<PAGE> 1
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 a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
REGISTRY MAGIC INCORPORATED
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
REGISTRY MAGIC INCORPORATED
One South Ocean Boulevard, Suite 206, Boca Raton, Florida 33432
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on January 11, 2000
-----------------------
To the Shareholders
Of Registry Magic Incorporated:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders
(the "Annual Meeting") of Registry Magic Incorporated, a Florida corporation
(the "Company"), will be held at 10:00 a.m., local time, on January 11, 2000, at
the Holiday Inn Highland Beach, 2809 South Ocean Boulevard, Highland Beach,
Florida 33487 for the following purposes:
(1) To elect four members to the Company's Board of Directors to
hold office until the Company's 2000 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To ratify the adoption of the Company's 1999 Stock Option Plan
by the Board of Directors on February 1, 1999 (the "Plan");
(3) To ratify the appointment of BDO Seidman, LLP, independent
certified public accountants, as the Company's auditors; and
(4) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on November 30,
1999 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
BRUCE CARLSMITH
CHIEF EXECUTIVE OFFICER
Boca Raton, Florida
December 8, 1999
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE> 3
2000 ANNUAL MEETING OF SHAREHOLDERS
OF
REGISTRY MAGIC INCORPORATED
----------------------
PROXY STATEMENT
----------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Registry Magic Incorporated, a Florida corporation
(the "Company"), of proxies from the holders of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), for use at the 2000 Annual Meeting
of Shareholders of the Company to be held at 10:00 a.m., local time, on January
11, 2000, at the Holiday Inn Highland Beach, 2809 South Ocean Boulevard,
Highland Beach, Florida 33487, or at any adjournment(s) or postponement(s)
thereof (the "Annual Meeting"), pursuant to the foregoing Notice of Annual
Meeting of Shareholders.
The approximate date that this Proxy Statement and the form of proxy
are first being sent to shareholders is December 10, 1999. Shareholders should
review the information provided herein in conjunction with the Company's 1999
Annual Report on Form 10-KSB, which accompanies this Proxy Statement. The
Company's principal executive offices are located at One South Ocean Boulevard,
Suite 206, Boca Raton, Florida 33432, and its telephone number is
(561) 367-0408.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
<PAGE> 4
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) The election of four members to the Company's Board of
Directors to serve until the Company's 2000 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To ratify the adoption of the Company's 1999 Stock Option Plan
by the Board of Directors on February 1, 1999;
(3) To ratify the appointment of BDO Seidman, LLP, independent
certified public accountants, as the Company's auditors; and
(4) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted for the election of the six nominees for director named below. In
the event a shareholder specifies a different choice by means of the enclosed
proxy, his shares will be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on November 30,
1999 as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 5,355,405 shares of Common Stock issued and outstanding,
all of which are entitled to be voted at the Annual Meeting. Each share of
Common Stock is entitled to one vote on each matter submitted to shareholders
for approval at the Annual Meeting. Shareholders do not have the right to
cumulate their votes for directors.
The attendance, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. Ratification of appointment of the Company's auditors,
approval of the Company's 1999 Stock Option Plan and other matters that may be
submitted to a vote of the shareholders, will require the affirmative vote of
the majority of the shares of the Company's Common Stock at the Annual Meeting
in person or by proxy, unless such matter is one for which a greater vote is
required by law or by the Company's Articles of Incorporation or By-Laws. If
less than a majority of outstanding shares entitled to vote are represented at
the Annual Meeting, a majority of the shares so represented may adjourn the
Annual Meeting to another date, time or place, and notice need not be given of
the new date, time or place if the new date, time or place is announced at the
meeting before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more
inspectors of election for the meeting. Such inspector(s) shall determine the
number of shares of Common Stock represented at the meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 1999, information
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each director and nominee for director, (iii) each Named
Executive Officer (as defined herein), and (iv) all directors and executive
officers as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING
NAME AND ADDRESS OF SHARES OF COMMON STOCK SHARES BENEFI-
BENEFICIAL OWNERS(1)(2) BENEFICIALLY OWNED CIALLY OWNED(1)
- ----------------------- ---------------------- ---------------
<S> <C> <C>
Lawrence Cohen (3)........................ 1,790,000 32.8%
Martin Scott(4)........................... 70,000 1.3%
Cornelia Eldridge(5)...................... 165,000 3.0%
Bruce S. Carlsmith(6)..................... 60,000 1.1%
Renney Senn (7)........................... 25,000 *
Ted Gordon
29 Pearl Street
Noank, CT 06340........................... 320,000 6.0%
All officers and directors
as a group (5 persons)(8)................. 2,110,000 36.9%
</TABLE>
* Less than 1%.
(1) Unless otherwise indicated below, the persons in the table above have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where
applicable. A person is deemed to be the beneficial owner of securities
that can be acquired by such person within 60 days from the date of
this Proxy Statement upon the exercise of options. Each person's
percentage of ownership is determined by assuming that any options held
by such person have been exercised. As of November 30, 1999 there were
5,355,405 shares of Common Stock outstanding.
(2) Unless otherwise indicated below, the address of each person is c/o the
Company at One South Ocean Boulevard, Boca Raton, Suite 206, Florida
33432.
(3) Includes (i) 100,000 shares of Common Stock underlying immediately
exercisable options and (ii) 1,690,000 shares owned by Alliant. Alliant
is wholly owned by East Ocean Limited Partnership, as to which Mr.
