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 [ ]
- --------------------------------------------------------------------------------
Check the appropriate box: [ ] Definitive Additional Materials
[ ] Preliminary Proxy Statement [ ] Soliciting Material Pursuant to
[x] 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:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: $___________________
5) Total fee paid: $_______________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LETTERHEAD OF EXIGENT INTERNATIONAL]
May 10, 1999
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 Wednesday,
June 30, 1999, at 9:00 a.m. EDT.
Only stockholders of record at the close of business on May 7, 1999 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 cards have been
sent to all such stockholders of record. As explained in the attached proxy
statement, you may revoke 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 in the form of
a proxy signed by the record owner indicating that you are acting as a proxy.
Detailed information about the meeting is included in the attached proxy
statement.
Respectfully,
Patricia A. Frank
Secretary
<PAGE>
[LETTERHEAD OF EXIGENT INTERNATIONAL]
May 10, 1999
Dear Fellow Stockholders:
I would like to thank you for your continued support of Exigent International
throughout 1998, which has been a year of transition for the company. During the
year we took determined action to enhance our credibility with our customers and
our stockholders. Exigent now has new leadership in several key functional areas
and our focus is on building a new culture relentlessly focused on performance
excellence.
I encourage you to review the documents we have sent to you about Exigent and to
attend the 1999 Annual Meeting of Stockholders on Wednesday, June 30, 1999 at
9:00 A.M. local time, at the Melbourne Airport Hilton in Melbourne, Florida.
The first item on the agenda will be the election of directors. As you may
recall, at last year's Annual Meeting, the stockholders adopted a number of
changes to Exigent's charter including the creation of three classes of
directors serving three-year staggered terms. This change begins at this year's
meeting and is reflected in Proposal 1, Election of Directors. To implement this
program in an equitable manner, the Directors decided to nominate directors with
the most years of service into the classes with the shortest initial terms.
Therefore, Don Riordan and Daniel Stark have been nominated for one-year terms;
Arthur Collier, Robert Janowiak and I have been nominated for two-year terms;
and Scott Helm and William Usher have been nominated for three-year terms.
On December 17, 1998, the Board of Directors approved the Omnibus Stock Option
and Incentive Plan (the "Option Plan") pursuant to which 2,500,000 shares of
Common Stock have been reserved for issuance. The general purpose of the Option
Plan is to assist the Company in the recruitment, retention and motivation of
employees, directors and independent contractors who are in a position to make
contributions to the Company's success. The Option Plan offers a significant
incentive to these individuals by enabling them to acquire the Company's Common
Stock, thereby increasing their commitment to the growth and success of the
Company. The Board also believes that the number of options currently available
for future option grants under the Company's existing stock option plans is
insufficient. This Option Plan is an important tool in attracting new employees
to the Company. We believe we will need to hire between 50 and 100 people in
1999 to meet our goals. For all these reasons, the Board of Directors would
greatly appreciate your support for the Option Plan.
On February 3, 1999, the Board of Directors approved an Employee Stock Purchase
Plan (the "Purchase Plan") which allows employees to purchase Common Stock
through payroll deductions (in a maximum amount of 10% of an employee's base pay
per month) at a discount of 15% from the fair market value of the Common Stock
on the date of purchase, without brokerage fees or commissions. The Board has
reserved 250,000 shares of Common Stock for the Purchase Plan. This plan is
another important tool in our competitive employment market. It also encourages
employees to own more shares of Exigent, further aligning their interests with
our stockholders. The Board of Directors would also appreciate your support of
this plan.
Best wishes for 1999,
B. R. "Bernie" Smedley
Chairman and Chief Executive Officer
<PAGE>
1999 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS.......................................1
GOVERNANCE OF THE COMPANY......................................................2
Role and Composition of the Board of Directors..............................2
Functioning of the Board....................................................3
Functioning of Committees...................................................3
Periodic Review.............................................................3
FREQUENTLY ASKED QUESTIONS CONCERNING THIS PROXY STATEMENT.....................4
Why am I receiving these materials?.........................................4
What information is contained in these materials?...........................4
What proposals will be voted on at the meeting?.............................4
What are the voting recommendations of the Board of Directors?..............4
Who is entitled to vote?....................................................4
What class of shares are entitled to be voted?..............................4
What constitutes a quorum?..................................................4
What does it mean if I receive more than one proxy card?....................4
How do I vote?..............................................................4
How do I sign the proxy?....................................................5
Who will count the votes?...................................................5
How many votes are needed for approval of each proposal?....................5
What is the difference between holding shares as a stockholder
of record and as a beneficial owner?.....................................6
Who can attend the Annual Meeting?..........................................6
What percentage of stock do the directors and officers own?.................6
Who are the largest principal stockholders?.................................6
When are stockholder proposals and nominations for the Board of
Directors for the 2000 Annual Meeting due?................................6
Who will bear the cost of soliciting votes for the meeting?.................6
BOARD STRUCTURE AND COMMITTEES.................................................8
COMPENSATION OF DIRECTORS.....................................................10
PROPOSALS TO BE VOTED ON
Proposal 1 - Election of Directors.....................................11
Proposal 2 - Approval of Omnibus Stock Option and Incentive Plan.......15
Proposal 3 - Approval of Employee Stock Purchase Plan..................21
Proposal 4 - Ratification Appointment of Independent Auditors..........23
PRINCIPAL STOCKHOLDERS........................................................24
Section 16(A) Beneficial Ownership Reporting Compliance.................27
EXECUTIVE OFFICERS............................................................28
COMPENSATION OF EXECUTIVE OFFICERS............................................29
Summary Compensation Table..............................................29
Employment Contracts....................................................30
Option Grants in Fiscal Year Ending December 31, 1998...................32
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values...........................................32
Report of the Compensation Committee....................................34
Performance Graph.......................................................36
Exhibit A - Omnibus Stock Option and Incentive Plan...........................39
Exhibit B - Employee Stock Purchase Plan......................................50
<PAGE>
EXIGENT INTERNATIONAL, INC.
1225 Evans Road
Melbourne, Florida 32904
407-952-7550
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1999
TIME: 9:00 a.m. EDT on Wednesday, June 30, 1999
PLACE: Melbourne Airport Hilton
Grand Ballroom
200 Rialto Place
Melbourne, Florida
ITEMS OF 1. To elect directors, whose terms are described in the Proxy
BUSINESS: Statement
2. To approve the Omnibus Stock Option and Incentive Plan
3. To approve the Employee Stock Purchase Plan
4. To ratify the appointment of independent accountants
RECORD DATE: You are entitled to vote if you were a stockholder at the close of
business on May 7, 1999. 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.
MEETING ALL STOCKHOLDERS OF THE COMPANY ARE CORDIALLY INVITED TO ATTEND
ADMISSION: 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 REVOKE 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.
This proxy statement, proxy card, Form 10-K for the Company's fiscal year ending
on December 31, 1998 and a copy of the Company's Annual Report are enclosed and
are being distributed on or about May 10, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
Patricia A. Frank, Secretary
<PAGE>
GOVERNANCE OF THE COMPANY
Our Corporate Governance Principles
Role and Composition of the Board of Directors
1. The Board of Directors, which is elected by the stockholders, is the ultimate
decision-making body of Exigent International, Inc. ("Exigent" or the
"Company"), except with respect to those matters reserved to the stockholders.
It selects the senior management team, which is charged with the conduct of the
Company's business. Having selected the senior management team, the Board acts
as an advisor and counselor to senior management and ultimately monitors its
performance.
2. The Board also plans for succession to the position of Chairman of the Board
and Chief Executive Officer as well as certain other senior management
positions. To assist the Board, the Chairman and CEO from time to time provides
the Board with an assessment of senior managers and their potential to succeed
him. He also provides the Board with an assessment of persons considered
potential successors to certain senior management positions.
3. It is the policy of the Company that the Board consist of at least three
outside directors and that the number of Directors not exceed a number that can
function efficiently as a body. The Chairman considers and makes recommendations
to the Board concerning the appropriate size and needs of the Board. The
Nominating Committee considers candidates to fill new positions created by
expansion and vacancies that occur by resignation, by retirement, or for any
other reason. Candidates are selected for their character, judgment, business
experience and acumen. Scientific expertise, prior government service, and
familiarity with national and international issues affecting business are among
the relevant criteria. Final approval of a candidate is determined by the full
Board. The Compensation Committee from time to time reviews the compensation of
Directors. All Directors are encouraged to own stock in the Company.
4. It is the general policy of the Company that all major decisions be
considered by the Board as a whole. As a consequence, the committee structure of
the Board is limited to those committees considered to be basic to or required
for the operation of a publicly owned company. Currently these committees are
the Audit Committee, the Investment Committee, the Compensation Committee, the
Intellectual Property Rights Committee and the Nominating Committee. The members
and chairs of these committees are recommended to the Board by the Chairman and
CEO. The Audit Committee, the Compensation Committee, the Intellectual Property
Rights Committee and the Nominating Committee are made up of a majority of
outside directors. The membership of these four committees is rotated from time
to time.
5. In furtherance of its policy of having major decisions made by the Board as a
whole, the Company has a full orientation process for new Board members that
includes extensive materials, meetings with key management, and visits to
Company facilities.
6. The Compensation Committee is responsible for setting annual and long-term
performance goals for the Chairman and CEO and for evaluating his performance
against such goals. The Committee meets annually with the Chairman and CEO to
receive his recommendations concerning such goals, and to evaluate his
performance against such goals. Both the goals and the evaluation are then
submitted for consideration by the outside directors of the Board at a meeting
or executive session of that group. The Compensation Committee is also
responsible for reviewing the recommendations of the Chairman and CEO in setting
annual and long-term performance goals and compensation for members of
management who report directly to the Chairman and CEO. These decisions are
approved or ratified by subsequent action of the Board.
7. It is the policy of the Company that the positions of Chairman of the Board
and Chief Executive Officer be held by the same person, except in unusual
circumstances. The function of the Board in monitoring the performance of the
senior management of the Company is fulfilled by the presence of outside
directors who have a substantive knowledge of the business.
8. The Chairman and CEO is responsible for establishing effective communications
with the Company's stakeholder groups, i.e., stockholders, customers, employees,
communities, suppliers, creditors, governments, and corporate partners. It is
the policy of the Company that management speaks for the Company. This policy
does not preclude outside directors from meeting with stockholders, but it is
suggested that any such meetings be with management present.
<PAGE>
Functioning of the Board
1. The Chairman and CEO sets the agenda for Board meetings with the
understanding that certain items pertinent to the advisory and monitoring
functions of the Board be brought to it periodically by the Chairman and CEO for
review and/or decision. For example, the annual corporate budget is reviewed by
the Board. Agenda items that fall within the scope of responsibilities of a
Board committee are reviewed with the chair of that committee. Any member of the
Board may request that an item be included on the agenda.
2. Material decisions made by the Company's senior management are reported to
the Board at each meeting with the understanding that such decisions are subject
to change by the Board.
3. Board materials related to agenda items are provided to Board members
sufficiently in advance of Board meetings where necessary to allow the Directors
to prepare for discussion of the items at the meeting.
4. At the invitation of the Board, members of senior management recommended by
the Chairman and CEO attend Board meetings or portions thereof for the purpose
of participating in discussions. Generally, presentations of matters to be
considered by the Board are made by the manager responsible for that area of the
Company's operations. In addition, Board members have free access to all other
members of management and employees of the Company.
5. Executive sessions, i.e., meetings between outside directors, are held from
time to time with the Chairman and CEO for a general discussion of relevant
subjects.
Functioning of Committees
1. The frequency, length, and agenda of meetings of each of the committees are
determined by the chair of the committee. Sufficient time to consider the agenda
items is provided. Materials related to agenda items are provided to the
committee members sufficiently in advance of the meeting where necessary to
allow the members to prepare for discussion of the items at the meeting.
2. The Board determines the responsibilities of each of the committees from time
to time.
Periodic Review
These principles are reviewed by the Board from time to time.
<PAGE>
FREQUENTLY ASKED QUESTIONS CONCERNING THIS PROXY STATEMENT
Q: Why am I receiving these materials?
A: The Board of Directors is providing these proxy materials for you in
connection with the Company's Annual Meeting of stockholders which will
take place on June 30, 1999. You are invited to attend the meeting and are
requested to vote on the proposals described in this proxy statement.
Q: What information is contained in these materials?
A: The information included in this proxy statement relates to the proposals
to be voted on at the meeting, the voting process, the compensation of
directors and our most highly paid officers, and certain other required
information. Our 1998 Annual Report is also enclosed.
Q: What proposals will be voted on at the meeting?
A: There are four proposals scheduled to be voted on at the meeting:
1. Election of seven (7) directors for staggered terms (Daniel J. Stark
and Don F. Riordan, Jr. for a term expiring in the Year 2000 ("Class
I"); Bernard R. Smedley, Robert M. Janowiak and Arthur H. Collier for
a term expiring in the Year 2001 ("Class II"); and Scott B. Helm and
William R. Usher for a term expiring in the Year 2002 ("Class III"));
2. Approval of the Omnibus Stock Option and Incentive Plan;
3. Approval of the Employee Stock Purchase Plan; and
4. Ratification of Ernst & Young LLP as the Company's independent
auditors.
Q: What are the voting recommendations of the Board of Directors?
A: Our Board of Directors recommends that you vote your shares "FOR" each of
the nominees to the Board and "FOR" each of the other proposals.
Q: Who is entitled to vote?
A: Stockholders as of the close of business on May 7, 1999 (the "Record Date")
are entitled to vote at the Annual Meeting.
Q: What class of shares are entitled to be voted?
A: Each share of Common Stock and each share of Class A Preferred Stock
outstanding as of the close of business on May 7, 1999, the Record Date, is
entitled to one vote on each proposal at the Annual Meeting. As of April 1,
1999, there were approximately 4,194,353 shares of Common Stock issued and
outstanding and 609,882 shares of Class A Preferred Stock issued and
outstanding.
Q: What constitutes a quorum?
A: The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of the issued and
outstanding shares, present or represented by proxy, of the Company as of
the Record Date.
Q: What does it mean if I receive more than one proxy card?
It means that you hold shares registered in more than one account. Sign and
return all proxies to ensure that all your shares are voted.
Q: How do I vote?
A: Sign and date each proxy card you receive (many stockholders receive
multiple proxies) and return it in the prepaid envelope. If you return your
signed proxy but do not indicate your voting preferences, we will vote on
your behalf "FOR" the election of the seven director nominees as directors,
the approval of the Omnibus Stock Option and Incentive Plan, the approval
of the Employee Stock Purchase Plan, and the ratification of the selection
of the independent auditors. You have the right to revoke your proxy any
time before the meeting by (1) notifying the Company's Secretary, or (2)
returning a later-dated proxy. You may also revoke your proxy by voting in
person at the meeting.
Even if you plan to attend the Annual Meeting, we recommend that you also
submit your proxy as described below so that your vote will be counted if
you later decide not to attend the meeting.
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.
Stockholders do not have the right to cumulate their votes in the election
of directors of the Company.
