SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
INTERNATIONAL DISPENSING CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
2500 Westchester Avenue
Purchase, New York 10577
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 9, 1998
To the Stockholders:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders of
International Dispensing Corporation, a Delaware corporation (the "Company"),
will be held at The Hidden Falls Clubhouse, Hidden Pond Road, Rye Brook, New
York 10573 on July 9, 1998 at 10:00 A.M., New York time, for the following
purposes:
(1) To amend the Certificate of Incorporation of the Company to provide for
a classified Board of Directors commencing with the 1998 Annual Meeting;
(2) To elect five directors to serve for the ensuing year or for the
remainder of their respective terms if Proposal 1 is adopted;
(3) To ratify and approve the Company's 1998 Stock Option Plan;
(4) To ratify and approve the Company's Director Option Plan; and
(5) To consider and transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on May 28, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournments thereof.
A proxy statement and proxy are enclosed.
PLEASE READ THE ENCLOSED PROXY STATEMENT CAREFULLY.
Dated: June 2, 1998 By Order of the Board of Directors,
Jeffrey D. Lewenthal
Secretary
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU
OWN AND WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. THE
BOARD OF DIRECTORS URGES YOU TO DATE, SIGN AND RETURN AS SOON AS
POSSIBLE THE ENCLOSED PROXY CARD IN THE SELF-ADDRESSED ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU
MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE. IF YOU ATTEND
THE ANNUAL MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
2500 Westchester Avenue
Purchase, New York 10577
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JULY 9, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of INTERNATIONAL DISPENSING CORPORATION, a Delaware
corporation (the "Company"), of proxies in the form enclosed for use at the
Annual Meeting of Stockholders of the Company (the "Meeting") to be held on July
9, 1998, and at any adjournments thereof, at the time and place set forth in the
accompanying Notice of Annual Meeting of Stockholders.
The Meeting is being held to consider and vote upon (i) the proposed
amendment to the Company's Certificate of Incorporation to provide for a
classified Board of Directors commencing with the 1998 Annual Meeting, (ii) the
election of five directors to serve for the ensuing year or for the remainder of
their respective terms if Proposal 1 is adopted, (iii) to ratify and approve the
Company's 1998 Stock Option Plan (the "1998 Plan") and (iv) to ratify and
approve the Company's Director Option Plan (the "Director Plan" and together
with the 1998 Plan, the "Plans").
Your proxy, if properly executed, will be voted as you direct and may be
revoked by you by written notice received by the Secretary of the Company at any
time before it is voted. Unless contrary instructions are indicated on the
proxy, it is expected that all shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock") represented by valid proxies received
pursuant to this solicitation (and not revoked before they are voted) will be
voted FOR the amendment to the Company's Certificate of Incorporation to provide
for a classified Board of Directors, FOR the election of the five nominees for
director named herein, FOR ratification and approval of the 1998 Plan and FOR
ratification and approval of the Director Plan, and in the discretion of the
proxies named on the proxy card with respect to any other matters properly
brought before the Meeting and any adjournments thereof. This Proxy Statement
and the accompanying form of proxy are being mailed on or about June 2, 1998 to
all stockholders of record at the close of business on May 28, 1998.
The presence, in person or by proxy, of the holders of record of a majority
of the outstanding shares of Common Stock is necessary to constitute a quorum at
the Meeting.
This Proxy Statement should be read carefully.
2
<PAGE>
VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The Company's Common Stock is the only security of the Company entitled to
be voted at the Meeting. At the close of business on May 28, 1998, there were
9,566,668 shares of Common Stock entitled to be voted at the Meeting. Each
stockholder of record is entitled to one vote for each share held on all matters
to come before the Meeting. There are no cumulative voting rights. Only
stockholders of record at the close of business on May 28, 1998 are entitled to
notice of, and to vote at, the Meeting.
All proposals described in this Proxy Statement which are being submitted
to stockholders for a vote at the Meeting were duly adopted and approved by the
Board of Directors.
The holders of record of a majority of the outstanding shares of Common
Stock must be present in person or by proxy in order to establish a quorum for
conducting business at the Meeting. Under Delaware law, shares as to which a
stockholder abstains or withholds from voting and shares as to which a broker
indicates that it does not have discretionary authority to vote ("broker
non-votes") will be treated as present at the Meeting for the purposes of
determining a quorum. Proxies marked "Withhold Authority" with respect to the
election of one or more directors will not be counted in determining whether a
plurality of the shares of Common Stock voted at the Meeting in the election
have been voted in favor of the nominee for director. Proxies marked "Abstain"
with respect to other matters will have the effect of a vote against the matter
in question. Shares represented by broker non-votes will have the effect of a
vote against approval of the amendment to the Company's Certificate of
Incorporation and will not be counted in determining the number of shares
necessary for ratification of the Plans.
The following table sets forth certain information known to the Company
regarding beneficial ownership of the Common Stock as of May 28, 1998, for (i)
each person or group that is known by the Company to be a beneficial owner of
more than 5% of the outstanding shares of Common Stock, (ii) the Chief Executive
Officer and each director or nominee for director of the Company, and (iii) all
directors and officers of the Company as a group. Except as otherwise indicated,
the Company believes that such beneficial owners, based on information furnished
by such owners, have sole investment and voting power with respect to such
shares, subject to community property laws, where applicable. No directors or
officers own any Class A Warrants (warrants to purchase one share of Common
Stock for $7.00 per share during the four year period which commenced on October
3, 1997) or the Units offered in connection with the Company's Initial Public
Offering consummated on October 23, 1996 (the "IPO") (consisting of two shares
of Common Stock and two Class A Warrants), nor, to the knowledge of the Company,
does any person hold more than 5% of any such Class A Warrant or IPO Unit.
Name and Address Percent of
Of Beneficial Owner(1) Number of Shares Class(2)(3)
Reseal International Corporation 2,225,000 23.3%
c/o The ReSeal Companies
599 Lexington Avenue, 23rd Floor
New York, New York 10022
<PAGE>
Jon Silverman 600,000 6.3%
c/o International Dispensing Corporation
2500 Westchester Avenue
Suite 304
Purchase, New York 10577
Gregory Abbott 1,000,927 10.5%
1200 Kessler Drive
Aspen, CO 81611
David Brenman 253,000(3) 2.6%
George Kriste 280,000 2.9%
Jay M. Rosen 0 *
Claude K. Lee 0 *
All directors and executive officers 2,133,927(3) 22.3%
as a group (5 persons)
- -----------------------------
* Less than 1%
(1) Address provided for beneficial owners of more than 5% of the Common Stock.
(2) For purposes of computing the percentage of outstanding shares of Common
Stock held by each person or group of persons named above, any security
which such person or persons have or have the right to acquire within 60
days is deemed to be outstanding but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
(3) Includes 200,000 shares of Common Stock owned of record by Venture
Financial Limited Partnership, a limited partnership. David Brenman is the
sole shareholder of Venture Financial, Inc., the General Partner of such
limited partnership.
ADDITION OF A NEW ARTICLE TENTH TO THE CERTIFICATE OF
INCORPORATION TO PROVIDE FOR A CLASSIFIED BOARD OF DIRECTORS
The Board of Directors adopted, declared the advisability of, and proposes
and recommends that the stockholders approve, a new Article Tenth to the
Company's Certificate of Incorporation to provide for a classified Board of
Directors commencing with the election of directors at this Annual Meeting. The
proposed amendment is attached hereto as Exhibit A and the following discussion
is qualified in its entirety by reference to such Exhibit.