Cohen is the general partner and members of Mr. Cohen's family are
limited partners. Mr. Cohen disclaims beneficial ownership with respect
to the limited partnership interests owned by members of his family.
3
<PAGE> 6
(4) Includes 55,000 shares of Common Stock underlying vested options at
exercise prices ranging from $3.00 to $3.75.
(5) Includes 125,000 shares of Common Stock underlying vested options at
exercise prices ranging from $2.00 to $3.75.
(6) Includes 60,000 shares of Common Stock underlying vested options at
exercise prices ranging from $2.00 to $3.75.
(7) Includes 25,000 shares of Common Stock underlying options immediately
vested on October 2, 1999, at an exercise price of $2.00.
(8) See notes 3 - 7 above.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's outstanding Common Stock to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Such persons are required by SEC
regulation to furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners have been
complied with for the period which this proxy relates.
PROPOSAL 1:
ELECTION OF DIRECTORS; NOMINEES
The Company's Articles of Incorporation provide that the number of
directors constituting the Company's Board of Directors shall not be less than
one nor more than ten, as determined in the manner provided by the Company's
Bylaws. The Company's Bylaws provide that the number of directors shall be fixed
from time to time by resolution of the Board of Directors. The Board of
Directors has fixed at six the number of directors that will constitute the
Board for the ensuing year. Each director elected at the Annual Meeting will
serve for a term expiring at the Company's 2000 Annual Meeting of Shareholders
or when his successor has been duly elected and qualified.
The Company has nominated each of Lawrence Cohen, Cornelia Eldridge,
Bruce Carlsmith and Renney Senn to be elected as a director at the Annual
Meeting. The Board of Directors has no reason to believe that any nominee will
refuse or be unable to accept election; however, in the event that one or more
nominees are unable to accept election or if any other unforeseen contingencies
should arise, each proxy that does not direct otherwise will be voted for the
remaining nominees, if any, and for such other persons as may be designated by
the Board of Directors.
The following persons have been nominated by the Board for election to
the Board of Directors:
4
<PAGE> 7
NAME AGE TITLE
---- --- -----
Lawrence Cohen 55 Chairman of the Board
Bruce S. Carlsmith 44 Director and
Chief Executive Officer
Cornelia Eldridge(1)(2) 58 Director
Renney Senn(1)(2) 51 Director
- -----------------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
LAWRENCE COHEN has served as Chairman of the Board since he founded the
Company in October 1995. Mr. Cohen has been engaged in providing financial
consulting and merchant banking services to early-stage companies for more than
the past 25 years. He has served as Chairman of the Board and Chief Executive
Officer of Bristol Retail Solutions, Inc. (Nasdaq:BRTL), a point-of-sale
equipment distributor ("Bristol"), since he co-founded such company in April
1996. He is also the co-founder of Apollo BioPharmaceuticals, Inc., a
privately-held company in Massachusetts engaged in the development of
neuroprotective pharmaceuticals ("Apollo"), and currently Chairman of the Board
of McLaren Automotive Group, Inc., formerly ASHA Corp. (Nasdaq:MCLN), an
automotive design and motorsports group. Between November 1990 and September
1996, Mr. Cohen served as Chairman of the Board of BioTime, Inc. (Nasdaq:BTIM),
a biotechnology firm he founded to develop an artificial blood plasma
substitute. He was a co-founder of Cryomedical Sciences (Nasdaq:CMSI), a low
temperature surgery company, and served as its President from November 1990 to
November 1991.
BRUCE S. CARLSMITH has served as Chief Executive Officer since October
20, 1999 and director of the Company since February 1, 1999. From July 1999
until October 1999, Mr. Carlsmith served as acting Chief Executive Officer. Mr.
Carlsmith is currently President of Sayre Consulting, a telecommunications
consulting firm. From April 1995 until October 1998 he served as an equities
analyst with NationsBanc Montgomery Securities. From April 1993 to April 1995 he
served as Director, Strategy and Planning, with Pacific Telesis Video Services.
Prior to his services with Pacific Telesis Video Services, he was employed by
the Boston Consulting Group.
CORNELIA ELDRIDGE has served as a director of the Company since October
1998. Ms. Eldridge is President of Eldridge Associates, Inc., a
management-consulting firm she founded in 1981. Ms. Eldridge currently serves on
the board of directors of DE Frey, Inc., a financial services firm, and SysComm,
the largest assembler and reseller of IBM mid-range computers.
RENNEY SENN has served as a director of the Company since September
1999. Mr. Senn joined Holocomm Systems, Inc. as its president, CEO and board
chairman in June 1998. Previously, he was the President, CEO and principal
founder of FirstWorld Communications, formerly SpectraNet InternationalFormed in
1993, FirstWorld is a significant competitive local exchange carrier (CLEC) that
has recently acquired eight Internet Service Providers in California, Texas,
Utah, Colorado and Oregon and has a private market value of approximately
$1 billion. In January 1998 Mr. Senn left the company as part of a purchase of
controlling interest in FirstWorld Communications by Enron Corporation of
Houston, Texas and Donald Sturn SpectraNet grew out of another start-up
co-founded by Mr. Senn in 1990 that was a fiber optic cabling company.
5
<PAGE> 8
BOARD COMMITTEES AND RELATED INFORMATION
The Company's officers are elected annually by the Company's Board of
Directors and serve at the discretion of the Company's Board of Directors. The
Company compensates each non-employee director $500 per meeting for attending
meetings of the Board of Directors. In addition, directors will be reimbursed
for expenses incurred in attending such meetings and will be indemnified against
any claims arising out of his or her status as a director of the Company,
including claims arising under federal and state securities laws. In addition,
directors are eligible to receive options under the Company's 1997 and 1999
Stock Option Plan.
