<PAGE>
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 Registrant [x]
Filed by party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
INTERNATIONAL SPORTS WAGERING, INC.
-----------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 is determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
- --------------------------------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3. Filing Party:
- --------------------------------------------------------------------------------
4. Date Filed:
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<PAGE>
INTERNATIONAL SPORTS WAGERING INC.
201 Lower Notch Road, Suite 2B,
Little Falls, New Jersey 07424
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on March 22, 2000
--------------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN to the stockholders of INTERNATIONAL SPORTS
WAGERING INC., a Delaware corporation (the "Company"), that the Annual Meeting
of Stockholders (the "Meeting") will be held at the Radisson Hotel & Suites
Fairfield, 690 Route 46 East, Fairfield, NJ 07004, at 10:00 a.m., local time, on
March 22, 2000 for the following purposes:
1. To elect a board of five (5) directors to serve until the next
Annual Meeting of Stockholders and until their respective successors are elected
and qualified;
2. To approve an amendment to the Company's 1996 Stock Option Plan, to
increase by 350,000 the total number of shares of Common Stock authorized for
issuance under such Plan from 825,000 shares to 1,175,000 shares;
3. To ratify the selection of KPMG LLP as the Company's independent
public accountants for the fiscal year ending September 30, 2000; and
4. To transact such other and further business as may properly come
before the Meeting or any adjournments thereof.
Only stockholders of record of the Company at the close of business on
February 25, 2000 are entitled to notice of and to vote at the Meeting or any
adjournments thereof. The stock transfer books will not be closed.
A copy of the Company's Annual Report on Form 10-KSB/A for the fiscal
year ended September 30, 1999 accompanies this notice.
By Order of the Board of Directors,
Barry Mindes
Chairman of the Board of Directors
Little Falls, New Jersey
March 1, 2000
RETURN OF PROXIES
WE HOPE YOU PLAN TO ATTEND THE MEETING IN PERSON, BUT IN ANY EVENT YOU
ARE URGED TO MARK, DATE, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE AS SOON AS POSSIBLE SO THAT YOUR SHARES MAY BE VOTED IN
ACCORDANCE WITH YOUR WISHES. ANY PROXY GIVEN BY A STOCKHOLDER MAY BE REVOKED BY
THE STOCKHOLDER AT ANY TIME PRIOR TO THE VOTING OF THE PROXY.
<PAGE>
INTERNATIONAL SPORTS WAGERING INC.
PROXY STATEMENT
GENERAL
The enclosed proxy ("Proxy") is solicited by the Board of Directors
(the "Board") of INTERNATIONAL SPORTS WAGERING INC., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held at the
Radisson Hotel & Suites Fairfield, 690 Route 46 East, Fairfield, New Jersey
07004, on March 22, 2000 at 10:00 a.m., local time, or at any adjournments
thereof (the "Meeting"). The matters to be considered and acted upon at the
Meeting are described in the foregoing Notice of Annual Meeting of Stockholders
and this Proxy Statement. This Proxy Statement and the related form of Proxy are
being mailed on or about March 1, 2000, to all stockholders of record of the
Company on February 25, 2000. Any Proxy given by a stockholder may be revoked by
the stockholder at any time prior to the voting of the Proxy by delivering a
written notice to the Secretary of the Company, by executing and delivering a
later dated Proxy or by attending the Meeting and voting in person.
The management of the Company knows of no business other than that
specified in Items 1, 2 and 3 of the Notice of Annual Meeting of Stockholders
which will be presented for consideration at the Meeting. If any other matter is
properly presented, it is the intention of the persons named in the enclosed
Proxy to vote in accordance with their best judgment.
SOLICITATION OF PROXIES
The persons named as proxies are Barry Mindes, Chairman of the Board of
the Company, and Bernard Albanese, Director, President and Treasurer of the
Company. Shares of the Company's common stock, par value $.001 per share
("Common Stock"), represented at the Meeting by the enclosed Proxy will be voted
in the manner specified by the stockholder. In the absence of specification, the
stock will be voted (i) FOR the election of each of the five persons nominated
by the Board to serve as directors, (ii) FOR amendment of the 1996 Stock Option
Plan, (iii) FOR the ratification of the selection of KPMG LLP as the Company's
independent public accountants for the fiscal year ending September 30, 2000 and
(iv) in the discretion of the proxies, on any other business which may properly
come before the Meeting.
The cost of preparing, assembling and mailing the Notice of Annual
Meeting, the Proxy, this Proxy Statement and the other material enclosed will be
borne by the Company. In addition to solicitation of proxies by use of the
mails, officers and employees of the Company, without extra remuneration, may
solicit proxies personally, by telephone or other means of communication. The
Company may also request brokerage houses, banking institutions and other
custodians, nominees and fiduciaries, with respect to Common Stock held of
record in their names or in the names of their nominees, to forward the proxy
material to the beneficial owners of such shares and may reimburse them for
their reasonable expenses in forwarding the proxy material.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on February 25,
2000 (the "Record Date") will be entitled to notice of and to vote at the
Meeting or any adjournments thereof. On the Record Date, the issued and
outstanding securities of the Company entitled to vote at the Meeting consisted
of 8,676,326 shares of Common Stock. There was no other class of voting
securities outstanding on the Record Date. Each outstanding share of Common
Stock is entitled to one vote which may be cast in person or by proxy duly
authorized in writing. No shares have cumulative voting rights.
The presence in person or by properly executed proxy of the holders of
a majority of the outstanding shares of Common Stock entitled to vote at the
Meeting shall constitute a quorum for the transaction of business. Directors are
elected by a plurality of the voting power of the issued and outstanding Common
Stock of the Company present in person or represented by duly executed proxy at
the Meeting and entitled to vote on the election of directors. To act on all
other matters before or to come before the Meeting, the affirmative vote of the
majority of the voting power of the issued and outstanding Common Stock of the
Company present in person or represented by duly executed proxy at the Meeting
and entitled to vote on such subject matter will be required.
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of February 25, 2000, certain
information regarding the beneficial ownership of the Company's outstanding
Common Stock by (i) each person known by the Company to beneficially own more
than five percent of the outstanding Common Stock, (ii) each current director
and executive officer of the Company, (iii) each nominee for election as
director and (iv) all directors and executive officers as a group. As of
February 25, 2000, there were outstanding 8,676,326 shares of the Company's
Common Stock. No shares of the Company's Preferred Stock, par value $.001 per
share, were outstanding.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner (1) Amount and Nature of
Beneficial Ownership (2) Percent of Class (3)
<S> <C> <C>
Barry Mindes (4) 3,023,952 34.9
Mindes Family Limited Partnership 1,511,523 17.4
Bernard Albanese (5) 366,858 4.1
The Marie Albanese Trust, Marie Albanese 302,304 3.5
and Christine Albanese, trustees (6)
Fredric Kupersmith (7) 62,696 *
Janet Mandelker (8) 58,661 *
Harold Rapaport (9) 81,322 *
Barry Rubenstein (10) 593,000 6.8
Andrew Harbison (11) 159,990 1.8
All directors and executive officers as a group 3,753,479 41.0
(6 persons) (12)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) The address of each beneficial owner identified is c/o International Sports
Wagering Inc., 201 Lower Notch Road, Suite 2B, Little Falls, NJ 07424,
except as indicated in Note 10.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them (see Note 10). A person is deemed
to be the beneficial owner of Common Stock that can be acquired by such
person within 60 days of the date hereof upon the exercise of options,
warrants or convertible securities.
(3) Each beneficial owner's percentage ownership is determined by assuming that
(i) options, warrants or convertible securities that are held by such person
(but not those held by any other person) and which are exercisable within 60
days of the date hereof have been exercised or converted and are outstanding
and (ii) 8,676,326 shares of Common Stock are outstanding, before any
consideration is given to options, warrants or convertible securities.
(4) Includes 1,511,523 shares held by Mindes Family Limited Partnership, the
general partner of which is an entity wholly-owned by Mr. Mindes. Mr. Mindes
disclaims beneficial ownership of the shares owned by Mindes Family Limited
Partnership to the extent such shares exceed his proportionate interest
therein. Does not include shares beneficially owned by Mr. Mindes' daughter,
Janet Mandelker, as to which Mr. Mindes disclaims beneficial ownership.
(5) Includes 215,706 shares underlying options held by Mr. Albanese which are
exercisable within 60 days of the date hereof.
2
<PAGE>
(6) Marie Albanese and Christine Albanese are the wife and daughter,
respectively, of Mr. Albanese. Mr. Albanese disclaims beneficial ownership
of the shares of Common Stock held in such Trust.
(7) Includes 43,500 shares underlying options held by Mr. Kupersmith which are
exercisable within 60 days of the date hereof.
(8) Represents 58,661 shares underlying options held by Ms. Mandelker which are
exercisable within 60 days of the date hereof. Does not include any shares
held by Mindes Family Limited Partnership, in which Ms. Mandelker has a
beneficial interest. Ms. Mandelker disclaims beneficial interest in shares
held by Mindes Family Limited Partnership to the extent such shares exceed
her proportionate interest therein.