The number of directors of the Company is currently fixed at five. The
effect of the new Article Tenth to the Certificate of Incorporation would be,
commencing with this 1998 Annual Meeting, to divide the directors into three
classes, consisting of one Class 1 director, two Class 2 directors and two Class
3 directors, with the term of office of the Class 1 director expiring at the
annual meeting of stockholders to be held in 1999, the term of office of the
Class 2 directors
4
<PAGE>
expiring at the annual meeting of stockholders to be held in 2000, and the term
of Class 3 directors expiring at the annual meeting of stockholders to be held
in 2001. Article Tenth would further provide that directors chosen to succeed
those whose terms expire in 1999, 2000 or 2001, shall be elected for a term of
three years. Under the proposed amendment, directors elected by the Board to
fill vacancies, other than by reason of an increase in the size of the Board of
Directors, will serve for the balance of such director's term. However, if the
Board fails to fill any such vacancy, it will be filled at the next annual
meeting of stockholders and the individual so elected shall serve for the
balance of such director's term. Under the proposed amendment, consistent with
the rule that the three classes of directors shall be as nearly equal in number
of directors as possible, the Board of Directors shall be required to allocate
any newly created directorship to Class 1 and then any additional newly created
directorship to the class whose term of office is due to expire at the earliest
date following such allocation.
The purpose of the amendment is to extend the time required to elect a
majority of directors and thus ensure continuity and stability in the management
of the Company. Classification of the Board will also better enable the Board of
Directors to protect the interests of the stockholders in the event that any
party should obtain, through a takeover bid or otherwise, a substantial amount
of Common Stock. The Company's Certificate of Incorporation does not contain any
provisions which may be viewed as having anti-takeover effect. Management has no
knowledge of any pending or threatened takeover bid, tender offer or similar
action, nor has the Company experienced, to date, difficulty in ensuring the
continuity and stability of its management. Conversely, if adopted, the proposed
amendment normally will extend from one to at least two years the time required
for stockholders to remove a majority of the Company's Board of the Directors
even when the only reason for such a change may be the performance of the
Company's directors and make more difficult a merger of the Company or the
assumption of control of the Company by a principal stockholder, thereby
adversely affecting stockholders who may desire to participate in a tender offer
or merger.
Under the General Corporation Law of the State of Delaware (the "GCL"),
amendments to the Certificate of Incorporation require the approval of the
holders of record of a majority of the outstanding stock entitled to vote
thereon and a majority of the outstanding stock of each class entitled to vote
thereon as a class. The GCL permits provisions in the Certificate of
Incorporation which require a greater vote than the vote otherwise required by
law for any corporate action. With respect to such supermajority provisions, the
GCL requires that any amendment or modification thereof, whether direct or
indirect, be approved by an equally large stockholder vote. The proposed
amendments to the Certificate of Incorporation provides that the concurrence of
the holders of at least 80% of the voting power of the Company entitled to vote
for the election of directors shall be necessary for their further amendment or
repeal of Article Tenth. The requirement of an increased stockholder vote is
designed to prevent a stockholder or stockholders with a majority, but less than
80% of the voting power of the Company, from avoiding the requirements of the
proposed amendments by simply amending such provision again.
Article II, Section 1 of the Company's current By-Laws is inconsistent with
the proposed amendment to the Company's Certificate of Incorporation to be
considered at the Meeting. The Board of Directors has approved an amendment to
such section of the By-Laws to make it consistent with the Certificate of
Incorporation, as amended. The amendment will take effect only if the amendment
to the Company's Certificate of Incorporation is approved by the stockholders.
5
<PAGE>
Recommendation and Requisite Vote
The affirmative vote of the holders of record of a majority of the
outstanding shares of Common Stock casting votes at the Meeting, with each share
entitled to one vote, is required for approval of the proposed amendment to the
Certificate of Incorporation. A vote for such proposal will constitute the
specific approval of the amendment outlined above and presented in Exhibit A.
The Board of Directors recommends a vote FOR the proposed amendment to the
Certificate of Incorporation.
ELECTION OF DIRECTORS
If the proposal to amend the Company's Certificate of Incorporation to
provide for a classified Board of Directors is approved, the five persons listed
below will be nominees for election for the terms of office indicated below, to
serve until their respective successors are duly elected and qualified. If the
proposal is not approved, all elected directors will serve until the next annual
meeting of stockholders or until their successors are duly elected and
qualified.
At a meeting held on April 2, 1998, the Board of Directors approved an
increase in the size of the Board of Directors from four to five. Three of the
nominees are currently directors of the Company. Directors shall be elected by
the affirmative vote of a plurality of the votes cast at the Meeting. If the
enclosed proxy is executed properly and returned, it is intended that the
persons named in the proxy will vote the shares represented FOR the election of
the directors nominated unless authority to do so is withheld. Management
believes that all nominees will be available and able to serve as directors. If,
for any reason, which management does not expect, any of these persons shall not
be available or able to serve, the proxies may exercise discretionary authority
to vote for and substitute such nominees as may be designated by the Board of
Directors.
Nominees
The following information is furnished as of May 28, 1998 with respect to
each nominee for director:
Year first
elected or
Current position and office with the appointed as a
Company and principal occupation during director of the
Name and Age the past five years; other directorships Company
- --------------------------------------------------------------------------------
Class 1
Claude K. Lee Chairman of the Board of the Power Group, a ------
(65) privately held company he founded in 1968.
The Power Group is engaged in contract
packaging.
<PAGE>
Class 2(1)
George Kriste Director of the Company since 1995; Chairman 1995
(51) and Chief Executive Officer of New Century
Media, a radio station owner, since
January, 1992.
Jay M. Rosen Independent consultant since January, 1998; -----
(60) Vice President, General Counsel and Secretary
of Celcore, Inc., a privately held
company engaged in telecommunications
from January 1997 to December 1997; Vice
President and Associate General Counsel
of GTE Corporation for more than five
years prior thereto.
Class 3(2)
Jon D. Silverman Chairman, President, Chief Executive Officer 1996
(57) and a Director of the Company since
November 1996; principal of Tilis
Products, a privately owned specialized
international business consulting,
mergers and acquisitions firm in the
food, beverage and consumer products and
services industries, since 1982.
Gregory B. Abbott Director of the Company since 1995; 1995
(48) Private investor and writer for more than five
years.
- -----------------------------
(1) Term will expire at the year 2000 annual meeting of stockholders if the
proposal to amend the Company's Certificate of Incorporation to provide for
a classified Board is approved by stockholders.
(2) Term will expire at the year 2001 annual meeting of stockholders if the
proposal to amend the Company's Certificate of Incorporation to provide for
a classified Board is approved by stockholders.
The only other executive officer of the Company is Jeffrey D. Lewenthal,
age 54, who has served as the Executive Vice President of Business Development
and Chief Financial Officer of the Company since March 1997 and Secretary and
Treasurer of the Company since June 1997. From March 1996 until joining the
Company in March 1997, Mr. Lewenthal acted as Vice President/Regional Director
for Westar Linen Services, Inc., a company providing linen services to the
hospital industry. From 1995 to 1996, he acted as General Manage, Western
Region, for
7
<PAGE>
Brink's Incorporated, a company providing security services to financial
institutions. From 1993 to 1995, he acted as Region Chief Operating Officer for
Loomis Armored, Inc., a security service provider to financial and retail
customers. Prior to that, Mr. Lewenthal held various international senior
executive positions with PepsiCo and the Seven-Up division of Philip Morris.
