SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14 a-11(c) or 240.14a-12
SYSCOMM INTERNATIONAL CORPORATION
(Name of Registrant as Specified In Its Charter)
Dennis Wilson, Secretary
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check Appropriate Box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
4) Proposed maximum aggregate value of transaction:
[ ] 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:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
SYSCOMM INTERNATIONAL CORPORATION
(a Delaware corporation)
NOTICE OF 1998 ANNUAL
MEETING OF STOCKHOLDERS TO BE
HELD AT 10:00 A.M. ON FEBRUARY 24, 1998
To the Stockholders of SYSCOMM INTERNATIONAL CORPORATION:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Meeting") of SYSCOMM INTERNATIONAL CORPORATION (the "Company") will be held on
February 24, 1998, at 10:00 A.M. at The Smithtown Sheraton, 110 Motor Parkway,
Smithtown, New York 11788 for the following purposes:
1. to elect three Class I directors;
2. to adopt the Company's 1998 Stock Option Plan;
3. to ratify the appointment of Albrecht, Viggiano, Zureck & Company, P.C.
as the Company's independent auditors for the fiscal year ending September 30,
1998; and
4. to transact such other business as may properly come before the Meeting
and any adjournment or postponement thereof.
The Board of Directors has fixed January 15, 1998, at the close of
business, as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting, and only holders of record of shares of
the Company's Common Stock at the close of business on that day will be entitled
to vote. The stock transfer books of the Company will not be closed.
A complete list of stockholders entitled to vote at the Meeting shall be
available at the offices of the Company during ordinary business hours from
January 24, 1998 until the Meeting for examination by any stockholder for any
purpose germane to the Meeting. This list will also be available at the Meeting.
All stockholders are cordially invited to attend the Meeting in person.
However, whether or not you expect to be present at the Meeting, you are urged
to mark, sign, date and return the enclosed Proxy, which is solicited by the
Board of Directors, as promptly as possible in the postage-prepaid envelope
provided to ensure your representation and the presence of a quorum at the
Meeting. The shares represented by the Proxy will be voted according to your
specified response. The Proxy is revocable and will not affect your right to
vote in person in the event you attend the Meeting.
By Order of the Board of Directors
Dennis Wilson, Secretary
Hauppauge, New York
January 29, 1998
<PAGE>
SYSCOMM INTERNATIONAL CORPORATION
275 Marcus Boulevard
Hauppauge, NY 11788
------------------------------
PROXY STATEMENT
------------------------------
1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 10:00 A.M. ON FEBRUARY 24, 1998
The enclosed Proxy Statement is solicited by the Board of Directors of
SYSCOMM INTERNATIONAL CORPORATION (the "Company") in connection with the 1998
Annual Meeting of Stockholders (the "Meeting") to be held on February 24, 1998,
at 10:00 a.m. at The Smithtown Sheraton, 110 Motor Parkway, Smithtown, New York
11788 and at any adjournment thereof. The Board of Directors has set January 15,
1998, at the close of business, as the record date ("Record Date") for the
determination of stockholders entitled to notice of and to vote at the Meeting.
As of the record date, the Company had 4,555,540 shares of Common Stock
outstanding. A stockholder executing and returning a proxy has the power to
revoke it at any time before it is exercised by filing a later proxy with, or
other communication to, the Secretary of the Company or by attending the Meeting
and voting in person.
The proxy will be voted in accordance with your directions as to:
(1) the election of the persons listed herein as directors of the Company;
(2) the adoption of the Company's 1998 Stock Option Plan;
(3) the ratification of the appointment of Albrecht, Viggiano, Zureck &
Company, P.C. as the Company's independent auditors for the fiscal year ending
September 30, 1998; and
(4) the transaction of such other business as may properly come before the
Meeting and any adjournment or postponement thereof.
In the absence of direction, the proxy will be voted in favor of these
proposals.
The entire cost of soliciting proxies will be borne by the Company. The
cost of solicitation, which represents an amount believed to be normally
expended for a solicitation relating to an uncontested election of directors,
will include the cost of supplying necessary additional copies of the
solicitation materials and the Company's 1997 Annual Report to Stockholders (the
"Annual Report") to beneficial owners of shares held of record by brokers,
dealers, banks, trustees, and their nominees, including the reasonable expenses
of such recordholders for completing the mailing of such materials and Annual
Report to such beneficial owners.
In voting at the Meeting, each stockholder of record on the Record Date
will be entitled to one vote on all matters to come before the Meeting. Holders
of a majority of the outstanding shares of Common Stock must be represented in
person or by proxy in order to achieve a quorum to vote on all matters. The
Proxy Statement, the attached Notice of Meeting, the enclosed form of Proxy and
the Annual Report are being mailed to stockholders on or about January 29, 1998.