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.
We encourage you to complete, sign, date, and return the enclosed proxy
card before 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.
Q: How do I sign the proxy?
A: Sign your name exactly as it appears on the proxy. If you are signing in a
representative capacity (for example, as an attorney, executor,
administrator, guardian, trustee, or the officer or agent of a company),
you should indicate your name and title or capacity. If the stock is held
in custody for a minor (for example, under the Uniform Transfers to Minors
Act), the custodian should sign, not the minor. If the stock is held in
joint ownership, each owner must sign.
Q: Who will count the votes?
A: Reliance Trust Company, Transfer Agent for the Company, will tabulate the
votes and act as the independent inspector of election.
Q: How many votes are needed for approval of each proposal?
A: There are differing vote requirements for the various proposals. Directors
will be elected by a plurality of the votes cast at the Annual Meeting,
meaning the seven nominees receiving the most votes will be elected
directors. Abstentions, broker non-votes (as described below), and
instructions on the accompanying proxy to withhold authority to vote for
one or more of the nominees will result in those nominees receiving fewer
votes. However, such action will not reduce the number of votes otherwise
received by the nominees. The proposals to approve the Omnibus Stock Option
and Incentive Plan and the Employee Stock Purchase Plan, and to ratify the
selection of the auditors will be approved if the votes cast for the
proposal exceed those cast against the proposal. Abstentions and broker
non-votes will not be counted either for or against the proposal.
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 for any nominee 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. Common Stock 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.
Q: What is the difference between holding shares as a stockholder of record
and as a beneficial owner?
A: Many Exigent stockholders hold their shares through a stockbroker, bank, or
other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
Stockholder of Record
If your shares are registered directly in your name with Exigent's Transfer
Agent, Reliance Trust Company, you are considered, with respect to those
shares, the stockholder of record and these proxy materials are being sent
directly to you by Exigent. As the stockholder of record, you have the
right to grant your voting proxy directly to Exigent or to vote in person
at the meeting. Exigent has enclosed a proxy card for you to use.
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in street
name and these proxy materials are being forwarded to you by your broker or
nominee who is considered, with respect to those shares, the stockholder of
record. As the beneficial owner, you have the right to direct your broker
on how to vote and are also invited to attend the meeting. However, since
you are not the stockholder of record, you may not vote these shares in
person at the meeting. Your broker or nominee has enclosed a voting
instruction card for you to use.
Q: Who can attend the Annual Meeting?
A: All stockholders as of the Record Date can attend. If your shares are held
in the name of a broker or other nominee, please bring proof of share
ownership, such as a broker's statement, to the Annual Meeting to receive
admittance.
Q: What percentage of stock do the directors and officers own?
A: Together, they own approximately 39.4% of the Common Stock as of March 31,
1999. (See page 24 for details.)
Q: Who are the largest principal stockholders?
A: The Employee Stock Ownership Plan ("ESOP") of Software Technology, Inc. (a
subsidiary of Exigent), Daniel J. Stark, and Dean W. Boley (See page 24 for
details.)
Q: When are stockholder proposals and nominations for the Board of Directors
for the 2000 Annual Meeting due?
A: Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 2000 Annual Meeting, and nominations
of candidates for election to the Board of Directors at the 2000 Annual
Meeting, must be submitted in writing by December 31, 1999 to the Company's
Secretary, 1225 Evans Road, Melbourne, Florida 32904. Such proposals and
nominations must be in compliance with applicable laws and regulations, as
well as the Company's By-laws, in order to be considered for inclusion in
the proxy statement and form of proxy for that meeting. Copies of the
By-laws are available to stockholders free of charge upon request to the
Company's Secretary.
Q: Who will bear the cost of soliciting votes for the meeting?
A: 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>
BOARD STRUCTURE AND COMMITTEES
Our Board has seven (7) directors and the following five committees: (1)
Audit, (2) Compensation, (3) Nominating, (4) Intellectual Property Rights
("IPR"), and (5) Investment. The Board met 8 times during fiscal year ended
December 31, 1998, including telephonic meetings. All directors attended at
least 75% of the meetings held and attended at least 75% of all applicable
committee meetings.
- ------------------------|--------|--------------|------------|-----|----------|
Name of Director | Audit | Compensation | Nominating | IPR |Investment|
- ------------------------|--------|--------------|------------|-----|----------|
Non-Employee Directors: | | | | | |
- ------------------------|--------|--------------|------------|-----|----------|
Robert M. Janowiak | X | X | | X* | X |
- ------------------------|--------|--------------|------------|-----|----------|
Arthur H. Collier | | X* | X | X | |
- ------------------------|--------|--------------|------------|-----|----------|
Scott B. Helm (1) | X* | X | | | X |
- ------------------------|--------|--------------|------------|-----|----------|
William R. Usher (2) | | | | | |
- ------------------------|--------|--------------|------------|-----|----------|
Daniel J. Stark | | | X* | | |
- ------------------------|--------|--------------|------------|-----|----------|
Employee Directors: | | | | | |
- ------------------------|--------|--------------|------------|-----|----------|
Bernard R. Smedley | | X | X | X | X |
- ------------------------|--------|--------------|------------|-----|----------|
Don F. Riordan, Jr. | X | | | | X |
- ------------------------|--------|--------------|------------|-----|----------|
X = Committee member
* = Chair
(1) Mr. Helm joined the Board on May 7, 1998 to fill the vacancy created by
Brad Walker's resignation in March 1998. Prior to his resignation, Mr.
Walker attended at least 75% of the Board meetings, and at least 75% of the
meetings of the Compensation and Audit Committees, of which he was a
member.
(2) Mr. Usher joined the Board on April 6, 1999 to fill the vacancy created by
William K. Presley's resignation from the Board in April 1999. Prior to his
resignation, Mr. Presley attended at least 75% of the Board meetings, and
at least 75% of the meetings of the IPR Committee, of which he was a
member.
The 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 and Mr. Riordan. The Audit
Committee met one time in the fiscal year ended December 31, 1998.
The 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. Collier (Chairman), Mr. Janowiak, Mr.
Helm, and Mr. Smedley. Mr. Smedley participates in recommendations to the Board
for compensation matters relating to all employees other than himself. The
Compensation Committee makes recommendations to the full Board of Directors with
respect to compensation matters for Mr. Smedley. The Compensation Committee met
five times, including telephonic conferences, during the fiscal year ended
December 31, 1998.
<PAGE>
The 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 formed in 1998. Two telephonic meetings were held in
the fiscal year ended December 31, 1998 to discuss and screen potential new
Board members.
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. Janowiak (Chairman), Mr.
Collier and Mr. Smedley. Stuart Dawley, Executive Vice President and General
Counsel, and Dean Oswald, Executive Vice President and Deputy Chief Technical
Officer are invited to attend Intellectual Property Rights Committee meetings,
but do not have the right to vote because they are not directors. The
Intellectual Property Rights Committee met three times during the fiscal year
ended December 31, 1998.
The 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 met three times, including telephonic
meetings, in the fiscal year ended December 31, 1998.
<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 attended,
as well as stock options upon his election or admission to the Board. The
directors currently eligible to receive such compensation are Messrs. Collier,
Helm, Janowiak and Usher. Each of Messrs. Collier, Helm and Janowiak received
40,000 non-qualified stock options under the Company's Independent Director
Stock Option Plan 5NQ ("Plan 5NQ") upon his election or admission to the Board,
at an exercise price per share equal to the fair market value of the Common
Stock on the date of grant, which was $3.1250, $4.0625, and $3.3750,
respectively. These options vest at the rate of 2,500 shares per quarter for the
16 quarters following the grant date. Following the grant of these options, all
options available under Plan 5NQ had been granted.
Upon his admission to the Board on April 6, 1999, Mr. Usher was granted
non-qualified options to purchase 7,500 shares of Common Stock at an exercise
price of $3.875 per share. Of these 7,500 options, 2,500 vest and will become
exercisable on July 6, 1999, 2,500 vest and will become exercisable on October
6, 1999 and the remaining 2,500 will vest and become exercisable on January 6,
2000. These options were granted pursuant to, and subject to stockholder
approval of, the Omnibus Stock Option and Incentive Plan.
Provided that the Omnibus Stock Option and Incentive Plan (Proposal 2) is
approved by stockholders at the Annual Meeting, future grants of stock options
to outside directors are intended to be made pursuant to the Omnibus Stock
Option and Incentive Plan, on the terms described in such plan. Generally,
except for those outside directors who are 10% or greater stockholders, or who
then have non-vested stock option grants under Plan 5NQ, on January 1 of each
year, each outside director will automatically receive nonstatutory options to
purchase 10,000 shares of Common Stock at an exercise price equal to the fair
market value on the date of grant. Each such automatic stock option grant shall
vest and become exercisable by the outside director on a quarterly basis
following grant of the options at the rate of 2,500 shares per quarter per
annum, with the initial 2,500 shares vesting on the last day of the calendar
quarter in which the initial grant occurs, and an additional 2,500 shares
vesting on the last day of each subsequent calendar quarter, provided at each
quarterly vesting date the outside director continues to serve on the Board.
Each option shall expire on the tenth anniversary of the grant date, unless
sooner terminated in the event of death, disability or a termination of
directorship. Currently, Mr. Usher is eligible to receive options under the
Omnibus Stock Option and Incentive Plan, as each of the other outside directors
currently hold non-vested options under Plan 5NQ (in the case of Messrs.
Collier, Helm and Janowiak) or is a 10% or greater stockholder (in the case of
Mr. Stark).
In addition, under the Omnibus Stock Option and Incentive Plan, each
outside director will have the opportunity to elect to receive his or her annual
Board retainer fee in nonstatutory options based on a formula set forth therein.
Four outside directors (Messrs. Collier, Helm, Janowiak and Usher) are currently
eligible to receive options in lieu of fees.
The Company reimburses all directors for authorized out-of-pocket expenses.
The Company does not currently pay members for attending Committee meetings.
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Number of Directors
The number of directors authorized by the By-laws is a maximum of ten (10),
with the exact number currently fixed by the Board at seven (7). In accordance
with the changes to the Company's charter approved at the June 30, 1998 Annual
Meeting, the terms of the directors are staggered into three classes beginning
with the election of directors at the 1999 Annual Meeting. The Board has
nominated two directors to serve a one-year term expiring at the Annual Meeting
to be held in 2000 ("Class I"); three directors to serve a two-year term
expiring at the Annual Meeting to be held in 2001 ("Class II"); and two
directors to serve a three-year term expiring at the Annual Meeting to be held
in 2002 ("Class III"). At the 2000 Annual Meeting, Class I directors will be
elected for a three year term. At the 2001 Annual Meeting, Class II directors
will be elected for a three year term.
All nominees are currently directors of the Company. 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 directors for
Classes I, II and III:
Class I Nominees
Don F. Riordan, Jr. Mr. Riordan is an Executive Vice President for
Director since 1996 Customer Relations and Special Projects as an
Age 51 adjunct to the CEO's office. He is also a director
and Secretary of Exigent's subsidiaries: Software
Technology, Inc. ("STI"), since 1980, and FotoTag,
Inc., since 1996. He has been employed by the
Company in various capacities since 1979 and, in
addition to administrative duties, provided
software engineering support for Process Control
commercial contracts in the Company's earlier
years. Mr. Riordan has held the offices of
Chairman of the Board, Vice President, Secretary,
and Treasurer of STI at various times prior to
1991. He was Treasurer and Chief Financial Officer
of STI from 1991 to 1997, was Secretary of Exigent
from May 1996 to September 1997, and was Treasurer
and Chief Financial Officer of Exigent from May
1996 to December 1998. Prior to joining the
Company in January 1979, Mr. Riordan was employed
for 11 years with RCA on the Air Force Eastern
Missile Test Range at Cape Canaveral and on-site
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.
Daniel J. Stark Mr. Stark was one of the founders of STI. He was a
Director since 1996 director of STI from 1978 to 1997 and Vice
Age 51 President from 1983 to 1997. He has also held the
offices of President, Chairman of the Board,
Secretary and Treasurer of STI in certain years
prior to 1983. Mr. Stark was an employee of STI
from 1993 to July 1998 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.
Class II Nominees
Bernard R. Smedley Mr. Smedley is currently serving as Chairman,
Director since 1997 President, Chief Executive Officer and Chief
Age 62 Operating Officer of Exigent and President of STI.
From 1994 to 1997, he was President and Chief
Executive Officer of AirNet Communications
Corporation, an infrastructure products company
for Wireless Local Loop, cellular and PCS markets.
Prior to taking early retirement from Motorola in
1994, he held several management positions at
Motorola. In the 1980's, Mr. Smedley developed the
Cellular Infrastructure business from an
engineering concept to worldwide leadership with
annual sales in the billions. In 1991, he was
appointed General Manager of the newly formed
Wireless Enterprise Systems (WES). Mr. Smedley
continued to innovate and 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 dual role 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.
Arthur H. Collier After beginning his career in 1964 as a naval
Director since 1998 aviator, Mr. Collier served in Director since 1998
Age 57 two squadrons, attended post-graduate school and
in 1978 assumed the Age 57 responsibilities of
Space Systems Acquisition Division Director in the
Special Systems Program Office, Washington D.C. In
1980 he became the Program Director for the
development of aircraft anti-submarine warfare
systems at the Naval Air Development Center,
Warminster, Pennsylvania. In 1983, Mr. Collier
returned to the Special Systems Program Office in
Washington, D.C., and became the overall Program
Manager with the responsibility for the
acquisition, operation and replenishment of a
constellation of satellites and the worldwide
infrastructure of mission ground stations
supporting them. After retirement from the U.S.
Navy in 1993, Mr. Collier formed the Advanced
Program Development Corporation to provide systems
engineering 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 MS degrees in Management and
Aeronautical Engineering, both from the U.S. Naval
Post Graduate School.
Robert M. Janowiak Mr. Janowiak began his career with the IIT
Director since 1997 Research Institute in January 1958 and became
Age 62 Director of 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 in September 1971
and later was promoted to Vice President of
worldwide marketing of Rockwell International's
Graphic Group. Subsequently, Mr. Janowiak joined
Federal Signal Corporation in July 1975 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 and the Telecommunications
Outlook Report. He was an adjunct 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 including ArrayComm, Inc. and
Conductus, Inc., both publicly held companies. 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
Stanford University's Executive Program.
Class III Nominees
William R. Usher Mr. Usher is Chairman of the Board and Chief
Director since 1999 Executive Officer of Core Software Technology,
Age 66 Inc., a private company. Core Software provides
commercial aerial and satellite imagery and
geospatial information to government and
commercial customers worldwide via
company-developed Internet/Intranet-based systems
and services. Mr. Usher served for 31 years in the
USAF as a jet fighter pilot, and in a series of
increasingly demanding and responsible Air Force
and Joint positions, achieving the rank of Major
General in 1979. After retirement from the Air
Force he joined the Defense Space & Communications
Company of Martin Marietta Astronautics in Denver
CO, serving for six years primarily as Director of
Human Resources and Security in support of the
company's classified space business. Following the
merger with Lockheed, he moved to Washington, DC
and joined Lockheed Martin's Management & Data
Systems company for the next six years, with his
area of concentration focused on the National and
Defense Intelligence, and command and control
communities, until he retired from that
organization in 1997. He brings to Exigent's Board
of Directors an extensive business background
coupled with a keen understanding of the
requirements of the Company's most demanding
clients. Mr. Usher resides in Reston, Virginia.
