company's
last fiscal year has not been a partner or executive officer of any investment
banking firm that has performed services for the Company, other than as a
participating underwriter in a syndicate, during the last fiscal year or
proposes to perform services for the Company during the current fiscal year; and
(viii) is not a party to any other relationships of which the Company is aware
that are substantially similar to those described in paragraphs (iv) through
(vii) above.
(c) The CEO is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as he may deem appropriate for the proper
administration of the Plan, and to make such determinations under, and such
interpretations of, and to take such steps in connection with, the Plan or the
options granted thereunder as he may deem necessary or advisable, which actions
shall be binding and conclusive, except as otherwise provided in paragraph 2(a)
above.
3. ELIGIBILITY. Options may be granted to such employees of the Company or
its subsidiaries as the CEO shall select from time to time and shall be tied to
the corporate financial performance goals of the officers' plan.
4. STOCK. The stock to be subject to options under the Plan shall be the
Company's Common Shares. The aggregate number of shares of stock for which
options may be granted under the Plan shall not exceed two hundred fifty
thousand (250,000) shares, subject to adjustment in accordance with the terms of
paragraph 8 hereof. The shares subject to the unexercised portion of any
terminated or expired options under the Plan may again be subjected to options
under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. All options granted pursuant to the
Plan shall be authorized by the CEO and shall be evidenced by stock option
agreements in writing in such form as the CEO shall determine. The terms and
conditions set forth in such option agreements shall include:
(a) Grant Date. The CEO shall determine the date on which such option
shall be granted; however, any options granted under this Plan shall be granted
within ten (10) years from the date this Plan is adopted or the date this Plan
is approved by the shareholders, whichever is earlier. After approval as
described in paragraph 2(a), an option shall be considered granted on the date
the CEO acts to grant the Option or such later date as the CEO shall specify,
except that the grant date of any options granted on the condition that such
person become an employee of the Company or any of its subsidiaries shall be no
earlier than the date such person becomes an employee of the Company or any of
its subsidiaries.
(b) Option Period. Each stock option agreement shall set forth the
period for which such option is granted, which shall not exceed three (3) years
from the date such option is granted (the "Option Period").
(c) Option Price. The purchase price per share underlying each option
granted under the Plan shall be not less than one hundred percent (100%) of the
fair market value, calculated as provided below, of a share of stock on the date
of grant of such option. The purchase price shall be at least one hundred ten
percent (110%) of the fair market value if such optionee beneficially owns
(including stock attributable to such employee under the Code) more than ten
percent (10%) of the total combined voting power of all the classes of stock of
the Company or of its subsidiaries.
(d) Fair Market Value. The fair market value of each Common Share
shall be calculated (i) if the Common Shares are listed on a national exchange,
the simple average of the high and low prices in trading of a Common Share as
reported by sources deemed reliable by the CEO, on such exchange on the date on
which the option is granted (or if there shall be no trading on such date, then
on the first previous date on which there shall have been trading); (ii) if the
Common Shares are not listed on a national exchange, but are traded in the
over-the-counter market, the average of the high and low prices on that date on
which the option is granted (or if there shall be no trading on such date, then
on the first previous date in which there shall have been trading); or (iii) if
the Common Shares are neither listed on a national exchange or traded in the
over-the-counter market, as determined in good faith by the CEO based upon an
appraisal or in accordance with the applicable provisions of section 20.2031-2
of the Federal Estate Tax Regulations, or in any other manner consistent with
the Code and accompanying regulations.
(e) Transfer of Option. No option may be transferred, assigned,
pledged or otherwise disposed of (whether by operation of law or otherwise)
except by will or the laws of descent and distribution. Any attempted transfer,
assignment, pledge or other disposition or levy of attachment or similar process
not specifically permitted herein shall be null and void and without effect.
(f) Exercise of Options. Each option may be exercised at any time
during its Option Period, or subject to the restrictions in this paragraph and
in the stock option agreement under which it is issued and provided that,
options must be exercised in increments of at least one hundred (100) Common
Shares (unless the optionee holds fewer than one hundred (100) in which case all
remaining options held by the optionee must be exercised). Disposition of the
shares received upon exercise of an option prior to the later of two (2) years
from date of grant of the option or one (1) year from the date the shares are
transferred to the employee may be a disqualifying disposition requiring the
employee to recognize the gain on disposition of the shares as compensation
income.
(g) Method of Exercise and Payment for Options. An option may be
exercised only by the optionee during the optionee's lifetime by giving written
notice of exercise of at least thirty (30) days to the CEO at the Company's
principal offices as provided in the applicable Stock Option Agreement. Such
notice shall specify the number of shares to be purchased (which shall be at
least the minimum number of shares described in paragraph 5(f)) and shall
contain such representations and agreements regarding optionee's investment
intent, access to information and other matters, if any, as may be required or
desirable to comply with applicable securities laws. The notice shall be
accompanied by full payment of the option price (i) in cash; (ii) with the
consent of the CEO, by tendering previously acquired shares of stock (valued at
their fair market value, as determined under paragraph 5(d), as of the date of
exercise); or (iii) with the consent of the CEO, any combination of (i) and
(ii). The Company will issue the shares as soon as practicable after exercise of
an option in accordance with this paragraph and the applicable agreement.
Notwithstanding the foregoing, the issuance of shares may be delayed in the
discretion of the CEO for such time period as is necessary to enable the Company
to comply with any federal or state securities laws applicable to the exercise
of the options. In addition, all certificates for shares or other securities
delivered under this Plan will be subject to such transfer orders, legends and
other restrictions as the CEO may deem necessary or advisable including
securities law or regulation restrictions or restrictions imposed by any stock
exchange or automated quotation system upon which the Company's shares are
listed or quoted.