<PAGE>
1. ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation provides
that the Board of Directors shall be divided into three classes, with each class
consisting, as nearly as may be possible, of one-third of the total number of
directors constituting the entire Board. The Company's Board of Directors
presently consists of seven members with three members in Class I and two
members in each of Classes II and III. Each Class is elected for a term of three
years. The term of office of the current Class I, II and III directors is
scheduled to expire at the 1998, 1999 and 2000 annual meeting of stockholders,
respectively. At each annual meeting, directors are elected to succeed those in
the class whose term expires at that annual meeting, such newly elected
directors to hold office until the third succeeding annual meeting and the
election and qualification of their respective successors.
Three directors are to be elected as Class I directors by a plurality of
the votes cast at the Meeting, each to hold office until the 2001 annual meeting
of stockholders and until their respective successors are elected and qualified.
Unless otherwise directed, the persons named in the accompanying Proxy have
advised management that it is their intention to vote for the election of Dennis
R. Wilson, Cornelia Eldridge and Lee Adams as Class I directors.
Each of the nominees for election as a Class I director has advised the
Company of his willingness to serve as a director and management believes that
each nominee will be able to serve. If any nominee becomes unavailable, proxies
may be voted for the election of such person or persons who may be designated by
the Board of Directors. The Board of Directors recommends voting FOR the
election of Dennis R. Wilson, Cornelia Eldridge and Lee Adams as Class I
directors.
Information Regarding Directors
The following table sets forth certain information with respect to (i) the
nominees for election as Class I directors, including the year in which such
nominees terms would expire, if elected, and (ii) each of the Class II and Class
III directors whose terms will continue after the Meeting:
<TABLE>
<CAPTION>
YEAR TERM EXPIRES
NAME AGE POSITION IF ELECTED, AND CLASS
<S> <C> <C> <C>
John H. Spielberger... 55 Chairman of the Board of Directors, 2000 Class III
President and Chief Executive Officer
of Syscomm
Thomas J. Baehr....... 41 Vice President, Director of SysComm, 2000 Class III
President and Chief Operating Officer
of InfoTech
Dennis R. Wilson*..... 48 Vice President, Director of SysComm, 2001 Class I
Chief Financial Officer and Secretary
of SysComm
Norman M. Gaffney..... 49 Director of SysComm, Executive Vice 1999 Class II
President of Marketing and Sales
of InfoTech
John C. Spielberger... 28 Director of SysComm 1999 Class II
Cornelia Eldridge*.... 56 Director of SysComm 2001 Class I
Lee Adams*............ 65 Director of SysComm 2001 Class I
</TABLE>
------------------------
* Nominee for Class I Director
John H. Spielberger is the Chairman of the Board of Directors, President
and Chief Executive Officer of SysComm, which he founded in 1986. He is also
currently the Chairman of the Board and Chief Executive Officer of InfoTech,
which he founded in 1980. From 1968 through 1976, Mr. Spielberger worked for IBM
as a sales representative. From 1976 through 1980, Mr. Spielberger was employed
as Vice President of The Harvey Group Inc., a company listed on the American
Stock Exchange, where he was responsible for all management information systems
and communications. In 1980, Mr. Spielberger founded John Spielberger &
Associates, Inc., a designer, programmer and installer of computer systems,
which later became known as InfoTech. Mr. Spielberger is a member of various IBM
advisory boards which assist IBM in developing new and innovative programs to
market their products. Mr. Spielberger graduated from Long Island University,
C.W. Post Campus, New York in May 1966 with a B.A. in Biology.
Thomas J. Baehr joined InfoTech in January 1994 and has been a member of
SysComm's Board of Directors since August 1995. Mr. Baehr became InfoTech's
President in January 1996 and is currently its Chief Operating Officer. From
June 1978 through October 1979, Mr. Baehr worked as a sales representative at
the Burroughs Corporation. From October 1979 through November 1986, Mr. Baehr
was employed at Honeywell Information Systems, where he was responsible for the
sale of mainframe and minicomputers to the General Electric Company. From
November 1986 through July 1992, Mr. Baehr was employed by Prime Computer Inc.
in various positions including sales manager for the New York metropolitan area
and regional manager for the northeastern United States. From July 1992 through
January 1994, Mr. Baehr was employed by Basic Computer Corporation in White
Plains, New York. Mr. Baehr graduated Fairfield University, Connecticut in May
of 1978 with a B.S. in Marketing.
Dennis R. Wilson has been a director of the Company since 1986 and became
Vice President and Chief Financial Officer of SysComm and InfoTech in March
1995. From 1972 through March 1992, Mr. Wilson was employed by The Harvey Group
Inc. During his career at The Harvey Group, Mr. Wilson held the following
positions: Member of the Board of Directors, Executive Vice President and Chief
Financial Officer, Corporate Secretary and Director of Internal Audit. From 1992
through February 1995, Mr. Wilson was employed at The Boerner Company, a
successor to The Harvey Group, as Chief Financial Officer. He received a B.S. in
Accounting from St. John's University in June 1970 and received his M.B.A. from
St. John's in January 1976. He is also a member of the Institute of Management
Accountants and the Association of MBA Executives.