Mr. Usher is a graduate of Yale University (B.A.,
Economics) and Harvard University (M.B.A.,
Business Administration).
Scott B. Helm Mr. Helm is the Chief Financial Officer of Orion
Director since 1998 Power Holdings, Inc., a private company engaged in
Age 34 the business of acquiring and managing power
generation assets in the United States and Canada.
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.
For more information on the Committees of the Board and Director
compensation, see "Compensation of Directors", "Certain Relationships and
Related Transactions", "Board Structure and Committees" and "Compensation
Committee Interlocks and Insider Participation".
<PAGE>
Required Vote
Assuming a quorum is present in person or by proxy at the Annual Meeting,
directors will be elected by a plurality of the votes cast by the holders of the
issued and outstanding Common Stock and Class A Preferred Stock, voting together
as a single class; the seven nominees receiving the most votes will be elected
as directors.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" EACH OF
THE NOMINEES LISTED ABOVE.
<PAGE>
PROPOSAL 2
APPROVAL OF OMNIBUS STOCK OPTION AND INCENTIVE PLAN
On December 17, 1998, the Board of Directors adopted, subject to approval
by the stockholders, the Omnibus Stock Option and Incentive Plan (the "Option
Plan"). The Option Plan provides for the grant of options and restricted stock
of the Company. Unless otherwise specifically provided in the Option Plan, all
employees (approximately 300 employees as of December 31, 1998), directors,
consultants and advisors of the Company are eligible to participate in the
Option Plan.
The Option Plan is summarized below. The full text of the Option Plan is
set forth in Exhibit "A" to this Proxy Statement. For purposes of the following
discussion and unless otherwise indicated, "Company" means Exigent
International, Inc. and its subsidiaries (as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code")). Capitalized terms not
defined in the summary below will have the definitions set forth in the Option
Plan.
Required Vote
Approval of the adoption of the Option Plan requires the affirmative vote
of the holders of a majority of the issued and outstanding Common Stock and
Class A Preferred Stock, 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 the Option Plan is in the Company's best
interests since it will facilitate the Company's ability to attract, motivate
and retain key employees, directors, consultants and advisors who are in a
position to make significant contributions to the success of the Company by
rewarding them for their contributions to the success of the Company and 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 OMNIBUS STOCK OPTION AND INCENTIVE PLAN.
SUMMARY OF THE OMNIBUS STOCK OPTION AND INCENTIVE PLAN
What is the Purpose of the Omnibus Stock Option and Incentive Plan?
The Board believes that the adoption of the Option Plan would advance the
interests of the Company and its stockholders. The Board believes that stock
options serve as an essential compensation tool that enables the Company and its
subsidiaries to attract and retain highly talented employees, directors,
consultants and advisors who are in a position to make significant contributions
to the success of the Company by rewarding them for their contributions to the
success of the Company, and encouraging them, through stock ownership, to
increase their proprietary interest in the Company and their personal interest
in its continued success and progress. Also, as the Company's workforce
continues to grow and the competition among high-technology companies for
qualified personnel remains tight, the Board believes it is important to have
maximum flexibility to devise compensation packages and awards that include
stock options and, in special limited cases, restricted stock grants.
Who Administers the Omnibus Stock Option and Incentive Plan?
A Committee will administer the Option Plan. "Committee" means a committee of
the Board designated from time to time by resolution of the Board. Commencing on
the Effective Date of the Plan, and until such time as the Board shall determine
otherwise, the Committee shall be the Compensation Committee with respect to all
Grants made to the Chief Executive Officer and President of the Company, Outside
Directors and all other officers participating in executive management incentive
compensation programs; and Bernard R. Smedley, a Board member and current Chief
Executive Officer of the Company, for Grants to all other Grantees. The
Committee has authority, among other things, to (i) determine which eligible
persons will receive options and restricted stock, (ii) determine the time when
grants will be made, (iii) determine the terms and conditions, not inconsistent
with the provisions of the Option Plan, of any grant, (iv) determine the number
of shares that may be issued upon exercise of the options and (v) interpret the
provisions of the Option Plan and of any grant thereunder.
Who can Participate in the Omnibus Stock Option and Incentive Plan?
Discretionary Grants. The Committee will have discretion to grant options or
restricted stock under the Option Plan to employees (including officers and
directors), consultants and advisors of the Company and of any "subsidiary" of
the Company (within the meaning of Section 424(f) of the Code), as designated
from time to time by the Committee. The option exercise price for shares is
determined by the Committee, provided that all stock options must be granted at
an option exercise price of not less than the fair market value of the shares on
the date of the grant. The Option Plan provides that options to acquire no more
than 3,000,000 shares may be granted to any individual during the first five
calendar years of the plan, and 1,000,000 per year thereafter.
Formula Plan for Outside Directors. Except for those Outside Directors who have
non-vested stock option grants under Plan 5NQ, on January 1 of each year, each
Outside Director will automatically receive nonstatutory options to purchase
10,000 shares of Common Stock at the fair market value on the date of grant.
Each such automatic stock option grant shall vest and become exercisable by the
Outside Director on a quarterly basis following grant of the options at the rate
of 2,500 shares per quarter per annum, with the initial 2,500 shares vesting on
the last day of the calendar quarter in which the initial grant occurs, and an
additional 2,500 shares vesting on the last day of each subsequent calendar
quarter, provided at each quarterly vesting date the Outside Director continues
to serve on the Board. Each option shall expire on the tenth anniversary of the
Grant date, unless sooner terminated in the event of death, Total Disability or
a termination of directorship. In addition, each Outside Director will have the
opportunity to elect to receive his or her annual Board retainer fee in
nonstatutory options based on a formula set forth in the Option Plan. One
Outside Director (Mr. Usher) is currently eligible to receive grants under the
Option Plan. Four Outside Directors (Messrs. Collier, Helm, Janowiak and Usher)
are currently eligible to receive options in lieu of annual Board retainer fees.
What Common Stock is subject to the Omnibus Stock Option and Incentive Plan?
Under the terms of the Option Plan, 2,500,000 authorized but unissued shares of
Common Stock will be reserved for issuance. In the event any change is made to
the Common Stock subject to the Option Plan (whether by reason of
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other specified increase, decrease
or change in such shares), the Board of Directors will adjust proportionately
the number and kinds of shares that may be purchased and the exercise price.
What Types of Options and Grants can be Made under the Plan?
Options. All options granted under the Option Plan are presumed to be
nonstatutory options, unless the Committee specifically designates an option as
an incentive stock option. The period within which any stock option granted
under the Option Plan may be exercised is a matter of Committee discretion,
provided that the period cannot exceed ten years from the date of grant. Each
option will vest at a rate set forth by the Committee in each individual option
agreement. The Committee may accelerate the time at which an option or
installment may be exercised. Options will cease vesting upon termination of
employment, and in any event expire no later than six months (one year in the
case of death or disability) following such a termination. The shares underlying
any unexercised options that expire or terminate will again be available for
award under the Option Plan.
Subject to stockholder approval of the Option Plan, the Company has made
aggregate grants thereunder of 177,090 options to 27 employees on December 17,
1998 and aggregate grants of 36,000 options to 162 employees on February 3,
1999, with an exercise price of $3.00 and $4.00 per share, respectively (the
fair market value on the grant dates). On April 1, 1999, the closing sales price
for the Company's Common Stock on the Nasdaq SmallCap Market was $4.1875 per
share.
Restricted Stock. Under the provision for awards of restricted stock under the
Option Plan, the Committee may grant to eligible persons shares of Common Stock
subject to such restrictions or conditions, if any, deemed appropriate by the
Committee. The Committee will establish the conditions to vesting, and the
period of time during which the conditions will apply (the "Restricted Period"),
at the time of grant. If the termination of a Grantee's employment/directorship
with the Company occurs during the Restricted Period, any unvested portion of
the award is forfeited unless the Committee, in its discretion, determines
otherwise. The Committee will determine on a case by case basis the vesting of
an award upon the death or permanent and total disability of a Grantee. Any
shares of restricted stock that are forfeited will again be available for award
under the Option Plan. The Committee may, in the agreement evidencing a grant of
restricted stock, provide that the Grantee will be entitled to vote the shares
of Common Stock subject to the award. Upon vesting of an award of restricted
stock, including the satisfaction, lapse or waiver of all applicable
restrictions and conditions, the Grantee will be entitled to receive a stock
certificate representing the vested shares.
No restricted stock awards have been granted under the Option Plan.
Performance Awards. Performance Awards may be granted to any employee or
director by the Committee in its sole discretion. A Performance Award shall
consist of a right that is (i) denominated in cash or Stock, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
Subject to the terms of the Option Plan and any applicable Award Agreement, the
Committee shall determine (i) the performance goals to be achieved during any
performance period, (ii) the length of any performance period, (iii) the amount
of any Performance Award, (iv) the amount and kind of any payment or transfer to
be made pursuant to any Performance Award, and (v) all other terms and
conditions of any Performance Award including the consequences of death,
disability, termination of employment or any Termination Transaction. No
Performance Awards have been granted under the Option Plan.
How Long does the Option Plan Remain Effective and Who Amends the Plan?
The Board may terminate or amend the Option Plan without stockholder approval,
except that approval would be required to the extent an amendment would cause
the Plan to fail to satisfy the incentive stock option requirements of the Code.
The Board may also, under certain circumstances, amend the terms of any option
previously granted, prospectively or retroactively, although no amendment may
materially adversely affect a previously granted option without the consent of
the optionee.
Are there Instances When Options or Stock Grants may be Forfeited for
Misconduct?
Yes. Under the Option Plan, a "Breach of Conduct" means activities which
constitute a serious breach of conduct as determined by the Committee in its
sole discretion, including, but not limited to: (i) the disclosure or misuse of
confidential information or trade secrets; (ii) activities in violation of the
policies of any Participating Company, including, without limitation, the
Company's insider trading policy; (iii) the violation or breach of any material
provision in any applicable employment contract or agreement; (iv) engaging in
conduct relating to the Grantee's employment for which either criminal or civil
penalties may be sought; (v) engaging in activities which adversely affect or
which are contrary or harmful to the interests of a Participating Company; or
(vi) engaging in competition with a Participating Company during employment or
within one (1) year following termination of employment with a Participating
Company.
In the event of a Breach of Conduct by a Grantee, or a former Grantee at any
time while employed by a Participating Company or within two years of
termination of employment with any Participating Company, the Committee may, in
its sole discretion, (i) cancel any award, whether vested or not, in whole or in
part, as of the date specified by the Committee, which shall thereafter be
communicated in writing to such Grantee or former Grantee, and/or (ii) upon
written notice to such Grantee or former Grantee, demand that any or all stock
certificates for Stock or Restricted Stock acquired under this Plan, or any
profit realized in connection with the sale or transfer of such Stock or
Restricted Stock, or any proceeds received upon the exercise or settlement of a
Stock Appreciation Right or Performance Award, be returned to the Company within
five (5) days of receipt of such notice. If the Grantee or former Grantee shall
have paid any consideration for the acquisition of Common Stock or Restricted
Shares, or the settlement of any Award, the Company shall immediately thereafter
return such consideration to the Grantee or former Grantee, without interest.
The Company shall be entitled to reimbursement of reasonable attorneys' fees and
expenses incurred in seeking to enforce its rights.
What is the Effect on the Plan in the event of a Merger or Acquisition?
In the event of a merger or acquisition in which the Company is not the
surviving corporation, and unless the Board determines otherwise, all options
outstanding under the Option Plan shall accelerate and become exercisable
immediately prior to, and subject to, the consummation of the transaction. All
unexercised options and the Option Plan would terminate upon such consummation,
unless provision was made in connection with the transaction to continue the
Option Plan and assume outstanding options, or substitute new options for
existing options. In addition, all outstanding shares of restricted stock will
vest and any restrictions and conditions applicable to the restricted stock will
lapse.
In the event of a merger in which the Company is the surviving entity, or a
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split, the Board has the authority to authorize a proportionate
adjustment in the number or kind of shares underlying, and the option price of,
outstanding options.
What are the Federal Tax Aspects of the Option Plan?
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.
Federal Income Tax Treatment of Restricted Stock Awards
An award of restricted stock will create no immediate tax consequences for the
employee or the Company unless the employee makes an election pursuant to
Section 83(b) of the Code. The employee will, however, realize ordinary income
when restricted stock becomes vested, in an amount equal to the fair market
value of the underlying shares of Common Stock on the date of vesting less any
consideration paid by the employee for such stock. If the employee makes an
election pursuant to Section 83(b) of the Code with respect to a grant of
restricted stock, the employee will recognize income at the time the restricted
stock is awarded (based upon the value of such stock at the time of award),
rather than when the restricted stock becomes vested. The Company will be
allowed a business expense deduction for the amount of any taxable income
recognized by the employee at the time such income is recognized (assuming the
Company complies with applicable reporting requirements).
The foregoing summary is limited to federal income tax consequences and does not
purport to be a complete description of the tax consequences with respect to the
Option Plan.
Which Officers have Received Option Grants under the Option Plan?
The following table presents certain information with respect to options
granted, subject to shareholder approval, under the Option Plan through April 1,
1999 to (i) the CEO and the four other most highly compensated executive
officers ("Named Officers"), (ii) all executive officers as a group, (iii) all
Outside Directors as a group and (iv) all non-executive officers and employees
as a group.
<PAGE>
<TABLE>
<CAPTION>
Options Granted between Options Exercised between
December 17, 1998 and December 17, 1998 and
April 1, 1999 April 1, 1999
--------------------------------- ------------------------------------
Average Net Value
Number Per Share Number Realized Upon
of Exercise Price of Exercise of
Name and Position Shares ($) Shares Options ($) (1)
----------------- ------ --- ------ ---------------
<S> <C> <C> <C> <C>
Bernard R. Smedley, 0 0 0 0
President, CEO, Director
William K. Presley, EVP, CTO 0 0 0 0
James A. Traficant, 0 0 0 0
EVP Commercial Sales
Jack D. Daily, 0 0 0 0
EVP Government Systems
Stuart P. Dawley, 0 0 0 0
EVP, General Counsel
All Executive Officers as a Group 69,745 3.00 0 0
All Outside Directors as a Group 0 0 0 0
All Non-Executive Officers 143,345 3.125 0 0
and Employees as a Group
</TABLE>
- ----------------------------
(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.