(h) Withholding Taxes. Whenever the Company proposed or is required to
issue or transfer Common Shares under the Plan, the Company shall have the right
to require the optionee to remit to the Company an amount sufficient to satisfy
any Federal, state or local withholding tax requirements prior to the delivery
of any certificate for such shares. Alternatively, the Company may issue or
transfer such Common Shares net of the number of shares sufficient to satisfy
the withholding tax requirements. Any shares so withheld shall be valued as
described in paragraph 5(d) as of the date the withholding obligation is
incurred.
(i) Maximum Value Per Optionee. The aggregate fair market value, as
determined by the CEO at the time of grant, of the shares for which options are
exercisable for the first time by an optionee in any one (1) calendar year
pursuant to options granted under this Plan and any other plans of the Company
or its Affiliates shall not exceed one hundred thousand dollars ($100,000). For
purposes of this provision, options are taken into account in the order in which
they were granted. If the fair market value of shares on the date of grant with
respect to which options are exercisable for the first time by an optionee
exceeds such amount, then the options for the first one hundred thousand dollars
($100,000) worth of shares to become exercisable in such calendar year will be
incentive stock options and the options for amount in excess of one hundred
thousand dollars ($100,000) will be nonqualified stock options. In the event
that the Code or the regulations promulgated thereunder are amended after the
effective date of this Plan to provide for a different limit on the fair market
value of the shares permitted to be subject to incentive stock options, such
different limit will be automatically incorporated herein and will apply to any
options granted after the effective date of such amendment.
(j) No Obligation to Exercise. The granting of an option shall impose
no obligation upon the optionee to exercise such option.
(k) Term of Employment. If the optionees employment with the Company
or any subsidiary of the Company is terminated for good cause, all options shall
terminate simultaneously therewith and optionee shall have no further right to
exercise an option thereafter. For purposes of this paragraph (i) "good cause"
shall be determined by the board of directors of the Company and any such
determination shall be final, binding and conclusive. If the optionee ceases to
be an employee of the Company or any subsidiary of the Company for any reason
other than good cause or death or disability (as hereinafter defined), the term
of all options shall expire on a date not later than three (3) months after
termination. If the optionee ceases to be an employee of the Company or any
subsidiary of the Company by reason of death or disability (within the meaning
of Section 22(e)(3) of the Code), the term of all options shall expire on a date
which is not later than twelve (12) months following the date of death or
disability. The CEO shall be entitled to make such rules, regulations and
determinations as he deems appropriate under this Plan in respect of any leave
of absence taken by or disability of any optionee. Without limiting the
generality of the foregoing, the CEO shall be entitled to determine (i) whether
or not any such leaves of absence shall constitute a termination of employment
within the meaning of this Plan, and (ii) the impact, if any, of any such leave
of absence on awards under this Plan made to any optionee who takes such leave
of absence.
6. STOCK APPRECIATION RIGHTS. The CEO, in his discretion, may grant any
optionee with a stock option under this Plan, the right to recover appreciation
of the optioned stock in the form of a taxable payment of cash and/or other
property, including stock of the Company, in exchange for the cancellation or
surrender of the optioned stock on which the appreciation is measured
("underlying stock option"). The appreciation of the optioned stock shall be
measured by the difference between the fair market value of the optioned stock
on the date of exercise and the option price. The rights described in this
paragraph shall be referred to hereafter as "stock appreciation rights."
7. RESTRICTIONS ON EXERCISE OF STOCK APPRECIATION RIGHTS. If granted by the
CEO and evidenced in a stock option agreement, an optionee may choose to
exercise stock appreciation rights in lieu of receipt of the optioned stock as
set forth above, but only under the following terms and conditions:
(a) the stock appreciation rights shall expire no later than the
expiration date of the stock option as set forth in paragraph 5(b) and the
optionee's stock option agreement;
(b) the amount of cash or the fair market value of property received
through stock appreciation rights shall not exceed the difference between the
fair market value of the option on the date of exercise and the option price
(hereinafter referred to as "appreciation");
(c) the stock appreciation rights shall be transferable only when the
underlying stock option is transferable, and only under the same conditions, as
set forth in paragraph 5(e) and the optionee's stock option agreement;
(d) the stock appreciation rights shall be exercised only when the
underlying stock option is eligible to be exercised as set forth in paragraphs,
5(b), 5(c) and 5(g), and the optionee's stock option agreement;
(e) the stock appreciation rights shall be exercised only when there
is a positive appreciation, i.e. when the market price of the underlying stock
exceeds the exercise price of the option;
(f) the exercise of the right has the same tax consequences as the
exercise of the option followed by the immediate sale of the stock;
(g) the optionee shall notify the CEO thirty (30) days prior to
exercise of stock appreciation rights of the optionee's intent to elect to
exercise such rights;
(h) the form of payment and the fair market value of any property paid
upon exercise of stock appreciation rights shall be within the sole and
reasonable discretion of the CEO and such determination shall be final, binding,
and conclusive; and
(i) upon exercise of an optionee's right to receive the stock
appreciation value in cash and/or property, the underlying options shall be
canceled.
8. ADJUSTMENT IN THE EVENT OF CHANGE OF STOCK. In the event of any change
in the outstanding stock by reason of stock dividends, recapitalizations, stock
split, reverse stock split, reorganizations, mergers, consolidations, split-ups,
changes in its capital or business structure without consideration, and the
like, the number and kind of shares which thereafter may be optioned and sold
under the Plan, the number and kind of shares under option in outstanding stock
option agreements and the purchase price per share thereof shall be
approximately adjusted consistent with such change subject to any required
action by the board of directors or shareholders of the Company and compliance
with applicable securities laws. Fractional shares will not be issued but will
either be replaced by a cash payment equal to the fair market value of such
fraction of a share (determined as provided in paragraph 5(d)) or will be
rounded up to the nearest whole share as determined by the CEO. The
determination of the CEO as to any adjustment shall be final and conclusive.