(9) Includes (i) 52,604 shares underlying options held by Mr. Rapaport which
are exercisable within 60 days of the date hereof and (ii) 21,161 shares
owned by Rapaport Family Limited Partnership, of which Mr. Rapaport is the
General Partner. Mr. Rapaport disclaims beneficial ownership of the shares
owned by Rapaport Family Limited Partnership to the extent such shares
exceed his proportionate interest therein.
(10) Includes 193,000 shares owned by Woodland Partners, 40,000 shares owned by
Brookwood Partners, L.P., 120,000 shares owned by Seneca Ventures and
240,000 shares owned by Woodland Venture Fund. The address for Barry
Rubenstein and the investment partnerships of which he or entities
controlled by him is general partner is 68 Wheatley Road, Brookville, NY
11545. Woodland Partners is a general partnership, the general partners of
which are Barry Rubenstein and Marilyn Rubenstein, his wife. Each general
partner shares voting power and dispositive power over the shares of Common
Stock owned by Woodland Partners. Brookwood Partners, L.P. is a limited
partnership, the general partners of which are Barry Rubenstein and Marilyn
Rubenstein, each of whom share voting and dispositive power over the shares
of Common Stock owned by Brookwood Partners, L.P. Seneca Ventures and
Woodland Venture Fund are each limited parnerships, the general partners of
which are Barry Rubenstein and Woodland Services Corp. Barry Rubenstein is
the sole shareholder of Woodland Services Corp. Barry Rubenstein and
Woodland Services Corp. share voting and dispositive power over the shares
of Common Stock owned by Seneca Ventures and Woodland Venture Fund.
(11) Includes 123,714 shares underlying options held by Mr. Harbison which are
exercisable within 60 days of the date hereof.
(12) Includes (i) 1,511,523 shares held by Mindes Family Limited Partnership
(see Note 4 above), (ii) 21,161 shares held by Rapaport Family Limited
Partnership (see Note 9 above) and (iii) an aggregate of 494,185 shares
underlying options held by all directors and executive officers as a group
which are exercisable within 60 days of the date hereof. Does not include
302,304 shares held by The Marie Albanese Trust (see Note 6 above).
Certain Relationships and Related Transactions
On January 12, 2000, Barry Rubenstein, investment partnerships in which
Mr. Rubenstein or entities controlled by him is general partner and certain
other accredited investors (collectively the "Investors") purchased 800,000
shares of the Company's Common Stock (the "Shares"), at a price of $1.25 per
share, a total of $1,000,000, in a private transaction that was not registered
under the Securities Act of 1933, or amended ("Act"). The Company also agreed as
part of the sale of the Shares, that if by April 11, 2000, it did not enter into
a transaction (the "Subsequent Transaction") relating to the licensing of its
proprietary software and intellectual property, pursuant to which Subsequent
Transaction the Company is to receive at least $7.5 million during the period of
three years after the date of the Subsequent Transaction, then the Company would
either (a) refund to the Investors a total of $520,000 or (b) deliver to the
Investors a total of 866,667 additional shares (the "Additional Shares"). The
Company was required to determine, by no later than February 11, 2000, which of
the foregoing alternatives it would elect if the Subsequent Transaction did not
occur. On February 10, 2000, the Company informed the Investors that it had
elected option (a) above. The Company also agreed to promptly file a
Registration Statement with the Securities and Exchange Commission ("SEC") in
order to register the Shares under the Act. The Company believes that it was in
the best interests of the Company and its stockholders to enter into this
transaction because the proceeds of this transaction plus the Company's existing
resources (a) provide the Company with the funds necessary to continue its
business and its research and development activities while pursuing negotiation
of domestic and international licensing opportunities; and (b) help the Company
in its attempt to meet the Net Tangible Asset requirement for continued listing
of the Company's Common Stock on NASDAQ (Small Cap).
3
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Nominations and Election of Directors
The Board has nominated Bernard Albanese, Fredric Kupersmith, Barry
Mindes, Janet Mandelker and Harold Rapaport (all of whom are members of the
present Board of the Company and all of whom have been elected for a term ending
at the Meeting) to serve as directors of the Company until the Company's 2001
Annual Meeting of Stockholders and until their respective successors have been
elected and qualified.
Unless otherwise specified, shares represented by proxies will be voted
in favor of the election of all of the nominees, except that, in the event any
nominee should not continue to be available for election, such proxies will be
voted for the election of such persons as the Board may recommend. Management
does not presently contemplate that any of the nominees will become unavailable
for any reason.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES.
Information Covering Nominees
The following table sets forth the names of the nominees and certain
information with regard to each nominee.
Name Age Position with the Company
---- --- -------------------------
Barry Mindes 68 Chairman of the Board and Secretary
Bernard Albanese 52 President, Treasurer (Chief Financial
Officer) and Director
Fredric Kupersmith (1) 66 Director
Janet Mandelker (2) 32 Director
Harold Rapaport (1)(2) 77 Director
- --------------------------------------------------------------------------------
(1) Member of the Audit Committee
(2) Member of the Stock Option Committee
Barry Mindes is the founder of the Company and has served as Chairman
of the Board of the Company since inception. Since December 1998, he has also
served as Secretary of the Company. From inception through August 1996, he also
served as Chief Executive Officer, President and Secretary of the Company, and
from inception to July 1995, he also served as Treasurer of the Company. Mr.
Mindes founded Systems Enterprises Inc., a predecessor to the Company, in
December 1992, and from its inception until its merger with the Company in May
1995, served as its only officer, director and stockholder.
Bernard Albanese has served as President of the Company since September
1996, as Treasurer since July 1995, as Vice President-Systems from July 1995
until August 1996, and as a director since October 1996. From 1993 to 1995, Mr.
Albanese was Vice President--Operations of Advanced Data Systems Inc., a
provider of medical-related computer systems, in which position he was
responsible for all installation, training and telephone support for an
installed base of over 1,000 customers.
Fredric Kupersmith has served as a director of the Company since
October 1996. Since 1977, Mr. Kupersmith has been President of Polsim
Consultants Inc., a private company that provides consulting services in
communications, computer and television systems. From 1971 to 1992, Mr.
Kupersmith held various executive positions at New York City Off-Track Betting
Corporation, including Vice President of Computers and Communications Systems.
Janet Mandelker has served as a director of the Company since July
1995. Since March 1999, she has been pursuing graduate studies. From June 1998
4
<PAGE>
until March 1999, she was an independent consultant. From December 1997 until
June 1998, Ms. Mandelker served as a financial analyst with DePuy ACE Medical
Company. From October 1996 through November 1997, she was an independent
consultant. From 1992 until October 1996, Ms. Mandelker served as Assistant
Managing Director of KuwAm Corporation, a private investment firm.
Harold Rapaport has served as a director of the Company since July
1995. Mr. Rapaport is an electronics, communications and computer executive with
over 40 years experience in management, technology and marketing. He is
President of Rapaport Associates, management consultants to high technology
businesses. From 1982 until 1995, he was Chairman of Control Transaction
Corporation, a manufacturer of computer-based point of sale systems. Mr.
Rapaport served as Chairman of the Board of RE Harrington Inc. from 1987 to
1996, when it was acquired by Health Plan Services Inc.
All directors hold their office until the next annual meeting of
stockholders of the Company and until their respective successors are elected
and qualified. There are no family relationships between any of the directors or
executive officers of the Company except that Barry Mindes is the father of
Janet Mandelker.
Information Concerning the Board of Directors and Committees
The business and affairs of the Company are managed by the Board, which
met four times and acted by unanimous written consent numerous times during the
fiscal year ended September 30, 1999. During such fiscal year, all current
directors attended all of the meetings of the Board and the Committees on which
they served except for Janet Mandelker, who was unable to attend one meeting of
the Board. The Board maintains two standing committees: the Audit Committee and
the Stock Option Committee.
The Audit Committee, consisting of Fredric Kupersmith and Harold
Rapaport, has authority to recommend annually to the Board the engagement of the
Company's independent public accountants and to review the independence of the
accounting firm, the audit and non-audit fees of the independent accountants and
the adequacy of the Company's internal control procedures. The Board of
Directors has not adopted a written charter for the Audit Committee. The members
of the Audit Committee are independent as defined by the rules of the National
Association of Securities Dealers. The Audit Committee held no meetings during
the fiscal year ended September 30, 1999, but acted by unanimous written consent
shortly after the end of such fiscal year in order to approve the retention of
KPMG LLP as the Company's independent public accountants for the fiscal year
ending September 30, 2000.
The Stock Option Committee, consisting of Janet Mandelker and Harold
Rapaport, has authority to administer the Company's 1996 Stock Option Plan, and
in this capacity determines the persons to whom options should be granted under
such Plan and the number of options to be granted to such persons. The Stock
Option Committee held one meeting during the fiscal year ended September 30,
1999, and acted by unanimous written consent numerous times during such year.