Meetings of Board of Directors and Committees
The Board of Directors met three times during the fiscal year ended
December 31, 1997 ("Fiscal 1997"). All incumbent directors who were members of
the Board during Fiscal 1997 directors' meetings personally or by conference
telephone. The Company does not have any audit or nominating committee of the
Board of Directors or committee performing similar functions.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission (the
"Commission") initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Reporting persons
are required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, no persons failed to file, on a timely basis,
reports required by Section 16(a) of the Exchange Act for any transactions
occurring during Fiscal 1997.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth for the three fiscal years ended December
31, 1997, information concerning the compensation paid or accrued to the Chief
Executive Officer of the Company. As of December 31, 1997, there were no other
persons serving as executive officers of the Company whose salary and bonus for
the Fiscal 1997 exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Other Annual
Name and Compen- Restricted Securities All Other
Principal Fiscal sation Stock Underlying Compensa-
Position Year Salary($) Bonus($) ($)(1) Awards($) Options(#) tion($)
<S> <C> <C> <C> <C> <C> <C> <C>
Jon Silverman 1997 $187,500 _ _ _ _ $4000(2)
Chairman, CEO 1996 $144,000 _ _ _ _ _
and President 1995 $ 36,000 _ _ _ _ _
<PAGE>
<FN>
(1) The aggregate amount of perquisites and other personal benefits paid to Mr.
Silverman did not exceed the lesser of (i) 10% of such officer's total
annual salary and bonus for any given fiscal year and (ii) $50,000. Thus,
such amounts are not reflected in the table.
(2) Represents the premiums paid on a $1,000,000 term life insurance policy as
to which Mr. Silverman may designate the beneficiary.
</FN>
</TABLE>
Employment and Non-Compete Agreements
The Company has entered into an employment agreement with Jon Silverman,
dated as of January 17, 1997, which expires on December 31, 1999. Pursuant to
such agreement, Mr. Silverman receives a base salary of $180,000. In addition,
if Mr. Silverman is insurable, the Company is obligated to pay the premium on a
$1,000,000 term life insurance policy, to which Mr. Silverman will designate the
beneficiary. Under the agreement, Mr. Silverman also is entitled to customary
benefits and perquisites.
Mr. Silverman's employment agreement may be terminated by the Company
sooner than December 31, 1999 in the case of his "disability" or "for cause" (as
such terms are defined in the agreement). If Mr. Silverman's employment is
terminated for any reason he shall receive his basic salary through the
effective date of termination. If his employment is terminated due to his
disability or without cause by the Company or if Mr. Silverman leaves the employ
of the Company for "good reason" (defined in the agreement to include, among
other things, a change in control of the Company or the removal of Mr. Silverman
from his position as the Chairman of the Board, President and Chief Executive
Officer), then Mr. Silverman shall also be entitled to receive in cash within 10
days after such termination an amount equal to the greater of (i) one year's
basic salary at the highest rate paid to him during the term of his employment
under the agreement or (ii) the basic salary that would have been paid to him
had the term of employment ended on December 31, 1999 calculated at the highest
rate paid to him during the term of his employment under the agreement.
Compensation of Directors
Non-employee directors of the Company are reimbursed for reasonable travel
and lodging expenses incurred in attending meetings of the Board of Directors
and any committees on which they may serve. Directors do not presently receive
any fees for attendance of or participation in meetings of the Board of
Directors or its committees.
PROPOSALS TO APPROVE THE
1998 STOCK OPTION PLAN AND THE DIRECTOR OPTION PLAN
1998 Stock Option Plan
On April 2, 1998, the Board of Directors adopted, subject to stockholder
approval, the 1998 Stock Option Plan (the "1998 Plan"). The 1998 Plan is
designed to provide long-term incentive benefits by the grant of stock options
to key employees and other persons (other than non-employee directors) who
perform services for or on behalf of the Company. An aggregate of 650,000 shares
are reserved for issuance upon exercise of options which may be granted under
the 1998 Plan. Currently there are approximately four persons that are eligible
to receive options
9
<PAGE>
under the 1998 Plan, three of which are Company employees and one of which is a
Company consultant.
The 1998 Plan authorizes the issuance of incentive stock options ("ISOs"),
as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and stock options that do not qualify under that Code section ("NSOs").
The 1998 Plan shall be administered by the Board of Directors or by one or
more committees composed solely of two or more non-employee directors within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Committee"). The Board of Directors or the Committee has authority
to administer and interpret the provisions of the 1998 Plan; to determine when
and to whom options will be granted; whether such options will be ISOs or NSOs,
and to prescribe the terms and conditions of the options (including the number
of shares of Common Stock subject to each option, the exercise price of the
option, the number of installments, if any, in which the option may be exercised
and the duration of the option), subject to the provisions of the 1998 Plan.
Options granted under the 1998 Plan are not transferable other than by will
or the laws of descent and distribution. In the case of an ISO, the exercise
price of each option shall not be less than 100% of the fair market value of the
underlying Common Stock on the date the ISO is granted.
If the holder of an ISO ceases to be employed by the Company for any reason
other than such person's death or permanent disability, the ISO will immediately
become void upon such termination; provided, however, that the option may be
exercised within three months after the date the holder ceases to be employed,
but only to the extent the option was exercisable on the date of such cessation
of employment. Special provisions relating to the termination of the option
apply in the case of death or permanent disability of the holder of an ISO.
Termination of employment with the Company by the holder of an NSO (including as
a result of death or permanent disability) will have the effect specified in the
individual option agreement as determined by the Board of Directors or the
Committee.
The purchase price for options granted under the 1998 Plan must be paid in
full by any one or a combination of the following methods: (i) in cash or by
certified or cashier's check payable to the order of the Company, (ii) by
cancellation of indebtedness, (iii) through the delivery of other shares of
Common Stock having an aggregate fair market value equal to the total exercise
price of the option being exercised, (iv) with the approval of the Board of
Directors or the Committee, by a promissory note made by the optionee in favor
of the Company upon the terms and conditions to be determined by the Board of
Directors or the Committee and secured by the shares issuable upon exercise of
such option, (v) through any combination of the foregoing, or (vi) in such other
manner as the Board of Directors or the Committee may specify in order to
facilitate the exercise of options by the holders thereof.
The Board of Directors is authorized to suspend, terminate or amend the
1998 Plan at any time, provided that, without the consent of the optionee, no
amendment, suspension or termination shall be made that would impair any rights
or obligations of the optionee under any option theretofore granted under the
1998 Plan. If stockholder approval is required pursuant to Rule 16b-
10
<PAGE>
3 or any other rule or regulation under the Exchange Act, no amendment shall be
effective unless approved by the stockholders of the Company if such amendment
shall (i) increase the maximum number of shares which may be acquired pursuant
to options under the 1998 Plan, (ii) change the minimum exercise price of any
option which may be granted, (iii) increase the maximum term of any option which
may be granted or (iv) change the designation of persons eligible to receive
options under the 1998 Plan.
Director Plan
On April 2, 1998, the Board of Directors also adopted, subject to
stockholder approval, the Director Option Plan (the "Director Plan") pursuant to
which 250,000 shares of Common Stock are reserved for issuance upon the exercise
of stock options granted under the Director Plan to directors who are not
employees of the Company ("Non-Employee Directors"). The Director Plan was
proposed by the Board of Directors to attract and retain the best available
personnel for service as outside directors.
If approved by the stockholders, the Director Plan will be effective as of
April 2, 1998. The Director Plan is administered by a committee comprised of the
Chairman of the Board of Directors and/or by such other person or persons
designated by him (the "Director Plan Committee"). All options granted under the
Director Plan are NSOs and may only be granted to Non-Employee Directors.
The Director Plan provides for automatic and non-discretionary grants of
options ("Non-Discretionary Options") as well as discretionary grants of
additional options to Non-Employee Directors on such terms as shall be
determined by the Director Plan Committee, except that the duration of such
options shall not exceed 10 years from the date of grant. Under the Director
Plan, on April 2, 1998 each of Gregory Abbott and George Kriste were granted
options to purchase 40,000 shares of Common Stock.