9. CORPORATE TRANSACTIONS. In the event of (a) a dissolution or liquidation
of the Company, (b) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the options granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption will be binding on all optionees), (c) a merger in which the Company
is the surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (d)
the sale of substantially all of the assets of the Company, or (e) the
acquisition, sale or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, any or all outstanding options
may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all optionees. In
the alternative, the successor corporation may substitute equivalent options or
provide substantially similar consideration to optionees as was provided to
shareholders (after taking into account the existing provisions of the options).
In the event such successor corporation (if any) refuses to assume or substitute
options, as provided above, pursuant to a transaction described in this
paragraph 9, such options will expire on such transaction at such time and on
such conditions as the CEO shall determine; provided, however, that the CEO may,
in his sole discretion, provide that the vesting of any or all options granted
pursuant to this Plan will accelerate. If the CEO exercises such discretion with
respect to options, such options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the CEO
determines, and if such options are not exercised prior to the consummation of
the corporate transaction, they shall terminate at such time as determined by
the CEO. Subject to any greater rights granted to optionees under the foregoing
provisions of this paragraph 9, in the event of the occurrence of any
transaction described in this paragraph 9, any outstanding options will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation or sale of assets.
10. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The board of
directors of the Company may terminate, amend, or modify the Plan, at any time;
provided, however, that no such action of the board of directors, without
approval of the shareholders, may (a) increase the total number of shares of
stock for which options may be granted under the Plan, except as contemplated in
paragraph 8; (b) permit the granting of options to anyone other than an employee
of the Company; (c) decrease the minimum option price; (d) increase the maximum
option periods; (e) increase the maximum per optionee as set forth in paragraph
5(i); or (f) withdraw the administration of the Plan from the CEO. No amendment,
modification, or termination of the Plan shall in any manner affect any option
heretofore granted to an optionee under the Plan without the consent of the
optionee.
11. TERM OF THE PLAN. The Plan is effective as of April 21, 1998. The Plan
will be submitted to the shareholders of the Company for approval at the next
annual meeting which is expected to occur before July 30, 1998. All options
granted prior to shareholders approval shall be subject to such approval. The
Plan shall terminate on April 20, 2008, or on such earlier date as may be
determined by the board of directors of the Company. Termination of the Plan,
however, shall not affect the rights of optionees under options granted to them
under this Plan prior to termination, and all unexpired options shall continue
in force and operation after termination of the Plan except as they may lapse or
terminate by their own terms and conditions. 0120011.01
Exhibit F
INDEPENDENT DIRECTOR STOCK OPTION PLAN (5NQ)
1. PURPOSE.
This Independent Director Stock Option Plan (5NQ) (the "Plan") is intended
to further the established policy of EXIGENT INTERNATIONAL, INC. (the
"Corporation") of encouraging ownership of its Common Stock by independent
directors of the Corporation and of providing inducements to obtain and
retain the services of qualified persons to serve as members of the Board
of Directors and to demonstrate the Corporation's appreciation for their
service upon the Board of Directors.
2. DEFINITIONS.
(a) "Option" shall mean any option granted hereunder, which option is not
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.
(b) "Optionee" shall mean any director of the Corporation who is not (i)
an employee of or consultant to the Corporation; (ii) an officer of
the Corporation; or (iii) an affiliate of the Corporation by reason of
direct or indirect beneficial ownership of 10% or more of any class of
capital stock of the Corporation. The payment to a director of fees
for serving as a director, shall not, in and of itself, disqualify any
director as an Optionee.
3. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Compensation Committee as and if
appointed by the Board of Directors of the Corporation (the
"Committee") from time to time. Notwithstanding the foregoing, to the
extent required by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), for exemption
from Section 16(b) of the Exchange Act, each grant of an Option, and
the terms of each disposition of a security to the Corporation, shall
be approved by the Board of Directors of the Corporation or, if
composed solely of two or more Non-Employee Directors within the
meaning of Rule 16b-3 at the time of the approval, the Committee.
Hereinafter, all references to the Committee shall mean the Board of
Directors if no Committee has been appointed. Any action of the
Committee may be taken by a written instrument signed by the
Committee. Subject to the provisions of the Plan, and subject to the
ratification of the grant or authorization of each Option or award by
the Board of Directors (if so required by applicable state law), the
Committee shall have full and final authority in its discretion to
take any action with respect to the Plan including, without
limitation, the following: (i) to determine the Optionees to whom, and
the time or times at which, Options shall be granted, the term of such
Options, and the number of shares to be covered by each Option, and if
at any time the vesting of any Options shall be accelerated; (ii) to
prescribe the form or forms of the agreements (which need not be
identical) evidencing any Options granted under the Plan; (iii) to
establish, amend and rescind rules and regulations for administration
of the Plan; (iv) to construe and interpret the Plan, the rules and
regulations, and the agreements evidencing Options granted under the
Plan; and (v) to make all other determinations deemed necessary or
advisable for administering the Plan.