The Company does not have a nominating or a compensation committee.
EXECUTIVE OFFICERS AND KEY PERSONNEL
Set forth below is certain information, as of February 25, 2000,
regarding the executive officers and key personnel of the Company.
Name Age Position with the Company
---- --- -------------------------
Barry Mindes 68 Chairman of the Board and Secretary
Bernard Albanese 52 President, Treasurer (Chief Financial
Officer)and Director
Andrew Harbison 41 Vice President-Software Development
Information with regard to Mr. Mindes and Mr. Albanese is set forth
under "Information Covering Nominees."
Andrew Harbison has served as Vice President-Software Development of
the Company since October 1996. From June 1995 to October 1996, Mr. Harbison
5
<PAGE>
served as Manager of Software Development of the Company. From 1993 to 1995, Mr.
Harbison served as Vice President of Programming of Infomed Holdings, Inc., in
which position he was in charge of the programming and data conversion
department consisting of 25 individuals involved in developing computer systems
for medical billing, clinical records and managed care systems.
In addition to the above, Sidney Diamond served as General
Manager-Nevada Operations of the Company from February 1997 until May 1999, when
he left the employ of the Company. For five years prior thereto, Mr. Diamond was
in charge of the race and sports book operations at Excalibur Hotel and Casino
in Las Vegas, Nevada.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company for the fiscal years ended September
30, 1999, 1998 and 1997 to Barry Mindes, the Company's Chairman of the Board and
Principal Executive Officer, and to each of the most highly compensated
executive officers and key personnel, whose annual base salary and bonus
compensation exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities
Name and Principal Position Other Annual Underlying All Other
Year Salary($) Bonus Compensation (1) Options Compensation
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Barry Mindes 1999 166,250 -0- 15,690(2) -0- -0-
Chairman of the Board 1998 127,500 -0- 19,600(2) -0- -0-
1997 115,000 100,000 25,122(2) -0- -0-
Bernard Albanese 1999 152,500 -0- -0- 45,000(3) -0-
President and Treasurer 1998 150,000 -0- -0- 80,000(3) -0-
1997 137,008 25,000 -0- 80,000 -0-
Sidney Diamond 1999 102,408 -0- -0- -0- -0-
General Manager-Nevada 1998 200,000 -0- -0- 100,000(3) -0-
Operations (4) 1997 132,308 -0- -0- 100,000 -0-
Andrew Harbison 1999 122,423 -0- -0- 30,000(5) -0-
Vice President-Software 1998 104,606 6,694 -0- 30,000(5) -0-
Development 1997 96,528 10,000 -0- 30,000 -0-
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Excludes personal benefits which did not exceed the lesser $50,000 or 10%,
on annual basis, of such person's salary and bonus.
(2) Represents benefits attributable to the Company's payments or reimbursements
for lease of a car (approximately $7,220 in the fiscal year ended September
30, 1999, $11,330 in the fiscal year ended September 30, 1998 and $10,300 in
the fiscal year ended September 30, 1997, other expenses relating to such
car, life insurance premiums ($6,746 in the fiscal year ended September 30,
1999), medical insurance and related expenses and certain other perquisites.
(3) On December 21, 1998, Mr. Albanese was granted options to purchase 45,000
shares of Common Stock at $1.41 per share, the fair market value of the
Company's Common Stock on that date. On March 16, 1998, Mr. Albanese and Mr.
Diamond were granted options to purchase 80,000 and 100,000 shares of Common
Stock, respectively, at an exercise price of $0.72 per share, the fair
market value of the Common Stock on such date, upon the surrender of options
to purchase a similar number of shares previously granted to them at a
higher exercise price.
6
<PAGE>
(4) Mr. Diamond became an officer of the Company in February 1997. The salary
shown for Mr. Diamond includes a base salary at the rate of $100,000 per
annum plus a non-refundable draw of $100,000 per annum, against certain
commissions to which he might have become entitled. Mr. Diamond left the
employ of the Company on May 21, 1999.
(5) On December 21, 1998 Mr. Harbison was granted options to purchase 30,000
shares of the Company's Common Stock at $1.41 per share, the fair market
value of the Company's Common Stock on that date. On February 23, 1998, Mr.
Harbison was granted an option to purchase 30,000 shares of Common Stock at
an exercise price of $0.672 per share, the fair market value of the Common
Stock on such date, upon the surrender of options to purchase a similar
number of shares previously granted to him at a higher exercise price.
Stock Option Tables
Option Grants in Last Fiscal Year
The following tables sets forth for the fiscal year ended September 30,
1999, the options to purchase Common Stock granted to the executives named
below.
Individual Grants
<TABLE>
<CAPTION>
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Fiscal Exercise Price
Name Granted Year (1) ($/Sh) (2) Expiration Date
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Barry Mindes, Chairman of
the Board -0- -0- ___ ___
Bernard Albanese,
President and Treasurer 45,000 (3) 23.6 1.41 December 20, 2008
Sidney Diamond, General
Manager-Nevada Operations -0- -0- ___ ___
Andrew Harbison,
Vice President-Software
Development 30,000 (3) 15.7 1.41 December 20, 2008
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During the fiscal year ended September 30, 1999, the Company granted a total
of 191,000 options to employees under the 1996 Stock Option Plan. This
number was used in calculating the percentages set forth above.
(2) The exercise price is equal to the fair market value of the Common Stock on
the date of the grant of such options.
(3) Represents options granted on December 21, 1998, which vest in three equal
annual installments, commencing on the first anniversary of the date of
grant (see Notes 3 and 5 to Summary Compensation Table).
7
<PAGE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
The following table sets forth, as of September 30, 1999, information
concerning outstanding options to purchase Common Stock held by the executives
named below.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underyling Unexercised "In-the Money" Options
Options at September 30, 1999 at September 30, 1999(1)
-------------------------------------------------------
Shares
Acquired on Value Realized
Exercise (2) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Barry Mindes
Chairman of the Board -0- -0- -0- -0- -0- -0-
Bernard Albanese
President and Treasurer -0- -0- 151,367 139,900 $16,122 $9,485
Sidney Diamond
General Manager-Nevada
Operations 33,000 $23,745 -0- -0- -0- -0-
Andrew Harbison
Vice President-Software
Development -0- -0- 103,714 50,000 $11,667 $3,810
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options are "in-the-money" at the fiscal year-end if the fair market value
of the Common Stock on such date exceeds the exercise price of the option.
The last sales price of the securities underlying the options on September
30, 1999, was $0.8125 per share.
(2) Value realized is the closing market price of the Common Stock on the date
of exercise less the option price, multiplied by the number of shares
acquired, or that could be acquired, on exercise.
Employment Agreements
The Company entered into a one-year employment agreement with Barry
Mindes dated as of July 1, 1999, for the period from July 1, 1999 through June
30, 2000, pursuant to which (i) Mr. Mindes receives a base salary of not less
than $170,000 per annum; (ii) such salary increases, bonuses or other incentive
compensation as may be approved by the Board; (iii) such health and life
insurance and other fringe benefits as may be provided to other executives of
the Company; (iv) six weeks of vacation each year; and (v) severance equal to
one year's base salary and continuation of fringe benefits at the end of the
term of the Agreement. In the event that, during the term (a) the Company
requests that he relocate and, as a consequence, he voluntarily terminates his
employment, or (b) the Company terminates his employment other than for "cause"
(as defined in the Agreement), or his employment terminates as a result of his
death or disability, he or his representative is entitled to continued payment
of his base salary and benefits for a period of one year. In addition, in the
event of a "change of control" (as defined in the Agreement) of the Company
during the term, followed by termination of his employment either (i) by the
Company, other than as a result of death or disability or for cause, or (ii) by
him for "good reason" (as defined in the Agreement), he is entitled to continued
payment of base salary and benefits until the end of the term, but not for less
than six months. In addition, Mr. Mindes is entitled to payment of such
severance if, after a change of control, he elects voluntarily to terminate his
employment with the Company. Mr. Mindes is also entitled, at the Company's
expense, to the use of a leased automobile, including all operating, maintenance
and insurance expenses. In addition, in lieu of participating in the health
insurance program provided by the Company, Mr. Mindes may elect to participate
in other health insurance (including Medicare), in which case the Company shall
pay or reimburse him for (i) any deductible or co-payments required to be paid
by him, (ii) any medical or hospitalization costs not reimbursed to him by such
other health insurance (and/or Medicare) and (iii) the premiums for his existing
life insurance policies in the amount of $200,000, provided that the aggregate
payment to which he shall be entitled for all of the foregoing during the term
of the Agreement shall not exceed $13,400.