The Director Plan provides that each Non-Employee Director, other than the
incumbent directors, shall be granted an option to purchase 5,000 shares of
Common Stock on the date such person first becomes a director. After the initial
grant of options to each Non-Employee Director, such person is automatically
granted an option to purchase an additional 5,000 shares of Common Stock on the
date of his reelection as a director if on such date he shall have served as a
director for at least six months.
The terms of each Non-Discretionary Option granted under the Director Plan
shall be 10 years. The exercise price of such Non-Discretionary Option shall be
100% of the fair market value (as defined) of a share of Common Stock on the
date of grant. All Non-Discretionary Options granted under the Plan become
exercisable in three annual installments of one-third of the total number of
shares subject to the option commencing on the first anniversary of the date of
grant.
Options granted under the Director Plan are not transferable other than by
will or the laws of descent and distribution. In the event of the death of an
optionee, the optionee's estate or the person who acquired the right to exercise
the option by bequest or inheritance may exercise the option within 12 months
after the optionee's death, but only to the extent the optionee was entitled
11
<PAGE>
to exercise it on the date of his death. In the event an optionee ceases to be a
director as a result of total and permanent disability, the optionee may
exercise his option for a period of 12 months from the date of his termination
as a director, but only to the extent he was entitled to exercise the option as
of the date of termination. If an optionee ceases to be a director other than by
reason of his death or total and permanent disability, the optionee may exercise
his option for a period of three months after his termination, but only to the
extent he was entitled to exercise the option as of the date of termination.
The Board of Directors may at any time amend, alter, suspend or discontinue
the Director Plan, but without the consent of the optionee, no amendment,
alteration, suspension or discontinuation shall be made which would impair the
rights of an optionee under any grant theretofore made.
Federal Income Tax Consequences
Options granted under the 1998 Plan that qualify as ISOs under Section 422
of the Code will be treated as follows:
No tax consequences will result to the optionee or the Company from the
grant of an ISO to, or the exercise of an ISO by, the optionee. Instead, the
optionee will recognize gain or loss when he sells or disposes of the shares
transferred to him upon exercise of the option. For the purposes of determining
such gain or loss, the optionee's basis in such shares will be his option price.
If the date of sale or disposition of such shares is at least two years after
the date of the grant of the ISO and at least one year after the transfer of the
shares to him upon exercise of the option, the optionee will be entitled to
long-term capital gain treatment upon the sale or disposition.
The Company generally will not be allowed a deduction with respect to an
ISO. However, if an optionee fails to meet the foregoing holding period
requirements, any gain recognized by the optionee upon sale or disposition of
the shares transferred to him upon exercise of an ISO will be treated in the
year of such sale or disposition as ordinary income, rather than capital gain,
to the extent of the excess, if any, of the fair market value of the shares at
the time of exercise (or, if less, in certain cases the amount realized on such
sale or disposition) over their option price, and in that case the Company will
be allowed a corresponding deduction.
The amount, if any, by which the fair market value of the shares
transferred to the optionee upon the exercise of an ISO exceeds the option price
will constitute an "item of tax preference" subject in certain circumstances to
the "alternative minimum tax." Such item of tax preference will increase the
optionee's basis in his stock for purposes of the alternative minimum tax.
Options granted under the 1998 Plan and the Director Plan which are NSOs
will be treated as follows:
There are no federal income tax consequences to an optionee or to the
Company upon the grant of an NSO under either plan. Except as described below,
upon exercise of an NSO, the optionee will be treated as having received
ordinary income in an amount equal to the excess of the fair market value of the
Common Stock over the exercise price.
12
<PAGE>
The ordinary income recognized by an optionee with respect to the exercise
of an option is subject to both wage withholding and employment taxes. The
Company will generally be entitled to a deduction for federal income tax
purposes of an amount equal to the ordinary income taxable to the optionee upon
exercise, provided that applicable income tax withholding requirements are
satisfied.
An optionee's tax basis in the Common Stock received on exercise of such
option is equal to the amount of any cash paid on exercise plus the amount of
ordinary income recognized as a result of the receipt of such shares. The
holding period for such Common Stock generally begins on the date of exercise
or, in the case of an officer, director or beneficial owner of more than 10% of
any class of equity securities of the Company, on the earlier of (i) six months
after acquisition, or (ii) the earliest date on which such person may sell such
shares of Common Stock at a profit without being subject to suit under Section
16(b) of the Exchange Act (unless the optionee elects to be taxed as of the date
of exercise).
If an optionee exercises an option by delivering Common Stock held by the
optionee, the optionee will recognize ordinary income (and the Company will be
entitled to an equivalent tax deduction) to the extent that the value of Common
Stock received exceeds the exercise price under the option; however, based upon
rulings issued by the Internal Revenue Service, in general, no gain or loss
should be recognized upon the transfer of such previously acquired Common Stock
to the Company upon exercise of the option. Provided the optionee receives a
separate identifiable stock certificate therefor, the optionee's tax basis in
that number of shares of Common Stock received on such exercise which is equal
to the number of shares exchanged therefor will be equal to his tax basis in the
shares of Common Stock surrendered. Common Stock received by the optionee in
excess of the number of previously acquired shares of Common Stock surrendered
upon exercise of the option will have a tax basis equal to the amount of
ordinary income recognized in connection with such exercise. The holding period
for such additional shares will commence on the date ordinary income is
recognized.
On the disposition of Common Stock received upon exercise of an option, the
difference between the amount realized and the tax basis of the Common Stock
will be a long-term or short-term capital gain or loss, depending on whether the
optionee held the Common Stock for the requisite holding period.
New Plan Benefits
The following table sets forth the benefits or amounts that have been
received or allocated to each of the following under the 1998 Plan and the
Director Plan. Additional benefits or amounts that may be received by or
allocated to potential participants in the 1998 Plan and the Director Plan are
not determinable.
13
<PAGE>
Shares of
Name and Position Dollar Value Common Stock
Jon D. Silverman $4,000(1) 100,000
Chairman of the Board
and Chief Executive Officer
Executive Group $6,000(1) 150,000
Non-Executive Director Group $4,800(1) 120,000
Non-Executive Officer
Employee Group $ 200(1) 5,000
Claude K. Lee, Nominee for
Election as a Director $ 200(2) 5,000(3)
Jay M. Rosen, Nominee for
Election as a Director $ 200(2) 5,000(3)
Michael Handler4, Other Person
who is to Receive 5% of Options $2,000(1) 50,000
- --------
1 Based on a comparison of the average bid and asked price of the Common
Stock as reported on the National Association of Securities Dealers OTC
Bulletin Board on April 23, 1998 ($1.635) and the exercise price for the
options granted to the person or group. All options were granted under the
1998 Plan and Director Plan at an exercise price of $1.595 per share.
2 Not determinable.
3 Contingent upon the Director Plan being approved and the nominees being
elected at the Meeting.
4 President of Nologies, Inc., a consultant to the Company.
Recommendation and Requisite Vote
The Board of Directors believes that the adoption of the proposed 1998 Plan
and Director Plan will advance the interests of the Company by providing equity
incentive to motivate and retain its key employees and outside directors and
further aligning their interests with those of the Company's stockholders.
Accordingly, the Board of Directors recommends a vote FOR approval of the 1998
Plan and Director Plan. An affirmative vote of the holders of record of a
majority of the outstanding shares of Common Stock present, in person or by
proxy, and entitled to vote at the Meeting, is required to approve the adoption
of the 1998 Plan and Director Plan.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1996, Stratton Oakmont, Inc. ("Stratton Oakmont") acted as the
underwriter of the IPO pursuant to an underwriting agreement with the Company
(the "Underwriting Agreement"). On January 29, 1997, the United States District
Court Judge for the Southern District of New York, entered an order which, inter
alia, appointed Harvey R. Miller, Esq. (the "Trustee") to liquidate the business
of Stratton Oakmont pursuant to the Securities Investor Protection Act of 1970
(the "Liquidation Proceeding"). As part of such Liquidation Proceeding, the
Trustee and the Company entered into a Sale and Assignment Agreement dated as of
November 19, 1997 (the "Sale and Assignment Agreement").