During the year ended July 31, 1999, the Company's Board of Directors
held meetings and took action by unanimous written consent a total of 9 times.
The Board of Directors of the Company has established a Compensation
and an Audit Committee. The Compensation Committee, comprised of Cornelia
Eldridge and Renney Senn, administers the Company's stock option plan and makes
recommendations to the full Board of Directors concerning compensation,
including bonuses and incentive arrangements, of the Company's officers and key
employees. The Audit Committee, comprised of Cornelia Eldridge and Renney Senn,
reviews the engagement of the independent accountants and independence of the
accounting firm, as well as the audit and non-audit fees of the independent
accountants and the adequacy of the Company's internal accounting controls. The
Compensation and Audit Committees are comprised of a majority of the independent
directors.
SUMMARY COMPENSATION TABLE
The following table sets forth the aggregate compensation paid to
Lawrence Cohen, Walt Nawrocki and Neal Bernstein (the "Named Executive Officer")
by the Company. No other executive officer of the Company was paid a total
annual salary and bonus for the fiscal year ended July 31, 1999 which was
$100,000 or more.
<TABLE>
<CAPTION>
Securities Other
Name and Principal Fiscal Underlying Annual
Position Year Salary Bonus Options Compensation
- --------------------------- ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
Lawrence Cohen, 1999 $115,500 -0- -0- -0-
Chairman 1998 $115,500 -0- -0- -0-
1997 $ 67,375 -0- 100,000 -0-
Bruce Carlsmith, 1999 $ 12,788 -0- 35,000 -0-
President & CEO
Walt Nawrocki, 1999 $176,458 -0- -0- -0-
Former President & CEO 1998 $175,000 -0- -0- -0-
1997 $175,000 -0- 200,000 -0-
Neal Bernstein, 1999 $114,584 -0- -0- -0-
Former Vice-President 1998 $125,000 -0- -0- -0-
1997 $ 62,500 -0- 50,000 -0-
</TABLE>
6
<PAGE> 9
EMPLOYMENT AGREEMENTS
Effective December 21, 1997, the Company entered into a three-year
employment agreement with Lawrence Cohen providing for base annual salary of
$115,500. The employee may receive annual bonuses at the discretion of the
Company, with bonuses to be determined by the Compensation and Audit Committee.
No formula or criteria have been specifically determined. The agreements provide
for severance equal to one year's salary in the event of (i) non-renewal of the
agreement upon expiration other than for cause or (ii) a change of control of
the Company as a result of which the employee is not retained by new management
on a comparable basis. In addition, the agreements contain confidentiality
provisions and 12-month post termination non-competition restriction which may
be imposed by the Company provided the employee receives a lump sum payment
equal to one year's salary within 30 days of termination of employment. Under
Florida law, a court of competent jurisdiction may determine not to enforce such
non-competition restrictions or partially enforce or modify such provisions.
Effective October 20, 1999, the Company entered into a one year employment
agreement, automatically renewing for one additional year with its President and
CEO, Bruce Carlsmith, providing for a base salary of $175,000. The employee may
receive annual bonuses at the discretion of the Company, with bonuses to be
determined by the Compensation Committee. No formula or criteria have been
specifically determined. The agreements provide for severance equal to one
year's salary in the event of (i) non-renewal of the agreement upon expiration
other than for cause or (ii) a change of control of the Company as a result of
which the employee is not retained by new management on a comparable basis. In
addition, the agreements contain confidentiality provisions and a 12-month post
termination non-competition restriction that may be imposed by the Company
provided that the employee receives a lump sum payment equal to one year's
salary within 30 days of termination of employment.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No stock options were granted to the Named Executive Officers during
the year ended July 31, 1999.
AGGREGATED FISCAL YEAR END OPTION VALUE TABLE
The following table sets forth-certain information concerning
unexercised stock options held by the Named Executive Officers as of July 31,
1999. No stock options were exercised by the Named Executive Officers during the
period ended July 31, 1999. No stock appreciation rights were granted or are
outstanding.
<TABLE>
<CAPTION>
Number of Unexercised Options Value of Unexercised in the Money
Held at July 31, 1999 Options at July 31, 1999 (1)
---------------------------------------- ---------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Bruce Carlsmith 35,000 - - -
Lawrence Cohen 100,000 - - -
Walt Nawrocki (2) 200,000 - - -
Neil Bernstein (2) 50,000 - - -
</TABLE>
(1) Dollar values are calculated based on the difference between the option
exercise price and $3.00, the closing price of the Company's Common
Stock on July 30, 1999, as reported by NASDAQ.
(2) Mr. Nawrocki's and Mr. Bernstein's stock options have been canceled as
of October 28, 1999 pursuant to settlement agreements between the
Company and each of Mr. Nawrocki and Mr. Bernstein.
7
<PAGE> 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996 and 1997, Lawrence Cohen contributed $25,959 and $3,500,
respectively, to the capital of the Company. At that time he also advanced the
Company $50,000 which bore interest at the rate of 6.5% per annum. In October
and November 1996, Donna Cohen, Mr. Cohen's wife, advanced the Company a total
of $50,000, which was repaid in December 1996 together with interest at the rate
of 7% per annum.