The Company entered into a two-year employment agreement with Bernard
Albanese dated as of July 1, 1998, for the period from July 1, 1998 through June
30, 2000, pursuant to which (i) Mr. Albanese receives a base salary of not less
8
<PAGE>
than $150,000 per annum; (ii) such salary increases, bonuses or other incentive
compensation as may be approved by the Board; (iii) such health and life
insurance as may be provided to other executives of the Company; and (iv)
severance equal to six months' base salary (one year's base salary after
reaching age 55) in the event (a) the Company requests that he relocate and, as
a consequence, he voluntarily terminates his employment, or (b) the Company
terminates his employment other than for "cause" (as defined in the Agreement)
or if his employment terminates as a result of his death or disability during
the term or after the term but while he continues to be employed by the Company,
or (c) upon expiration of the term of the Agreement without the Agreement being
renewed or replaced. In addition, in the event of a "change of control" (as
defined in the Agreement) of the Company, followed by termination of his
employment either (i) by the Company, other than as a result of death or
disability or for cause, or (ii) by him for "good reason" (as defined in the
Agreement), he is entitled to (a) if termination occurs during the term,
continued payment of base salary and benefits until the end of the term but not
for less than six months, or (b) if termination occurs after the term, but while
he is still employed by the Company, payment of six months' base salary and
benefits. The Agreement also provides that if his employment terminates for any
reason whatsoever, including his death or disability, other than by the Company
for cause or by him voluntarily (other than as permitted by the Agreement), all
stock options theretofore granted to him which have not become exercisable shall
vest and become exercisable and remain exercisable in accordance with the
Company's 1995 and 1996 Stock Option Plans and related stock option agreements.
Mr. Albanese's current base salary is $160,000 per annum.
Each of Messrs. Mindes and Albanese have entered into agreements
restricting competitive activities for 12 months following termination of their
employment and prohibiting disclosure of confidential information of the
Company.
On February 3, 1997 the Company entered into a three-year employment
agreement with Sidney Diamond, pursuant to which Mr. Diamond served the Company
in the capacity as General Manager-Nevada Operations. During the term of the
agreement, Mr. Diamond received an annual base salary of $100,000, and during
the first two years of the term an additional non-refundable draw at the rate of
$100,000 per year against certain commissions to which he might have become
entitled. In the third year of the term, he was entitled to certain commissions
earned by him as specified in the Agreement. Mr. Diamond was entitled to
severance equal to six months' base salary if the Company terminated his
employment without cause during the term. As an integral part of the employment
agreement, the Company loaned to Mr. Diamond $100,000, which loan accrued no
interest and was repayable in bi-weekly installments such that during the first
year of the term $50,000 was repaid and during each of the second and third
years of the term $25,000 would be repaid to the Company. If Mr. Diamond's
employment had been terminated by the Company other than as a result of his
death, disability or for cause, prior to the end of the term, the unpaid balance
of the loan was to be forgiven. During the fiscal year ended September 30, 1999,
the largest amount that was outstanding on this loan was $33,687. Mr. Diamond
left the employ of the Company on May 21, 1999. Shortly after he left the
Company's employ, the remaining balance of the loan was repaid.
Director Compensation
Prior to October 1, 1998, outside directors did not receive any cash
compensation for their services as members of the Board or Committees of the
Board, although they were reimbursed for their out-of-pocket expenses incurred
in attending Board and Committee meetings. Effective as of October 1, 1998, the
Company pays each outside director $1,000 for each Board meeting attended, up to
a maximum of $4,000 per fiscal year. The Company also compensates outside
directors by means of grants of options at fair market value on the date of
grant. During the fiscal year ended September 30, 1999, each of the outside
directors, Mr. Kupersmith, Ms. Mandelker and Mr. Rapaport, were granted options
to purchase 24,000 shares of the Company's Common Stock at a price equal to the
fair market value of such shares on the date the options were granted. Each of
such outside directors have been granted options in prior fiscal years, all of
which have been described in proxy statements previously furnished to the
Company's stockholders (see "Security Ownership").
PROPOSAL NO. 2 - AMENDMENT OF THE 1996 STOCK OPTION PLAN
The Company has two stock option plans pursuant to which options to
purchase Common Stock may be granted and under which options are currently
outstanding. The 1995 Stock Option Plan, as amended (the "1995 Plan") and the
1996 Stock Option Plan, as amended (the "1996 Plan," collectively the "Plans").
As of February 25, 2000, there were (a) 533,195 options outstanding and 32,805
options available for grant under the 1995 Plan and (b) 728,667 options
outstanding and 45,667 options available for grant under the 1996 Plan.
Stockholders are requested to approve an amendment to the 1996 Plan to
increase the number of shares of Common Stock authorized for issuance under the
1996 Plan by 350,000 shares, from a total of 825,000 shares to 1,175,000 shares.
9
<PAGE>
The purpose of the increase is to ensure that the Company can continue to grant
stock options to officers, directors, employees and consultants at levels
determined appropriate by the Board of Directors and the Stock Option Committee.
The Company believes that its ability to continue to provide attractive
equity-based incentives is critical in allowing it to attract and retain
qualified individuals. The Company believes the grant of stock options
encourages employees to build long-term stockholder value. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the meeting will be required to
approve the amendment to the 1996 Plan.
The following is a summary of the material provisions of the 1995 and
1996 Plans, as heretofore amended, and are qualified in their entirety by the
specific language of each Plan, which Plans have been previously filed with the
SEC.
1996 Stock Option Plan. In October 1996, the Board adopted and the
stockholders approved the 1996 Plan which authorized the grant of options to
purchase up to 825,000 shares of Common Stock. The purpose of the 1996 Plan is
to attract and retain exemplary employees, agents, consultants and directors. As
of February 25, 2000, options to purchase 728,667 shares were outstanding,
options to purchase 50,666 shares had been exercised and options to purchase
45,667 shares remained available for grant. The shares subject to and available
under the 1996 Plan may consist, in whole or in part, of authorized but unissued
shares of Common Stock or treasury stock not reserved for any other purpose. Any
shares subject to an option that terminates, expires or lapses for any reason,
and any shares purchased pursuant to an option and subsequently repurchased by
the Company pursuant to the terms of the option, shall again be available for
grant under the 1996 Plan.
The 1996 Plan provides for the grant of incentive stock options
("ISOs") (within the meaning of Section 422 of the Internal Revenue Code, as
amended ("Code")) and non-qualified stock options ("NQSOs") at the discretion of
the administrator of the 1996 Plan. The Stock Option Committee administers the
1996 Plan. Subject to the terms of the 1996 Plan, the Board determines the terms
and conditions of options granted under the 1996 Plan. Options granted under the
1996 Plan are evidenced by written agreements which contain such terms,
conditions, limitations and restrictions as the Board deems advisable and which
are not inconsistent with the 1996 Plan. ISOs may be granted to individuals who,
at the time of grant, are officers or other employees of the Company. NQSOs may
be granted to individuals who, at the time of grant, are employees, directors,
officers, agents or consultants of the Company whether or not such agents or
consultants are employees of the Company. The 1996 Plan provides that the Board
must establish an exercise price for ISOs that is no less than the fair market
value per share of the Common Stock at the date of grant. The exercise price for
NQSOs shall be determined by the Board .
Options under the 1996 Plan may provide for the payment of the exercise
price by (i) delivery of cash or a check payable to the order of the Company,
(ii) "cashless exercises" (delivery of shares of stock of the Company having a
fair market value equal to the exercise price), or (iii) any combination of (i)
and (ii).
To the extent that the aggregate fair market value, as of the date of
grant, of the shares into which ISOs become exercisable for the first time by an
optionee during the calendar year exceeds $100,000, the ISO will be treated as
an NQSO. In addition, if an optionee owns more than 10% of the Company's stock
at the time such optionee is granted an ISO, the option price per share cannot
be less than 110% of the fair market value per share and the term of the option
cannot exceed five years. Options granted under the 1996 Plan may not be
exercisable for terms in excess of 10 years from the date of grant. No options
may be granted under the 1996 Plan later than 10 years after the 1996 Plan's
effective date.
Options granted under the 1996 Plan to officers, directors, employees
or consultants of the Company generally may be exercised only while the optionee
is employed or retained by the Company or within one year after termination of
the optionee's employment or consulting relationship by reason of death or
permanent disability, and three months after termination for any other reason
except termination for cause (unless such options expire sooner by their terms).
Options are nontransferable, except by will or the laws of descent and
distribution.
The number and price of shares of Common Stock covered by each option,
the total number of options that may be granted under the Plan and the maximum
number of options that may be granted to any optionee will be proportionately
adjusted to reflect any stock dividend, stock split or other recapitalization of
the Company.
In addition, unless otherwise determined by the Board in its
discretion, upon (i) any merger or consolidation of the Company pursuant to
which the stockholders receive cash or securities of another corporation and
less than a majority of the outstanding stock of the surviving corporation
pursuant to such merger or consolidation shall be owned by the stockholders of
the Company, (ii) a sale to another entity of all or substantially all of the
10
<PAGE>
assets of the Company, or (iii) a "change of control" of the Company (as
defined), the Company shall, or shall cause such surviving corporation or the
purchaser of the Company's assets, to deliver to the optionees the same kind of
consideration that is delivered to the stockholders of the Company as a result
of such merger, consolidation, sale or change of control, or the Board may
cancel all outstanding options in exchange for consideration in cash or
marketable securities, which consideration shall be equal in value to the value
of the securities the optionee would have received had the option been
exercised, less the exercise price therefor. The Board also has the right to
accelerate the exercisability of options upon the occurrence of any such merger,
consolidation, sale or change of control.