Pursuant to the Sale and Assignment Agreement the Trustee agreed to sell to
the Company or to no more than 10 qualified designees of the Company, (a) on the
closing date an aggregate number of shares of Common Stock of the Company equal
to or greater than 995,705 shares minus (1) 176,778 shares, retained by another
person pursuant to a certain settlement agreement with the Trustee and (2)
200,000 shares and (b) all of the remaining shares of Common Stock held by the
Trustee on or prior to the first business day that is 180 days after the closing
date. The Trustee also agreed to assign to the Company on the closing date all
of Stratton Oakmont's right, title and interest in, to and under the
Underwriting Agreement, including, without limitation, (i) all of its right,
title and interest in, to and under its option to purchase up to an aggregate of
83,333 IPO Units for a purchase price of $.001 per underlying IPO Unit (the
"Underwriter's Purchase Option"), (ii) its rights to enforce an agreement by
certain stockholders not to sell Common Stock for a period of two years after
the effective date of the registration statement relating to the IPO (the
"Effective Date"), and (iii) its rights to enforce the agreement by the Company
not to issue new stock (except in connection with dividends or similar
transactions) for a period of two years after the Effective Date. The
Underwriter's Purchase Option was exercisable for a term of twelve months after
the Effective Date. Pursuant to the Sale and Assignment Agreement, Mr. Jon
Silverman, the Chairman, President and Chief Executive Officer of the Company,
and Messrs. Gregory Abbott and George Kriste, each of whom is a director of the
Company, purchased from the Trustee for $0.60 per share, 100,000, 367,927, and
150,000 shares of Common Stock, respectively. Each of such persons has agreed
not to sell the shares he purchased for a period of two years.
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals to be included in the
proxy statement and form of proxy for consideration at the next Annual Meeting
of Stockholders. In order to be considered, such proposals must be received at
the Company's principal executive offices no later than February 2, 1999 and
should be directed to the Secretary of the Company.
OTHER MATTERS
The Board of Directors does not know of any matters to be brought before
the Meeting. If any other matters not mentioned in this Proxy Statement are
properly brought before the Meeting or any adjournment thereof, the persons
named in the accompanying proxy intend to vote the shares represented by such
proxy in accordance with their best judgment on such matters.
15
<PAGE>
The Company has selected Arthur Andersen LLP to audit the Company's
financial statements for the year ending December 31, 1998. Arthur Andersen LLP
audited the Company's financial statements for Fiscal 1997.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and will have the opportunity to make any desired statement and respond
to appropriate questions.
Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. The proxies are being solicited principally by mail. In
addition, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone, for which they will receive no consideration
other than their regular compensation. The Company will also request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of Common Stock and will reimburse such person for their
expenses so incurred. Shareholder Communications Corporation has been retained
by the Company to assist in the solicitation of proxies, for a fee of $4,000,
plus out-of-pocket expenses, anticipated to be approximately $2,500 in the
aggregate.
The Company will provide to any stockholder of record at the close of
business on May 28, 1998, without charge, upon written request to its Secretary,
Jeffrey D. Lewenthal, a copy of the Company's Annual Report on Form 10-KSB for
Fiscal 1997.
16
<PAGE>
EXHIBIT A
"TENTH A. Commencing with the Annual Meeting of Stockholders held in
July, 1998, the directors of the Corporation are classified with respect to
the time for which they shall severally hold office by dividing them into
three classes, each class to be as nearly equal in number as possible,
which classes shall be designated as Class 1, Class 2 and Class 3. Subject
to the provisions hereof, the number of directors in each class shall from
time to time by designated by the Board of Directors of the Corporation.
The Class 1 directors shall be elected initially for a term of one year;
the Class 2 directors shall be elected initially for a term of two years;
and the Class 3 directors shall be elected initially for a term of three
years. At each annual meeting, the successors to the class of directors
whose terms shall expire that year shall be elected to hold office for a
term of three years so that each term of office of one class of directors
shall expire in each year. Notwithstanding the rule that the three classes
shall be as nearly equal in number of directors as possible, in the event
of any change in the authorized number of directors, each director then
continuing to serve as such shall nevertheless continue as a director of
the class of which he is a member until the expiration of his current term,
or his prior death, resignation or removal. If any newly created
directorship may, consistent with the rule that the three classes shall be
as nearly equal in number of directors as possible, be allocated to one or
two or more classes, the Board shall allocate it to that of the available
classes whose term of office is due to expire at the earliest date
following such allocation.
B. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at
least 80% of the voting power of all of the shares of the Corporation
entitled to vote for the election of directors shall be required to amend
or repeal, or to adopt any provisions inconsistent with this Article
TENTH."
17
<PAGE>
APPENDIX TO PROXY STATEMENT
[Not to be distributed to stockholders]
1998 STOCK OPTION PLAN
OF
INTERNATIONAL DISPENSING CORPORATION
1. Purpose
The purpose of this Stock Option Plan (the "Plan") of International
Dispensing Corporation, a Delaware corporation (the "Company"), is to secure for
the Company and its stockholders the benefits arising from stock ownership by
selected key employees of the Company or its subsidiaries, directors,
consultants or other persons ("Participants") as the Board of Directors of the
Company, or a committee thereof constituted for the purpose, may from time to
time determine. The Plan will provide a means whereby (i) such employees
(including employees who are directors) may purchase shares of the Common Stock
of the Company pursuant to options that will qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) such employees, directors, consultants or other person may
purchase shares of the Common Stock of the Company pursuant to "non-qualified
stock options."
2. Administration
2.1 The Plan shall be administered by the Board of Directors of the Company
(the "Board of Directors") or by one or more committees of the Board of
Directors (the "Committee") each composed solely of two or more "Non-Employee
Directors", as that term is defined in Rule 16b-3(b)(3) of the General Rules and
Regulations under the Securities Exchange Act of 1934 (the "Exchange Act"), of
the Company. Any action of the Board of Directors or the Committee with respect
to administration of the Plan shall be taken by a majority vote or written
consent of its members.
2.2 Subject to the provisions of the Plan, the Board of Directors or the
Committee shall have authority (i) to construe and interpret the Plan, (ii) to
define the terms used therein, (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan, (iv) to determine the individuals to whom and
the time or times at which options shall be granted, whether any options granted
will be incentive stock options or non-qualified stock options, the number of
shares to be subject to each option, the exercise price of an option, the number
of installments, if any, in which each option may be exercised, and the duration
of each option, (v) to approve and determine the duration of leaves of absence
which may be granted to Participants without constituting a termination of their
employment for the purposes of the Plan, and (vi) to make all other
determinations necessary or advisable for the administration of the Plan. All
determinations and interpretations made by the Board of Directors or the
Committee shall be binding and conclusive on all Participants in the Plan and
their legal representatives and beneficiaries.
18
<PAGE>
3. Shares Subject to the Plan
Subject to adjustment as provided in Paragraph 14 hereof, the shares to be
issued under the Plan shall consist of the Company's Common Stock. The aggregate
number of shares of common stock, par value $.001 per share of the Company
("Shares") which may be issued upon exercise of all options under the Plan shall
not exceed 650,000, subject to adjustment as provided in Paragraph 14. If any
option granted under the Plan shall expire or terminate for any reason, without
having been exercised in full, the unpurchased shares subject thereto shall
again be available for options to be granted under the Plan.