All transactions between the Company and its officers, shareholders and
each of their affiliated companies have been made on terms no less favorable to
the Company than those available from unaffiliated parties. In the future, the
Company intends to handle transactions of a similar nature on terms no less
favorable to the Company than those available from unaffiliated parties. In
addition, any forgiveness of loans must be approved by a majority of the
Company's independent directors who do not have an interest in the transaction
and who have access, at the Company's expense, to the Company's counsel or
independent counsel.
PROPOSAL 2:
PROPOSAL RELATING TO THE 1999 STOCK OPTION PLAN
On February 1, 1999, the Board of Directors adopted, subject to
approval by the stockholders, a stock option plan called the "1999 Stock Option
Plan." The following summary describes features of the Plan. This summary is
qualified in its entirety by reference to the specific provisions of the Plan,
the full text of which is set forth as Appendix A.
The Board of Directors have determined that the Plan will work to
increase the employees', consultants, and non-employee directors' proprietary
interest in the Company and to align more closely their interests with the
interests of the Company's stockholders. The Plan will also maintain the
Company's ability to attract and retain the services of experienced and highly
qualified employees and non-employee directors. The Board of Directors believes
that the Plan is in the Company's best interests and therefore recommends
adoption of the Plan on essentially the terms and conditions as are set forth
below.
Under the Plan, the Company has reserved an aggregate of 500,000 shares
of Common Stock for issuance pursuant to options granted under the Plan ("Plan
Options"). The Board of Directors or the Compensation Committee of the Board of
Directors (the "Committee") of the Company administers the Plan including,
without limitation, the selection of the persons who will be granted Plan
Options under the Plan, the type of Plan Options to be granted, the number of
shares subject to each Plan Option and the Plan Option price.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended, or options that do not qualify ("Non-Qualified
Options"). Any Incentive Option granted under the Plan must provide for an
exercise price of not less that 100% of the fair market value of the underlying
shares on the date of such grant, but the exercise price of any Incentive Option
granted to an eligible employee owning more that 10% of the Company's Common
Stock must be at least 110% of such fair market value as determined on the date
of the grant. The term of each Plan Option and the manner in which it may be
exercised is determined by the Board of the Directors or the Committee, provided
that no Plan Option may be exercisable more than 10 years after the date of its
grant and, in case of an Incentive Option granted to an eligible employee owning
more that 10% of the Company's Common Stock, no more than five years after the
date of the grant.
The exercise price of Non-Qualified Options shall be determined by the
Board of Directors or the Committee but shall in no event be less than 5% of the
fair market value of the underlying shares on the date of grant.
8
<PAGE> 11
Officers, key employees, board members and consultants of the Company
and its subsidiaries are eligible to receive Non-Qualified Options under the
Plan. Only officers and key employees of the Company who are employed by the
Company or by any subsidiary thereof are eligible to receive Incentive Options.
If an optionee's employment is terminated for any reason, other than
his death or disability or termination for cause, the Plan Option granted to him
shall lapse to the extent unexercised on the earlier of the expiration date or
three months following the date of termination. If the optionee dies during the
term of his employment, the Plan Option granted to him shall lapse to the extent
unexercised on the earlier of the expiration date of the Plan Option or the date
one year following the date of the optionee's death. If the optionee is
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Internal Revenue Code of 1986, the Plan Option granted to him lapses to the
extent unexercised on the earlier of the expiration date of the option or one
year following the date of such disability. Plan Options will immediately
terminate if employment is terminated for cause as determined by the Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain federal income tax
consequences of option grants and exercises under the Plan based upon the
federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
The grant of incentive stock options to an employee does not result in
any income tax consequences. The exercise of an incentive stock option does not
result in any income tax consequences to the employee if the incentive stock
option is exercised by the employee during his employment with the Company, or
within a specified period after termination of employment due to death or
retirement for age or disability under then established rules of the Company.
However, the excess of the fair market value of the shares of stock as of the
date of exercise over the option price is a tax preference item for purposes of
determining an employee's alternative minimum tax. An employee who sells shares
acquired pursuant to the exercise of an incentive stock option after the
expiration of (i) two (2) years from the date of grant of the incentive stock
option, and (ii) one (1) year after the transfer of the shares to him (the
"Waiting Period") will generally recognize long term capital gain or loss on the
sale.
An employee who disposes of his incentive stock option shares prior to
the expiration of the Waiting Period (an "Early Disposition") generally will
recognize ordinary income in the year of sale in an amount equal to the excess,
if any, of (a) the lesser of (i) the fair market value of the shares as of the
date of exercise or (ii) the amount realized on the sale, over (b) the option
price. Any additional amount realized on an Early Disposition should be treated
as capital gain to the employee, short or long term, depending on the employee's
holding period for the shares. If the shares are sold for less than the option
price, the employee will not recognize any ordinary income but will recognize a
capital loss, short or long term, depending on the holding period.
The Company will not be entitled to a deduction as a result of the
grant of an incentive stock option, the exercise of an incentive stock option,
or the sale of incentive stock option shares after the Waiting Period. If an
employee disposes of his incentive stock option shares in an Early Disposition,
the Company will be entitled to deduct the amount or ordinary income recognized
by the employee.
The grant of non-qualified stock options under the Plan will not result
in the recognition of any taxable income by the participants. A participant will
recognize ordinary income on the date of exercise of the non-qualified stock
option equal to the difference between (i) the fair market value on that date of
the shares acquired, and (ii)
9
<PAGE> 12
the exercise price. The tax basis of these shares for purpose of a subsequent
sale includes the option price paid and the ordinary income reported on exercise
of the option. The income reportable on exercise of the option by an employee is
subject to federal and state income and employment tax withholding.