Norman M. Gaffney has been a Director on the Board of SysComm since
September 1996. He joined the Company in November 1994 and has served as
Executive Vice President of Sales and Marketing of InfoTech since January 1996.
Prior to joining SysComm, Mr. Gaffney was employed by IBM in various positions
including Consulting Marketing Representative and Senior Accounts Manager for 22
years. Mr. Gaffney graduated from the University of Miami receiving a B.S. in
Marketing.
John C. Spielberger is a Director of the Board of SysComm. In 1991, he
received a B.S. in Marketing from the Wallace School of Management, Boston
College. From February 1992 through October 1992, Mr. Spielberger was employed
as a marketing support representative for Lexmark International. Mr. Spielberger
joined InfoTech in October 1992 and is a sales specialist for the RISC
System/6000. Mr. Spielberger is the son of John H. Spielberger, the Chairman of
the Board, President and Chief Executive Officer of SysComm.
Cornelia Eldridge has been a Director of the Company since July 1997. Since
1981, Ms. Eldridge has been President of Eldridge Associates, Inc., a management
consulting firm. Eldridge Associates provides strategic planning and
organizational consulting services to senior executive management including
Chief Executive Officers. Ms. Eldridge has a B.A. from Ohio Wesleyan University
and an M.B.A. from the University of Massachusetts. She serves on the Board of
Directors of DE Frey, Inc., a privately-held financial services firm. Ms.
Eldridge also currently provides consulting services to Commonwealth Associates.
Lee Adams has been a Director of the Company since July 1997. From 1989
through March 1997, when that company was sold, Mr. Adams was the Chairman and
Chief Executive Officer of Target Solutions, Incorporated, a privately-held
vertical remarketer of IBM's AS/400 line of products. From 1963 to 1989, Mr.
Adams held various executive sales and marketing positions at IBM. Mr. Adams
received a B.B.A. from Kalamazoo College in June 1963.
The Company's officers are elected annually by the Board of Directors and
serve until their successors are duly elected and qualified.
The Company's By-Laws provide that the Company shall indemnify each
director and such of the Company's officers, employees and agents as the Board
of Directors shall determine from time to time to the fullest extent provided by
the laws of the State of Delaware.
The Company carries insurance providing indemnification, under certain
circumstances, to all of its directors and officers for claims against them by
reason of, among other things, any act or failure to act in their capacities as
directors or officers. To date, no sums have been paid to any past or present
director or officer of the Company under this or any prior indemnification
insurance policy.
Meetings and Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Compensation Committee.
The Board of Directors does not have a nominating committee or a committee
performing the functions of a nominating committee.
The members of the Audit Committee are John C. Spielberger, Cornelia
Eldridge and Lee Adams. The Audit Committee held no meetings during the fiscal
year ended September 30, 1997. The function of the Audit Committee is to
recommend annually to the Board of Directors the appointment of the independent
public accountants of the Company, discuss and review the scope and the fees of
the prospective annual audit and review the results thereof with the independent
public accountants, review and approve non-audit services of the independent
public accountants, review compliance with existing major accounting and
financial policies of the Company, review the adequacy of the financial
organization of the Company and review management's procedures and policies
relative to the adequacy of the Company's internal accounting controls.
The members of the Compensation Committee are Thomas Baehr, Cornelia
Eldridge and Lee Adams. The Compensation Committee held one meeting during
fiscal year ended September 30, 1997. The function of the Compensation Committee
is to make recommendations to the Board of Directors concerning salaries and
incentive compensation for the Company's executives and employees.
The Board of Directors met on two occasions and acted four times by
unanimous written consent during the fiscal year ended September 30, 1997.
Family Relationships
John H. Spielberger, the Chairman of the Board of Directors, President and
Chief Executive Officer of the Company is the father of John C. Spielberger, a
Director of the Company.
Director's Compensation
Directors who are employees of the Company receive no compensation, as
such, for service as members of the Board. Directors who are not employees of
the Company receive options to purchase 5,000 shares of Common Stock for each
year served on the Board and reimbursement of expenses incurred in connection
with attendance of Board and Committee Meetings. The Company's officers are
elected annually by the Board of Directors and serve at the discretion of the
Board.