4. Eligibility and Participation
4.1 All regular salaried employees of the Company or any subsidiary
corporation (as defined in Section 424(f) of the Code) shall be eligible to
receive incentive stock options and non-qualified stock options. Directors of
the Company or any subsidiary corporation, consultants and other persons who are
not regular salaried employees of the Company or any subsidiary corporation are
not eligible to receive incentive stock options, but are eligible to receive
non-qualified stock options.
4.2 No incentive stock options may be granted to any employee who, at the
time the incentive stock option is granted, owns shares possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company (or of its subsidiary corporations as defined in Section 424(f) of the
Code), unless the exercise price of such incentive stock option is at least one
hundred ten percent of the fair market value of the Common Stock, determined by
fair market value as of the date each respective option is granted in accordance
with Paragraph 7, and such incentive stock option by its terms is not
exercisable after the expiration of five years from the date such incentive
stock option is granted.
4.3 The aggregate fair market value of the Common Stock for which incentive
stock options granted to any one employee under this Plan or any other incentive
stock option plan of the Company which may by their terms first become
exercisable during any calendar year shall not exceed $100,000, determined by
fair market value as of the date each respective option is granted.
4.4 All options granted under the Plan shall be granted within ten years
from April 2, 1998.
5. Duration of Options
Each option and all rights associated therewith shall expire on such date
as the Board of Directors or the Committee may determine, but in no event later
than ten years from the date on which the option is granted, and shall be
subject to earlier termination as provided herein.
6. Price and Exercise of Options
19
<PAGE>
6.1 Subject to Paragraph 4.2, the purchase price of the Common Stock
covered by each option shall be determined by the Board of Directors or the
Committee, but in the case of an incentive stock option shall not be less than
one hundred percent of the fair market value of such Common Stock on the date
the incentive stock option is granted. The purchase price of the Common Stock
upon exercise of an option shall be paid in full at the time of exercise (i) in
cash or by certified or cashier's check payable to the order of the Company,
(ii) by cancellation of indebtedness owed by the Company to the Participant,
(iii) by delivery of shares of Common Stock of the Company already owned by, and
in the possession of the Participant, (iv) if authorized by the Board of
Directors or the Committee or if specified in the option being exercised, by a
promissory note made by the Participant in favor of the Company, subject to
terms and conditions determined by the Board of Directors or the Committee,
secured by the Common Stock, issuable upon exercise, and in compliance with
applicable law (including, without limitation, state, corporate and federal
requirements), (v) by any combination thereof, or (vi) in such other manner as
the Board of Directors or the Committee may specify in order to facilitate the
exercise of options by the holders thereof. Shares of Common Stock used to
satisfy the exercise price of an option shall be valued at their fair market
value determined in accordance with Paragraph 7 hereof.
6.2 No option granted under this Plan shall be exercisable if such exercise
would involve a violation of any applicable law or regulation (including without
limitation, federal and state securities laws and regulations). Each option
shall be exercisable in such installments during the period prior to its
expiration date as the Board of Directors or Committee shall determine;
provided, however, that unless otherwise determined by the Board of Directors or
Committee, if the Participant shall not in any given installment period purchase
all of the shares which the Participant is entitled to purchase in such
installment period, then such Participant's right to purchase any shares not
purchased in such installment period shall continue until the expiration date or
sooner termination of the Participant's option. No option may be exercised for a
fraction of a share and no partial exercise of any option may be for less than
ten shares.
7. Fair Market Value of Common Stock
The "Fair Market Value of a Share of Common Stock" of the Company shall be
defined and determined as follows:
(a) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the National Market of the
National Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq")
System, the Fair Market Value of a Share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such system or exchange (or the exchange with the greatest volume of
trading in Common Stock) on the date of grant, as reported in The Wall Street
Journal or such other source as the Board deems reliable;
(b) If the Common Stock is quoted on Nasdaq (but not on the National Market
thereof) or regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock shall
be the mean between the high bid and low asked prices for the Common Stock on
the last market trading day prior to the day of
20
<PAGE>
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable, or;
(c) In the absence of an established market for the Common Stock, the Fair
Market Value thereof shall be determined in good faith by the Board.
8. Withholding Tax
Upon (i) the disposition of shares of Common Stock acquired pursuant to the
exercise of an incentive stock option granted pursuant to the Plan within two
years of the granting of the incentive stock option or within eighteen months
after exercise of the incentive stock option, or (ii) the exercise of a
non-qualified stock option, the Company shall have the right to require such
employee or other person, and such employee or other person, by accepting the
options granted under the Plan agrees, to pay the Company the amount of any
taxes which the Company may be required to withhold with respect thereto. In the
event of (i) or (ii), then such employee or other person may elect to pay the
amount of any taxes which the Company may be required to withhold by delivering
to the Company shares of the Company's Common Stock having a fair market value
determined in accordance with Paragraph 7 equal to the withholding tax
obligation determined by the Company. Such shares so delivered may be either
shares withheld by the Company upon the exercise of the option or other shares.
Such election shall comply with all applicable laws (including without
limitation, state, corporate and federal requirements).
9. Nontransferability
An option granted under the Plan shall, by its terms, be nontransferable by
the holder either voluntarily or by operation of law, other than by will or the
laws of descent and distribution and shall be exercisable during the holder's
lifetime only by the holder, regardless of any community property interest
therein of the spouse of the holder, or such spouse's successors in interest. If
the spouse of the holder shall have acquired a community property interest in an
option, the holder, or the holder's permitted successors in interest, may
exercise the option on behalf of the spouse of the holder or such spouse's
successors in interest.
10. Holding of Stock After Exercise of Option
Shares shall not be issued pursuant to the exercise of an option unless the
exercise of such option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, state securities laws, and the
requirements of any stock exchange yon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such
21
<PAGE>
Shares, if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
11. Termination of Employment
If a holder of an incentive stock option ceases to be employed by the
Company or one of its subsidiary corporations (as defined in Section 424(f) of
the Code) for any reason other than the holder's death or permanent disability
(within the meaning of Section 22(e)(3) of the Code), the holder's incentive
stock options shall immediately become void and of no further force or effect;
provided, however, that within three months after the date the holder ceases to
be an employee of the Company or such subsidiary such incentive stock option may
be exercised to the extent exercisable on the date of such cessation of
employment. A leave of absence approved in writing by the Board of Directors or
the Committee shall not be deemed a termination of employment for the purposes
of this Paragraph 11, but no incentive stock option may be exercised during any
such leave of absence, except during the first three months thereof. Termination
of employment or other relationship with the Company by the holder of a
non-qualified stock option will have the effect specified in the individual
option agreement or certificate of grant as determined by the Board of Directors
or the Committee.
12. Death or Permanent Disability of Option Holder
If the holder of an incentive stock option dies or becomes permanently
disabled while the option holder is employed by the Company or one of its
subsidiary corporations (as defined in Section 424(f) of the Code), the holder's
option shall expire one year after the date of such death or permanent
disability unless by its terms it expires sooner. During such period after
death, such incentive stock option may, to the extent that it remains
unexercised (but exercisable by the holder according to such option's terms)
upon the date of such death, be exercised by the person or persons to whom the
option holder's right under the incentive stock option shall pass by the option
holder's will or by the laws of descent and distribution. The death or permanent
disability of a holder of a non-qualified stock option will have the effect
specified in the individual option agreement or certificate of grant as
determined by the Board of Directors or the Committee.