(b) The interpretation and construction by the Committee of any provisions
of the Plan or of any Option or right granted under the Plan shall be
final unless otherwise determined by the Board of Directors. No member
of the Board of Directors or Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any
Option or right granted under it. The Corporation shall indemnify and
hold harmless each current and former director of the Corporation
against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with
or resulting from any claim, action, suit or proceeding to which such
person may be a party or in which such person may be involved by
reason of any action taken or failure to act under the Plan (excluding
intentional wrongdoing) and against and from any and all amounts paid
by such person in settlement thereof, with the Corporation's approval,
or paid by such person in satisfaction of any judgment in any such
action, suit or proceeding in which such person is involved; provided
that such person gives the Corporation prompt notice of the claim,
action suite or proceeding and an opportunity, at its own expense, to
handle and defend the same. This right of indemnification shall not
exclude any other indemnification rights to which such persons may be
entitled under the Corporation's Certificate of Incorporation or
Bylaws, as a matter of law or otherwise, or any power of the
Corporation may have to indemnify or hold them harmless.
(c) The Committee, if appointed, shall consist of at least two persons.
The Committee may select one of its members as its chairman, and shall
hold meetings at such times and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing
by the Committee, shall be valid acts of the Committee. From time to
time, the Board of Directors may increase the size of the Committee
and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
4. EFFECTIVE DATE OF THE PLAN.
The Effective date of the Plan is September 30, 1997. Options may be
granted under the Plan on and after the effective date, but not after
September 30, 2007.
5. OPTIONS; SHARES OF STOCK SUBJECT TO THE PLAN.
Options granted hereunder are not options intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). One Hundred Twenty Thousand
(120,000) Common Shares of the Corporation (hereinafter called "Common
Stock") may be issued pursuant to the exercise of Options granted hereunder
(subject to adjustment as provided in Section 13 below), and the
Corporation has reserved sufficient authorized shares to provide for the
exercise of such Options. Any shares subject to an Option which, for any
reason, expires or is terminated unexercised as to such shares may again be
subjected to an option granted under the Plan.
6. AMOUNT OF OPTIONS AND ELIGIBILITY.
(a) Options may be granted only to Optionees.
(b) Subject to Section 6(c) and Section 8 below, each Optionee who is
granted Options under the Plan shall receive Options to purchase Forty
Thousand (40,000) shares of Common Stock, which Options shall vest and
become exercisable by the Optionee on a quarterly basis following
grant of the options at the rate of 2,500 shares per quarter for the
16 quarters following the grant date, provided at each quarterly
vesting date the Optionee continues to serve on the Board of
Directors. Subject to Section 6(c) below, Optionees will be eligible
to receive a grant of Options to purchase such 40,000 shares of Common
Stock upon their initial election to the Board of Directors.
(b) With respect to eligible Optionees serving on the Board of Directors
upon the adoption of the Plan by the Board of Directors: if such
Optionee holds no options to purchase shares of Common Stock granted
under other stock option plans of the Corporation, such Optionee will
be eligible to receive under the Plan an initial grant of Options to
purchase 40,000 shares of Common Stock, which Options shall vest and
become exercisable over a 48-month period, taking into account the
service on the Board of Directors by such Optionee prior to the
adoption of the Plan, as follows: on the date ("Section 6 (c) Initial
Vesting Date") 31 days following the grant of such Options, Options
for the purchase of an amount of shares of Common Stock equal to 2,500
multiplied by the number of quarters such Optionee shall have then
served on the Board of Directors shall vest and become exercisable.
Thereafter, subject to Section 8 below, the balance of the remaining
unvested Options shall vest and become exercisable at the rate of
2,500 shares of Common Stock per quarter for the quarters following
the Section 6 (c) Initial Vesting Date, provided the Optionee
continues to serve on the Board of Directors;
(c) Notwithstanding the foregoing or any other provision of this Plan (i)
in the event of a proposed sale of the Corporation through a sale of
its stock by stockholders or a sale of all or substantially all of its
assets, subject to the closing of such sale and, effective upon the
closing or any record date established for stockholder participation
in such sale and prior to any distribution of assets to stockholders
or any dissolution or liquidation of the Corporation, any and all
unvested Options held by Optionees shall thereupon vest and become
exercisable; and (ii) if following a merger or similar transaction
resulting in a change in control, other than a sale of the
Corporation, any Optionee then serving on the Board of Directors is
removed from the Board of Directors or not nominated to serve on the
Board of Directors or, if nominated, is not reelected to the Board of
Directors, then any and all unvested Options held by such an Optionee
shall thereupon vest and become exercisable.
7. OPTION PRICE.
The purchase price of the Common Stock covered by each Option shall be one
hundred percent (100%) of the fair market value of the Common Stock at the
time the Option is granted. The fair market value shall be (i) if the
Common Stock is listed on a national exchange, the simple average of the
high and the low prices in trading of the Common Stock as reported by
sources deemed reliable by the Committee, on such exchange on the date on
which the Option is granted (or if there shall be no trading on such date,
then on the first previous date on which there shall have been trading);
(ii) if the Common Stock is not listed on a national exchange but is traded
in the over-the-counter market, the average of the high and low prices on
the date on which the Option is granted (or if there shall be no trading on
such date, then on the first previous date on which there shall have been
trading); or (iii) if the Common Stock is neither listed on a national
exchange or traded in the over-the-counter market, as determined in good
faith by the Committee in accordance with the applicable provisions of
Section 20.2031-2 of the Federal Estate Tax Regulations, or in any other
manner consistent with the Code and accompanying regulations.
8. OPTION PERIOD AND LIMITATIONS ON THE RIGHT TO EXERCISE OPTIONS.
(a) The term of each Option shall be for a term of ten (10) years, and
shall be subject to earlier termination as hereinafter provided.
(b) Options granted to an Optionee pursuant to Section 6 shall become
exercisable in such amounts and on such dates as set forth in Section
6, provided the Optionee served as a director throughout the period
from the date of the grant of such Options through such respective
dates of vesting and provided such Optionee shall have attended at
least seventy-five percent (75%) of the Board of Directors meetings
held during the 12 months preceding each such respective vesting date.
