<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:
[X] Preliminary Proxy Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it is determined):
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(4) Proposed maximum aggregate value of transaction:
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<PAGE>
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] 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:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
PRELIMINARY COPY
----------------
INTERNATIONAL SPORTS WAGERING INC.
2 Andrews Road
West Paterson, New Jersey 07424
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on February 28, 2001
----------------
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
February 28, 2001 for the following purposes:
1. To elect a board of five 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 Certificate of
Incorporation to change the name of the Company to Interactive Systems Worldwide
Inc.;
3. To ratify the selection of KPMG LLP as the Company's independent
public accountants for the fiscal year ending September 30, 2001; 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
January 22, 2001 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 for the fiscal
year ended September 30, 2000 accompanies this notice.
By Order of the Board of Directors,
Barry Mindes
Chairman of the Board of Directors
West Paterson, New Jersey
February 1, 2001
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 February 28, 2001 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 February 1, 2001, to all stockholders of record of the
Company on January 22, 2001. 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
Common 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 to the
Company's Certificate of Incorporation to approve a change in the Company's name
to Interactive Systems Worldwide Inc., (iii) FOR the ratification of the
selection of KPMG LLP as the Company's independent public accountants for the
fiscal year ending September 30, 2001 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 January 22,
2001 (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 8,965,392 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. Approval by the
affirmative vote of a majority of the outstanding Common Stock entitled to vote
is required for the amendment to the Certificate of Incorporation described
herein to be adopted. 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
<PAGE>
present in person or represented by duly executed proxy at the Meeting
and entitled to vote on such subject matter will be required.
SECURITY OWNERSHIP
The following table sets forth, as of January 22, 2001, 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 January
22, 2001, there were outstanding 8,965,392 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 33.4
Mindes Family Limited Partnership 1,511,523 16.9
Bernard Albanese (5) 442,419 4.8
The Marie Albanese Trust, Marie Albanese 302,304 3.4
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 6.6
Andrew Harbison (11) 185,990 2.0
All directors and executive officers as a group 3,855,040 40.3
(6 persons) (12)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) The address of each beneficial owner identified is c/o International
Sports Wagering Inc., 2 Andrews Road, West Paterson, 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) 8,965,392 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 of Common Stock
exceed his proportionate interest therein. Does not include shares of
Common Stock beneficially owned by Mr. Mindes' daughter, Janet
Mandelker, as to which Mr. Mindes disclaims beneficial ownership.
2
<PAGE>
(5) Includes 291,267 shares underlying options held by Mr. Albanese which
are exercisable within 60 days of the date hereof.
(6) Marie Albanese and Christine Albanese are the wife and daughter,
respectively, of Mr. Albanese. Mr. Albanese disclaims beneficial
interest in 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
interest in shares held 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 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 owned by Brookwood Partners, L.P.
Seneca Ventures and Woodland Venture Fund are each limited
partnerships, 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 owned by Seneca
Ventures and Woodland Venture Fund.
(11) Includes 149,714 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 595,746 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, as amended ("Act"). 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. A Registration
Statement on Form S-3 covering the Shares, and other shares of Common Stock, was
filed with the SEC and declared effective on May 5, 2000. 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) provided 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) helped 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 2002
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 69 Chairman of the Board and Secretary
Bernard Albanese 53 President, Treasurer (Chief Financial
Officer) and Director
Fredric Kupersmith (1) 67 Director
Janet Mandelker (1)(2) 33 Director
Harold Rapaport (1)(2) 78 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
until March 1999, she was an independent consultant. From December 1997 until
June
4
<PAGE>
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 six times and acted by unanimous written consent numerous times during the
fiscal year ended September 30, 2000. During such fiscal year, all current
directors attended at least 75% of the meetings of the Board and each of the
Committees on which they served. The Board maintains two standing committees:
the Audit Committee and the Stock Option Committee.