<PAGE>
Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company during each of the three fiscal years ended September 30, 1997 to the
Company's Chief Executive Officer and the three most highly paid Company's
Executive Officers whose total cash compensation for such periods exceeded
$100,000 (the "Named Executives"):
SUMMARY COMPENSATION TABLE
Annual Compensation
<TABLE>
<CAPTION>
Name and Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
- ------------------ ------- ------------ ---------- -----------------
<S> <C> <C> <C> <C>
John H. Spielberger, Chairman of 1997 $140,000 $ 133,142 $ 27,623(1)
the Board of Directors, 1996 $100,000 $ 90,000 $ 29,411(2)
President and Chief Executive 1995 $100,000 $ - $ -
Officer of SysComm
Dennis R. Wilson, Vice President, 1997 $120,000 $ 15,000 -
Chief Financial Officer, 1996 $100,000 $ 35,000 $ -
Secretary and Director of SysComm 1995 $ 58,333 $ - $ -
Thomas J. Baehr, Vice President 1997 $150,000 $160,332 $ -
and Director of SysComm 1996 $134,579 $157,000 $ -
President and Chief Operating 1995 $157,016 $ - $ -
Officer of InfoTech
Norman M. Gaffney, Director of 1997 $125,000 $169,852 $ -
SysComm, Executive Vice 1996 $304,613 $ - $ -
President, Marketing and Sales 1995 $141,972 $ - $ -
of InfoTech
</TABLE>
-------------------------------
(1) Consists of expenses for a Company car ($719), life insurance premiums
($25,854) and administration fees on his pension plan ($1,050).
(2) Consists of expenses for a Company car ($4,464), life insurance
premiums ($23,897) and administration fees on his pension plan ($1,050).
<PAGE>
Stock Options
The following table discloses information concerning stock options granted
to the Named Executives during the Company's fiscal year ended September 30,
1997:
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Individual Stock Price Appreciation for
Grants Option Term
---------- ------------------------
% of Total
Options/SARs Exercise or
Options/SARs Granted to Employees Base Price Expiration
Name Granted (#) in Fiscal Year ($/share) Date 5%($) 10%($)
---- ---------- --------------- ---------- ----- ------ -------
<S> <C> <C> <C> <C> <C> <C>
John H. Spielberger 3,000 4.32% 6.11875 9/1/01 $1,927.51 $6,075.92
Dennis R. Wilson 3,000 4.32% 5.5625 9/1/01 $3,596.26 $7,744.67
Thomas J. Baehr 3,000 4.32% 5.5625 9/1/01 $3,596.26 $7,744.67
Norman M. Gaffney 3,000 4.32% 5.5625 9/1/01 $3,596.26 $7,744.67
John C. Spielberger 2,000 2.88% 5.5625 9/1/01 $3,596.26 $7,744.67
</TABLE>
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Year-End Values
The following table sets forth information concerning the exercise of stock
options by the Named Executives during the Company's fiscal year ended September
30, 1997, the number of options owned by the Named Executives and the value of
any in-the-money unexercised stock options as of September 30, 1997.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercisable
Unexercised In-the-Money
Options Options at
at Fiscal Year End (#) Fiscal Year End ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) $ Unexercisable Unexercisable (1)
---- --------------- -------------- ------------- -----------------
<S> <C> <C> <C> <C>
John H. Spielberger 0 0 26,400/16,600 148,500/77,269
Dennis R. Wilson 0 0 68,640/38,360 390,905/203,813
Thomas J. Baehr 0 0 66,000/37,000 375,870/196,068
Norman M. Gaffney 0 0 66,000/37,000 375,870/196,068
John C. Spielberger 0 0 2,640/3,360 15,035/9,370
</TABLE>
-------------------
(1) Represents the closing price of the Company's Common Stock listed on
the NASDAQ National Market on September 30, 1997 ($6.375) minus the respective
exercise prices.
Stock Option Plan
1988 Stock Option Plan.
On July 29, 1988, the stockholders approved a stock option plan (the "1988
Stock Option Plan"). In connection with the 1988 Stock Option Plan, 1,000,000
shares of Common Stock are reserved for issuance pursuant to options that may be
granted under the plan through May 5, 1998.
The purpose of the 1988 Stock Option Plan is to encourage stock ownership
by employees of the Company, its divisions and subsidiary corporations and to
give them a greater personal interest in the success of the Company. The 1988
Stock Option Plan is administered by the Compensation Committee. The
Compensation Committee consists of at least three members of the Board of
Directors. The Compensation Committee shall have the authority in its
discretion, subject to and not inconsistent with the express provisions of the
Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan, including, without limitation, the authority to
grant Options; to determine which Options shall constitute incentive stock
options ("ISO") and which Options shall constitute Non-Qualified Stock Options;
to determine which Options (if any) shall be accompanied by rights or limited
rights; to determine the purchase price of the shares of Common Stock covered by
each Option (the "Option Price"); to determine the persons to who, and the time
or times at which, Options shall be granted; to determine the number of shares
to be covered by each Option; to interpret the Plan; to prescribe, amend and
rescind rules and regulations relating to the Plan; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Compensation Committee may delegate to one or more of its members or to one
or more agents such administrative duties as it may deem advisable, and the
Compensation Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Compensation Committee or such person may have under the
Plan.
Options granted under the 1988 Stock Option Plan may not be granted at a
price less than the fair market value of the Common Stock on the date of grant
(or 110% of fair market value in the case of persons holding 10% or more of the
voting stock of the Company). The aggregate fair market value of shares for
which ISOs granted to any employee are exercisable for the first time by such
employee during any calendar year (under all stock option plans of the Company
and any related corporation) may not exceed $100,000. Options granted under the
1988 Stock Option Plan will expire not more than ten years from the date of
grant (five years in the case of ISOs granted to persons holding 10% or more of
the voting stock of the Company). Options granted under the 1988 Stock Option
Plan are not transferable during an optionee's lifetime but are transferable at
death by will or by the laws of descent and distribution.