Any Options which do not vest because the Optionee has not attended
the Board of Directors meetings as required in the foregoing sentence
are forfeited; provided, however, that the Options may be reinstated
by the Committee if special circumstances are present and, if required
under Rule 16b-3, the reinstatement is approved by the Board of
Directors of the Corporation. The foregoing rights of exercise are
cumulative and, while the Optionee continues to serve as a director,
may be exercised throughout the term of the Option as specified above
in subsection (a). An Option may be exercised upon satisfaction of
such other or additional conditions as the Committee may specify. No
fractional shares will be issued.
(c) An Option may be exercised by giving written notice of at least 30
days to the Committee at such place as the Committee shall direct.
Such notice shall specify the aggregate number of shares to be
purchased pursuant to an Option and shall be accompanied by payment of
such purchase price either (i) in United States dollars in cash or by
check, (ii) in the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value as of the date of
the exercise equal to the cash exercise price of the Option, (iii) in
the discretion of the Committee, through delivery of the Optionee's
personal recourse negotiable promissory note bearing interest payable
not less frequently than annually at no less than 100% of the lowest
applicable federal rate, as defined in Section 1274(d) of the Code, or
(iv) in the discretion of the Committee, over a three (3) year period,
by any combination of (i), (ii) and (iii) above. The shares will be
issued as soon as practical after exercise of an Option in accordance
with this paragraph. Notwithstanding the foregoing, the issuance of
shares may be delayed in the discretion of the Committee for such time
period as is necessary to enable the Corporation to comply with any
federal and state securities laws applicable to the exercise of the
Options granted to any Optionee.
(d) Except as provided in Section 12 hereof, no Option may be exercised at
any time unless the holder thereof is then an Optionee. The holder of
an Option shall not have any of the rights of a stockholder with
respect to the shares covered by his or her Option until such shares
shall be issued to him upon the due exercise of the Option. Nothing in
the Plan or in any Option granted pursuant to the Plan shall confer
upon any Optionee any right to continue in the service of the
Corporation. Subject to the provisions of Section 6(d), in the event
of the proposed dissolution or liquidation of the Corporation, each
Option will terminate immediately prior to the consummation of such
proposed action or at such other time and subject to such other
conditions as shall be determined by the Committee.
9. OPTIONEEE'S INTENTION TO SERVE.
Each Optionee receiving an Option shall, as one of the terms of the Option
agreement, acknowledge his or her present intention to devote such time,
energy and skill to the service of the Corporation and the promotion of its
interests as are commensurate with his or her position as a director of the
Corporation. If an Optionee who has received an Option shall at any time
thereafter not be a member of the Board of Directors of the Corporation,
the Option shall terminate immediately, subject only to exercise as
provided in Section 12.
10. NON-TRANSFERABILITY OF OPTIONS.
An Option granted under the Plan shall not be transferable otherwise than
by will or the laws of descent and distribution.
11. WITHHOLDING.
The Committee shall require any recipient of shares pursuant to the
exercise of an Option, or on the surrender of any Option, to pay to the
Corporation in cash the amount of any tax or other amount required by any
governmental authority to be withheld and paid over by the Corporation to
such authority for the account of such recipient. Notwithstanding the
foregoing, the recipient may satisfy such obligation in whole or in part,
and any other local, state or federal income tax obligations resulting from
the exercise of an Option, or the surrender of any Option, by electing (the
"Election") to deliver to the Corporation shares owned by the Optionee at
the time of exercise or surrender, or to have the Corporation withhold from
the shares to which the recipient is entitled. The number of shares to be
delivered or withheld shall have a fair market value as of the date that
the amount of tax is to be withheld is determined (the "Tax Date") as
nearly as equal as possible to (but not exceeding) the amount of such
obligations being satisfied. The following rules shall apply with respect
to Elections:
(a) Each Election must be made in writing to the Committee prior to the
Tax Date. The Committee may reject any Election, or may suspend or
terminate the right to make an Election. An Election, once made by the
recipient and accepted by the Committee, shall be irrevocable.
(b) The fair market value of the shares to be delivered or withheld shall
be determined pursuant to Section 7.
12. TERMINATION OF STATUS AS OPTIONEE.
In the event of termination for any reason (including but not limited to
resignation, removal, or expiration of term as a director without
re-election, acceptance of employment with the Corporation, or death) of an
Optionee's status, after an Option has been granted to him or her, as an
independent director of the Corporation ("Termination of Status"), an
Option may be exercised, to the extent that the Optionee was entitled to do
so on the date of Termination of Status, at any time within three (3)
months after such termination, but in no event after the expiration of the
term of the Option. If Termination of Status is caused by the Optionee's
death, such Option may be exercised to the extent that the Optionee was
entitled to do so at the date of his death, by his executor or
administrator or other person at the time entitled by law to the Optionee's
rights under the Option.
13. ADJUSTMENTS UPON CHANGE IN CAPITALIZATION.
The number of Common Shares available under the Plan in the aggregate, the
number of Common Shares covered by each Option and the price per share
thereof in each Option shall be adjusted for any increase or decrease in
the number of issued shares of all classes of the common stock of the
Corporation by reason of merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares, stock split-up
or dividend paid in stock of the Corporation. If the Corporation shall be a
party to any merger or consolidation, any Option shall pertain to and apply
to the securities to which a holder, immediately prior to such merger or
consolidation, of the number of shares of Common Stock then subject to the
Option would have been entitled upon such merger or consolidation; but a
dissolution or liquidation of the Corporation shall cause the Option to
terminate as provided for in Section 8. Except as expressly provided
herein, no issuance by the Corporation of shares of stock of any class, or
securities convertible into any shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to Options. No adjustment shall be made
for dividends paid in cash or property other than securities of the
Corporation.