13. Privileges of Stock Ownership
No person entitled to exercise any option granted under the Plan shall have
any of the rights or privileges of a stockholder of the Company in respect of
any shares of Common Stock issuable upon exercise of such option until
certificates representing such shares shall have been issued and delivered. No
shares shall be issued and delivered upon exercise of any option unless and
until, in the opinion of counsel for the Company there shall have been full
compliance with
22
<PAGE>
any applicable registration requirements of the Act, any applicable listing
requirements of any national securities exchange on which the Common Stock is
then listed, and any other requirements of law or of any regulatory bodies
having jurisdiction over such issuance and delivery.
23
<PAGE>
14. Adjustments
14.1 If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company through a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of shares as to which options may
be granted under this Plan. A corresponding adjustment changing the number or
kind of shares allocated to unexercised options or portions thereof, which shall
have been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding options shall be made without change to the
aggregate purchase price applicable to the unexercised portion of the option but
with a corresponding adjustment in the purchase price for each share covered by
the option.
14.2 Notwithstanding the foregoing, the Board of Directors or the Committee
may provide in writing in connection with such transaction for any or all of the
foregoing alternatives (separately or in combination): (i) for options therefore
granted to become immediately exercisable; (ii) for the assumption by the
successor corporation of the options theretofore granted or the substitution by
such corporation for such options or new stock options covering the stock of the
successor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; and (iii) for the
continuance of the Plan by such successor corporation in which event the Plan
and the options theretofore granted shall continue in the manner and under the
terms so provided.
14.3 Adjustments under this Paragraph 14 shall be made by the Board of
Directors or Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of stock shall be issued under the Plan on any such
adjustment.
15. Amendment and Termination of Plan
15.1 The Board of Directors or the Committee may at any time suspend or
terminate the Plan. The Board of Directors or the Committee may also at any time
amend or revise the terms of the Plan, provided, however, that if stockholder
approval is required pursuant to Rule 16b-3 or another Rule of the General Rules
and Regulations under the Exchange Act, no such amendment or revision to (i)
increase the maximum number of shares which may be acquired pursuant to options,
granted under the Plan, (ii) change the minimum purchase price set forth in
Paragraph 4.2 and 6, (iii) increase the maximum term of options provided for in
Paragraph 5, or (iv) change the designation of persons eligible to receive
options or as provided in Paragraph 4, shall become effective until such
stockholder approval of such amendment or revision is obtained.
15.2 No amendment, suspension or termination of the Plan shall, without the
consent of the holder, alter or impair any rights or obligations under any
option or theretofore granted under the Plan.
24
<PAGE>
16. Effective Date of Plan
16.1 No option may be granted under the Plan unless and until (i) the
options and underlying shares have been registered under the Act and qualified
with the appropriate state regulatory agencies, or (ii) the Company has been
advised by counsel that such options and underlying shares are exempt from such
registration and/or qualification.
16.2 The Plan shall be effective as of April 2, 1998, the date on which it
was approved by the Board. However, notwithstanding any other provisions
contained herein, the Plan and all stock options granted under the Plan shall be
void if the Plan is not approved at the next Annual Meeting of Stockholders by
the holders of a majority of the outstanding voting stock of the Company (voting
as a single class) present, or represented, and entitled to vote at a meeting of
such stockholders duly held in accordance with the Delaware General Corporation
Law. No stock option issued under the Plan shall become exercisable in whole or
in part until the Plan is so approved by stockholders.
17. Reservation of Shares
The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
25
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this Director Option Plan are to
attract and retain the best available personnel for service as Outside Directors
(as defined herein) of the Company, to provide additional incentive to the
Outside Directors of the Company to serve as Directors, and to encourage their
continued service on the Board.
All options granted hereunder shall be "nonqualified stock options."
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" means the Common Stock of the Company.
(d) "Company" means International Dispensing Corporation, a Delaware
corporation.
(e) "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
(f) "Director" means a member of the Board.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the date of grant, as reported in
The Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is quoted on Nasdaq (but not on
the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to
26
<PAGE>
the day of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(i) "Option" means a stock option granted pursuant to the Plan.
(j) "Optioned Stock" means the Common Stock subject to an Option.
(k) "Optionee" means an Outside Director who receives an Option.
(l) "Outside Director" means a Non-Employee Director, as defined in
Rule 16b-3 of the General Rules and Regulations under the Exchange Act.
(m) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(n) "Plan" means this Director Option Plan.
(i) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(o) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
3. Shares Subject to the Plan. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 250,000 Shares (the "Pool") of Common Stock. The Shares may be
authorized but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administration. The Plan shall be administered by a committee (the
"Committee") comprised of the Chairman of the Board of the Company and/or by
such other person or persons designated by him. Subject to the express
provisions of the Plan, the Committee shall have authority to (i) interpret the
Plan; (ii) prescribe, amend and rescind rules and regulations regulating it;
(iii) except as set forth in Section 4(b), determine the individuals to whom and
the time or times at which Options shall be granted, the number of shares
subject to each of such Options, the duration of such Options and the number of
installments, if any, in which each such Option may be exercised; and (iv) make
all other determinations necessary or advisable for the
27
<PAGE>
administration of the Plan. The Committee's determination on the matters
referred to in this Plan shall be final, conclusive and binding upon all
Optionees. No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to the Plan
or any transaction under the Plan. The Committee may act by the vote of a
majority of its members present at a meeting, provided that at least 50% of such
Committee members are in attendance at such meeting, or by unanimous written
consent. The Committee shall keep a record of its proceedings and acts and shall
keep or caused to be kept such books and records as may be necessary in
connection with the proper administration of the Plan.
(b) Procedure for Grants. The provisions set forth in this Section
4(b) shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder. Except as set forth in Section 4(b)(vi),
all grants of Options to Outside Directors under this Plan shall be automatic
and non-discretionary and shall be made strictly in accordance with the
following provisions:
(i) On the Effective Date (as hereinafter defined) each person
who is an incumbent Outside Director on the Effective Date (each an "Incumbent
Outside Director") shall be granted options to purchase such number of Shares as
shall be specified in a resolution of the Board of Directors of the Company (the
"Incumbent Director Options").
(ii) Each Outside Director other than an Incumbent Outside
Director shall be automatically granted an Option to purchase 5,000 Shares (the
"First Options") on the date such person first becomes a Director, whether
through election by the shareholders of the Company or appointment by the Board
to fill a vacancy.
(iii) After either the Incumbent Director Options or the First
Options have been granted to an Outside Director, such Outside Director shall
thereafter be automatically granted an Option to purchase 5,000 Shares (a
"Subsequent Option") on the date of such Outside Director's reelection as a
Director at an Annual Meeting of Stockholders, if on such date, he shall have
served on the Board for at least six months.
(iv) The terms of a First Option or Incumbent Director Option
granted hereunder shall be as follows:
(A) the term of the First Option or Incumbent Director
Option shall be ten years.
(B) the First Option or Incumbent Director Option shall be
exercisable only while the Outside Director remains a Director of the Company,
except as set forth in Section 8 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option or Incumbent
Director Option.
28
<PAGE>
(D) the First Option or Incumbent Director Option shall
become exercisable in installments cumulatively as to 33 1/3 % of the Shares
subject to the First Option or Incumbent Director Option on each anniversary of
its date of grant.
(v) The terms of a Subsequent Option granted hereunder shall be
as follows:
(A) the term of the Subsequent Option shall be ten years.
(B) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Section 8 hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.
(D) the Subsequent Option shall become exercisable as to 33
1/3 % of the Shares subject to the Subsequent Option on each anniversary of its
date of grant.
(vi) In addition to the Incumbent Director Options, First Options
and Subsequent Options, the Committee may grant to Outside Directors additional
Options ("Discretionary Options"). The Committee shall determine the duration
(not to exceed ten years from the date on which said Option is granted) of such
Discretionary Option, the exercise price of such Discretionary Option, and
number of installments, if any, in which each Discretionary Option may be
exercised.