The Board may amend the Plans as it deems advisable provided that the
Board may not, without stockholder approval, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plans.
1995 Stock Option Plan. In May 1995, the Board adopted and the
stockholders approved the 1995 Plan. The 1995 Plan is substantially similar to
the 1996 Plan, except that it is administered by the Board and that there were
649,948 shares of Common Stock authorized for issuance pursuant to options which
may be granted thereunder, of which, as of February 25, 2000, options to
purchase a total of 533,195, shares were outstanding, 83,948 options had been
exercised and options to purchase 32,805 shares were available for grant.
The specific benefits or amounts which have been or which may be
received by directors, officers and employees under the 1995 Plan and 1996 Plan,
to the extent determinable as of February 11, 2000, are as follows:
<TABLE>
<CAPTION>
1995 Plan Benefits 1996 Plan Benefits
------------------ ------------------
Name and Position Dollar Value ($)(1) Number of Shares Dollar Value ($)(1) Number of Shares(2)
- ----------------- ------------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Barry Mindes - 0 - - 0 - - 0 - - 0 -
Bernard Albanese 18,206 166,267 14,900 140,000
Andrew Harbison 10,262 93,714 7,215 54,000
Executive Officer Group 28,468 259,981 22,115 194,000
(3 persons)
Fredric Kupersmith - 0 - - 0 - 1,804 19,500
Janet Mandelker 2,317 21,161 1,249 13,500
Harold Rapaport 1,490 13,604 1,387 15,000
Executive Director Group 3,807 34,765 4,440 48,000
(3 persons)
Non-Executive Officer Group 11,497 104,990 29,384 227,667
(11 persons)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Dollar value of options equals the fair market value of the shares at
September 30, 1999 ($0.8125) less the option exercise price, multiplied by
the number of options held by such person or group, whether or not such
options were fully vested and exercisable. These benefits are hypothetical
since the dollar value realized is based upon the last sales price of the
Company's Common Stock on NASDAQ (Small Cap) on September 30, 1999 ($0.8125
per share), the last day of its last fiscal year. The amount actually
realized upon exercise of any option and the sale of the shares issuable
upon exercise of such options, could be higher or lower than the amounts set
forth as in this table. The closing price of the Company's Common Stock on
February 11, 2000 was $4 per share. Had that price been used, the benefits
realized as shown in the table would have been substantially higher.
(2) Excludes the following options that are not in-the-money based upon the
final sales price of the Company's Common Stock on September 30, 1999
($0.8125): Mr. Albanese - 45,000; Mr. Harbison - 30,000; Mr. Kupersmith
-24,000; Ms. Mandelker - 24,000; Mr. Rapaport -24,000; and Non-Executive
Officer Group - 140,000.
Federal Income Tax Consequences
The following is a summary of the United States federal income tax
consequences that generally will arise with respect to options granted under the
Plans and with respect to the exercise of options and sale of Common Stock under
the Plans.
Incentive Stock Options. In general, an optionee will not recognize
regular taxable income upon the grant or exercise of an ISO. Instead, an
11
<PAGE>
optionee will recognize taxable income with respect to an ISO only upon the sale
of Common Stock acquired through the exercise of the ISO ("ISO Stock"). The
exercise of an ISO may, however, subject the optionee to the alternative minimum
tax.
Generally, the tax consequences of selling ISO Stock will vary with the
length of time that the optionee has owned the ISO Stock at the time it is sold.
If the Optionee sells the ISO Stock after having owned if for at least two years
from the date the option was granted (the "Grant Date") and more than one year
from the date the option was exercised (the "Exercise Date"), then the optionee
will recognize a long-term capital gain in an amount equal to the excess of the
sale price of the ISO Stock over the exercise price.
If the optionee sells ISO Stock for more than the exercise price, prior
to having owned it for at least two years from the Grant Date and one year from
the Exercise Date (a "Disqualifying Disposition"), then all or a portion of the
gain recognized by the optionee will be ordinary compensation income and the
remaining gain, if any, will be a capital gain. The capital gain will be a
long-term capital gain if the optionee has held the ISO Stock for more than one
year prior to the date of sale.
If the optionee sells ISO Stock for less than the exercise price, then
the optionee will recognize a capital loss equal to the excess of the exercise
price over the sale price of the ISO Stock. This capital loss will be a
long-term capital loss if the optionee has held the ISO Stock for more than one
year prior to the date of sale.
Non-Qualified Stock Options. As in the case of an ISO, an optionee will
not recognize taxable income upon the grant of an NQSO. Unlike the case of an
ISO, however, an optionee who exercises an NQSO generally will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the Common Stock acquired through the exercise of the NQSO ("NQSO
Stock") on the Exercise Date over the exercise price.
With respect to any NQSO Stock, an optionee will have a tax basis equal
to the exercise price plus any income recognized upon the exercise of the NQSO.
Upon selling NQSO Stock, an optionee generally will recognize a capital gain or
loss in an amount equal to the excess of the sale price of the NQSO Stock over
the optionee's tax basis in the NQSO Stock. This capital gain or loss will be a
long-term gain or loss if the optionee has held the NQSO Stock for more than one
year prior to the date of the sale.
Tax Consequences to the Company. The grant of an option under the Plans
will have no tax consequences to the Company. Moreover, in general, neither the
exercise of an ISO nor the sale of any Common Stock acquired under the Plans
will have any tax consequences to the Company. The Company generally will be
entitled to a business-expense deduction, however, with respect to any ordinary
compensation income recognized by an optionee under the Plans, including as a
result of the exercise of an NQSO or a Disqualifying Disposition.
THE BOARD OF DIRECTORS BELIEVES THAT THE AMENDMENT OF THE 1996 PLAN
IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND THEREFORE
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
PROPOSAL NO. 3 - RATIFICATION OF SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board and the Audit Committee have approved the engagement of KPMG
LLP as the independent public accountants for the Company for the fiscal year
ending September 30, 2000. KPMG LLP has served as the Company's independent
public accountants since 1996. The Board considers KPMG LLP to be well qualified
for the function of serving as the Company's independent public accountants.
Unless otherwise specified, shares represented by proxies will be voted
for the ratification of KPMG LLP as the independent public accountants for the
Company. If the stockholders do not so approve, the selection of independent
public accountants will be reconsidered by the Board.
Representatives of KPMG LLP are expected to be present at the 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.
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<PAGE>
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF KPMG LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY.
OTHER BUSINESS
Management of the Company knows of no other business which will be
presented for consideration at the Meeting, but should any other matters be
brought before the Meeting, it is intended that the persons named in the
accompanying Proxy will vote such Proxy in their discretion.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and persons who own
beneficially more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership of such stock with the SEC. Directors,
executive officers and greater than 10% stockholders are required by SEC
regulations 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, its directors, executive officers and greater than 10% stockholders
complied with these requirements during the fiscal year ended September 30,
1999, except that Sidney Diamond, formerly the General Manager, Nevada
Operations, filed one Form 4 with respect to the sale of shares of the Company's
Common Stock, approximately 10 days late. Mr. Diamond left the employ of the
Company in May 1999.
ANNUAL REPORT
The Annual Report of the Company on Form 10-KSB/A for the fiscal year
ended September 30, 1999, including financial statements but excluding exhibits,
is being furnished herewith to stockholders of record of the Company on the
Record Date. The Annual Report does not constitute a part of the proxy
soliciting material.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any stockholder desiring to present proposals to stockholders at the
2001 Annual Meeting of the Company must transmit such proposal to the Company in
writing and such proposal must be received by the Secretary of the Company at
its offices no later than October 31, 2000. All such proposals should be in
compliance with applicable SEC regulations.
By Order of the Board of Directors
Barry Mindes
Chairman of the Board
A copy of the Company's Annual Report on Form 10-KSB/A for the year ended
September 30, 1999, including financial statements and schedules thereto filed
with the SEC, is available without charge to stockholders upon written request
addressed to Bernard Albanese, International Sports Wagering Inc., 201 Lower
Notch Road, Suite 2B, Little Falls, New Jersey 07424.
13
<PAGE>
INTERNATIONAL SPORTS WAGERING INC.
201 Lower Notch Road, Suite 2B, Little Falls, NJ 07424
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS - MARCH 22, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRCTORS
The undersigned hereby appoints BARRY MINDES and BERNARD ALBANESE, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all of the shares of
Common Stock, $.001 par value, of INTERNATIONAL SPORTS WAGERING INC. held of
record by the undersigned on February 25, 2000, at the Annual Meeting of
Stockholders of INTERNATIONAL SPORTS WAGERING INC., on March 22, 2000 at 10:00
a.m., local time, or at any adjournments thereof.
(1) Election Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as indicated otherwise below) nominees listed below
INSTRUCTION: To withhold authority to vote for an individual nominee, write such
nominee's name in the space below.