The Audit Committee, consisting of Fredric Kupersmith, Janet Mandelker
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. In June 2000, the Board of Directors adopted a written charter for
the Audit Committee. A majority of the members of the Audit Committee are
independent as defined by the rules of the National Association of Securities
Dealers. The Audit Committee met twice during the fiscal year ended September
30, 2000. The Audit Committee (a) reviewed and discussed the audited financial
statements with management of the Company (b) discussed the matters required to
be discussed by SAS 61, (c) received the written disclosures and letter from the
independent accountants required by Independence Standards Board Standard No. 1
and has discussed with KPMG their independence and (d) based upon such review
and discussions, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Company's Annual Report in
Form 10-KSB for the fiscal year ended September 30, 2000, as filed with the
Securities and Exchange Commission.
The Stock Option Committee, consisting of Janet Mandelker and Harold
Rapaport, has authority to administer the Company's 1995 and 1996 Stock Option
Plans, and in this capacity determines the persons to whom options should be
granted under such Plans and the number of options to be granted to such
persons. The Stock Option Committee held no meetings during the fiscal year
ended September 30, 2000 but 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 January 22, 2001,
regarding the executive officers and key personnel of the Company.
Name Age Position with the Company
---- --- -------------------------
Barry Mindes 69 Chairman of the Board and Secretary
Bernard Albanese 53 President, Treasurer (Chief Financial
Officer)and Director
Andrew Harbison 42 Vice President-Software Development
5
<PAGE>
Information relating 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
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.
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, 2000, 1999 and 1998 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 $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Compensation (1) Long Term Compensation
---------------- ----------------------
Awards Payouts
------ -------
Securities
Name and Principal Position Underlying All Other
Year Salary Options Compensation
($) (#) ($)
<S> <C> <C> <C> <C>
Barry Mindes 2000 212,115 -0- -0-
Chairman of the Board 1999 166,250 -0- -0-
1998 127,500 -0- -0-
Bernard Albanese 2000 179,615 60,000 (2) -0-
President and Treasurer 1999 152,500 45,000 (2) -0-
1998 150,000 80,000 (2) -0-
Andrew Harbison 2000 134,423 24,000 (3) -0-
Vice President-Software 1999 122,423 30,000 (3) -0-
Development 1998 104,606 30,000 (3) -0-
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</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. There were no
bonus payments made to any person shown in the Table during the fiscal
years ended September 30, 2000, 1999 or 1998. No person listed in the
Table received benefits or other annual compensation during the years
shown that exceeded the lesser of $50,000 or 10% of such person's
salary and bonus except for Mr. Mindes during the year ended September
30, 1998. In the fiscal year ended September 30, 1998, Mr. Mindes
received benefits and other annual compensation amounting to
approximately $19,600, consisting of $11,330 relating to lease payments
for an automobile and $8,270 in other expenses relating to use of the
automobile, premiums on life insurance, medical insurance and related
expenses and certain other perquisites. (See "Employment Agreements"
for a description of the employment agreements between the Company and
each of Messrs. Mindes and Albanese, including the benefits payable
thereunder.)
(2) On October 12, 1999, Mr. Albanese was granted options to purchase
60,000 shares of Common Stock at an exercise price of $0.69 per share,
and on December 21, 1998 he was granted options to purchase 45,000
shares of Common Stock at an exercise price of $1.41 per share, in each
case such prices represented the fair market value of the Common Stock
on such dates. On March 16, 1998, Mr. Albanese was granted options to
purchase 80,000 shares of
6
<PAGE>
Common Stock 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 him at a
higher exercise price.
(3) On October 12, 1999, Mr. Harbison was granted options to purchase
24,000 shares of the Company's Common Stock at an exercise price of
$0.69 per share, and on December 21, 1998 he was granted options to
purchase 30,000 shares of Common Stock at in exercise price of $1.41
per share, in each case such prices represented the fair market value
of the Company's Common Stock on such dates. On February 23, 1998, Mr.
Harbison was granted an option to purchase 30,000 shares of Common
Stock at an exercise price of $0.67 per share, the fair market value of
the Common Stock on such date, upon the surrender of options to
purchase a similar number of shares previously granted to him at a
higher exercise price.