As of September 30, 1997, 564,500 options were granted at exercise prices
ranging from $.68 to $6.11875 per share. To date, none of those options has been
exercised. The options vest over a three or four year period, depending on the
particular grant, following the date of the grant. Currently, only 328,680
shares are exercisable.
<PAGE>
Stock Performance Graph
The following graph compares the percentage change in the cumulative total
stockholder return for the period beginning on June 17, 1997 and ending on
September 30, 1997, based upon the market price of the Company's Common Stock,
the NASDAQ Stock Market Index for U.S. companies and a group consisting of the
Company's peer corporations on a line-of-business basis. The corporations making
up the peer group are Alpha Net Solutions, Inc., En Pointe Technologies, Inc.,
Manchester Equipment Co., Inc., Micros to Mainframes, Inc. and Pomeroy Computer
Resources, Inc. The graph assumes (i) the reinvestment of dividends, if any, and
(ii) the investment of $100 on June 17, 1997 (the date the Company's Common
Stock commenced trading) in the Company's Common Stock, the NASDAQ Stock Market
Index and the Peer Group Index.
Comparison Among SysComm International Corporation,
NASDAQ Stock Market Index and Peer Group Index
<TABLE>
<CAPTION>
SysComm International NASDAQ Stock
Period Ending Corporation Market Index Peer Group Index
<S> <C> <C> <C>
Measurement
Pt-6/17/97 $100 $100 $100
9/30/97 $127.50 $116.81 $149.32
</TABLE>
Employment Agreements
The Company has entered into employment agreements with its executive
officers that expire on September 30, 1999, unless sooner terminated for death,
physical or mental incapacity or cause (which is defined as the uncured refusal
to perform, or habitual neglect of, the performance of his duties, willful
misconduct, dishonesty or breach of trust which causes the Company to suffer any
loss, fine, civil penalty, judgment, claim, damage or expense, a material breach
of the employment agreement, or a felony conviction), or terminated by either
party with thirty (30) days' written notice, and are automatically renewed for
consecutive terms, unless cancelled at least thirty (30) days prior to
expiration of the existing term. Each Employment Agreement provides that all of
such executive's business time be devoted to the Company. In addition, each of
the Employment Agreements also contains: (i) non-competition provisions that
preclude each employee from competing with the Company for a period of up to two
years from the date of the termination of his employment of the Company, (ii)
non-disclosure and confidentiality provisions providing that all confidential
information developed or made known during the term of employment shall be
exclusive property of the Company, and (iii) non-interference provisions
whereby, for a period of two years after his termination of employment with the
Company, the executive shall not interfere with the Company's relationship with
its customers or employees.
The employment agreements also include compensation plans for fiscal year
1998 as follows: John H. Spielberger will receive $160,000 plus a bonus based on
a percentage of pre-tax earnings of the Company based on sales volume; Thomas J.
Baehr will receive $160,000 plus a bonus of a percentage of pre-tax earnings of
InfoTech based on sales volume; Dennis R. Wilson will receive $140,000 plus a
discretionary bonus determined by the Compensation Committee; and Norman M.
Gaffney will receive $140,000 plus a bonus of 1% of the gross profit dollars of
InfoTech and 1% of the pre-tax earnings of InfoTech.
These employment agreements contain annual performance incentive plans
which will be reviewed during the fiscal year and new incentive plans will be
implemented by the Company's Compensation Committee for fiscal year 1999, and
thereafter as applicable.
401(k) Plan
On January 1, 1994, the Company adopted a 401(k) savings plan for the
benefit of all eligible employees. All employees as of the effective date of the
401(k) became eligible. An employee who became employed after January 1, 1994
would become a participant after the completion of six months of service and
attainment of 20 years of age. Under the 401(k) plan, participants may elect to
contribute from their compensation any amount up to the maximum deferral allowed
by the Internal Revenue Code. Company contributions are discretionary and the
Company may make optional contributions for any plan year at its discretion.
During the fiscal years ended September 30, 1997, 1996 and 1995, the Company
recorded 401(k) costs totaling $29,681, $31,738 and $19,148 respectively. During
the fiscal year ended September 30, 1997, the Company recorded 401(k)
contributions in the amounts of $3,164, $2,817 and $3,169 for the accounts of
Thomas J. Baehr, Dennis R. Wilson and Norman M. Gaffney, respectively.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Prior to the Company's initial public offering in June 1997, the Company
did not have a Compensation Committee of its Board of Directors. In June 1997,
the Company formed a Compensation Committee. Prior to the formation of the
Compensation Committee, decisions regarding compensation were made by John H.