NOMINEES: Bernard Albanese, Fredric Kupersmith, Janet Mandelker, Barry Mindes
and Harold Rapaport
WITHHOLD AUTHORITY FOR THE FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(2) To approve an amendment to 1996 Stock Option Plan, to increase by 350,000 FOR AGAINST ABSTAIN
the total number of shares of Common Stock authorized for issuance under the [ ] [ ] [ ]
Plan, from 825,000 shares to 1,175,000 shares.
(3) To ratify the selection of KPMG LLP as the Company's independent public FOR AGAINST ABSTAIN
accountants for the fiscal year ending September 30, 2000. [ ] [ ] [ ]
(4) In their discretion, the Proxies are authorized to vote upon such other FOR AGAINST ABSTAIN
business as may properly come before the meeting or any adjournments thereof. [ ] [ ] [ ]
</TABLE>
(To be signed below)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS
GIVEN ABOVE.
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 indicate the capacity in which signing. When a proxy
is given by a corporation, please give your full corporation name and have the
proxy signed by the president or other authorized officer. If a partnership,
please sign in partnership name by an authorized person.
Date:_______________________________, 2000
Stockholder:______________________________
__________________________________________
Signature
__________________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
INTERNATIONAL SPORTS WAGERING INC.
1996 STOCK OPTION PLAN
(As Amended January 26, 2000)
<PAGE>
INTERNATIONAL SPORTS WAGERING INC.
1996 STOCK OPTION PLAN
Table of Contents
Page
----
1. Purpose of the Plan.......................................................1
2. Stock Subject to the Plan.................................................1
3. Administration of the Plan................................................1
4. Type of Option............................................................2
5. Eligibility...............................................................2
6. Restrictions on Options...................................................3
7. Option Agreement; Disqualifying Dispositions..............................3
8. Option Price..............................................................4
9. Manner of Payment; Manner of Exercise.....................................4
10. Exercise of Options.......................................................5
11. Term of Options; Exercisability...........................................5
12. Transferability...........................................................6
13. Recapitalization, Reorganizations and the Like............................7
14. No Special Employment Rights..............................................8
15. Withholding...............................................................8
16. Restrictions on Exercise of Options and Issuance of Shares................8
17. Purchase for Investment; Rights of Holder on Subsequent Registration......9
18. Loans.....................................................................9
19. Modification of Outstanding Options......................................10
20. Approval of Board and Stockholders.......................................10
21. Termination and Amendment of Plan........................................10
22. Duties of the Company....................................................10
23. Limitation of Rights in the Option Shares................................11
24. Governing Law............................................................11
-i-
<PAGE>
25. Notices..................................................................11
26. Headings.................................................................11
-ii-
<PAGE>
INTERNATIONAL SPORTS WAGERING INC.
1996 STOCK OPTION PLAN
(As Amended January 26, 2000)
1. Purpose of the Plan.
The purpose of the International Sports Wagering Inc. 1996 Stock Option
Plan (the "Plan") is to advance the interests of International Sports Wagering
Inc., a Delaware corporation (the "Company"), by providing an opportunity for
ownership of the stock of the Company by employees, agents and directors of, and
consultants to, the Company or of any subsidiary corporation (herein called
"subsidiary" or "subsidiaries"), as defined in Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury regulations
promulgated thereunder (the "Regulations"). Such employees, agents and directors
of, and consultants to, the Company or any subsidiary are hereinafter referred
to individually as an "Eligible Person" and collectively as "Eligible Persons".
By providing an opportunity for such stock ownership, the Company seeks to
attract and retain qualified personnel, and otherwise to provide additional
incentive for optionees to promote the success of its business.
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued or
treasury shares of the common stock, having no par value per share, of the
Company (the "Common Stock") for which options may be granted under the Plan
(the "Options") shall be 825,000, subject to adjustment as provided in Section
13 hereof.
(b) If an Option granted or assumed hereunder shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for subsequent Option grants under the
Plan.
(c) Common Stock issuable upon exercise of an Option may be subject to
such restrictions on transfer, repurchase rights or other conditions or
restrictions as shall be determined by the Board of Directors of the Company
(the "Board").
(d) The maximum number of Options that may be granted to any Eligible
Person during any calendar year is 300,000.
3. Administration of the Plan.
(a) The Plan shall be administered by the Board. No member of the Board
shall act upon any matter affecting any Option granted or to be granted to
himself or herself under the Plan; provided, however, that nothing contained
herein shall be deemed to prohibit a member of the Board from acting upon any
matter generally affecting the Plan or any Options granted thereunder. A
majority of the members of the Board shall constitute a quorum, and any action
may be taken by a majority of those present and voting at any meeting. The
decision of the Board as to all questions of interpretation and application of
the Plan shall be final, binding and conclusive on all persons. The Board, in
its sole discretion, may grant Options to purchase shares of the Common Stock
only as provided in the Plan, and shares shall be issued upon
1
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exercise of such Options as provided in the Plan. The Board shall have
authority, subject to the express provisions of the Plan, to determine the
Eligible Persons who shall be issued Options, the times when Options shall be
granted and within which they may be exercised, the prices at which Options
shall be exercised, the number of shares of Common Stock to be subject to each
Option and whether an Option shall be treated as an incentive stock option or a
non-qualified stock option. The Board shall also have the authority, subject to
the express provisions of the Plan, to amend the Plan, to determine the terms
and provisions of the respective option agreements, which may but need not be
identical, to construe the respective option agreements and the Plan, and to
make all other determinations in the judgment of the Board necessary or
desirable for the administration of the Plan. Notwithstanding the foregoing, the
maximum aggregate number of Options that may be granted to any Eligible Person
during any one-year period shall not exceed 300,000. The Board may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement in the manner and to the extent it shall deem expedient to
implement the Plan and shall be the sole and final judge of such expediency. The
Board, in its discretion, may delegate its power, duties and responsibilities to
a committee, consisting solely of two or more "Non-Employee Directors" (as
hereinafter defined). If a committee is so appointed, all references to the
Board herein shall mean and relate to such committee. The existence of such a
committee shall not affect the power or authority of the Board to administer the
Plan. For the purposes of the Plan, the term "Non-Employee Director" shall have
the meaning ascribed to it in paragraph (b)(3) of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such
term is interpreted from time to time.
4. Type of Option.
Options granted pursuant to the Plan shall be authorized by action of
the Board and may be designated as either incentive stock options meeting the
requirements of Section 422 of the Code or non-qualified stock options which are
not intended to meet the requirements of such Section 422 of the Code, the
designation to be in the sole discretion of the Board. Options designated as
incentive stock options that fail to continue to meet the requirements of
Section 422 of the Code shall be redesignated as non-qualified stock options
automatically without further action by the Board on the date of such failure to
continue to meet the requirements of Section 422 of the Code.
5. Eligibility.
Options designated as incentive stock options may be granted only to
Eligible Persons who are officers or employees of the Company or of any
subsidiary. Directors who are not otherwise employees of the Company or a
subsidiary shall not be eligible to be granted incentive stock options pursuant
to the Plan. Options designated as non-qualified stock options may be granted to
any Eligible Person.
The Board shall take into account such factors as it may deem relevant
in determining the number of shares of Common Stock to be included in an Option
to be granted to any Eligible Person.
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6. Restrictions on Options.
Incentive stock options (but not non-qualified stock options) granted
under this Plan shall be subject to the following restrictions:
(a) Limitation on Number of Shares. The aggregate fair market value of
the shares of Common Stock with respect to which incentive stock options are
granted (determined as of the date the incentive stock options are granted),
exercisable for the first time by an individual during any calendar year shall
not exceed $100,000. If an incentive stock option is granted pursuant to which
the aggregate fair market value of shares with respect to which it first becomes
exercisable in any calendar year by an individual exceeds such $100,000
limitation, the portion of such option which is in excess of the $100,000
limitation shall be treated as a non-qualified stock option pursuant to Section
422(d)(1) of the Code. In determining the fair market value under this clause
(a), the provisions of Section 8 hereof shall apply. In the event that an
individual is eligible to participate in any other stock option plan of the
Company or any subsidiary of the Company which is also intended to comply with
the provisions of Section 422 of the Code, such $100,000 limitation shall apply
to the aggregate number of shares for which incentive stock options may be
granted under this Plan and all such other plans.
(b) Ten Percent Stockholder. If any Eligible Person to whom an
incentive stock option is granted pursuant to the provisions of the Plan is on
the date of grant the owner of stock (as determined under Section 424(d) of the
Code) possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiary of the Company, then the following
special provisions shall be applicable to the incentive stock options granted to
such individual:
(i) The Option price per share subject to such Options shall
be not less than 110% of the fair market value of the shares of Common Stock
with respect to which Options are granted (determined as of the date such Option
was granted). In determining the fair market value under this clause (i), the
provisions of Section 8 hereof shall apply.
(ii) The Option by its terms shall not be exercisable after
the expiration of five years from the date such Option is granted.