<PAGE>
PROPOSAL 3
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN
In response to expressions of interest from a number of employees, the
Company has developed an Employee Stock Purchase Plan (the "Plan"). The Plan
offers employees the opportunity to purchase shares of Common Stock of the
Company with convenient payroll deductions without payment of any brokerage fees
or commissions and is intended to provide employees with an opportunity to
acquire a proprietary interest in the Company. It is the intention of the
Company to have the plan qualify under Section 423 of the Code. The full text of
the Plan is set forth as Exhibit B to this Proxy Statement. Capitalized terms
not defined in the summary of the Plan (below) have the definitions set forth in
the Plan.
Required Vote
Approval of the adoption of the Plan requires the affirmative vote of the
Common Stock and Class A Preferred Stock 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 the Plan 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 EMPLOYEE STOCK PURCHASE PLAN.
SUMMARY DESCRIPTION OF THE EMPLOYEE STOCK PURCHASE PLAN
The following is a summary of the principal provisions of the Plan. The summary
is qualified in its entirety by reference to the full text of the Plan.
The Plan. The Plan was approved by the Company's Board of Directors on February
3, 1999. However, the Plan will not be effective, and participation in the Plan
will not be permitted, unless and until stockholder approval of the Plan is
obtained at the 1999 Annual Meeting.
The Plan allows participants to purchase Common Stock through payroll deductions
(in a maximum amount of 10% of an employee's base pay per month) at a discount
of 15% of the fair market value of the Common Stock on the date of purchase,
without brokerage fees or commissions. Payroll deductions are applied to
purchase Common Stock as of the last day of each calendar quarter. A Participant
may discontinue participation in any offering by giving written notice of
termination at least five days prior to the Offering Termination Date as defined
in the Plan.
Upon purchase of the Common Stock, Participants shall have all of the rights of
ownership of such Common Stock, including voting and dividend rights; except
that Participants may not sell, assign, pledge or otherwise transfer such Common
Stock within two years of purchase.
The aggregate number of shares of Common Stock of the Company which may be
issued under the Plan shall not exceed 250,000 shares.
Eligibility. Any full time employee of the Company (with certain exceptions)
shall be eligible to participate. The eligibility criteria covers a group of
approximately 300 employees.
Participants' Accounts. The Company will establish a Stock Purchase Account for
each Participant which account shall be credited with the payroll deductions
elected by the Participant.
Stock Certificates. Except as approved by the Administrator, no Participant may
sell, assign, transfer, pledge or otherwise dispose of such Common Stock prior
to the expiration of two (2) years from the Offering Termination Date upon which
such shares of Common Stock are purchased. No certificates for Common Stock
shall be delivered to a Participant until the expiration of the foregoing
restriction. Upon written request of the Participant at any time after the
expiration of such restrictions, the Company shall deliver to the Participant
stock certificates representing the Common Stock registered in his or her name.
Purchase of Common Stock. As of the Offering Termination Date, the Participant's
account shall be debited to reflect the purchase of Common Stock. Fractional
shares will not be issued.
Purchase Price. The purchase price of Common Stock purchased under the Plan
shall be equal to the lesser of (i) 85% of the closing price of the Common Stock
on the Offering Termination Date or the nearest prior business day on which
trading occurred on the Nasdaq SmallCap Market or any other exchange upon which
the Common Stock may be listed, or (ii) 85% of the closing price of the Common
Stock on the Offering Commencement Date or the nearest prior business day on
which trading occurred on the Nasdaq SmallCap Market or any other exchange upon
which the Common Stock may be listed. As of April 1, 1999, the closing price was
$4.1875.
Restrictions on Participation. No employee shall be granted an option to
purchase Common Stock under the Plan:
(a) if, immediately after such purchase, the employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the voting power or outstanding shares of any class of stock of the Company
or of the total combined voting power or outstanding shares of any class of
stock of the Company; or
(b) which permits the Participant's rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value for each calendar year in which such
option is outstanding.
Termination of Employment and Death. Upon termination of the Participant's
employment, the Participant's Stock Purchase Account shall be returned to
him/her without interest, as soon as administratively practicable. However, the
restrictions described above in "Stock Certificates" above shall apply.
Upon termination of the Participant's employment by reason of death, the
Participant's beneficiaries shall have the right to elect to withdraw the
Participant's Stock Purchase Account, without interest, or to exercise the
Participant's option on the Offering Termination Date next following the date of
the Participant's death.
Non-Transferability. Neither payroll deductions nor the right to purchase shares
are transferable by the Participant except by will or the laws of descent and
distribution.
Administration. The Plan is administered by the Chief Executive Officer (the
"Administrator"). Among other things, the Administrator has the power to
interpret the terms and provisions of the Plan, and to establish rules and
regulations for the proper administration of the Plan.
Federal Income Tax Treatment of Plan Participation. No income is recognized by a
participant upon the purchase of Common Stock under the Plan. Upon sale of the
Common Stock at least two years after purchase, the participant will have
taxable ordinary income in the year of disposition in an amount equal to the
lesser of (i) the excess of the fair market value per share at the time of
disposition over the purchase price, or (ii) the excess of the fair market value
per share on the Offering Termination Date over the purchase price. A
participant will have capital gain or loss on the difference between the sales
proceeds and the sum of the purchase price plus any ordinary income recognized
as described above. The Company is not entitled to any tax deduction.
Employee Retirement Income Security Act of 1974. The Plan is not subject to the
terms of the Employee Retirement Income Security Act of 1974 and is not
qualified under Section 401(a) of the Code.
Period of Plan. The Plan will become effective if approved at the Annual Meeting
and continue for 10 years thereafter unless earlier terminated by the Board of
Directors. The Board of Directors of the Company may terminate or amend the
Plan, provided, however, that the Board shall not, without the approval of the
stockholders of the Company (i) increase the maximum number of shares which may
be issued under any Offering, except as set forth in the Plan or (ii) amend the
requirements as to the class of employees eligible to participate.
Benefits Under the Plan. Assuming the Plan is approved by the stockholders,
officers and employee directors, with certain exceptions, may elect to
participate in the Plan. The benefits to be received under the Plan by such
officers and employee directors cannot be determined.
<PAGE>
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS FOR CURRENT YEAR
Ernst & Young LLP has been approved by the Board as the Company's
independent auditors for the Company's fiscal year ending December 31, 1999,
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.
Required Vote
Ratification of the Company's appointment of its 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 appointment
of Ernst & Young LLP as the Company's independent auditors for the Company's
fiscal year ending December 31, 1999 requires the affirmative vote of the
holders of a majority of the issued and outstanding Common Stock and Class A
Preferred Stock, 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, 1999.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock and Class A
Preferred Stock as of March 31, 1999 by (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock and Class A Preferred Stock (each a "Principal Stockholder"), (ii) each of
the Company's directors as of March 31, 1999 and each nominee for director,
(iii) the Chief Executive Officer and the four other most highly compensated
executive officers of the Company (the "Named Officers"), and (iv) all executive
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 Stock Class A Preferred Stock (18)
- ---------------------------------------------------------------------------------------------------------------------
Name and Address Amount and Nature of Percent Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership (1) of Class Beneficial Ownership of Class
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dean W. Boley (16) 559,820 (2) 11.5% 110,632 18.1%
Rudiger D. Lichti (17) 277,455 (3) 5.8% 50,694 8.3%
William K. Presley (15) 137,373 (4) 2.8% 0 0
Don F. Riordan, Jr. (15) 452,796 (5) 9.2% 51,558 9.6%
Daniel J. Stark (15) 695,462 (6) 14.3% 110,486 19.0%
Bernard R. Smedley (15) 472,254 (7) 9.1% 0 0
Restated Employee Stock Ownership
Plan of STI ("STI ESOP") (15) 1,927,952 (8) 40.1% 257,702 42.3%
James B. Traficant (15) 133,136 (9) 2.7% 8,840 2.2%
Jack D. Daily (15) 167,699 (10) 3.4% 2,687 1.8%
Stuart P. Dawley (15) 92,338 (11) 1.9% 0 0
Arthur H. Collier (15) 12,500 (12) * 0 0
Robert M. Janowiak (15) 15,000 (13) * 0 0
Scott B. Helm (15) 10,000 (14) * 0 0
Total Number of Shares owned by 2,308,075 (19) 39.4% 208,118 34.1%
Directors and Executive Officers as
a Group (12 persons)
</TABLE>
*Less than 1%
- -------------------------
(1) "Beneficial ownership" is a technical term broadly defined by the SEC to
mean more than ownership in the usual sense. A person "beneficially owns"
stock not only if he holds it directly, but also if he indirectly
(through a relationship, position as a director or officer or trustee, or
a contract or understanding) has or shares the power to vote the stock or
the power to sell the stock, or has the right to acquire it within 60
days.
(2) Includes 339,870 shares of Common Stock directly owned, 110,632 shares of
Common Stock issuable upon conversion of the Class A Preferred Stock,
78,378 shares of Common Stock issuable upon exercise of the Warrants to
Purchase Common Stock, 5,595 shares of Common Stock issuable upon
conversion of the Class A Preferred Stock held in trust by the STI ESOP,
and 25,345 shares of Common Stock held in trust by the STI ESOP.
(3) Includes 188,102 shares of Common Stock directly owned, 50,694 shares of
Common Stock issuable upon conversion of the Class A Preferred Stock,
6,200 shares of Common Stock issuable upon conversion of the Class A
Preferred Stock held in trust by the STI ESOP, and 32,459 shares of
Common Stock held in trust by the STI ESOP.
(4) Includes 14,074 shares of Common Stock directly owned, 6,840 shares of
Common Stock issuable upon exercise of the Warrants to Purchase Common
Stock, 67,466 shares of Common Stock issuable upon exercise of options
held by Mr. Presley, 7,817 shares of Common Stock issuable upon
conversion of the Class A Preferred Stock held in trust by the STI ESOP,
and 41,176 shares of Common Stock held in trust by the STI ESOP.
(5) Includes 244,390 shares of Common Stock directly owned, 51,558 shares of
Common Stock issuable upon conversion of the Class A Preferred Stock,
39,420 shares of Common Stock issuable upon exercise of the Warrants to
Purchase Common Stock, 74,533 shares of Common Stock issuable upon
exercise of options held by Mr. Riordan, 6,901 shares of Common Stock
issuable upon conversion of the Class A Preferred Stock held in trust by
the STI ESOP, and 35,994 shares of Common Stock held in trust by the STI
ESOP.
(6) Includes 472,330 shares of Common Stock directly owned, 110,486 shares of
Common Stock issuable upon conversion of the Class A Preferred Stock,
78,210 shares of Common Stock issuable upon exercise of the Warrants to
Purchase Common Stock, 5,485 shares of Common Stock issuable upon
conversion of the Class A Preferred Stock held in trust by the STI ESOP,
and 28,951 shares of Common Stock held in trust by the STI ESOP.
(7) Includes 65,100 shares of Common Stock directly owned, 406,665 shares of
Common Stock issuable upon exercise of options held by Mr. Smedley, and
489 shares of Common Stock held in trust by the STI ESOP.
(8) Includes 1,669,536 shares of Common Stock directly owned, 257,702 shares
of Common Stock issuable upon conversion of the Class A Preferred Stock
held by the STI ESOP, and 714 shares of Common Stock issuable upon
exercise of the Warrants to Purchase Common Stock held by the STI ESOP.
(9) Includes 33,150 shares of Common Stock directly owned, 8,840 shares of
Common Stock issuable upon conversion of the Class A Preferred Stock,
9,018 shares of Common Stock issuable upon exercise of the Warrants to
purchase Common Stock, 52,916 shares of Common Stock issuable upon the
exercise of options held by Mr. Traficant, 4,531 shares of Common Stock
issuable upon conversion of the Class A Preferred Stock held in trust by
the STI ESOP, 24,681 shares of Common Stock held in trust by the STI
ESOP.
(10) Includes 13,435 shares of Common Stock directly owned, 2,687 shares of
Common Stock issuable upon conversion of the Class A Preferred Stock,
7,230 shares of Common Stock issuable upon exercise of the Warrants to
Purchase Common Stock, 94,076 shares of Common Stock issuable upon
exercise of the Options held by Mr. Daily, 8,038 shares of Common Stock
issuable upon conversion of the Class A Preferred Stock held in trust by
the STI ESOP, and 42,233 shares of Common Stock held in trust by the STI
ESOP.
(11) Includes 92,111 shares of Common Stock issuable upon exercise of options
held by Mr. Dawley and 227 shares of Common Stock held in trust by the
STI ESOP.
(12) Includes options to purchase 12,500 shares of Common Stock which are
exercisable by Mr. Collier within 60 days following March 31, 1999.
(13) Includes 10,000 shares of Common Stock directly owned, and options to
purchase 5,000 shares of Common Stock which are exercisable by Mr.
Janowiak within 60 days following March 31, 1999.
(14) Includes options to purchase 10,000 shares of Common Stock which are
exercisable by Mr. Helm within 60 days following March 31, 1999.
(15) The business address is in care of Exigent International, Inc., 1225
Evans Road, Melbourne, Florida.
(16) Mr. Boley's mailing address is 832 Palmetto Terrace, Oviedo, Florida.
(17) Mr. Lichti's mailing address is 620 Nightingale Drive, Indialantic,
Florida.
(18) Each share of Class A Preferred Stock is convertible into a share of
Common Stock at the option of the holder. Each share of Class A Preferred
Stock participates equally with each share of Common Stock upon
declaration of dividends and voting rights. Upon liquidation or
dissolution, the Class A Preferred stockholders are entitled to receive
$2.50 per share prior to any distribution to holders of Common Stock. The
Class A Preferred Stock is not subject to call or redemption. The
dividends of Class A Preferred Stock are noncumulative.
(19) Includes 208,118 shares of Common Stock issuable upon conversion of the
Class A Preferred Stock.
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>
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 Stock (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, 4 and 5 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e) of the Exchange Act during fiscal year
ending December 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 December 31, 1998, with the
exception that: (i) Dean W. Boley, a ten percent holder, inadvertently failed to
timely file two Forms 4 relating to nine transactions; (ii) Daniel J. Stark,
director, inadvertently failed to timely file one Form 4 relating to one
transaction; (iii) Jeffery B. Weinress, CFO, failed to timely file one Form 4
relating to one transaction; (iv) Sally H. Ball, Controller, inadvertently
failed to timely file one Form 4 relating to one transaction; (v) William K.
Presley, director, inadvertently failed to timely file one Form 4 relating to
one transaction; and (vi) Software Technology, Inc. Restated Employee Stock
Ownership Plan, a ten percent holder, inadvertently failed to timely file one
Form 4 relating to one transaction.