14. TERMINATION AND AMENDMENT OF THE PLAN.
(a) Unless the Plan shall theretofore have been terminated as hereinafter
in this paragraph provided, no Option shall be granted hereunder after
ten years from the adoption of the Plan. The Board of Directors of the
Corporation may at any time prior to that date terminate the Plan or
make such modification or amendment of the Plan as it shall deem
advisable; provided, however, that no amendment may be made which
will, except as provided in Section 13 hereof, increase the maximum
number of shares for which Options may be granted under the Plan,
either in the aggregate or to any individual, or change the manner of
determining the minimum Option prices or extend the period during
which an Option may be granted or amend the requirements as to the
class of persons eligible to receive Options. No termination,
modification, or amendment of the Plan may adversely affect the rights
of an Optionee under an Option previously granted to such Optionee
without the consent of such Optionee.
(b) Notwithstanding subsection (a) above, the provisions set forth in
Section 5 with respect to the number of Options to be granted to
Optionees and in Section 6 with respect to the purchase price of such
Options shall not be amended more than once every six months.
15. GOVERNMENT REGULATIONS.
The Plan and the granting and exercise of Options thereunder, and the
obligation of the Corporation to sell and deliver shares under such Options
shall be subject to all applicable laws, rules and regulations.
16. REPURCHASE AND RESTRICTIONS ON TRANSFER.
Shares issued pursuant to Options granted under the Plan shall be subject
to such repurchase provisions and such restriction on sale or transfer as
shall be determined by the Committee, in connection with the grant of such
Options. Such provisions may include provisions obligating or permitting
the Corporation to purchase such shares for some period of time after
termination of service and providing for rights of first refusal in favor
of the Corporation.
17. APPLICABLE LAW.
Except as otherwise provided herein, the Plan shall be construed and
enforced in accordance with the laws of the State of Delaware.
18. MISCELLANEOUS.
(a) Applications of Funds. Proceeds from the sale of stock pursuant to the
Plan shall be used for general corporate purposes.
(b) Governmental Regulation. The Corporation's obligations to sell and
deliver Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization,
issuance or sale of such shares.
19. TERM OF THE PLAN. The Plan is effective as of the 30th day of September,
1997. The Plan was approved by the Board of Directors of the Corporation on
the 30th day of September, 1997.
Exhibit G
STOCK OPTION PLAN 6NQ
1. PURPOSE. This Stock Option Plan 6NQ (the "Plan") is intended as a
management bonus plan and to encourage stock ownership by employees of Exigent
International, Inc. (the "Company") and its subsidiaries by granting stock
options as provided herein. It is intended that the options issued pursuant to
the Plan will not constitute incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. ADMINISTRATION.
(a) The Plan shall be administered by the Chief Executive Officer of
the Company (the "CEO"), except with respect to options granted to the CEO, in
which case the board of directors of the Company shall administer the grants in
accordance with the applicable approved Compensation Committee award program.
Notwithstanding anything to the contrary contained herein, each grant of an
option (as well as any cashless exercise or tax withholding rights) pursuant to
this Plan when determined by the CEO shall be approved in advance of issuance by
a committee of the board of directors of the Company composed solely of two or
more non-employee directors (as defined in paragraph 2(b) below) or, if no such
committee exists, by the board of directors of the Company. If a grant is not
approved as described above, it shall not be made under this Plan. No member of
the board of directors of the Company or the CEO shall be liable for any action
taken, or determination made, hereunder in good faith. Service by the CEO as the
administrator of the Plan shall constitute service as a director of the Company
so that the CEO shall be entitled to indemnification and reimbursement as a
director of the Company pursuant to its Bylaws and Delaware law.
(b) A person will qualify as a "non-employee director" if such person
(while a member of the committee): (i) is not an officer or employee of the
Company or a parent or subsidiary of the Company (collectively, "Affiliates");
(ii) does not directly or indirectly receive more than sixty thousand dollars
($60,000) in compensation in any fiscal year from the Company and its Affiliates
in any capacity (including services rendered as a consultant); (iii) does not
possess an interest in any transaction or series of similar transactions in any
fiscal year to which the Company or an Affiliate is a party in which the amount
involved exceeds sixty thousand dollars ($60,000); (iv) is not and has not been
during the last fiscal year an executive officer or greater than ten percent
(10%) beneficial or record equity holder of an entity that has made during the
Company's last fiscal year or proposes to make during the Company's current
fiscal year payments to, or receive payments from, the Company and its
Affiliates for property or services in excess of five percent (5%) of (1) the
Company's consolidated gross revenues for its last full fiscal year or (2) the
other entity's consolidated gross revenues for its last full fiscal year; (v) is
not and has not been during the last fiscal year an executive officer or greater
than ten percent (10%) beneficial or record equity holder of an entity to which
the Company or its subsidiaries were indebted at the end of the Company's last
full fiscal year in an aggregate amount in excess of five percent (5%) of the
Company's total consolidated assets at the end of such fiscal year; (vi) is not
or during the Company's last fiscal year has not been a member of or counsel to
a law firm that the issuer has retained during the last fiscal year or proposes
to retain during the current fiscal year; (vii) is not or during the Company's
last fiscal year has not been a partner or executive officer of any investment
banking firm that has performed services for the Company, other than as a
participating underwriter in a syndicate, during the last fiscal year or
proposes to perform services for the Company during the current fiscal year; and
(viii) is not a party to any other relationships of which the Company is aware
that are substantially similar to those described in paragraphs (iv) through
(vii) above.