(vii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action to increase the number of Shares which may be issued under the Plan or
through cancellation or expiration of Options previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. Except as
set forth in Section 4(b)(vi), all Options shall be automatically granted in
accordance with the terms set forth in Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan. The Plan shall be effective as of April 2, 1998 (the
"Effective Date"), the date on which it was approved by the Board. However,
notwithstanding any other provisions contained herein, the Plan and all Options
granted under the Plan shall be void if the
29
<PAGE>
Plan is not approved at the next Annual Meeting of Stockholders by the holders
of a majority of the outstanding voting stock of the Company (voting as a single
class) present, or represented, and entitled to vote at a meeting of such
stockholders duly held in accordance with the Delaware General Corporation Law.
No Option issued under the Plan shall become exercisable in whole or in part
until the Plan is so approved by stockholders.
7. Form of Consideration. The purchase price of the Common Stock upon
exercise of an Option shall be paid in full at the time of exercise (i) in cash
or by certified or cashier's check payable to the order of the Company, (ii) by
cancellation of indebtedness owed by the Company to the Director, (iii) by
delivery of shares of Common Stock already owned by, and in the possession of
the Director, (iv) if authorized by the Board or if specified in the Option
being exercised, by a promissory note made by the Director in favor of the
Company, subject to terms and conditions determined by the Board, secured by the
Common Stock, issuable upon exercise, and in compliance with applicable law
(including, without limitation, state, corporate and federal requirements), (v)
by any combination thereof, or (vi) in such other manner as the Board may
specify in order to facilitate the exercise of Options by the holders thereof.
Shares used to satisfy the exercise price of an Option shall be valued at their
Fair Market Value.
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of the
Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Rule 16b-3. Options granted to Outside Directors must comply with
the applicable provisions of Rule 16b-3 promulgated under the Exchange Act or
any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder
30
<PAGE>
to qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
(c) Termination of Continuous Status as a Director. In the event an
Optionee's Continuous Status as a Director terminates (other than upon the
Optionee's death or total and permanent disability (as defined in Section
22(e)(3) of the Code)), the Optionee may exercise his or her Option, but only
within three months from the date of such termination, and only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of its ten year term). To the extent
that the Optionee was not entitled to exercise an Option at the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
(d) Disability of Optionee. In the event Optionee's Continuous Status
as a Director terminates as a result of total and permanent disability (as
defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her
Option, but only within twelve months from the date of such termination, and
only to the extent that the Optionee was entitled to exercise it at the date of
such termination (but in no event later than the expiration of its ten year
term). To the extent that the Optionee was not entitled to exercise an Option at
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
(e) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve months
following the date of death, and only to the extent that the Optionee was
entitled to exercise it at the date of death (but in no event later than the
expiration of its ten year term). To the extent that the Optionee was not
entitled to exercise an Option at the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. An Option granted under the Plan shall,
by its terms, be nontransferable by the holder either voluntarily or by
operation of law, other than by will or the laws of descent and distribution and
shall be exercisable during the holder's lifetime only by the holder, regardless
of any community property interest therein of the spouse of the holder, or such
spouse's successors in interest. If the spouse of the holder shall have acquired
a community property interest in an Option, the holder, or the holder's
permitted successors in interest, may exercise the Option on behalf of the
spouse of the holder or such spouse's successors in interest.
10. Adjustments.
(a) If the outstanding shares of Common Stock are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock
31
<PAGE>
split or other similar transaction, an appropriate and proportionate adjustment
shall be made in the maximum number and kind of shares as to which Options may
be granted under this Plan. A corresponding adjustment changing the number or
kind of shares allocated to unexercised Options or portions thereof, which shall
have been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding Options shall be made without change to the
aggregate purchase price applicable to the unexercised portion of the Option but
with a corresponding adjustment in the purchase price for each Share covered by
the Option.
(b) Notwithstanding the foregoing, the Board may provide in writing in
connection with such transaction for any or all of the foregoing alternatives
(separately or in combination); (i) for Options therefore granted to become
immediately exercisable; (ii) for the assumption by the successor corporation of
the Options theretofore granted or the substitution by such corporation for such
Options or new stock Options covering the stock of the successor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the number
and kind of shares and prices; and (iii) for the continuance of the Plan by such
successor corporation in which event the Plan and the Options theretofore
granted shall continue in the manner and under the terms so provided.
(c) Adjustments under this Paragraph 10 shall be made by the Board,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final, binding and conclusive. No fractional shares of stock
shall be issued under the Plan on any such adjustment.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. Except as set forth in Section 4, the
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted except if such
amendment is required for compliance with Rule 16b-3 under the Exchange Act or
any provision under the Code, and such Options shall remain in full force and
effect as if this Plan had not been amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4 hereof. Notice of
the determination shall be given to each Outside Director to whom an Option is
so granted within a reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations
32
<PAGE>
promulgated thereunder, state securities laws, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
33
<PAGE>
PROXY
INTERNATIONAL DISPENSING CORPORATION
2500 Westchester Avenue, Suite 304
Purchase, New York 10577
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of International Dispensing
Corporation (the "Company") hereby constitutes and appoints Jon D. Silverman and
Jeffrey D. Lewenthal, and each of them the true and lawful attorneys, agents and
proxies of the undersigned, each with full power of substitution, to vote, at
the meeting, if only one shall be present and acting at the meeting, then that
one, all of the shares of common stock of the Company that the undersigned would
be entitled, if personally present, to vote at the annual meeting of
stockholders of the Company to be held on July 9, 1998 at 10:00 a.m., local
time, at The Hidden Falls Clubhouse, Hidden Pond Road, Rye Brook, New York
10573, or any adjournments thereof.
1. To amend the Certificate of Incorporation of the Company to provide for a
classified Board of Directors commencing with the 1998 Annual Meeting.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
2. Election of one Class 1 Director to serve until the 1999 Annual Meeting of
Stockholders
[ ]FOR the nominee listed below [ ]WITHHOLD AUTHORITY to vote for
the nominee listed below
Claude K. Lee
3. Election of 2 Class 2 Directors to serve until the 2000 Annual Meeting of
Stockholders (or 1999 Annual Meeting of Stockholders if Proposal 1 is not
adopted)
[ ]FOR all the nominees listed below [ ]WITHHOLD AUTHORITY to vote for
(except as marked to the contrary the nominee listed below
below)
George V. Kriste
Jay M. Rosen
4. Election of 2 Class 3 Directors to serve until the 2001 Annual Meeting of
Stockholders (or 1999 Annual Meeting of Stockholders if Proposal 1 is not
adopted)
[ ]FOR all the nominees listed below [ ]WITHHOLD AUTHORITY to vote for
(except as marked to the contrary the nominee listed below
below)
Jon D. Silverman
Gregory B. Abbott
(Instruction: To withhold authority to vote for any individual nominee, strike
the nominee's name in the list below.)
Claude K. Lee
George V. Kriste
Jay M. Rosen
Jon D. Silverman
Gregory B. Abbott
(over)
<PAGE>
5. To ratify and approve the Company's 1998 Stock Option Plan.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
6. To ratify and approve the Company's Director Option Plan.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
stockholder.
If no direction is made, this proxy will be voted for Proposals 1, 5 and 6,
FOR the election of Claude K. Lee as the Class 1 Director, FOR the election of
each of George V. Kriste and Jay M. Rosen as the Class 2 Directors, and FOR the
election of Jon D. Silverman and Gregory B. Abbott as the Class 3 Directors.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign name by authorized person.
DATED:
-----------------------------------
Signature
-----------------------------------
Signature if held jointly
Please mark, sign, date and return this
Proxy card promptly using the enclosed envelope.