7. Option Agreement; Disqualifying Dispositions.
(a) Each Option shall be evidenced by an option agreement, in a form
approved from time to time by the Board (the "Agreement"), duly executed on
behalf of the Company and by the optionee to whom such Option is granted, which
Agreement shall comply with and be subject to the terms and conditions of the
Plan. The Agreement may contain such other terms, provisions and conditions
which are not inconsistent with the Plan as may be determined by the Board;
provided that Options designated as incentive stock options shall meet all of
the conditions for incentive stock options as defined in Section 422 of the
Code. No Option shall be
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granted within the meaning of the Plan and no purported grant of any Option
shall be effective until the Agreement shall have been duly executed on behalf
of the Company and the optionee.
(b) If an optionee makes a "disposition" (within the meaning of Section
424(c) of the Code) of shares of Common Stock issued upon exercise of an
incentive stock option within two years from the date of grant or within one
year from the date the shares of Common Stock are transferred to the optionee,
the optionee shall, within ten days of disposition, notify the Board and deliver
to it any withholding and employment taxes due. However, if the optionee is a
person subject to Section 16(b) of the Exchange Act, delivery of any withholding
and employment taxes due may be deferred until ten days after the date any
income on the disposition is recognized under Section 83 of the Code. The
Company may cause a legend to be affixed to certificates representing shares of
Common Stock issued upon exercise of incentive stock options to ensure that the
Board receives notice of disqualifying dispositions.
8. Option Price.
(a) The Option price or prices of shares of the Common Stock for
Options designated as non-qualified stock options shall be as determined by the
Board.
(b) Subject to the conditions set forth in Section 6(b) hereof, the
Option price or prices of shares of the Company's Common Stock designated as
incentive stock options shall be at least the fair market value of such Common
Stock on the date the Option is granted as determined by the Board in accordance
with the Regulations promulgated under Section 422 of the Code.
(c) If such shares are then listed on any national securities exchange,
the fair market value shall be the mean between the high and low sales prices,
if any, on the largest such exchange on the date of the grant of the Option or,
if there are no such sales on such date, shall be determined by taking a
weighted average of the means between the highest and lowest sales prices on the
nearest date before and the nearest date after the date of grant in accordance
with Section 25.2512-2 of the Regulations. If the shares are not then listed on
any such exchange, the fair market value of such shares shall be the mean
between the closing "Bid" and the closing "Ask" prices, if any, as reported in
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") for the date of the grant of the Option, or, if there are no such
prices on such date, shall be determined by taking a weighted average of the
means between the highest and lowest sales prices on the nearest date before and
the nearest date after the date of grant in accordance with Section 25.2512-2 of
the Regulations. If the shares are not then either listed on any such exchange
or quoted in NASDAQ, the fair market value shall be the mean between the average
of the "Bid" and "Ask" prices, if any, as reported in the National Association
of Securities Dealers National Daily Quotation Service for the date of the grant
of the Option, or, if there are no such prices on such date, shall be determined
by taking a weighted average of the means between the highest and lowest sales
prices on the nearest date before and the nearest date after the date of grant
in accordance with Section 25.2512-2 of the Regulations. If the fair market
value cannot be determined under the preceding three sentences, it shall be
determined in good faith by the Board in accordance with Section 422 of the
Code.
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9. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such Options, (ii) shares of
Common Stock owned by the optionee having a fair market value (at the date of
exercise) equal in amount to the exercise price of the Options being exercised,
or (iii) any combination of (i) and (ii). The fair market value of any shares of
Common Stock which may be delivered upon exercise of an Option shall be
determined by the Board in accordance with Section 8 hereof.
(b) To the extent that an Option is exercisable, Options may be
exercised in full at one time or in part from time to time, by giving written
notice, signed by the person or persons exercising the Option, to the Company,
stating the number of shares with respect to which the Option is being
exercised, accompanied by payment in full for such shares as provided in Section
9(a) hereof. No exercise of an Option may be made for fewer than 100 full shares
of Common Stock unless such exercise is made for the entire fractional amount of
a share remaining to be purchased pursuant to such Option. Upon such exercise,
delivery of a certificate for paid-up, non-assessable shares shall be made by
the Company to the person or persons exercising the Option within 20 business
days after receipt of such notice by the Company.
10. Exercise of Options.
Each Option granted under the Plan shall, subject to Sections 11(b), 13
and 16 hereof, be exercisable at such time or times and during such period as
shall be set forth in the Agreement; provided, however, that except as otherwise
provided pursuant to the provisions of Section 6(b) hereof, no Option granted
under the Plan shall have a term in excess of ten years from the date of grant.
11. Term of Options; Exercisability.
(a) Term.
(i) Each Option shall expire on a date determined by the Board
which is not more than ten years from the date of the granting thereof, except
(a) as otherwise provided pursuant to the provisions of Section 6(b) hereof, and
(b) for earlier termination as herein provided.
(ii) Except as otherwise provided in this Section 11, an
Option granted to any optionee who ceases to be an Eligible Person for any
reason shall terminate on the earlier of (i) three (3) months after the date
such optionee ceased to be an Eligible Person, or (ii) the date on which the
Option expires by its terms.
(iii) If an optionee ceases to be an Eligible Person because
the Company has terminated his or her status with the Company for cause (as such
term is defined in any
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employment or similar agreement between such optionee and the Company or, if
there is no such agreement, or such agreement does not contain provisions
relating to termination or removal for cause, as such term is defined by the law
of the State of New York), such Option will, to the extent not terminated, be
deemed to have terminated on the date immediately preceding the date the
optionee ceased to be an Eligible Person.
(iv) If an optionee ceases to be an Eligible Person because
the optionee has become disabled (within the meaning of Section 22(e)(3) of the
Code), such Option shall terminate on the earlier of (i) one year after the date
such optionee ceased to be an Eligible Person, or (ii) the date on which the
Option expires by its terms.
(v) In the event of the death of any optionee, such Option
shall terminate on the earlier of (i) one year after the date of death, or (ii)
the date on which the Option expires by its terms.
(b) Exercisability.
(i) Except as otherwise provided in this Section 11(b), an
Option granted to an optionee who thereafter ceases to be an Eligible Person
shall be exercisable only to the extent that the right to purchase shares under
such Option is exercisable on the date such optionee ceased to be an Eligible
Person.
(ii) An Option granted to an optionee who ceases to be an
Eligible Person because he or she has become disabled (as such term is defined
in any employment or similar agreement between such optionee and the Company or,
if there is no such agreement, or such agreement does not contain provisions
relating to termination or removal for disability, as determined by the Board)
shall be immediately exercisable as to the full number of shares covered by such
Option, whether or not under the provisions of the Plan or Agreement such Option
was otherwise exercisable as of the date of disability.
(iii) In the event of the death of an optionee, the Option
granted to such optionee may be exercised as to the full number of shares
covered by such Option, whether or not under the provisions of the Plan or
Agreement the optionee was otherwise exercisable at the date of his or her
death, by the executor, administrator or personal representative of such
optionee, or by any person or persons who acquired the right to exercise such
Option by bequest or inheritance or by reason of the death of such optionee.
(iv) In addition to the acceleration of the exercisability of
Options pursuant to this Section 11(b) and Section 13(b)(ii) hereof, the Board
shall have the right, in the exercise of its discretion and for any reason, and
with the consent of the optionee, to accelerate the date on which Options shall
be exercisable.
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12. Transferability.
The right of any optionee to exercise any Option granted to him or her
shall not be assignable or transferable by such optionee other than by will or
the laws of descent and distribution, and any such Option shall be exercisable
during the lifetime of such optionee only by him or her. Any Option granted
under the Plan shall be null and void and without effect upon the bankruptcy of
the optionee to whom the Option is granted, or upon any attempted assignment or
transfer, except as herein provided, including, without limitation, any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition, or levy of execution, attachment, trustee
process or similar process, whether legal or equitable, upon such Option. The
Board shall have discretion to grant any Option that is not designated as an
incentive stock option, free of any or all of the restrictions described in this
Section.
13. Recapitalization, Reorganizations and the Like.
(a) In the event that after October 25, 1996 the outstanding shares of
the Common Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of any reorganization,
recapitalization, reclassification, stock split, combination of shares, or
dividends payable in capital stock, appropriate and equitable adjustment shall
be made by the Board, in its sole discretion, in the number and kind of shares
as to which Options may be granted under the Plan and as to which outstanding
Options or portions thereof then unexercised shall be exercisable. Such
adjustment in outstanding Options shall be made without change in the total
price applicable to the unexercised portion of such Options and with a
corresponding adjustment in the Option price per share.