Generally, the Company will be entitled to a deduction in the amount
reportable as income by the participant on the exercise of a non-qualified stock
option.
As of November 30, 1999 the Company has granted options to purchase an
aggregate of 363,600 shares under the 1999 Stock Option Plan and exercise prices
ranging from $3.00 to $3.63 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
RATIFICATION OF THE ADOPTION OF THE 1999 STOCK OPTION PLAN.
PROPOSAL 3:
PROPOSAL TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, AS THE
COMPANY'S AUDITORS
The Board of Directors of the Company has selected BDO Seidman, LLP,
independent certified public accountants, as independent auditors for the
Company for the fiscal year ended July 31, 2000 and determined that it would be
desirable to request that the Company stockholders ratify such selections. One
or more representatives of BDO Seidman, LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions from
shareholders.
Although the Board of Directors of the Company is submitting the
appointment of BDO Seidman, LLP for stockholder ratification it reserves the
right to change the selection of BDO Seidman, LLP as auditors, at any time
during the fiscal year, if it deems such change to be in the best interest of
the Company, even after stockholder ratification.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
RATIFICATION OF BDO SEIDMAN, LLP, AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING JULY 31, 2000.
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, business should properly come before the Annual Meeting,
the persons named in the accompanying proxy may vote proxies as in their
discretion they may deem appropriate, unless they are directed by shareholders
otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A shareholder intending to present a proposal to be included in the
Company's proxy statement for the Company's 2000 Annual Meeting of Shareholders
must deliver a proposal in writing to the Company's executive offices no later
than August 12, 2000.
10
<PAGE> 13
In addition, the proxy solicited by the Board of Directors for the 2000
Annual Meeting of Shareholders will confer discretionary authority to vote on
any shareholder proposal presented at that meeting, unless the Company is
provided with notice of such proposal no later than October 27, 2000.
By Order of the Board of Directors
BRUCE CARLSMITH
CHIEF EXECUTIVE OFFICER
BOCA RATON, FLORIDA
DECEMBER 8, 1999
<PAGE> 14
APPENDIX A
REGISTRY MAGIC INCORPORATED
1999 STOCK OPTION PLAN
1. GRANT OF OPTIONS; GENERALLY. In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the
REGISTRY MAGIC INCORPORATED 1999 STOCK OPTION PLAN (the "Plan"), the Board of
Directors (the "Board") or, the Compensation Committee (the "Stock Option
Committee") of Registry Magic Incorporated (the "Corporation") is hereby
authorized to issue from time to time on the Corporation's behalf to any one or
more Eligible Persons, as hereinafter defined, options to acquire shares of the
Corporation's $.001 par value common stock (the "Stock").
2. TYPE OF OPTIONS. The Board or the Stock Option Committee is
authorized to issue Incentive Stock Options ("ISOs") which meet the requirements
of Section ss.422 of the Internal Revenue Code of 1986, as amended (the "Code"),
which options are hereinafter referred to collectively as ISOs, or singularly as
an ISO. The Board or the Stock Option Committee is also, in its discretion,
authorized to issue options which are not ISOs, which options are hereinafter
referred to collectively as Non-Statutory Options ("NSOs"), or singularly as an
NSO. The Board or the Stock Option Committee is also authorized to issue "Reload
Options" in accordance with Paragraph 8 herein, which options are hereinafter
referred to collectively as Reload Options, or singularly as a Reload Option.
Except where the context indicates to the contrary, the term "Option" or
"Options" means ISOs, NSOs and Reload Options.
3. AMOUNT OF STOCK. The aggregate number of shares of Stock which may
be purchased pursuant to the exercise of Options shall be 500,000 shares. Of
this amount, the Board or the Stock Option Committee shall have the power and
authority to designate whether any Options so issued shall be ISOs or NSOs,
subject to the restrictions on ISOs contained elsewhere herein. If an Option
ceases to be exercisable, in whole or in part, the shares of Stock underlying
such Option shall continue to be available under this Plan. Further, if shares
of Stock are delivered to the Corporation as payment for shares of Stock
purchased by the exercise of an Option granted under this Plan, such shares of
Stock shall also be available under this Plan. If there is any change in the
number of shares of Stock due to of the declaration of stock dividends,
recapitalization resulting in stock split-ups, or combinations or exchanges of
shares of Stock, or otherwise, the number of shares of Stock available for
purchase upon the exercise of Options, the shares of Stock subject to any Option
and the exercise price of any outstanding Option shall be appropriately adjusted
by the Board or the Stock Option Committee. The Board or the Stock Option
Committee shall give notice of any adjustments to each Eligible Person granted
an Option under this Plan, and such adjustments shall be effective and binding
on all Eligible Persons. If because of one or more recapitalizations,
reorganizations or other corporate events, the holders of outstanding Stock
receive something other than shares of Stock then, upon exercise of an Option,
the Eligible Person will receive what the holder would have owned if the holder
had exercised the Option
<PAGE> 15
immediately before the first such corporate event and not disposed of anything
the holder received as a result of the corporate event.
4. ELIGIBLE PERSONS.
(a) With respect to ISOs, an Eligible Person means any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days.
(b) With respect to NSOs, an Eligible Person means (i) any
individual who has been employed by the Corporation or by any subsidiary of the
Corporation, for a continuous period of at least sixty (60) days, (ii) any
director of the Corporation or any subsidiary of the Corporation or (iii) any
consultant of the Corporation or any subsidiary of the Corporation.