Stock Option Tables
Option Grants in Last Fiscal Year
The following tables sets forth for the fiscal year ended September 30,
2000, the options to purchase Common Stock granted to the executives named
below.
<TABLE>
<CAPTION>
Individual Grants
Percent of Total
Number of Securities Options Granted to
Underlying Options Employees in Exercise Price
Name Granted Fiscal Year (1) ($/Sh)(2) Expiration Date
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Barry Mindes, Chairman of
the Board -0- -0- --- ---
Bernard Albanese,
President and Treasurer 60,000 (3) 22.4 0.69 October 11, 2009
Andrew Harbison,
Vice President-Software
Development 24,000 (3) 9.0 0.69 October 11, 2009
-------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During the fiscal year ended September 30, 2000, the Company granted a
total of 268,000 options to employees under the 1995 and 1996 Stock
Option Plans. 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 October 12, 1999, which vest in four
equal annual installments, commencing on the first anniversary of the
date of grant (see Notes 3 and 5 to Summary Compensation Table).
Aggregate Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
The following table sets forth, as of September 30, 2000, information
concerning outstanding options to purchase Common Stock held by the executives
named below.
7
<PAGE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underyling Unexercised "In-the Money" Options
Options at September 30, 2000 at September 30, 2000(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- 234,600 116,667 $91,765 $37,050
Andrew Harbison
Vice President-Software
Development -0- -0- 123,714 54,000 $48,608 $15,030
--------------------------------------------------------------------------------------------------------------------------
</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 29, 2000, was $1.125 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 an employment agreement with Barry Mindes
dated as of March 17, 2000, for the period from March 17, 2000 through December
31, 2002, pursuant to which (i) Mr. Mindes receives a base salary of not less
than $250,000 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 one year. 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 or reimbursement per annum to which he shall be entitled for all of the
foregoing during the term of the Agreement shall not exceed $13,400. Mr. Mindes'
current base salary is $250,000 per annum.
The Company entered into an employment agreement with Bernard Albanese
dated as of March 17, 2000, for the period from March 17, 2000 through June 30,
2003, pursuant to which (i) Mr. Albanese receives a base salary of not less than
$200,000 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) four weeks of vacation each year; and (v) severance equal to
one year's base salary 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 one year, or (b) if termination occurs after the
term, but while he is still employed by the Company, payment of one year's base
salary and benefits. Mr. Albanese is also entitled, at the Company's expense, to
the use of a leased automobile, including all operating, maintenance and
insurance expenses. 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
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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. The Agreement
also provides that if Mr. Albanese has been employed by the Company for a total
of 10 years, he will have the right, in his discretion, to voluntarily retire
from the Company and upon such retirement he is entitled to receive continuation
of his base salary and benefits for a period of one year. Mr. Albanese's current
base salary is $200,000 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.
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 paid each outside director $1,000 for each Board meeting attended, up to
a maximum of $4,000 per fiscal year. Effective as of October 1, 2000, the
Company pays each outside director $12,000 per year, payable quarterly. The
Company also periodically grants to outside directors options to purchase Common
Stock. 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 COMPANY'S CERTIFICATE
OF INCORPORATION IN ORDER TO CHANGE THE COMPANY'S NAME
On December 22, 2000, the Board of Directors of the Company unanimously
adopted a resolution to amend the Company's Certificate of Incorporation,
subject to approval of the stockholders, in order to change the Company's name
to Interactive Systems Worldwide Inc. The purpose of the proposed name change is
to reflect the changes in the business focus of the Company that have occurred
during the past year. The Board believes that the existing name was too limiting
and that the proposed name is more descriptive of the Company's business and
technology.
The change in corporate name will not affect the status of the Company
or the rights of any stockholder in any respect, or the validity or
transferability of stock certificates presently outstanding. The Company's
stockholders will not be required to exchange stock certificates to reflect the
new name. If a stockholder's shares of Common Stock are currently represented by
a physical certificate, that certificate will continue to represent such
stockholder's ownership of such shares, notwithstanding the change in the
Company's name. Stockholders should keep the stock certificates they now hold,
which will continue to be valid, and should not send them to the Company or its
transfer agent. The Company will retain the trading symbol "ISWI" if the
amendment is approved.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE AMENDMENT TO
THE CERTIFICATE OF INCORPORATION IN ORDER TO CHANGE THE NAME OF THE COMPANY.