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company, who are elected by and serve at the
discretion of the Board of Directors, are as follows:
<TABLE>
<CAPTION>
|------------------------|---------|------------------------------------------------------|------------------|
| Name of Officer | Age | Position | Employed Since |
|------------------------|---------|------------------------------------------------------|------------------|
<S> <C> <C> <C>
|Bernard R. Smedley | 62 | Chairman of the Board of Directors, Chief Executive | 1997 |
| | | Officer, Chief Operating Officer and President | |
|------------------------|---------|------------------------------------------------------|------------------|
|Don F. Riordan, Jr. | 51 | Director, Executive Vice President for Customer | 1979 |
| | | Relations and Special Projects | |
|------------------------|---------|------------------------------------------------------|------------------|
|Jeffrey B. Weinress | 52 | Senior Vice President, Chief Financial Officer and | 1998 |
| | | Treasurer | |
|------------------------|---------|------------------------------------------------------|------------------|
|Stuart P. Dawley | 36 | Executive Vice President and General Counsel | 1997 |
|------------------------|---------|------------------------------------------------------|------------------|
|Jack D. Daily | 56 | Executive Vice President Government Division | 1981 |
|------------------------|---------|------------------------------------------------------|------------------|
|James A. Traficant | 37 | Executive Vice President Commercial Sales | 1984 |
|------------------------|---------|------------------------------------------------------|------------------|
|William K. Presley | 52 | Executive Vice President and Chief Technical | 1983 |
| | | Officer |
|------------------------|---------|------------------------------------------------------|------------------|
|Dean C. Oswald | 37 | Executive Vice President and Deputy Chief Technical | 1992 |
| | | Officer | |
|------------------------|---------|------------------------------------------------------|------------------|
</TABLE>
Biographical information concerning Mr. Smedley and Mr. Riordan can be
found in "Proposal 1 - Election of Directors."
Mr. Weinress has served as Senior Vice President, Chief Financial Officer
and Treasurer since December 1998. Mr. Weinress also serves as Chairman and
Director of ENV America Incorporated. From 1997 to 1998 Mr. Weinress served as
Vice President, Chief Financial Officer and Secretary of Avanir Pharmaceuticals.
From 1996 to 1997, he was Executive Vice President and in 1997 Chief Financial
Officer of Omega Environmental, Inc. (on May 2, 1997, Omega Environmental filed
a voluntary petition for relief under Chapter 11 of the Bankruptcy Code). From
1987 to 1995, he was Chief Financial Officer of Energy America Incorporated.
Stuart P. Dawley has served as Executive Vice President and General Counsel
since July 1997, when he joined Exigent. Prior to that, Mr. Dawley joined AirNet
Communications Corporation, an infrastructure products company for Wireless
Local Loop, cellular and PCS markets in June 1995 where he served as Director of
Marketing and Strategic Alliances until November 1996 and he then served as
General Counsel until July 1997. Prior to that, from June 1988 to June 1995, Mr.
Dawley was with Motorola, Inc.'s Infrastructure Group where he worked in the
business development section.
Jack D. Daily has held the position of Executive Vice President of the
Government Division since 1998. He has been employed in management and executive
positions with STI since 1981.
James A. Traficant has been Executive Vice President Commercial Sales since
1998. He has been employed by STI in various management and executive positions
since 1984, including Vice President of Advanced Programs from 1992 to 1997 and
Vice President Business Development.
William K. Presley has been serving as Chief Technical Officer of Exigent
since 1997. He has been employed by STI since 1983 in management and executive
positions, including Chairman of the Board and Vice President of STI from 1987
to 1998.
Dean C. Oswald has been serving as Executive Vice President and Chief
Deputy Officer since 1998. He has been employed in management and executive
positions with STI since 1992, including Executive Vice President Products
Division from 1997 to 1998 and Director of Engineering from 1996 to 1997.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth a summary of all compensation information
earned, awarded or paid in the fiscal years ended December 31, 1998 ("1998B"),
January 31, 1998 ("1998A"), and January 31, 1997 as applicable, to those persons
who were at December 31, 1998, the Named Officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------------------- -----------------
Name and Year Salary Bonus Other Annual Restricted
Principal Position (1) ($)(1) ($)(1) Compensation (2) ($) Stock
Awards ($)
- ----------------------------- -------------- ----------- --------- --------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Bernard R. Smedley 1998B 229,167 0 12,294 (3) 0
Chairman, Chief Executive 1998A 159,626 0 3,500 0
Officer, President,
Chief Operating Officer 1997 0 0 0 0
William K. Presley 1998B 124,014 13,350 0 0
Executive Vice President, 1998A 138,718 2,503 3,500 0
Chief Technical Officer 1997 111,168 2,503 3,500 7,085
James A. Traficant 1998B 117,708 12,750 0 0
Executive Vice President 1998A 125,513 15,000 0 0
Commercial Programs 1997 115,125 0 3,500 0
Jack D. Daily 1998B 122,083 12,500 0 0
Executive Vice President 1998A 120,405 40,000 0 0
Government Programs 1997 112,364 0 3,500 0
Stuart P. Dawley 1998B 110,973 11,600 0 0
Executive Vice President, 1998A 59,333 7,500 0 0
General Counsel 1997 0 0 0 0
</TABLE>
(1) Because of the change in the Company's fiscal year in 1998, salary and
bonus shown for 1998B cover an 11-month period with a fiscal year ending
December 31, 1998; 1998A and 1997 cover a 12-month period with a fiscal
year ending January 31, 1998 and January 31, 1997, respectively.
(2) All directors received $3,500 per year in director's fees until February 8,
1998, when the Board passed a resolution limiting payment of director's
fees to outside, independent directors only, and concurrently modified
compensation to $1,500 per meeting.
(3) Includes certain benefits Mr. Smedley receives under his Employment
Agreement with the Company, consisting of (a) key-man life insurance policy
premiums of $4,464, (b) medical reimbursements of $6,400, and (c) 75% of
local country club membership dues, or $1,430.
<PAGE>
EMPLOYMENT CONTRACTS
Employment Agreements
The Company has entered into employment agreements, dated June 11, 1997,
with Messrs. Smedley, Presley, Traficant, Daily and Dawley. Under their
employment agreements, Messrs. Smedley, Presley, Traficant, Daily and Dawley are
entitled to annual salaries of $250,000, $131,000, $125,000, $125,000 and
$96,000 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
the annual salaries of Messrs. Presley, Traficant, Daily and Dawley are subject
to increase as determined by the Company's management and approved by the Board
of Directors.
In consideration of their executing employment agreements containing
restrictive covenants, the Company granted to Messrs. Smedley, Presley,
Traficant, Daily and Dawley fully vested, non-qualified stock options to
purchase 125,000, 50,000, 50,000, 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 stock option agreements with the Company.
The employment agreements, as amended to date, provide that the Company
shall grant additional options to purchase the Company's Common Stock to Messrs.
Smedley, Presley, Traficant, Daily and Dawley based on the Company achieving
certain financial goals as outlined in the Annual Executive Incentive Plan
approved by the Board of Directors from year to year. Since the Company met the
earnings goal for fiscal year ending January 31, 1998, on September 14, 1998 the
Board approved grants of 66,665, 17,466, 16,666, 39,076 and 42,111 fully vested,
non-qualified options to purchase Common Stock to Messrs. Smedley, Presley,
Traficant, Daily and Dawley, respectively, at an exercise price of $3.3750 per
share. These options were granted 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, Traficant,
Daily and Dawley 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 employment without due cause, the employee
is entitled to receive severance equal to 18 months' salary if termination
occurs during the first year of employment, 12 months' salary if termination
occurs during the second year of employment, 6 months' salary if termination
occurs during the third year of employment, and 3 months' salary if termination
occurs after the third year of employment. Severance payments are payable in
equal installments in accordance with the Company's normal pay periods. If
terminated without due cause, the employee is also eligible to receive group
medical insurance benefits during any applicable severance payment period plus
any additional extension of the applicable noncompete period.
The Compensation Committee intends to grant Messrs. Smedley, Presley,
Traficant, Daily and Dawley (as well as other members of Exigent's management)
additional stock options under the Omnibus Stock Option and Incentive Plan in
order to provide them with additional long term incentives. The grant of these
options will be contingent upon receipt at the Annual Meeting of stockholder
approval for the Omnibus Stock Option and Incentive Plan.
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 entitled Mr. Clift to
receive an amount equal to eighteen months' salary based on his annual salary of
$145,000 as of the effective date of his termination on December 31, 1997, and
is payable in equal installments in accordance with the Company's normal pay
periods. The severance arrangement will terminate on June 30, 1999.
<PAGE>
OPTION GRANTS IN FISCAL YEAR ENDING DECEMBER 31, 1998
The following table sets forth information with respect to the stock
options granted to the Named Officers during the fiscal year ended December 31,
1998:
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates Of
Stock Price Appreciation
For Option Term (2)
-----------------------------
% of Total Option
Options Options Price Expiration
Name Granted Granted ($/share) Date (1) 5% 10%
- ---- ------- ------- --------- -------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Bernard R. Smedley 66,665 4.6% $3.3750 9/14/01 $ 35,465 $ 74,473
275,000 16.1% $3.4375 10/27/01 $126,208 $265,027
William K. Presley 17,466 1.2% $3.3750 9/14/01 $9,292 $19,512
James B. Traficant 16,666 1.2% $3.3750 9/14/01 $8,866 $18,618
Jack D. Daily 39,076 2.7% $3.3750 9/14/01 $20,788 $43,653
Stuart P. Dawley 42,111 2.9% $3.3750 9/14/01 $22,402 $47,043
</TABLE>
(1) These options could expire earlier in certain situations.
(2) The potential realizable value of the options granted for each of the Named
Officers was calculated by multiplying those options by the excess of the
assumed market value of Common Stock if the market value were to increase
5% or 10% in each year of the option's 3-year term over the option price
shown. This calculation does not take into account any taxes or other
expenses which might be owed. Actual values, if any, that an executive may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised, so there is no assurance that
values realized will be at or near the values indicated in the table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth for each of the Named Officers certain
information concerning the number of options exercised by each of them in fiscal
year ending December 31, 1998 and the value of such Named Officers' unexercised
options as of December 31, 1998:
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options at In-the-Money Options
December 31, 1998(#) at December 31, 1998($)(1)
-------------------- --------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bernard R. Smedley 50,000 142,500 416,665 0 14,063 0
William K. Presley 100 101 67,466 0 9,375 0
James B. Traficant 45,000 96,714 50,316 2,600 6,127 0
Jack D. Daily 0 0 94,076 0 10,063 0
Stuart P. Dawley 0 0 92,111 0 9,375 0
</TABLE>
(1) Calculated by determining the difference between the exercise price of the
options and $2.4375, the closing price of the Company's Common Stock on
December 31, 1998, the last trading day of the fiscal year.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Daniel J. Stark, a member of the Board of Directors, resigned his position
with the Company effective July 17, 1998, and is compensated pursuant to the
terms of a Confidential Release and Waiver Agreement ("Release Agreement") dated
August 11, 1998. Pursuant to the Release Agreement, Mr. Stark will receive a
total of $91,520 of severance pay over twelve regularly scheduled paydays
commencing from August 31, 1998. Mr. Stark also received salary continuation
between July 17 and July 31, 1998, and accrued vacation and sick leave
allowances. In addition to numerous other covenants, promises and restrictions
for the benefit of the Company, Mr. Stark provided the Company with certain
unconditional releases and non-competition covenants. At the discretion of the
CEO, Mr. Stark may provide consulting services on matters pertaining to the
business of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year ending December 31, 1998, the Compensation Committee
consisted of Messrs. Collier, Janowiak, Smedley and Helm. Mr. Smedley is the
Company's Chairman and Chief Executive Officer. There were no committee
interlocks with other companies in fiscal year ending December 31, 1998 within
the meaning of the Securities and Exchange Commission's proxy rules.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
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. The
stock price performance shown in the Performance Graph is not necessarily
indicative of future stock price performance.
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year ending December 31,
1998.
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.
<PAGE>
What is the Company's philosophy of executive officer 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 stockholders.
Compensation for executive officers consists of:
|X| Base salary;
|X| Annual incentive award based upon performance; and
|X| Long-term incentive awards, typically in the form of stock options.
The Compensation Committee believes that this three-part approach best serves
the interests of the Company and its stockholders. As a result, much of the
executive officers' compensation depends on the Company's financial performance.
This enables the Company to meet the requirements of the highly competitive
environment in which the Company operates while ensuring that executive officers
are compensated in a way that advances both the short- and long-term interests
of stockholders. Under this approach, compensation for these officers involves a
significant proportion of pay that is "at risk" - namely, the annual bonus and
stock options. The variable annual bonus permits individual performance to be
recognized on an annual basis, and is based, in significant part, on an
evaluation of the contribution made by the officer to Company performance.
(Bonus arrangements applicable to the Chief Executive Officer are described
below.) Stock options relate a significant portion of long-term remuneration
directly to stock price appreciation realized by all of the Company's
stockholders.
Base Salary. The Company targets executive base salary ranges at the 50th to
75th percentile of relevant market data. The Chief Executive Officer annually
establishes recommendations for each executive officer's base salary, based on
an evaluation of the executive officer's performance and contribution for the
previous year and on competitive pay practices. The Chief Executive Officer
provides his recommendations to the Compensation Committee, and then presents
them to the Board of Directors for approval.
Annual Bonus. Each year, in accordance with the Company's Executive Annual
Incentive Plan, the Company's executive officers are eligible to receive an
incentive bonus. The bonus is based on the Company's performance as measured
against corporate financial and individual performance goals. The Chief
Executive Officer provides his recommendations to the Compensation Committee,
and then presents them to the Board of Directors for approval. To encourage
stock ownership, the bonus is paid in a combination of cash and stock.
For the fiscal year ending December 31, 1998, no bonuses were paid to any
executive officers pursuant to the executive incentive compensation plan, as
corporate financial goals were not met.
Stock Options. Stock option grants may be made to executive officers upon
initial employment, upon promotion to a new, higher level position that entails
increased responsibility and accountability, in connection with the execution of
a new employment agreement, in connection with the achievement of certain
company-wide performance or earnings goals, and/or when all previously granted
stock options have either fully vested or are within twelve months of full
vesting. The Chief Executive Officer recommends the number of options to be
granted to executive officers, within a range associated with the individual's
salary level, and presents this to the Compensation Committee for review and
subsequent presentation to the Board of Directors for approval.
How is the Company's Chief Executive Officer compensated?
Under his 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. Pursuant to his employment agreement, as amended
to date, Mr. Smedley received in September 1998 non-qualified fully vested
options to purchase 66,665 shares of Common Stock at an exercise price of $3.375
per share in recognition of the Company's achievement of performance goals for
the fiscal year ended January 31, 1998. After completion of a review in November
1998, and in consideration of competitive data showing total direct stock
ownership of chief executive officers of comparable companies, Mr. Smedley
received fully vested options to purchase an additional 275,000 shares of Common
Stock (of which 16,000 were incentive stock options) at an exercise price of
$3.4375 per share.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder, deductions for employee remuneration in
excess of $1 million which is not performance-based are disallowed for publicly
traded companies. Since levels of compensation paid by the Company are expected
to be significantly below $1 million, the Compensation Committee has determined
that it is unnecessary at this time to seek to qualify the components of its
compensation program as performance-based compensation within the meaning of
Section 162(m).