5. GRANT OF OPTIONS. The Board or the Stock Option Committee has the
right to issue the Options established by this Plan to Eligible Persons. The
Board or the Stock Option Committee shall follow the procedures prescribed for
it elsewhere in this Plan. A grant of Options shall be set forth in a writing
("Option Grant") signed on behalf of the Corporation or by a majority of the
members of the Stock Option Committee. The Option Grant shall identify whether
the Option being granted is an ISO or an NSO and shall set forth the terms which
govern the Option. The terms shall be determined by the Board or the Stock
Option Committee, and may include, among other terms, the number of shares of
Stock that may be acquired pursuant to the exercise of the Options, when the
Options may be exercised, the period for which the Option is granted and
including the expiration date, the effect on the Options if the Eligible Person
terminates employment and whether the Eligible Person may deliver shares of
Stock to pay for the shares of Stock to be purchased by the exercise of the
Option. However, no term shall be set forth in the Option Grant which is
inconsistent with any of the terms of this Plan. The terms of an Option granted
to an Eligible Person may differ from the terms of an Option granted to another
Eligible Person, and may differ from the terms of an earlier Option granted to
the same Eligible Person.
6. OPTION PRICE. The option price per share shall be determined by the
Board or the Stock Option Committee at the time any Option is granted, and shall
be not less than (i) in the case of an ISO, the fair market value, (ii) in the
case of an ISO granted to a ten percent or greater shareholder, 110 percent
(110%) of the fair market value, or (iii) in the case of an NSO, not less than
55% of the fair market value (but in no event less than the par value) of one
share of Stock on the date the Option is granted, as determined by the Board or
the Stock Option Committee. Fair market value as used herein shall be:
(a) If shares of Stock shall be traded on an exchange or
over-the-counter market, the mean between the high and low sales prices of Stock
on such exchange or over-the-counter market on which such shares shall be traded
on that date, or if such exchange or
2
<PAGE> 16
over-the-counter market is closed or if no shares shall have traded on such
date, on the last preceding date on which such shares shall have traded.
(b) If shares of Stock shall not be traded on an exchange or
over-the-counter market, the value as determined by a recognized appraiser as
selected by the Board or the Stock Option Committee.
7. PURCHASE OF SHARES. An Option shall be exercised by the tender to
the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise. The purchase price
of the Stock shall be in United States dollars, payable in cash, check,
Promissory Note secured by the Shares issued through exercise of the related
Options, or in property or Corporation stock, if so permitted by the Board or
the Stock Option Committee in accordance with the discretion granted in
Paragraph 5 hereof, having a value equal to such purchase price. The Corporation
shall not be required to issue or deliver any certificates for shares of Stock
purchased upon the exercise of an Option prior to (i) if requested by the
Corporation, the filing with the Corporation by the Eligible Person of a
representation in writing that it is the Eligible Person's then present
intention to acquire the Stock being purchased for investment and not for
resale, and/or (ii) the completion of any registration or other qualification of
such shares under any government regulatory body, which the Corporation shall
determine to be necessary or advisable.
8. GRANT OF RELOAD OPTIONS. In granting an Option under this Plan, the
Board or the Stock Option Committee may include a Reload Option provision
therein, subject to the provisions set forth in Paragraphs 20 and 21 herein. A
Reload Option provision provides that if the Eligible Person pays the exercise
price of shares of Stock to be purchased by the exercise of an ISO, NSO or
another Reload Option (the "Original Option") by delivering to the Corporation
shares of Stock already owned by the Eligible Person (the "Tendered Shares"),
the Eligible Person shall receive a Reload Option which shall be a new Option to
purchase shares of Stock equal in number to the tendered shares. The terms of
any Reload Option shall be determined by the Board or the Stock Option Committee
consistent with the provisions of this Plan.
9. STOCK OPTION COMMITTEE. The Stock Option Committee may be appointed
from time to time by the Corporation's Board of Directors. The Board may from
time to time remove members from or add members to the Stock Option Committee.
The Stock Option Committee shall be constituted so as to permit the Plan to
comply in all respects with the provisions set forth in Paragraph 21 herein. The
members of the Stock Option Committee may elect one of its members as its
chairman. The Stock Option Committee shall hold its meetings at such times and
places as its chairman shall determine. A majority of the Stock Option
Committee's members present in person shall constitute a quorum for the
transaction of business. All determinations of the Stock Option Committee will
be made by the majority vote of the members constituting the quorum. The members
may participate in a meeting of the Stock Option Committee by conference
telephone or similar communications equipment by means of which all members
participating in the meeting can hear each other.
3
<PAGE> 17
Participation in a meeting in that manner will constitute presence in person at
the meeting. Any decision or determination reduced to writing and signed by all
members of the Stock Option Committee will be effective as if it had been made
by a majority vote of all members of the Stock Option Committee at a meeting
which is duly called and held.
10. ADMINISTRATION OF PLAN. In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Stock Option Committee is granted the full right and authority to interpret and
construe the provisions of this Plan, promulgate, amend and rescind rules and
procedures relating to the implementation of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan,
consistent, however, with the intent of the Corporation that Options granted or
awarded pursuant to the Plan comply with the provisions of Paragraph 20 and 21
herein. All determinations made by the Board or the Stock Option Committee shall
be final, binding and conclusive on all persons including the Eligible Person,
the Corporation and its shareholders, employees, officers and directors and
consultants. No member of the Board or the Stock Option Committee will be liable
for any act or omission in connection with the administration of this Plan
unless it is attributable to that member's willful misconduct.