Spielberger, the Company's Chairman, President and Chief Executive Officer. Mr.
Spielberger, in his capacities as director, made all decisions concerning
compensation of executive officers for the Company's fiscal year ended September
30, 1997, including entering into two year employment agreements between
themselves and the Company, which agreements became effective June 17, 1997 and
terminate September 30, 1999.
Board Compensation Committee Report
The Compensation Committee of the Board of Directors (the "Committee") is
composed of two independent outside directors of the Company and one inside
director or the Company.
The Committee focuses on compensating Company executives on a competitive
basis with other comparably sized and managed companies; in a manner consistent
and supportive of overall Company objectives; and through a compensation plan
which balances the long-term and short-term strategic initiatives of the
Company. The Committee intends that the Company's executive compensation program
will:
(1) reward executives for strategic management and enhancement of
stockholder value;
(2) reflect each executive's success at resolving key operational issues;
(3) facilitate both the short-term and long-term planning process; and
(4) attract and retain key executives believed to be critical to the
long-term success of the Company.
The Company's compensation program for executive officers generally
consists of a fixed base salary, performance-related annual bonus awards and
long-term incentive compensation in the form of stock options. In addition,
Company executives are able to participate in various benefit plans generally
available to other full-time employees of the Company.
In reviewing the Company and executives' performance over the past
fiscal year, the Committee took into consideration, among other things, the
following performance factors in making its compensation recommendations:
revenues, net income and cash flow.
Base Salary
Base salary for the Company's executives is intended to provide competitive
remuneration for services provided to the Company over a one year period. Base
salaries are set at levels designed to attract and retain the most appropriately
qualified individuals for each of the key management level positions within the
Company. Minimum base salary levels for the Named Executives are determined
according to employment agreements which are in effect through September 30,
1999.
Short-Term Incentives
Short-term incentives are paid primarily to recognize specific operating
performance achieved within the last fiscal year. Since such incentive payments
are related to a specific year's performance, the Committee understands and
accepts that such payments may vary considerably from one year to the next. The
Company's bonus program ties executive compensation directly back to the annual
performance of both the individual executive and the Company overall. Through
this program, in the fiscal year ended September 30, 1997, each of the Named
Executives' actual bonus payment was derived from specific measures of Company
and individual performance. Depending on management level and seniority,
executives within each entity are able to earn a percentage of the base salary
as a performance-related bonus. The actual annual bonus awards payable to the
Named Executives are based on the terms established in their employment
agreements which are in effect through September 30, 1999.
Long-Term Incentives
In keeping with its desire to align long-term executive compensation with
long-term shareholder value improvements, the Committee has again awarded stock
option grants to executives of the Company. Recognizing the value of these
grants in motivating long-term strategic decision making, the use of the stock
options, in compensating other members of Company management was again employed
by the Company. For the fiscal year ended September 30, 1997, the Named
Executives received 12,000 stock options.
Chief Executive Officer
Through September 30, 1999, Mr. John H. Spielberger, Chief Executive
Officer, will be compensated under a previously disclosed employment agreement
between himself and the Company. This contract establishes the minimum levels of
compensation which are to be paid to Mr. Spielberger by the Company.
During the fiscal year ended September 30, 1997, Mr. Spielberger received
an increase in his base salary of approximately 14% from the prior year's level.
In addition to his base salary, Mr. Spielberger is eligible to participate in
the short-term or long-term incentive programs outlined above for the other
Named Executives. During the fiscal year ended September 30, 1997, the amount of
Mr. Spielberger's short-term incentive bonus was calculated based on the terms
established in the employment agreement. Based on this formula, Mr. Spielberger
received a $133,142 bonus payment for the fiscal year ended September 30, 1997.
COMPENSATION COMMITTEE:
Thomas J. Baehr
Cornelia Eldridge
Lee Adams
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of shares of the
Common Stock as of the date hereof, by (i) each person who owns beneficially
more than 5% of the outstanding shares of Common Stock; (ii) each executive
officer and director of the Company; and (iii) all officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership (2) of Class
<S> <C> <C>
John H. Spielberger (1) (3) 2,506,400 56.70%
Dennis R. Wilson (1) (5) 88,640 2.01%
Thomas J. Baehr (1) (6) 86,000 1.95%
Norman M. Gaffney (1) (6) 66,000 1.49%
John C. Spielberger (1) (4) 7,640 .17%
Cornelia Eldridge (1) (7) - -
Lee Adams (8)...................... - -
Mark Vinelli (1) (9) 270,000 6.11%
All Officers and Directors as a group
(five persons).................. 2,754,680 62.32%
</TABLE>
---------------
The addresses of John H. Spielberger, Dennis R. Wilson, Thomas J. Baehr,
John C. Spielberger, Norman M. Gaffney and Mark Vinelli are c/o SysComm
International Corporation, 275 Marcus Boulevard, Hauppauge, New York 11788.