COMPENSATION COMMITTEE
Arthur H. Collier
Scott B. Helm
Robert M. Janowiak
Bernard R. Smedley
<PAGE>
PERFORMANCE GRAPH
[OBJECT OMITTED]
<PAGE>
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 is effective
for the audit for the fiscal year ended December 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 accountants' reports on the financial statements for the
previous two years have not contained adverse opinions or disclaimer of opinions
nor were such reports qualified or modified as to uncertainty, audit scope or
accounting principles. The Company has not had any disagreements with its
principal 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 such period or since then, the
Company has not been advised by its principal accountants: (i) that the internal
controls necessary for the Company to develop reliable financial information do
not exist; (ii) that information has come to the accountants' attention that has
led the accountant to no longer be able to rely on management's representations
or that have made the accountants 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 accountants' 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 accountants' attention that the accountants have 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, Ernst & Young LLP 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.
<PAGE>
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 and proxies in the proxies.
By Order of the Board of Directors
Patricia A. Frank
Secretary
Dated: May 10, 1999
<PAGE>
<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, Jr. and Stuart P. Dawley, and each of them, attorneys and proxies,
with full power of substitution, to vote all of the Common Stock and Class A
Preferred Stock of the Company held of record in the name of the undersigned (or
held of record in the name of the Restated Employee Stock Ownership Plan of
Software Technology, Inc. and allocated to the undersigned) at the close of
business on May 7, 1999 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 Wednesday, June 30, 1999, 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 May 10, 1999, 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.
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. Elect the following as Directors of the Company:
Class I: For a term expiring in 2000
Don F. Riordan, Jr.
Daniel J. Stark
Class II: For a term expiring in 2001
Arthur H. Collier
Robert M. Janowiak
B. R. "Bernie" Smedley
Class III: For a term expiring in 2002
Scott B. Helm
William R. Usher
[ ] FOR all nominees (except those withheld below)
[ ] WITHHOLD all nominees
[ ] WITHHOLD authority to vote for any individual nominee.
Write names of nominee(s) below:
-----------------------
-----------------------
-----------------------
2. Approve the adoption of the Omnibus Stock Option and Incentive Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve the adoption of the Employee Stock Purchase Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the selection of the firm of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending December 31,
1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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 this proxy exactly as the name or names appearing on the label
below. Joint owners must both sign. Attorney, executor, administrator, trustee
or guardian must give full title as such. A duly authorized officer or
representative must sign on behalf of a corporation, partnership or other legal
entity and give full title as such.
- ----------------------------------------------
Signature of Stockholder
Title (if applicable):
------------------------
Date: , 1999
------------------------------------------
- ----------------------------------------------
Signature if held jointly
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
I/We intend to 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
EXIGENT INTERNATIONAL, INC.
OMNIBUS STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of this Omnibus Stock Option and Incentive Plan (the "Plan") is
to advance the interests of Exigent International, Inc. ("Exigent" or "Company")
and its stockholders by enabling Exigent and Participating Companies (as defined
below) to attract and retain highly talented employees, directors, consultants
and advisers who are in a position to make significant contributions to the
success of Exigent, to reward them for their contributions to the success of
Exigent, and to encourage them, through stock ownership, to increase their
proprietary interest in Exigent and their personal interest in its continued
success and progress.
The Plan provides for the award of Exigent stock options and Exigent Common
Stock. Options granted pursuant to the Plan may be incentive or nonstatutory
stock options. Options granted pursuant to the Plan shall be presumed to be
nonstatutory options unless expressly designated as incentive options at the
time of grant.
2. DEFINITIONS
For the purposes of this Plan and related documents, the following
definitions apply:
"Award Agreement" means the stock option agreement, restricted stock
agreement, stock appreciation right agreement, performance award agreement or
other written agreement between Exigent and a Grantee that evidences and sets
out the terms and conditions of a Grant.
"Board" means the Board of Directors of the Company.
"Breach of Conduct" shall mean activities which constitute a serious breach
of conduct as determined by the Committee in its sole discretion, including, but
not limited to: (i) the disclosure or misuse of confidential information or
trade secrets; (ii) activities in violation of the policies of any Participating
Company, including without limitation, the Company's insider trading policy;
(iii) the violation or breach of any material provision in any applicable
employment contract or agreement; (iv) engaging in conduct relating to the
Grantee's employment for which either criminal or civil penalties may be sought;
(v) engaging in activities which adversely affect or which are contrary or
harmful to the interests of a Participating Company, or (vi) engaging in
competition with a Participating Company during employment or within one (1)
year following termination of employment with a Participating Company. The
determination of Breach of Conduct shall be determined by the Committee in good
faith and in its sole discretion.
"Committee" means a committee of the Board designated from time to time by
resolution of the Board. Commencing on the Effective Date, and until such time
as the Board shall determine otherwise, the Committee shall be the Compensation
Committee with respect to all Grants made to the Chief Executive Officer and
President of the Company and Outside Directors and all other officers
participating in executive management incentive compensation programs; and
Bernard R. Smedley, a Board member and current Chief Executive Officer of the
Company, for Grants to all other Grantees.
"Company" or "Exigent" means Exigent International, Inc., a Delaware
corporation, or any successor thereof.
"Effective Date" means December 17, 1998.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the closing sale price of Stock on the national
securities exchange on which the Stock is then principally traded or, if that
measure of price is not available, on a composite index of such exchanges or, if
that measure of price is not available, in a national market system for
securities on the date of the option grant (or such other date as is specified
herein). In the event that there are no sales of Stock on any such exchange or
market on date of the option grant (or such other date as is specified herein),
the Fair Market Value of Stock on the date of the grant (or such other date as
is specified herein) shall be deemed to be the closing sales price on the next
preceding day on which Stock was sold on any such exchange or market. In the
event that the Stock is not listed on any such market or exchange on the
applicable date, a reasonable valuation of the Fair Market Value of the Stock on
such date shall be made by the Board.
"Grant" means an award of an option, Restricted Stock, Stock Appreciation
Right or Performance Award under the Plan.
"Grantee" means a person who receives or holds an option, Restricted Stock,
Stock Appreciation Right or Performance Award under the Plan.
"I.R.C." means the Internal Revenue Code of 1986, as it may be amended from
time to time.
"Incentive Option" means any option granted under the Plan intended to
satisfy the requirements under I.R.C. Section 422(b) as an incentive stock
option.
"Nonstatutory Option" means any option granted under the Plan that does not
qualify as an Incentive Option.
"Option Termination Date" is defined in Section 13(b) below.
"Outside Director" means a member of the Board who is not an officer, more
than 10% owner, or employee of the Company.
"Parent" means a parent corporation as defined in I.R.C. Section 424(e).
"Participating Company" means the Company, any Parent of the Company, and
any subsidiary (as defined in Rule 405 under the Securities Act of 1933, as
amended) of the Company or its Parent.
"Performance Award" shall mean any right granted under Section 16 of the
Plan.
"Plan" means this Omnibus Stock Option and Incentive Plan.
"Restricted Stock" means shares of Stock awarded to a Grantee pursuant to
Section 15 hereof.
"Stock" means shares of the Company's authorized Common Stock, $.01 par
value per share.
"Subsidiary" means a subsidiary corporation as defined in I.R.C. Section
424(f).
"Stock Appreciation Rights" means 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.
"Terminating Transaction" means any of the following events: (a) the
dissolution or liquidation of the Company; (b) a reorganization, merger or
consolidation of the Company with one or more other persons in which the Company
is not the surviving corporation or becomes a subsidiary of another corporation
other than a corporation that was a Participating Company immediately prior to
such event; (c) a sale of substantially all the Company's assets to a person or
entity other than a corporation that was a Participating Company immediately
prior to such event; or (d) the acquisition by a person or persons acting as a
group or otherwise in concert (other than a Company stockholder or employee of a
Participating Company as of the Effective Date, or an employee benefit plan of a
Participating Company) of equity securities of the Company that represent a
majority or more of the aggregate voting power of all outstanding equity
securities of the Company. As used herein or elsewhere in this Plan, the word
"person" shall mean an individual, corporation, partnership, association or
other person or entity, or any group of two or more of the foregoing that have
agreed to act together.
"Total Disability" means a "total and permanent disability" as defined in
I.R.C. Section 22(e)(3).
3. ADMINISTRATION OF PLAN
(a) Administration by Committee. The Plan shall be administered by the
Committee. The Committee shall have authority, not inconsistent with the express
provisions of the Plan and subject to the recommendations of the Chief Executive
Officer of the Company, to:
(i) award Grants consisting of options, Restricted Stock, Stock
Appreciation Rights or Performance Awards or all of such awards, to such
eligible persons as the Committee may select;
(ii) determine the timing of Grants and the number of shares of Stock
subject to each Grant;
(iii) determine the terms and conditions of each Grant, including
whether an option is an Incentive Option or a Nonstatutory Option
(consistent with the requirements of the I.R.C.) and the nature and
duration of any restriction or condition (or provision for lapse thereof)
relating to the vesting or forfeiture of a Grant;
(iv) adopt such rules and regulations as the Committee may deem
necessary or appropriate to carry out the purposes of the Plan; and
(v) interpret the provisions of the Plan and of any Grants made
hereunder and decide any questions and settle all controversies and
disputes that may arise in connection with the Plan.
All decisions, determinations, interpretations or other actions by the Committee
with respect to the Plan shall be final, conclusive and binding on all persons,
including the Company, Participating Companies and Grantees and their respective
legal representatives, their successors in interest and permitted assigns and
upon all other persons claiming by, through, under or against any of them.
(b) Grants to Officers and Directors. Notwithstanding the foregoing, (i)
Grants issued to Company directors, officers or other persons subject to Section
16 of the Exchange Act which are intended to comply with the exemption provided
by Exchange Act Rule 16b-3(d)(1) shall be approved by the Board or a committee
of the Board that meets the requirements described Exchange Act Rules
16b-3(d)(1) and 16b-3(b)(3), and (ii) Grants to the CEO and other officers
considered "covered employees" under I.R.C. Section 162(m)(3) which are intended
to comply with the exemption provided by I.R.C. 162(m)(4)(c) shall be approved
by the Board or a committee of the Board that meets the requirements contained
in I.R.C. Regulation Section 1.162-27(e)(3); provided, however, that nothing
contained in this subparagraph (b) shall be construed as requiring any Grant to
meet the requirements of any law, rule or regulation described above.
4. SHARES SUBJECT TO THE PLAN
(a) Availability. Subject to adjustment as provided in Section 4(c) below,
the maximum aggregate number of shares of Stock available for issuance under the
Plan shall be 2,500,000.
(b) Reavailability of Options; Stock to be Delivered. If any Stock covered
by a Grant is not purchased or is forfeited, or if a Grant otherwise terminates
without delivery of any Stock subject thereto, then the number of shares of
Stock so terminated or forfeited shall again be available for making Grants
under the Plan. In the event that Stock that was previously issued by the
Company is reacquired by the Company as part of the consideration received (in
accordance with Section 14(b) below) upon the subsequent exercise of an option,
such reacquired Shares shall again be available for the granting of options
hereunder. Stock delivered under the Plan shall be authorized but unissued
shares or, at the Board's discretion, previously issued Stock acquired by the
Company and held in its treasury. No fractional shares of Stock shall be
delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, exchange of shares, distribution payable in capital
stock, recapitalization or other change in Exigent's capital stock, the number
and kind of shares of Stock subject to Grants then outstanding or subsequently
awarded under the Plan, the exercise price of any outstanding option, the
maximum number of shares of Stock that may be delivered under the Plan, and
other relevant provisions shall be appropriately adjusted by the Board, so that
the proportionate interest of the Grantee immediately following such event
shall, to the extent practicable, be the same as immediately before such event.
5. EFFECTIVE DATE
The Plan shall be effective as of the Effective Date, subject to approval
of the Plan within one year of the Effective Date by Exigent's stockholders.
Upon approval of the Plan by the stockholders of Exigent as set forth above, all
Grants made under the Plan on or after the Effective Date shall be fully
effective as if Exigent's stockholders had approved the Plan on the Effective
Date. If the stockholders fail to approve the Plan within one year of the
Effective Date, any Grants made hereunder shall be null and void and of no
effect.
6. AWARD AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Award
Agreement, to be executed by Exigent and by the Grantee, in such form or forms
as the Committee shall from time to time approve. Each Award Agreement
evidencing a Grant of options shall specify whether such options are intended to
be Nonstatutory Options or Incentive Options.
7. OPTION EXERCISE PRICE
The option exercise price for shares of Stock to be issued under the
Plan shall be the Fair Market Value of the Stock on the Grant date (or 110% of
the Fair Market Value in the case of an Incentive Option granted to a
ten-percent shareholder).
8. DISCRETIONARY OPTION GRANTS
Grants may be made under the Plan to any employee or director of any
Participating Company as the Committee shall determine and designate from time
to time, provided, however, that Outside Directors may not receive Grants in
addition to the Grants provided for in Section 9 hereof unless such Grants are
approved by the Board. Grants of options may be made under the Plan to any
consultant or adviser to any Participating Company whose participation in the
Plan is determined by the Committee to be in the best interests of the Company
and is so designated by the Committee. Notwithstanding the foregoing, grants to
persons who are not employees of the Company or any Parent or Subsidiary of the
Company shall not be Incentive Options.
9. OUTSIDE DIRECTOR OPTION GRANTS
(a) Automatic Grants. Except for those Outside Directors who have
non-vested stock option grants under Plan 5NQ, on January 1st of each year, or
if such day shall not be a trading day on the principal stock exchange on which
the Stock shall be listed for trading at the time, on the next such trading day,
an option for the purchase of Ten Thousand (10,000) shares of Common Stock
shall, without further action of the Board or the Committee, be granted
automatically to each Outside Director. Each such automatic stock option grant
shall vest and become exercisable by the Outside Director on a quarterly basis
following grant of the options at the rate of 2,500 shares per quarter per
annum, with the initial 2,500 shares vesting on the last day of the calendar
quarter in which the initial grant occurs, and an additional 2,500 shares
vesting on the last day of each subsequent calendar quarter, provided at each
quarterly vesting date the Outside Director continues to serve on the Board.
Each option shall expire on the tenth anniversary of the Grant date, unless
sooner terminated as provided in Section 13 hereof in the event of death, Total
Disability or a termination of directorship.
(b) Grants in Lieu of Fee. Each Outside Director shall be entitled to
receive a Nonstatutory Option to purchase a specified number of shares of Stock
in lieu of his or her Board retainer fees. Such specified number (i) shall be
calculated by the Chief Financial Officer of the Company, using a Black-Scholes
(or other generally accepted) valuation method based on the Fair Market Value of
the Stock on January 15 of the applicable year (or the next business day, if
January 15 falls on a weekend), assuming a ten-year option term and (ii) shall
be adjusted upward by 10% to take into account the one-year vesting term. The
exercise price of such option shall be equal to the Fair Market Value of Common
Stock on January 15 (or the next business day, if January 15 falls on a
weekend), which shall also be the Grant date. Any Outside Director desiring to
receive an option in lieu of cash shall notify the Company of this election,
which shall be irrevocable, by submitting a written notice to the Corporate
Secretary in accordance to procedures as determined by the Committee. Such
non-qualified option shall be fully vested and exercisable on the Grant date,
and shall expire on the tenth anniversary of the Grant date, unless sooner
terminated as provided in Section 13 hereof in the event of death, Total
Disability or a termination of directorship.