11. PROVISIONS APPLICABLE TO ISOS. The following provisions shall apply
to all ISOs granted by the Board or the Stock Option Committee and are
incorporated by reference into any writing granting an ISO:
(a) An ISO may only be granted within ten (10) years from
February 1, 1999, the date that this Plan was originally adopted by the
Corporation's Board of Directors.
(b) An ISO may not be exercised after the expiration of ten
(10) years from the date the ISO is granted.
(c) The option price may not be less than the fair market
value of the Stock at the time the ISO is granted.
(d) An ISO is not transferrable by the Eligible Person to whom
it is granted except by will, or the laws of descent and distribution, and is
exercisable during his or her lifetime only by the Eligible Person.
(e) If the Eligible Person receiving the ISO owns at the time
of the grant stock possessing more than ten (10%) percent of the total combined
voting power of all classes of stock of the employer corporation or of its
parent or subsidiary corporation (as those terms are defined in the Code), then
the option price shall be at least 110% of the
4
<PAGE> 18
fair market value of the Stock, and the ISO shall not be exercisable after the
expiration of five (5) years from the date the ISO is granted.
(f) The aggregate fair market value (determined at the time
the ISO is granted) of the Stock with respect to which the ISO is first
exercisable by the Eligible Person during any calendar year (under this Plan and
any other incentive stock option plan of the Corporation) shall not exceed
$100,000.
(g) Even if the shares of Stock which are issued upon exercise
of an ISO are sold within one year following the exercise of such ISO so that
the sale constitutes a disqualifying disposition for ISO treatment under the
Code, no provision of this Plan shall be construed as prohibiting such a sale.
(h) This Plan was adopted by the Corporation on February 1,
1999, by virtue of its approval by the Corporation's Board of Directors.
Approval by the shareholders of the Corporation is to occur prior to February 1,
2000.
12. DETERMINATION OF FAIR MARKET VALUE. In granting ISOs under this
Plan, the Board or the Stock Option Committee shall make a good faith
determination as to the fair market value of the Stock at the time of granting
the ISO.
13. RESTRICTIONS ON ISSUANCE OF STOCK. The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulations. The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his or her then present intention to acquire the shares of Stock for
investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, "distribution" shall be defined to exclude distribution by will
or under the laws of descent and distribution. Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall take such
steps as it deems necessary to satisfy any withholding tax obligations imposed
upon it by any level of government.
14. EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF EMPLOYMENT.
(a) If an optionee shall die (i) while an employee of the
Corporation or a Subsidiary or (ii) within three months after termination of his
employment with the Corporation or a Subsidiary because of his disability, or
retirement or otherwise, his Options may be exercised, to the extent that the
optionee shall have been entitled to do so on the date of his death or such
termination of employment, by the person or persons to whom the optionee's right
under the Option pass by will or applicable law, or if no such
5
<PAGE> 19
person has such right, by his executors or administrators, at any time, or from
time to time. In the event of termination of employment because of his death
while an employee or because of disability, his Options may be exercised not
later than the expiration date specified in the Option Grant or one year after
the optionee's death, whichever date is earlier, or in the event of termination
of employment because of retirement or otherwise, not later than the expiration
date specified in the Option Grant or one year after the optionee's death,
whichever date is earlier.
(b) If an optionee's employment by the Corporation or a
Subsidiary shall terminate because of his disability and such optionee has not
died within the following three months, he may exercise his Options, to the
extent that he shall have been entitled to do so at the date of the termination
of his employment, at any time, or from time to time, but not later than the
expiration date specified in the Option Grant or one year after termination of
employment, whichever date is earlier.
(c) If an optionee's employment shall terminate by reason of
his retirement in accordance with the terms of the Corporation's tax-qualified
retirement plans if any, or with the consent of the Board or the Stock Option
Committee or involuntarily other than by termination for cause, and such
optionee has not died within the following three months, he may exercise his
Option to the extent he shall have been entitled to do so at the date of the
termination of his employment, at any time and from to time, but not later than
the expiration date specified in the Option Grant or thirty (30) days after
termination of employment, whichever date is earlier. For purposes of this
Paragraph 14, termination for cause shall mean; (i) termination of employment
for cause as defined in the optionee's Employment Agreement or (ii) in the
absence of an Employment Agreement for the optionee, termination of employment
by reason of the optionee's commission of a felony, fraud or willful misconduct
which has resulted, or is likely to result, in substantial and material damage
to the Corporation or a Subsidiary, all as the Board or the Stock Option
Committee in its sole discretion may determine.
(d) If an optionee's employment shall terminate for any reason
other than death, disability, retirement or otherwise, all right to exercise his
Option shall terminate at the date of such termination of employment absent
specific provisions in the optionee's Option Agreement.
15. CORPORATE EVENTS. In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation's shares
of Common Stock the Board of Directors may declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be
6
<PAGE> 20
exercisable. Nothing set forth herein shall extend the term set for purchasing
the shares of Stock set forth in the Option.
16. NO GUARANTEE OF EMPLOYMENT. Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue in
the employ of the Eligible Person's employer, or will interfere with or restrict
in any way the right of the Eligible Person's employer to discharge such
Eligible Person at any time for any reason whatsoever, with or without cause.