Beneficial ownership is determined in accordance with the Rule 13d-3 of the
Securities Exchange Act of 1934 and generally includes voting and investment
power with respect to securities, subject to community property laws, where
applicable. A person is deemed to be the beneficial owner of securities that can
be acquired by such person within 60 days from the date hereof upon exercise of
options or warrants. Each beneficial owner's percentage ownership is determined
by assuming that options or warrants that are held by such person (but not those
held by any other person) and that are exercisable within 60 days from the date
hereof have been exercised. Unless otherwise noted, 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.
Includes 600,000 shares owned by Bearpen Limited Partnership, a partnership
of which John H. Spielberger and his wife, Catherine, are the general partners.
Excludes 50,000 shares owned by Mr. Spielberger's wife, Catherine, of which John
H. Spielberger disclaims beneficial ownership. Includes options to purchase
26,400 shares of Common Stock at an exercise price of $.75 per share,
exercisable as of June 30, 1997. Does not include options to purchase 13,600
shares of Common Stock at an exercise price of $.75 per share, or options to
purchase 3,000 shares of Common Stock at an exercise price of $6.11875 per
share.
Excludes 20,000 shares owned by Teresa Murphy, John C. Spielberger's wife.
Includes options to purchase 2,640 shares of Common Stock at an exercise price
of $.68 per share, exercisable as of June 30, 1997. Does not include options not
currently exercisable to purchase 1,360 shares of Common Stock at an exercise
price of $.68 per share, or options to purchase 2,000 shares of Common Stock at
an exercise price of $5.5625 per share.
Includes options to purchase 68,640 shares of Common Stock at an exercise
price of $.68 per share, exercisable as of June 30, 1997. Does not include
options not currently exercisable to purchase 35,360 shares of Common Stock at
an exercise price of $.68 per share or options to purchase 3,000 shares of
Common Stock at an exercise price of $5.5625 per share.
Includes options to purchase 66,000 shares of Common Stock at an exercise
price of $.68 per share, exercisable as of June 30, 1997. Does not include
options not currently exercisable to purchase 34,000 shares of Common Stock at
an exercise price of $.68 per share, or options to purchase 3,000 shares of
Common Stock at an exercise price of $5.5625per share.
The address of Cornelia Eldridge is 4514 Elkhorn Road, P.O. Box 6243, Sun
Valley, Idaho 83354. Does not include options to purchase 5,000 shares of Common
Stock at an exercise price of $5.5625 per share.
The address of Lee Adams is P.O. Box 2404, Lake Arrowhead, California
92352. Does not include options to purchase 5,000 shares of Common Stock at an
exercise price of $5.5625 per share.
Does not include options to purchase 1,500 shares of Common Stock at an
exercise price of $5.5625 per share.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
the Company with copies of these reports. Based solely on the Company's review
of the copies of such forms received by it during its fiscal year ended
September 30, 1997, the Company believes that all reports required to be filed
by such persons with respect to the Company's fiscal year ended September 30,
1997 were filed except that initial reports of ownership for Cornelia Eldridge
and Lee Adams and reports of changes in ownership for John H. Spielberger,
Dennis R. Wilson, Thomas J. Baehr, Norman M. Gaffney and John C. Spielberger
were filed late.
Certain Relationships and Related Transactions
John H. Spielberger has a consulting Agreement with Ameriquest
Technologies, Inc. ("Ameriquest"), a company that purchased Romel Technology,
Inc., a subsidiary of the Company. Pursuant to this Agreement, which commenced
in December 1993, Ameriquest paid Mr. Spielberger $10,000 per month through
December 1997. This Agreement was completed in December 1997.
2. ADOPTION OF 1998 STOCK OPTION PLAN
At the Meeting, the Company's stockholders will be asked to adopt the 1998
Stock Option Plan (the "Plan"). The Plan was adopted by the Board of Directors
of the Company in January, 1997.
The Board believes that in order to enable the Company to continue to
attract and retain personnel of the highest caliber, provide incentives for
certain directors, officers and employees of the Company and certain other
persons instrumental to the success of the Company and to continue to promote
the well-being of the Company, it is in the best interest of the Company and its
stockholders to provide to such persons, through the granting of stock options,
the opportunity to participate in the value and/or appreciation in value of the
Company's Common Stock. The Board has found that the grant of options has proven
to be a valuable tool in attracting and retaining key employees. The Board
believes that the Plan (i) will provide the Company with significant means to
attract and retain talented personnel; (ii) will result in saving cash, which
otherwise would be required to maintain current key employees and adequately
attract and reward key personnel; and (iii) consequently will prove beneficial
to the Company's ability to be competitive.
If the above-described Plan is approved by the stockholders, options will
be granted under the Plan, the timing, amounts and specific terms of which
cannot be determined at this time.
The following summary of the Plan does not purport to be complete, and is
subject to and qualified in its entirety by reference to the full text of the
Plan set forth as Exhibit "A" to this Proxy Statement.