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, 2001. 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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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,
2000.
ANNUAL REPORT
The Annual Report of the Company on Form 10-KSB for the fiscal year
ended September 30, 2000, 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 2002 ANNUAL MEETING
Any stockholder desiring to present proposals to stockholders at the
2002 Annual Meeting of Stockholders 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, 2001. 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 for the year ended
September 30, 2000, 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., 2 Andrews
Road, West Paterson, New Jersey 07424.
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APPENDIX TO PROXY MATERIALS
FOR INTERNATIONAL SPORTS WAGERING INC.
<PAGE>
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the corporation's policies, procedures and practices
at all levels. The Audit Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
o Review and appraise the audit efforts of the Corporation's
independent accountants.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of two or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee. A
director shall be deemed to be "independent" if he or she meets the requirement
of an "independent director" as defined by the Rules of the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers
("NASDAQ"). All members of the Committee shall have a working familiarity with
basic finance and accounting practices, and at least one member of the Committee
shall have accounting or related financial management expertise.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board and continue in such capacity until
their successors shall be duly elected and qualified. Unless a Chair is elected
by the full Board, the
<PAGE>
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. MEETINGS
The Committee shall meet periodically during each fiscal year as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
accountants and management quarterly to review the Corporations financials
consistent with IV.4 below).
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
------------------------
1. Review and update the Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's response.
4. Review with financial management and the independent accountants the
Form 10-QSB prior to its filing or prior to the release of earnings.
The Chair of the Committee may represent the entire Committee for
purposes of this review.
Independent Accountants
-----------------------
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the independent accountants
have with the Corporation to determine the accountants' independence,
including obtaining from the accountants a written statement
delineating any relationships between the accountants and the
Corporation consistent with SEC and NASDAQ requirements.
6. Review the performance of the independent accountants.
2
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7. Periodically consult with the independent accountants out of the
presence of management about internal controls and the accuracy of the
organization's financial statements.
Financial Reporting Processes
-----------------------------
8. In consultation with the independent accountants, review the integrity
of the organization's financial reporting processes, both internal and
external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
10. Consider and approve, if appropriate, major changes in the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
auditing department.
Process Improvement
-------------------
11. Establish, if appropriate, regular and separate systems of reporting to
the Audit Committee by each of management and the independent
accountants regarding any significant judgments made in management's
preparation of the financial statements and the view of each as to
appropriateness of such judgements.
12. Following completion of the annual audit, review separately with each
of management and the independent accountants any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
13. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the
financial statements.
14. Review with the independent accountants and management the extent to
which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review
should be conducted at an appropriate time subsequent to implementation
of changes or improvements, as decided by the Committee).
Legal Compliance
----------------
15. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
16. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
3
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17. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or the Board
deems necessary or appropriate.
4
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PRELIMINARY COPY
----------------
INTERNATIONAL SPORTS WAGERING INC.
2 Andrews Drive, West Paterson, NJ 07424
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 28, 2001
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
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 January 22, 2001, at the Annual Meeting of
Stockholders of INTERNATIONAL SPORTS WAGERING INC., on February 28, 2001 at
10:00 a.m., local time, or at any adjournments thereof.
(1) Election of Directors
<TABLE>
<S> <C>
/ / FOR all nominees listed below (except as / / WITHHOLD AUTHORITY to vote for all nominees
indicated otherwise below) 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:
(2) To approve an amendment to the Company's Certificate of Incorporation to FOR AGAINST ABSTAIN
change the name of the Company to Interactive Systems Worldwide Inc. / / / / / /
(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, 2001. / / / / / /
(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: , 2001
---------------------------------------
Stockholder:
-------------------------------------
-------------------------------------------------
Signature
-------------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMTLY
USING THE ENCLOSED ENVELOPE.