17. NON-TRANSFERABILITY. No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution.
During the lifetime of the optionee, an Option shall be exercisable only by him.
18. NO RIGHTS AS SHAREHOLDER. No optionee shall have any rights as a
shareholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.
19. AMENDMENT AND DISCONTINUANCE OF PLAN. The Corporation's Board of
Directors may amend, suspend or discontinue this Plan at any time. However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan. Further, no amendment to this Plan
which has the effect of (a) increasing the aggregate number of shares of Stock
subject to this Plan (except for adjustments pursuant to Paragraph 3 herein), or
(b) changing the definition of Eligible Person under this Plan, may be effective
unless and until approval of the shareholders of the Corporation is obtained in
the same manner as approval of this Plan is required. The Corporation's Board of
Directors is authorized to seek the approval of the Corporation's shareholders
for any other changes it proposes to make to this Plan which require such
approval, however, the Board of Directors may modify the Plan, as necessary, to
effectuate the intent of the Plan as a result of any changes in the tax,
accounting or securities laws treatment of Eligible Persons and the Plan,
subject to the provisions set forth in this Paragraph 19, and Paragraphs 20 and
21.
20. COMPLIANCE WITH RULE 16b-3. This Plan is intended to comply in all
respects with Rule 16b-3 ("Rule 16b-3") promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to participants who are subject to Section 16 of
the Exchange Act, and any provision(s) herein that is/are contrary to Rule 16b-3
shall be deemed null and void to the extent appropriate by either the Stock
Option Committee or the Corporation's Board of Directors.
21. COMPLIANCE WITH CODE. The aspects of this Plan on ISOs is intended
to comply in every respect with Section 422 of the Code and the regulations
promulgated thereunder. In the event any future statute or regulation shall
modify the existing statute, the aspects of this Plan on ISOs shall be deemed to
incorporate by reference such
7
<PAGE> 21
modification. Any stock option agreement relating to any Option granted pursuant
to this Plan outstanding and unexercised at the time any modifying statute or
regulation becomes effective shall also be deemed to incorporate by reference
such modification and no notice of such modification need be given to optionee.
If any provision of the aspects of this Plan on ISOs is
determined to disqualify the shares purchasable pursuant to the Options granted
under this Plan from the special tax treatment provided by Code Section 422,
such provision shall be deemed null and void and to incorporate by reference the
modification required to qualify the shares for said tax treatment.
22. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of Options thereunder, and the obligation of the Corporation to sell
and deliver Stock under such options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Corporation shall not be required
to issue or deliver any certificates for shares of Stock prior to (a) the
listing of such shares on any stock exchange or over-the-counter market on which
the Stock may then be listed and (b) the completion of any registration or
qualification of such shares under any federal or state law, or any ruling or
regulation of any government body which the Corporation shall, in its sole
discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if its exercise or the receipt of Stock pursuant thereto would be
contrary to applicable laws.
23. DISPOSITION OF SHARES. In the event any share of Stock acquired by
an exercise of an Option granted under the Plan shall be transferable other than
by will or by the laws of descent and distribution within two years of the date
such Option was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation or the Stock Option Committee.
24. NAME. The Plan shall be known as the "Registry Magic Incorporated
1999 Stock Option Plan."
25. NOTICES. Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to the
Corporation shall be sent to it at its office, 1 South Ocean Boulevard, Suite
206, Boca Raton, Florida 33432 and when addressed to the Committee shall be sent
to it at 1 South Ocean Boulevard, Suite 206, Boca Raton, Florida 33432, subject
to the right of either party to designate at any time hereafter in writing some
other address, facsimile number or person to whose attention such notice shall
be sent.
26. HEADINGS. The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.
8
<PAGE> 22
27. EFFECTIVE DATE. This Plan, the Registry Magic Incorporated 1999
Stock Option Plan, was adopted by the Board of Directors of the Corporation on
February 1, 1999. The effective date of the Plan shall be the same date.
9
<PAGE> 23
REGISTRY MAGIC INCORPORATED
ONE SOUTH OCEAN BOULEVARD
SUITE 206
BOCA RATON, FL 33432
PROXY
THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS LAWRENCE COHEN AS PROXY, WITH
THE POWER TO APPOINT THEIR SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO REPRESENT
AND TO VOTE AS DESIGNATED BELOW, ALL SHARES OF COMMON STOCK OF THE COMPANY HELD
OF RECORD BY THE UNDERSIGNED ON NOVEMBER 30, 1999, AT THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON JANUARY 11, 2000, OR ANY ADJOURNMENT THEREOF.
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS MARKED TO THE FOR ALL NOMINEES LISTED
CONTRARY) BELOW
[ ] [ ]
LAWRENCE COHEN BRUCE S. CARLSMITH
CORNELIA ELDRIDGE RENNEY SENN
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE PLEASE
DRAW A LINE THROUGH THAT NOMINEE'S NAME)
2. TO RATIFY THE ADOPTION OF THE COMPANY'S 1999 STOCK OPTION PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP, INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS, AS THE COMPANY'S AUDITORS FOR THE FISCAL YEAR
ENDING JULY 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF REGISTRY
MAGIC INCORPORATED. 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 THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS
2 AND 3.
<PAGE> 24
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW. 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 THE CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
------------------------------------
SIGNATURE
------------------------------------
SIGNATURE IF HELD JOINTLY
------------------------------------
(PLEASE PRINT NAME)
------------------------------------
NUMBER OF SHARES SUBJECT TO PROXY
DATED: , 1999
-------------