(c) The CEO is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as he may deem appropriate for the proper
administration of the Plan, and to make such determinations under, and such
interpretations of, and to take such steps in connection with, the Plan or the
options granted thereunder as he may deem necessary or advisable, which actions
shall be binding and conclusive, except as otherwise provided in paragraph 2(a)
above.
3. ELIGIBILITY. Options may be granted to such employees of the Company or
its subsidiaries to be included in management bonus awards as the CEO shall
select from time to time.
4. STOCK. The stock to be subject to options under the Plan shall be the
Company's Common Shares. The aggregate number of shares of stock for which
options may be granted under the Plan shall not exceed five hundred thousand
(500,000) shares, subject to adjustment in accordance with the terms of
paragraph 8 hereof. The shares subject to the unexercised portion of any
terminated or expired options under the Plan may again be subjected to options
under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. All options granted pursuant to the
Plan shall be authorized by the CEO and shall be evidenced by stock option
agreements in writing in such form as the CEO shall determine. The terms and
conditions set forth in such option agreements shall include:
(a) Grant Date. The CEO shall determine the date on which such option
shall be granted; however, any options granted under this Plan shall be granted
within ten (10) years from the date this Plan is adopted. After approval as
described in paragraph 2(a), an option shall be considered granted on the date
the CEO acts to grant the Option or such later date as the CEO shall specify.
(b) Option Period. Each stock option agreement shall set forth the
period for which such option is granted, which shall not exceed three (3) years
from the date such option is granted (the "Option Period").
(c) Option Price. The purchase price per share underlying each option
granted under the Plan shall be $2.25 per share.
(d) Transfer of Option. No option may be transferred, assigned,
pledged or otherwise disposed of (whether by operation of law or otherwise)
except by will or the laws of descent and distribution. Any attempted transfer,
assignment, pledge or other disposition or levy of attachment or similar process
not specifically permitted herein shall be null and void and without effect.
(e) Exercise of Options. Each option may be exercised at any time
during its Option Period, subject to any restrictions in the stock option
agreement under which it is issued and provided that, options must be exercised
in increments of at least one hundred (100) Common Shares (unless the optionee
holds fewer than one hundred (100) in which case all remaining options held by
the optionee must be exercised).
(f) Method of Exercise and Payment for Options. An option may be
exercised only by the optionee during the optionee's lifetime by giving written
notice of exercise of at least thirty (30) days at the Company's principal
offices to the person and as provided in the applicable Stock Option Agreement.
Such notice shall specify the number of shares to be purchased (which shall be
at least the minimum number of shares described in paragraph 5(e)) and shall
contain such representations and agreements regarding optionee's investment
intent, access to information and other matters, if any, as may be required or
desirable to comply with applicable securities laws. The notice shall be
accompanied by full payment of the option price (i) in cash; (ii) with the
consent of the CEO, by tendering previously acquired shares of stock (valued at
their fair market value, as determined under paragraph 5(g), as of the date of
exercise); or (iii) with the consent of the CEO, any combination of (i) and
(ii). The Company will issue the shares as soon as practicable after exercise of
an option in accordance with this paragraph and the applicable agreement.
Notwithstanding the foregoing, the issuance of shares may be delayed in the
discretion of the CEO for such time period as is necessary to enable the Company
to comply with any federal or state securities laws applicable to the exercise
of the options. In addition, all certificates for shares or other securities
delivered under this Plan will be subject to such transfer orders, legends and
other restrictions as the CEO may deem necessary or advisable including
securities law or regulation restrictions or restrictions imposed by any stock
exchange or automated quotation system upon which the Company's shares are
listed or quoted.
(g) Fair Market Value. The fair market value of each Common Share
tendered as provided above shall be (i) if the Common Shares are listed on a
national exchange, the simple average of the high and low prices in trading of a
Common Share as reported by sources deemed reliable by the CEO, on such exchange
on the date on which the option is granted (or if there shall be no trading on
such date, then on the first previous date on which there shall have been
trading); (ii) if the Common Shares are not listed on a national exchange, but
are traded in the over-the-counter market, the average of the high and low
prices on that date on which the option is granted (or if there shall be no
trading on such date, then on the first previous date in which there shall have
been trading); or (iii) if the Common Shares are neither listed on a national
exchange or traded in the over-the-counter market, as determined in good faith
by the CEO based upon an appraisal or in accordance with the applicable
provisions of section 20.2031-2 of the Federal Estate Tax Regulations, or in any
other manner consistent with the Code and accompanying regulations.
(h) Withholding Taxes. Whenever the Company proposed or is required to
issue or transfer Common Shares under the Plan, the Company shall have the right
to require the optionee to remit to the Company an amount sufficient to satisfy
any Federal, state or local withholding tax requirements prior to the delivery
of any certificate for such shares. Alternatively, the Company may issue or
transfer such Common Shares net of the number of shares sufficient to satisfy
the withholding tax requirements. Any shares so withheld shall be valued as
described in paragraph 5(g) as of the date the withholding obligation is
incurred.
(i) No Obligation to Exercise. The granting of an option shall impose
no obligation upon the optionee to exercise such option.
(j) Term of Employment. If the optionee s employment with the Company
or any subsidiary of the Company is terminated for good cause, all options shall
terminate simultaneously therewith and optionee shall have no further right to
exercise an option thereafter. For purposes of this paragraph (i) "good cause"
shall be determined by the board of directors of the Company and any such
determination shall be final, binding and conclusive. If the optionee ceases to
be an employee of the Company or any subsidiary of the Company for any reason
other than good cause or death or disability (as hereinafter defined), the term
of all options shall expire on a date not later than three (3) months after
termination. If the optionee ceases to be an employee of the Company or any
subsidiary of the Company by reason of death or disability (within the meaning
of Section 22(e)(3) of the Code), the term of all options shall expire on a date
which is not later than twelve (12) months following the date of death or
disability. The CEO shall be entitled to make such rules, regulations and
determinations as he deems appropriate under this Plan in respect of any leave
of absence taken by or disability of any optionee. Without limiting the
generality of the foregoing, the CEO shall be entitled to determine (i) whether
or not any such leaves of absence shall constitute a termination of employment
within the meaning of this Plan, and (ii) the impact, if any, of any such leave
of absence on awards under this Plan made to any optionee who takes such leave
of absence.