(b) (i) In addition, unless otherwise determined by the Board in its
sole discretion, in the case of any (I) merger or consolidation pursuant to
which the Company's stockholders shall receive cash or securities of another
corporation and less than 50% of the outstanding capital stock of the surviving
corporation pursuant to such merger or consolidation shall be owned by the
stockholders of the Company, (II) sale or conveyance to another entity of all or
substantially all of the property and assets of the Company or (III) Change in
Control of the Company, the Company shall, or shall cause such surviving
corporation or the purchaser(s) of the Company's assets to, deliver to the
optionee the same kind of consideration that is delivered to the stockholders of
the Company as a result of such merger, consolidation, sale, conveyance or
Change in Control, or the Board may cancel all outstanding Options in exchange
for consideration in cash or marketable securities, which consideration in both
cases shall be equal in value to the value of those shares of stock or other
securities the optionee would have received had the Option been exercised (but
only to the extent then exercisable) and had no disposition of the shares
acquired upon such exercise been made prior to such merger, consolidation, sale,
conveyance or Change in Control, less the Option price therefor or, in lieu
thereof, the Board shall give the optionee at least twenty days prior written
notice of any such transaction in order to enable the optionee to exercise the
exercisable portion, if any, of the Option. Upon receipt of such consideration
or effective on the date specified in such notice, all Options (whether or not
then exercisable) shall immediately terminate and be of no further force or
effect. The value of
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the stock or other securities the optionee would have received if the Option had
been exercised shall be determined in good faith by the Board, and in the case
of shares of Common Stock, in accordance with the provisions of Section 8
hereof.
(ii) The Board shall also have the power and right to
accelerate the exercisability of any Options, notwithstanding any limitations in
this Plan or in the Agreement upon such merger, consolidation, sale, conveyance
or Change in Control.
(c) A "Change in Control" shall be deemed to have occurred if any
person, or any two or more persons acting as a group, and all affiliates of such
person or persons, who prior to such time Beneficially Owned (as defined in Rule
13d-3 under the Exchange Act) less than 40% of the then outstanding Common
Stock, shall acquire such additional shares of Common Stock in one or more
transactions, or series of transactions, such that following such transaction or
transactions, such person or group and affiliates Beneficially Own 50% or more
of the Common Stock outstanding.
(d) If by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation, the Board shall
authorize the issuance or assumption of a stock option or stock options in a
transaction to which Section 424(a) of the Code applies, then, notwithstanding
any other provision of the Plan, the Board may grant an option or options upon
such terms and conditions as it may deem appropriate for the purpose of
assumption of the old Option, or substitution of a new option for the old
Option, in conformity with the provisions of such Section 424(a) of the Code and
the Regulations thereunder, and any such option shall not reduce the number of
shares otherwise available for issuance under the Plan. In the event of such
issuance or assumption, the provisions of Section 13(b) hereof shall not be
applicable.
14. No Special Employment Rights.
Nothing contained in the Plan or in any Option granted under the Plan
shall confer upon any optionee any right with respect to the continuation of his
or her employment by the Company or any subsidiary or interfere in any way with
the right of the Company or any subsidiary, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate such employment
or to increase or decrease the compensation of the Option holder from the rate
in existence at the time of the grant of an Option. Whether an authorized leave
of absence, or absence in military or government service, shall constitute
termination of employment for purposes of any Option shall be determined by the
Board at the time of such occurrence.
15. Withholding.
The Company's obligation to deliver shares upon the exercise of any
Option granted under the Plan shall be subject to the Option holder's
satisfaction of any applicable federal, state and local income and employment
tax withholding requirements. The Company and optionee may agree to withhold
shares of Common Stock purchased upon exercise of an Option to satisfy the
above-mentioned withholding requirements.
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16. Restrictions on Exercise of Options and Issuance of Shares.
(a) Notwithstanding the provisions of Sections 9 and 11 hereof, an
Option cannot be exercised, and the Company may delay the issuance of shares
covered by the exercise of an Option and the delivery of a certificate for such
shares, until one of the following conditions shall be satisfied:
(i) The shares with respect to which such Option has been
exercised are at the time of the issuance of such shares effectively registered
or qualified under applicable federal and state securities acts now in force or
as hereafter amended; or
(ii) Counsel for the Company shall have given an opinion,
which opinion shall not be unreasonably conditioned or withheld, that the
issuance of such shares is exempt from registration and qualification under
applicable federal and state securities acts now in force or as hereafter
amended.
(b) The Company shall be under no obligation to qualify shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purpose of covering the issuance of shares in
respect of which any Option may be exercised or to cause the issuance of such
shares to be exempt from registration and qualification under applicable federal
and state securities acts now in force or as hereinafter amended, except as
otherwise agreed to by the Company in writing in its sole discretion.
17. Purchase for Investment; Rights of Holder on Subsequent Registration.
Unless and until the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the Securities Act
of 1933, as amended (the "1933 Act"), as now in force or hereafter amended, the
Company shall be under no obligation to issue any shares covered by any Option
unless the person who exercises such Option, in whole or in part, shall give a
written representation and undertaking to the Company which is satisfactory in
form and scope to counsel for the Company and upon which, in the opinion of such
counsel, the Company may reasonably rely, that he or she is acquiring the shares
issued pursuant to such exercise of the Option for his or her own account as an
investment and not with a view to, or for sale in connection with, the
distribution of any such shares, and that he or she will make no transfer of the
same except in compliance with any rules and regulations in force at the time of
such transfer under the 1933 Act, or any other applicable law, and that if
shares are issued without such registration, a legend to this effect may be
endorsed upon the securities so issued.
In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which an Option shall have been exercised, or to qualify any
such shares for exemption from the 1933 Act or other applicable statutes, then
the Company may take such action and may require from each optionee such
information in writing for use in any registration statement, supplementary
registration statement, prospectus, preliminary prospectus, offering circular or
any other document that is reasonably necessary for such purpose and may require
reasonable indemnity to
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the Company and its officers and directors from such holder against all losses,
claims, damages and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
18. Loans.
At the discretion of the Board, the Company may loan to the optionee,
or pay to the optionee as a bonus, some or all of the purchase price of the
shares acquired upon exercise of an Option, the terms of such loans or bonus to
be at the discretion of the Board.
19. Modification of Outstanding Options.
Subject to any applicable limitations contained herein, the Board may
authorize the amendment of any outstanding Option with the consent of the
optionee when and subject to such conditions as are deemed to be in the best
interests of the Company and in accordance with the purposes of the Plan.
Without limiting the foregoing, the Board shall have the authority to effect, at
any time and from time to time, with the consent of the affected optionees, the
cancellation of any or all outstanding Options under the Plan and to grant in
substitution therefor new Options under the Plan covering the same or different
numbers of Shares and having, at the discretion of the Board and subject to
Sections 6 and 8 hereof, an exercise price, in the case of Options designated as
non-qualified stock options, as shall be determined by the Board and, in the
case of Options designated as incentive stock options, of not less than one
hundred percent (100%) of the fair market value of the Common Stock on the new
grant date.
20. Approval of Board and Stockholders.
The Plan shall become effective upon adoption by the Board and the
stockholders of the Company; provided, however, that the Plan shall be submitted
for approval by the stockholders of the Company within 12 months after the date
of adoption of the Plan by the Board. If the stockholders of the Company fail to
approve the Plan within 12 months after the date of adoption of the Plan by the
Board, the Plan and all stock options granted thereunder shall be and become
null and void and of no further force or effect.
21. Termination and Amendment of Plan.
Unless sooner terminated as herein provided, the Plan shall terminate
ten years from the earlier of (x) the date on which the Plan was duly adopted by
the Board, and (y) the date on which the Plan was duly approved by the
stockholders of the Company. The Board may at any time terminate the Plan or
make such modification or amendment thereof as it deems advisable; provided,
however, (i) the Board may not, without the approval of the stockholders of the
Company obtained in the manner stated in Section 20 hereof, increase the maximum
number of shares for which Options may be granted or change the designation of
the class of persons eligible to receive Options under the Plan, and (ii) any
such modification or amendment of the
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Plan shall be approved by a majority of the stockholders of the Company to the
extent that such stockholder approval is necessary to comply with applicable
provisions of the Code, rules promulgated pursuant to Section 16 of the Exchange
Act (if any), applicable state law, or applicable NASD or exchange listing
requirements. Termination or any modification or amendment of the Plan shall
not, without the consent of an optionee, affect his or her rights under an
Option theretofore granted to him or her.
22. Duties of the Company.
The Company shall at all times keep available for issuance or delivery
such number of shares of Common Stock as will be sufficient to satisfy the
requirements of the Plan.
23. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of
the Company with respect to any of the Options until (x) the Option shall have
been exercised with respect thereto (including payment to the Company of the
exercise price) and (y) the earlier to occur of (i) the delivery by the Company
to the optionee of a certificate therefor, or (ii) the date on which the Company
is required to deliver a certificate pursuant to Section 9(b) hereof.
24. Governing Law.
The Plan and all Options shall be governed by and construed under the
laws of the State of New York, without giving effect to principles of conflicts
of law.
25. Notices.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to the attention of the President at the
Company's principal place of business; and, if to an optionee, to his or her
address as it appears on the records of the Company.
26. Headings.
The headings contained in this Plan are for convenience of reference
only and in no way define, limit or describe the scope or intent of the Plan or
in any way affect this Agreement.
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