10. LIMITATIONS ON GRANTS
(a) Limitation on Shares of Stock Subject to Grants. The maximum number of
shares of Stock subject to options that can be awarded under the Plan to any
person eligible for a Grant under Section 8 hereof is 3,000,000 shares of Stock
during the first five (5) calendar years of the Plan, and 1,000,000 per year
thereafter. The "per individual" limitations described in this paragraph shall
be construed and applied consistent with the rules and regulations under I.R.C.
Section 162(m).
(b) Limitations on Incentive Options. Incentive Options may only be granted
to employees of the Company or any Parent or Subsidiary of the Company.
11. STOCK APPRECIATION RIGHTS. The Committee, in its 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."
12. 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 13(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 Stock 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 14(c) 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 the Plan 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 Committee 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 Committee 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.
13. VESTING AND TERMINATION OF OPTIONS
(a) Vesting of Discretionary Options. Subject to the other provisions of
this Section 13, options granted pursuant to Section 8 shall vest and become
exercisable at such time and in such installments as the Committee shall provide
in each individual Award Agreement. Notwithstanding the foregoing, the Committee
may, in its sole discretion, accelerate the time at which all or any part of an
option may be exercised.
(b) Termination of Options. All options shall expire and terminate on such
date as the Committee shall determine ("Option Termination Date"), which in no
event shall be later than ten (10) years from the date such option was granted.
In the case of an Incentive Option granted to a ten-percent stockholder, the
option shall not be exercisable after the expiration of five (5) years from the
date such option was granted. Upon termination of an option or portion thereof,
the Grantee shall have no further right to purchase Stock pursuant to such
option.
(c) Termination of Employment or Service.
(i) Termination of Employment or Directorship. Upon the
termination of the employment or directorship of a Grantee with a Participating
Company for any reason other than for Breach of Conduct (pursuant to Section 17
below) or by reason of death or Total Disability, all options that are not
exercisable shall terminate on the employment/ directorship termination date.
Options that are exercisable on the employment/ directorship termination date
shall continue to be exercisable for (A) six (6) months following the
employment/directorship termination date (in the case of Nonstatutory Options),
(B) three (3) months following the employment termination date (in the case of
Incentive Options), or (C) the Option Termination Date, whichever occurs first.
A Grantee who is an employee or director of a Participating Company shall be
deemed to have incurred a termination for purposes of this Section 13(c)(i) if
such Participating Company ceases to be a Participating Company, unless such
Grantee is an employee, director, consultant or adviser of any other
Participating Company.
(ii) Service Termination. In the case of an optionee who is not
an employee or director of any Participating Company, provisions relating to the
exercisability of options following termination of service shall be specified in
the award. If not so specified, all options held by such optionee that are not
then exercisable shall terminate upon termination of service for any reason.
Unless such termination was for Breach of Conduct (pursuant to Section 17
below), options that are exercisable on the date the optionee's service as a
consultant or adviser terminates shall continue to be exercisable for a period
of six (6) months following the service termination date (as defined in a
consulting or similar agreement or as determined by the Committee) or the Option
Termination Date, whichever occurs first.
(d) Rights in the Event of Death. In the event that the employment and/or
directorship of an optionee with a Participating Company is terminated by reason
of death, all options that are not exercisable shall terminate on the date of
death. Options that were exercisable on the date prior to the optionee's death
may be exercised by the optionee's executor or administrator or by the person or
persons to whom the option is transferred by will or the applicable laws of
descent and distribution, at any time within the one-year period (or such longer
period as the Board may determine prior to the expiration of such one-year
period) beginning with the date of the optionee's death, but in no event beyond
the Option Termination Date.
(e) Rights in the Event of Total Disability. In the event that the
employment and/or directorship of an optionee with a Participating Company is
terminated by reason of Total Disability, all options that are not exercisable
shall terminate on the employment/directorship termination date. Options that
were exercisable on the employment/directorship termination date may be
exercised at any time within the one-year period (or such longer period as the
Committee may determine prior to the expiration of such one-year period, subject
to the requirements of I.R.C. Section 422(c)(6)) beginning with the commencement
of the optionee's Total Disability (as determined by the Committee) but in no
event beyond the Option Termination Date.
(f) Leave of Absence. An approved leave of absence shall not constitute a
termination of employment under the Plan. An approved leave of absence shall
mean an absence approved pursuant to the policy of a Participating Company for
military leave, sick leave, or other bona fide leave, not to exceed ninety (90)
days or, if longer, as long as the employee's right to re-employment is
guaranteed by contract, statute or the policy of a Participating Company.
Notwithstanding the foregoing, in no event shall an approved leave of absence
extend an option beyond the Option Termination Date.
14. EXERCISE OF OPTIONS; NON-TRANSFERABILITY
(a) Exercise of Options. Vested options may be exercised, in whole or in
part, by giving written notice of exercise to the Company, which notice shall
specify the number of shares of Stock to be purchased and shall be accompanied
by payment in full of the purchase price in accordance with Section 14(b) below
and the full amount of any federal and state withholding and other employment
taxes applicable to such person as a result of such exercise. No shares of Stock
shall be issued until full payment of the purchase price and applicable
withholding tax has been made. Until the issuance of stock certificates, no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to optioned shares notwithstanding the exercise of the
option.
(b) Payment. Full payment of the purchase price for the Stock as to which
an option is being exercised shall be made at the time of exercise (i) in United
States dollars in cash or by check in a form satisfactory to the Company, (ii)
at the Grantee's election, and subject to discretion of the Board, through
delivery of Common Stock having a Fair Market Value on the day immediately
preceding the day notice of exercise is received by the Company equal to the
cash exercise price of the option, (iii) in accordance with a so-called cashless
exercise plan established with a securities brokerage firm, or (iv) by any
combination of the permissible forms of payment.
(c) Non-Transferability of Options. Except as the Committee may otherwise
determine, no option may be transferred other than by will or by the laws of
descent and distribution, and during an optionee's lifetime an option may be
exercised only by the Grantee.
15. RESTRICTED STOCK
(a) Grant of Restricted Stock. The Committee may from time to time grant
Restricted Stock to certain employees and directors of a Participating Company,
subject to such restrictions, conditions and other terms, if any, as the
Committee may determine.
(b) Restrictions. At the time a Grant of Restricted Stock is made, the
Committee may establish a period of time (the "Restricted Period") during which
a Grantee's right to all or a portion of such Restricted Stock shall vest over
time, subject to certain terms and conditions. Each Grant of Restricted Stock
may be subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a Grant of Restricted Stock is made, prescribe
forfeiture or vesting conditions in addition to or other than the expiration of
the Restricted Period. The Committee also may, in its sole discretion, shorten
or terminate the Restricted Period or waive any other restrictions applicable to
all or a portion of the Restricted Stock. Restricted Stock may not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during the
Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Committee with respect to such Restricted Stock.
(c) Restricted Stock Certificates. Exigent shall issue, in the name of each
Grantee to whom Restricted Stock has been granted, stock certificates
representing the total number of shares of Restricted Stock granted to the
Grantee. The Secretary of Exigent shall hold such certificates for the Grantee's
benefit until such time as the restrictions lapse or the Restricted Stock is
forfeited to Exigent.
(d) Rights of Holders of Restricted Stock. Unless the Committee otherwise
provides in an Award Agreement, holders of Restricted Stock shall have the right
to vote such Stock and the right to receive any dividends declared or paid with
respect to such Stock. The Committee may provide that any dividends paid on
Restricted Stock must be reinvested in Stock, which may or may not be subject to
the same vesting conditions and restrictions applicable to such Restricted
Stock. All distributions, if any, received by a Grantee with respect to
Restricted Stock as a result of any stock split, stock dividend, combination of
shares, or other similar transaction shall be subject to the restrictions
applicable to the original Grant.
(e) Termination of Employment. Upon termination of the
employment/directorship of a Grantee with Exigent, other than by reason of death
or Total Disability, any Restricted Stock held by such Grantee that has not
vested, or with respect to which all applicable restrictions and conditions have
not lapsed, shall immediately be deemed forfeited, unless the Committee, in its
discretion, determines otherwise. Upon forfeiture of Restricted Stock, the
Grantee shall have no further rights with respect to such Grant, including but
not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock.
(f) Rights in the Event of Total Disability or Death. The rights of a
Grantee with respect to Restricted Stock in the event such Grantee terminates
employment/ directorship with Exigent by reason of Total Disability or death
shall be determined by the Committee at the time of Grant.
(g) Delivery of Stock and Payment Therefor. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to shares of
Restricted Stock shall lapse, and, upon payment by the Grantee to Exigent, in
cash or by check, of the aggregate par value of the shares of Stock represented
by such Restricted Stock, a stock certificate for such shares shall be
delivered, free of all such restrictions, to the Grantee or the Grantee's
beneficiary or estate, as the case may be.
16. PERFORMANCE AWARDS
(a) Grant. Performance Awards may be granted to any employee or director by
the Committee in its sole discretion. A Performance Award shall consist of a
right that is (i) denominated in cash or Stock, (ii) valued, as determined by
the Committee, in accordance with the achievement of such performance goals
during such performance periods as the Committee shall establish, and (iii)
payable at such time and in such form as the Committee shall determine.
(b) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall (i) determine the performance
goals to be achieved during any performance period, (ii) the length of any
performance period, (iii) the amount of any Performance Award, (iv) the amount
and kind of any payment or transfer to be made pursuant to any Performance
Award, and (v) all other terms and conditions of any Performance Award,
including the consequences of death, disability, termination of employment or
any Termination Transaction.
(c) Payment of Performance Awards. Performance Awards may be paid in a lump
sum or in installments following the close of the performance period or, in
accordance with procedures established by the Committee, on a current or
deferred basis.
17. BREACH OF CONDUCT
In the event of a Breach of Conduct by a Grantee, or a former Grantee at
any time while employed by a Participating Company or within two years of
termination of employment with any Participating Company, the Committee may, in
its sole discretion, (i) cancel any award, whether vested or not, in whole or in
part, as of the date specified by the Committee, which shall thereafter be
communicated in writing to such Grantee or former Grantee, and/or (ii) upon
written notice to such Grantee or former Grantee, demand that any or all stock
certificates for Stock or Restricted Stock acquired under this Plan, or any
profit realized in connection with the sale or transfer of such Stock or
Restricted Stock, or any proceeds received upon the exercise or settlement of a
Stock Appreciation Right or Performance Award, be returned to the Company within
five (5) days of receipt of such notice. If the Grantee or former Grantee shall
have paid any consideration for the acquisition of Common Stock or Restricted
Shares, or the settlement or any Award, the Company shall immediately thereafter
return such consideration to the Grantee or former Grantee, without interest.
The Company shall be entitled to reimbursement of reasonable attorneys fees and
expenses incurred in seeking to enforce its rights under this Section 17.
18. COMPLIANCE WITH SECURITIES LAWS
The delivery of Stock upon the exercise of an option or lapse of a
Restricted Period shall be subject to compliance with (i) applicable federal and
state laws and regulations, (ii) all applicable listing requirements of any
national securities exchange or national market system on which the Stock is
then listed or quoted, and (iii) Company counsel's approval of all other legal
matters in connection with the issuance and delivery of such Stock. If the sale
of Stock has not been registered under the Securities Act of 1933, as amended,
the Company may require, as a condition to exercise of the option or receipt of
Restricted Stock, such representations or agreements as counsel for the Company
may consider appropriate to avoid violation of such Act and may require that the
certificates evidencing such Stock bear an appropriate legend restricting
transfer.
19. MERGERS, ETC.
(a) Effect on Options and Plan. Unless the Board determines otherwise, and
except as otherwise provided herein, all options outstanding under the Plan
shall accelerate and become immediately exercisable for a period of fifteen
days, or such longer or shorter period as the Board may prescribe, (the "notice
period") immediately prior to the scheduled consummation of a Terminating
Transaction, provided, however, that any such acceleration and any exercise of
options during the notice period shall be (i) conditioned upon the consummation
of the Terminating Transaction and (ii) effective only immediately before the
consummation of such Terminating Transaction.
Upon consummation of any such event, the Plan and all outstanding but
unexercised options shall terminate. Notwithstanding the foregoing, to the
extent provision is made in writing in connection with such Terminating
Transaction for the continuation of the Plan and the assumption of options under
the Plan theretofore granted, or for the substitution for such options of new
options covering the stock of a successor company, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kinds of shares or
units and exercise prices, then the Plan and options theretofore granted shall
continue in the manner and under the terms so provided, and the acceleration and
termination provisions set forth in the first two sentences of this Section
19(a) shall be of no effect. The Company shall send written notice of a
Terminating Transaction to all individuals who hold options not later than the
time at which the Company gives notice thereof to its stockholders.
(b) Effect on Restricted Stock. All outstanding shares of Restricted Stock
shall be deemed to have vested, and all restrictions and conditions applicable
to such shares of Restricted Stock shall be deemed to have lapsed immediately
prior to the occurrence of a Terminating Transaction.
20. TAXES
The Company shall make such provisions and take such steps as it deems
necessary or appropriate for the withholding of any federal, state, local and
other tax required by law to be withheld with respect to the grant or exercise
of options, or the vesting of or other lapse of restrictions applicable to
Restricted Stock, or with respect to the disposition of Stock acquired pursuant
to the Plan, including, but without limitation, the deduction of the amount of
any such withholding tax from any compensation or other amounts payable to a
Grantee, or requiring a Grantee (or the optionee's beneficiary or legal
representative), as a condition of a Grant or exercise of an option or receipt
of Restricted Stock, to pay to the appropriate Participating Company any amount
required to be withheld, or to execute such other documents as the Committee
deems necessary or desirable in connection with the satisfaction of any
applicable withholding obligation.
21. EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the making of any Grants shall confer
upon any Grantee any right to continue as an employee or director of, or
consultant or adviser to, any Participating Company or affect in any way the
right of any Participating Company to terminate them at any time. Except as
specifically provided by the Committee in any particular case, the loss of
existing or potential profit in Grants under this Plan shall not constitute an
element of damages in the event of termination of the relationship of a Grantee
even if the termination is in violation of an obligation of the Company to the
Grantee by contract or otherwise.
22. AMENDMENT OR TERMINATION OF PLAN
(a) Neither adoption of the Plan nor the making of any Grants shall affect
the Company's right to make awards to any person that is not subject to the
Plan, to issue to such persons Stock as a bonus or otherwise, or to adopt other
plans or arrangements under which Stock may be issued.