6. STOCK APPRECIATION RIGHTS. The CEO, in his discretion, may grant any
optionee with a stock option under this Plan, the right to recover appreciation
of the optioned stock in the form of a taxable payment of cash and/or other
property, including stock of the Company, in exchange for the cancellation or
surrender of the optioned stock on which the appreciation is measured
("underlying stock option"). The appreciation of the optioned stock shall be
measured by the difference between the fair market value of the optioned stock
on the date of exercise and the option price. The rights described in this
paragraph shall be referred to hereafter as "stock appreciation rights."
7. RESTRICTIONS ON EXERCISE OF STOCK APPRECIATION RIGHTS. If granted by the
CEO and evidenced in a stock option agreement, an optionee may choose to
exercise stock appreciation rights in lieu of receipt of the optioned stock as
set forth above, but only under the following terms and conditions:
(a) the stock appreciation rights shall expire no later than the
expiration date of the stock option as set forth in paragraph 5(b) and the
optionee's stock option agreement;
(b) the amount of cash or the fair market value of property received
through stock appreciation rights shall not exceed the difference between the
fair market value of the option on the date of exercise and the option price
(hereinafter referred to as "appreciation");
(c) the stock appreciation rights shall be transferable only when the
underlying stock option is transferable, and only under the same conditions, as
set forth in paragraph 5(d) and the optionee's stock option agreement;
(d) the stock appreciation rights shall be exercised only when the
underlying stock option is eligible to be exercised as set forth in paragraphs,
5(b), 5(e), 5(f) and 5(j), and the optionee's stock option agreement;
(e) the stock appreciation rights shall be exercised only when there
is a positive appreciation, i.e. when the market price of the underlying stock
exceeds the exercise price of the option;
(f) the exercise of the right has the same tax consequences as the
exercise of the option followed by the immediate sale of the stock;
(g) the optionee shall notify the CEO thirty (30) days prior to
exercise of stock appreciation rights of the optionee's intent to elect to
exercise such rights;
(h) the form of payment and the fair market value of any property paid
upon exercise of stock appreciation rights shall be within the sole and
reasonable discretion of the CEO and such determination shall be final, binding,
and conclusive; and
(i) upon exercise of an optionee's right to receive the stock
appreciation value in cash and/or property, the underlying options shall be
canceled.
8. ADJUSTMENT IN THE EVENT OF CHANGE OF STOCK. In the event of any change
in the outstanding stock by reason of stock dividends, recapitalizations, stock
split, reverse stock split, reorganizations, mergers, consolidations, split-ups,
changes in its capital or business structure without consideration, and the
like, the number and kind of shares which thereafter may be optioned and sold
under the Plan, the number and kind of shares under option in outstanding stock
option agreements and the purchase price per share thereof shall be
approximately adjusted consistent with such change subject to any required
action by the board of directors or shareholders of the Company and compliance
with applicable securities laws. Fractional shares will not be issued but will
either be replaced by a cash payment equal to the fair market value of such
fraction of a share (determined as provided in paragraph 5(g)) or will be
rounded up to the nearest whole share as determined by the CEO. The
determination of the CEO as to any adjustment shall be final and conclusive.
9. CORPORATE TRANSACTIONS. In the event of (a) a dissolution or liquidation
of the Company, (b) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the options granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption will be binding on all optionees), (c) a merger in which the Company
is the surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (d)
the sale of substantially all of the assets of the Company, or (e) the
acquisition, sale or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, any or all outstanding options
may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all optionees. In
the alternative, the successor corporation may substitute equivalent options or
provide substantially similar consideration to optionees as was provided to
shareholders (after taking into account the existing provisions of the options).
In the event such successor corporation (if any) refuses to assume or substitute
options, as provided above, pursuant to a transaction described in this
paragraph 9, such options will expire on such transaction at such time and on
such conditions as the CEO shall determine; provided, however, that the CEO may,
in his sole discretion, provide that the vesting of any or all options granted
pursuant to this Plan will accelerate. If the CEO exercises such discretion with
respect to options, such options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the CEO
determines, and if such options are not exercised prior to the consummation of
the corporate transaction, they shall terminate at such time as determined by
the CEO. Subject to any greater rights granted to optionees under the foregoing
provisions of this paragraph 9, in the event of the occurrence of any
transaction described in this paragraph 9, any outstanding options will be
treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation or sale of assets.
10. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The board of
directors of the Company may increase or decrease (to the extent that options
have not been granted or outstanding options have expired) the number of shares
subject to the Plan or terminate, amend, or modify the Plan, at any time. No
amendment, modification, or termination of the Plan shall in any manner affect
any option heretofore granted to an optionee under the Plan without the consent
of the optionee.
11. TERM OF THE PLAN. The Plan is effective as of May 8, 1998. All options
granted prior to shareholders approval shall be subject to such approval. The
Plan shall terminate on May 7, 2008, or on such earlier date as may be
determined by the board of directors of the Company. Termination of the Plan,
however, shall not affect the rights of optionees under options granted to them
under this Plan prior to termination, and all unexpired options shall continue
in force and operation after termination of the Plan except as they may lapse or
terminate by their own terms and conditions. 0121588.01