(b) The Committee may at any time discontinue granting awards under the
Plan, (except to Outside Directors as provided in Section 9 hereof). With the
consent of the Grantee, the Committee may at any time cancel an existing Grant
in whole or in part and make any other Grant for such number of shares as the
Committee specifies. The Board may at any time, prospectively or retroactively,
amend the Plan (including the provisions of Section 9 with respect to Grants to
Outside Directors) or any outstanding Grant for the purpose of satisfying the
requirements of I.R.C. Section 422 or of any changes in applicable laws or
regulations or for any other purpose that may at the time be permitted by law,
or may at any time terminate the Plan as to further grants of awards (including
the provisions of Section 9 with respect to Grants to Outside Directors), but no
such amendment or termination shall materially adversely affect the rights of
any Grantee (without the Grantee's consent) under any outstanding Grant.
(c) In the Committee's discretion, the Committee may, with an optionee's
consent, substitute Nonstatutory Options for outstanding Incentive Options, and
any such substitution shall not constitute a new option grant for the purposes
of the Plan, and shall not require a revaluation of the option exercise price
for the substituted option. Any such substitution may be implemented by an
amendment to the applicable option agreement or in such other manner as the
Committee in its discretion may determine.
23. GENERAL PROVISIONS
(a) Titles and Headings. Titles and headings of sections of the Plan are
for convenience of reference only and shall not affect the construction of any
provision of the Plan.
(b) Governing Law. The Plan shall be governed by, interpreted under and
construed and enforced in accordance with the internal laws, and not the laws
pertaining to conflicts or choice of laws, of the State of Delaware, applicable
to agreements made and to be performed wholly within the State of Delaware.
(c) Severability. If any provision of the Plan or any Award Agreement shall
be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
* * *
The Plan was duly adopted by the Board of Directors of the Company as of
December 17, 1998.
--------------------------------------
The Plan was duly approved by the stockholders of the Company on _________
_____________________________________________.
Exhibit B
EXIGENT INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
This Exigent International, Inc. Employee Stock Purchase Plan (the "Plan")
is adopted by Exigent International, Inc. (the "Company") as of the ___ day of
________, 1999.
1. Introduction. The Plan is intended to provide employees of the Company
and Participating Subsidiaries an opportunity to acquire a proprietary interest
in the Company through the purchase of shares of the Common Stock, $.01 par
value ("Common Stock") of the Company with accumulated payroll deductions. It is
the intention of the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Definitions. For purposes of this Plan, the following terms shall have
the meanings set forth below:
"Administrator" means the Chief Executive Officer of the Company, or such
other person(s) to whom the CEO has delegated the responsibility of
administering the Plan.
"Base Pay" means regular straight time earnings, overtime pay, commissions,
and any other incentive pay.
"Beneficiary(ies)" means the person(s) designated by the Participant to the
Administrator to be the beneficiary of the Participant's Stock Purchase Account
in the event the Participant dies with a balance remaining. If a Participant
fails to make any such designation, the Participant's Beneficiary shall be the
Participant's estate.
"Board" means the Board of Directors of the Company.
"Employee" means any person who is customarily employed on a full-time
basis by the Company or a participating subsidiary and is regularly scheduled to
work more than 35 hours per week.
"Enrollment Period" means the one (1) calendar month period preceding an
Offering Period during which Employees may elect to participate in the Plan.
"Offering" means the opportunity to purchase Common Stock with accumulated
payroll deductions during any Offering Period.
"Offering Commencement Date" means January 1, April 1, July 1, and October
1 of each calendar year.
"Offering Period" means each consecutive three (3) month period during
which Employees have the opportunity to purchase Common Stock with accumulated
payroll deductions commencing on the Offering Commencement Date and ending on
the Offering Termination Date.
"Offering Termination Date" means March 31, June 30, September 30, and
December 31 of each calendar year.
"Participant" means an eligible Employee who has an active payroll
deduction authorization form on file with the Administrator.
"Participating Subsidiaries" means a subsidiary of the Company, as defined
in Section 424 of the Code, whose Employees have been designated as being
eligible to participate in the Plan.
"Stock Purchase Account" means the account established on behalf of each
Participant in accordance with Section 7 hereof.
3. Administration. The Plan shall be administered by the Administrator. The
Administrator may establish, subject to the provisions of the Plan, such rules
and regulations as it deems necessary for the proper administration of the Plan,
and make such determinations and take such actions in connection therewith or in
relation to the Plan as it deems necessary or advisable, consistent with the
Plan.
4. Eligibility. Any Employee of the Company shall be eligible to
participate in Offerings under the Plan by electing participation as provided in
Section 6(a).
5. Common Stock Subject to the Plan. The aggregate number of Common Stock
of the Company which may be issued under the Plan shall not exceed 250,000
shares; subject, however, to the adjustment provided in Section 16 hereof in the
event of certain changes in the Company's capital structure. The Common Stock to
be issued and delivered by the Company under the Plan may be either authorized
but unissued shares or treasury shares.
6. Participation in Offering/Payroll Deductions.
(a) An Employee of the Company may elect to participate in any
Offering by completing a payroll deduction authorization form provided by the
Company and filing it with the Administrator during any Enrollment Period. Each
Participant electing to participate in any Offering shall authorize the Company
to withhold an amount up to a maximum of 10% of Base Pay. Payroll deductions
shall commence as of the next following Offering Commencement Date and shall
continue through the Offering Termination Date and successive Offerings unless
and until the Participant files a notice to terminate participation with the
Administrator.
(b) A Participant may discontinue participation in any Offering by
giving written notice of termination to the Administrator at least five days
prior to the Offering Termination Date applicable to such Offering. Such
termination of participation shall be effective as of the date of receipt of
such notice. No further payroll deductions shall be made, and the Participant's
Stock Purchase Account shall be distributed in accordance with Section 11
hereof. The Participant may elect to participate in any succeeding Offering by
filing a new payroll deduction authorization form with the Administrator in
accordance with subparagraph (a) above.
(c) A Participant may alter the amount of payroll deductions as of the
next following Offering Commencement Date by completing a new payroll deduction
authorization form and filing it with the Administrator during the applicable
Enrollment Period. A Participant may not alter the amount of payroll deductions
during any Offering.
7. Participants' Accounts. The Company shall establish an account for each
Participant in the Plan to be known as the Stock Purchase Account. A
Participant's Stock Purchase Account shall be credited with the payroll
deductions elected to be withheld by the Participant, without interest. As of
each Offering Termination Date, the Participant's Stock Purchase Account shall
be debited to reflect the purchase of Common Stock upon the terms and conditions
described herein.
8. Purchase of Common Stock.
(a) Unless a Participant gives written notice to the Company to
terminate participation in the Plan as provided in Section 6(b) hereof at least
five days prior to an Offering Termination Date, the Participant shall be deemed
to have exercised on the Offering Termination Date an option to purchase the
number of full Common Stock which the balance in the Participant's Stock
Purchase Account at that time will purchase at the applicable purchase price as
described in Section 9 hereof. Any excess in the Participant's Stock Purchase
Account at that time will remain in the Participant's Stock Purchase Account and
be available for purchases of Common Stock in future Offerings. Fractional
shares will not be issued under the Plan.
(b) As promptly as practicable after the Offering Termination Date of
each Offering, the Company will cause the Common Stock purchased on behalf of
each Participant to be registered in the name of such Participant, or if the
Participant so directs by written notice to the Administrator prior to the
Offering Termination Date applicable thereto, in the names of the Participant
and one such other person as may be designated by the Participant, as joint
tenants with rights of survivorship or as tenants by the entireties, to the
extent permitted by applicable law. A Participant shall have all of the rights
and privileges of a shareholder with respect to all Common Stock registered in
the Participant's name, subject, however, to the restrictions described in
subparagraph (c) below.
(c) Notwithstanding any provision herein to the contrary and except as
approved by the Administrator, no Participant may sell, assign, transfer, pledge
or otherwise dispose of such Common Stock prior to the expiration of two years
from the Offering Termination Date upon which such Common Stock were purchased.
(d) No certificates for Common Stock shall be delivered to a
Participant until the expiration of the restrictions described in subparagraph
(c) above. Upon written request of the Participant at any time after the
expiration of such restrictions, the Company shall deliver to the Participant
stock certificates representing the Common Stock registered in his or her name.
9. Purchase Price. The purchase price of Common Stock purchased under the
Plan shall be equal to the lesser of (i) 85% of the closing price of the Common
Stock on the Offering Termination Date or the nearest prior business day on
which trading occurred on the Nasdaq SmallCap Market or any other exchange upon
which the Common Stock may be listed, or (ii) 85% of the closing price of the
Common Stock on the Offering Commencement Date or the nearest prior business day
on which trading occurred on the Nasdaq SmallCap Market or any other exchange
upon which the Common Stock may be listed.
10. Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an option to purchase Common
Stock under the Plan:
(a) if, immediately after such purchase, the Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company; or
(b) which permits the Participant's rights to purchase stock under all
employee stock purchase plans of the Company which qualify for treatment under
Section 423 of the Code to exceed $25,000 in fair market value of Common Stock
(determined at the time such option is granted) for each calendar year in which
options to purchase Common Stock are outstanding.
11. Voluntary Withdrawal from Plan. Upon the election by a Participant to
terminate participation in any Offering as provided in Section 6(b) hereof, the
Participant's Stock Purchase Account will be paid to him as soon as
administratively practicable, without interest. A Participant's withdrawal of
his or her Stock Purchase Account during any Offering will not have any effect
upon the Participant's eligibility to participate in any succeeding Offering.
12. Termination of Employment.
(a) Upon termination of the Participant's employment for any reason
other than death, the Participant's participation in the Plan shall immediately
cease, and his Stock Purchase Account shall be returned to him, without
interest, as soon as administratively practicable.
(b) Upon termination of the Participant's employment by reason of
death, the Participant's Beneficiaries shall have the right to elect, by written
notice given to the Administrator prior to the earlier of the Offering
Termination Date or the expiration of a period of sixty (60) days commencing
with the date of the death of the Participant, either:
(i) to withdraw the Participant's Stock Purchase Account, without
interest, or
(ii) to exercise the Participant's option on the Offering
Termination Date next following the date of the Participant's death to purchase
the number of full Common Stock which the balance in the Participant's Stock
Purchase Account at the date of the Participant's death will purchase at the
applicable purchase price, and any excess in such Stock Purchase Account will be
returned to such Beneficiaries without interest.
In the event that no such written notice of election shall be duly received
by the office of the Administrator, the Beneficiary shall automatically be
deemed to have elected, pursuant to subparagraph (b) above, to exercise the
Participant's option to purchase Common Stock.
(c) Upon termination of employment for any reason, including death,
the Company shall deliver to the Participant all certificates for Common Stock
registered in the name of such Participant pursuant to this Plan. Certificates
for Common Stock which were purchased less than two years prior to such
termination of employment shall bear the appropriate legend reflecting that such
Common Stock are subject to the restrictions contained in Section 8(c) hereof.
13. Compliance with Securities Laws. Common Stock issued by the Company
under the Plan shall be granted and issued only in full compliance with all
applicable securities laws, including laws, rules and regulations of the
Securities and Exchange Commission and applicable state Blue Sky Laws. With
respect thereof, the Administrator may impose such conditions on transfer,
restrictions and limitations as it may deem necessary and appropriate to assure
compliance with such applicable securities laws.
14. Transferability. Neither payroll deductions credited to a Participant's
Stock Purchase Account nor any rights with regard to the purchase of Common
Stock under the Plan may be assigned, transferred, pledged, or otherwise
disposed of in any way by the Participant other than by will or the laws of
descent and distribution. Any such attempted assignment, transfer, pledge, or
other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 11 hereof.
15. Use of Funds. All payroll deductions received or held by the Company
under this Plan may be commingled with the general funds of the Company, and the
Company shall not be obligated to segregate such payroll deductions.
16. Readjustment of Stock or Recapitalization.
(a) Upon any recapitalization or readjustment of the Company's capital
stock whereby the character of the present Common Stock shall be changed, the
Board may make such adjustments as it may deem appropriate so that the stock to
be purchased under the Plan shall be the equivalent of the present Common Stock
after such readjustment or recapitalization. In the event of a subdivision or
combination of the Common Stock, the number of shares that may be purchased
under the Plan and the purchase price shall be proportionately adjusted. In the
case of reclassification or other change in the Common Stock, the Board of
Directors shall take such action as it deems appropriate.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations, regardless of whether or not the Company is the surviving
corporation, or upon a sale of substantially all of the property or stock of the
Company to another corporation, unless the Board determines otherwise, the Plan
shall be terminated and Stock Purchase Accounts shall be distributed to
Participants, without interest, as soon as administratively practicable.
17. Amendment and Termination. The Board shall have complete power and
authority to terminate or amend the Plan for any reason, including a change in
control as provided in Section 16(b) hereof; provided, however, that the Board
shall not, without the approval of the stockholders of the Company (i) increase
the maximum number of shares which may be issued under any Offering (except
pursuant to Section 16 hereof); or (ii) amend the requirements as to the class
of employees eligible to purchase stock under the Plan. No termination,
modification, or amendment of the Plan may, without the consent of a
Participant, adversely affect the rights of such Participant with respect to
Common Stock already purchased under the Plan.
18. No Effect on Employment Status. The Plan does not, directly or
indirectly, create any right for the benefit of any Employee to purchase Common
Stock under the Plan, or create in any Employee any right with respect to
continuation of employment by the Company. The Plan shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise modify,
an Employee's employment at any time.
19. Company Responsibility. All expenses of this Plan, including the cost
of maintaining records, shall be borne by the Company. The Company shall have no
responsibility or liability (other than under applicable Securities Acts) for
any act or thing done or left undone with respect to the price, time, quantity,
or other conditions and circumstances of the purchase of Common Stock under the
terms of the Plan, so long as the Company acts in good faith.
20. Tax Withholding. Any purchase of Common Stock hereunder shall provide
as determined by the Administrator for appropriate arrangements for the
satisfaction by the Company and the Participant of all federal, state, local or
other income, excise or employment taxes or tax withholding requirements
applicable to the purchase of Common Stock or the later disposition of the
Common Stock thereby acquired and all such additional taxes or amounts as
determined by the Administrator in its discretion, including, without
limitation, the right of the Company to receive transfers of Common Stock or
other property from the Participant or to deduct or withhold in the form of
Common Stock from any transfer to a Participant, in such amount or amounts
deemed required or appropriate by the Administrator in its sole and absolute
discretion.
21. Implied Consent. Every Participant, by his or her participation in the
Plan, shall be deemed to have consented to be bound, on his own behalf and on
behalf of his heirs, assigns, and legal representatives, by all of the terms and
conditions of this Plan.
22. Effective Date. The Plan shall become effective as of __________, 1999,
subject to approval by the holders of the majority of the Common Stock present
and represented at a special or Annual Meeting of the stockholders held on or
before February 3, 2000. If the Plan is not so approved, the Plan shall not
become effective. The Plan shall terminate on __________, 2009 unless earlier
terminated by the Board as provided in Section 17 hereof.
23. Delaware Law to Govern. This Plan shall be construed and administered
in accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Exigent International, Inc.
Employee Stock Purchase Plan to be executed by its duly authorized officer this
____ day of ________, 1999.
EXIGENT INTERNATIONAL, INC.
By: /s/
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