Summary of the Plan
The Plan has 500,000 shares of Common Stock reserved for issuance upon the
exercise of options designated as either (i) incentive stock options ("ISOs")
under the Code or (ii) non-qualified stock options. ISOs may be granted under
the Plan to employees and officers of the Company. Non-qualified options may be
granted to consultants, directors (whether or not they are employees), employees
or officers of the Company. In certain circumstances, the exercise of stock
options may have an adverse effect on the market price of the Common Stock.
The purpose of the Plan is to encourage stock ownership by certain
directors, officers and employees of the Company and certain other persons
instrumental to the success of the Company and give them a greater personal
interest in the success of the Company. The Plan is administered by the
Compensation Committee. The Committee, within the limitations of the Plan,
determines the persons to whom options will be granted, the number of shares to
be covered by each option, whether the options granted are intended to be ISOs,
the duration and rate of exercise of each option, the option purchase price per
share and the manner of exercise, the time, manner and form of payment upon
exercise of an option, and whether restrictions such as repurchase rights in the
Company are to be imposed on the shares subject to options. Options granted
under the Plan may not be granted at a price less than the fair market value of
the Common Stock on the date of the grant (or 110% of fair market value in the
case of persons holding 10% or more of the voting stock of the Company). The
aggregate fair market value of shares for which ISOs granted to any person are
exercisable for the first time by such person during any calendar year (under
all stock option plans of the Company and any related corporation) may not
exceed $100,000. The Plan will terminate in February, 2008; however, options
granted under the Plan will expire not more than ten years from the date of
grant. Options granted under the Plan are not transferable during an optionee's
lifetime but are transferable at death by will or by the laws of descent and
distribution.
Certain Federal Income Tax Consequences of the Plan
The following is a brief summary of the Federal income tax aspects of stock
options to be granted under the Plan based upon statutes, regulations and
interpretations in effect on the date hereof. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
Incentive Stock Options. A participant will recognize no taxable income
upon the grant or exercise of an ISO. Upon a disposition of the shares after the
later of two years from the date of grant and one year after the transfer of the
shares to the participant, (i) the participant will recognize the difference, if
any, between the amount realized and the exercise price as long-term capital
gain or long-term capital loss (as the case may be) if the shares are capital
assets; and (ii) the Company will not qualify for any deduction in connection
with the grant or exercise of the options. The excess, if any, of the fair
market value of the shares on the date of exercise of an ISO over the exercise
price will be treated as an item of adjustment for a participant's taxable year
in which the exercise occurs and may result in an alternative minimum tax
liability for the participant. In the case of a disposition of shares in the
same taxable year as the exercise, where the amount realized on the disposition
is less than the fair market value of the shares on the date of exercise, there
will be no adjustment since the amount treated as an item of adjustment, for
alternative minimum tax purposes, is limited to the excess of the amount
realized on such disposition over the exercise price which is the same amount
included in the regular taxable income.
If Common Stock acquired upon the exercise of an ISO is disposed of prior
to the expiration of the holding periods described above, (i) the participant
will recognize ordinary compensation income in the taxable year of disposition
on an amount equal to the excess, if any, of the lesser of the fair market value
of the shares on the date of exercise or the amount realized on the disposition
of the shares, over the exercise price paid for such shares; and (ii) the
Company will qualify for a deduction equal to any such amount recognized,
subject to the limitation that the compensation be reasonable. The participant
will recognize the excess, if any, of the amount realized over the fair market
value of the shares on the date of exercise, if the shares are capital assets,
as short-term or long-term capital gain, depending on the length of time that
the participant held the shares, and the Company will not qualify for a
deduction with respect to such excess.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the participant's
employment, the option will generally be taxed as a non-qualified stock option.
See "Non-Qualified Stock Options."
Non-Qualified Stock Options. Except as noted below, with respect to
non-qualified stock options (i) upon grant of the option, the participant will
recognize no income; (ii) upon exercise of the option (if the shares of Common
Stock are not subject to a substantial risk of forfeiture), the participant will
recognize ordinary compensation income in an amount equal to the excess, if any,
of the fair market value of the shares on the date of exercise over the exercise
price, and the Company will qualify for a deduction in the same amount, subject
to the requirement that the compensation be reasonable; (iii) the Company will
be required to comply with applicable Federal income tax withholding
requirements with respect to the amount of ordinary compensation income
recognized by the participant; and (iv) on a sale of the shares, the participant
will recognize gain or loss equal to the difference, if any, between the amount
realized and the sum of the exercise price and the ordinary compensation income
recognized. Such gain or loss will be treated as capital gain or loss if the
shares are capital assets and as short-term or long-term capital gain or loss,
depending upon the length of time that the participant held the shares.
Recommendation and Vote Required
The vote of the holders of a majority of the shares of the Company's Common
Stock present in person or represented by proxy at the Meeting is required to
adopt the foregoing proposal to adopt the Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE ADOPTION OF PROPOSAL 2.
3. SELECTION OF AUDITORS
The firm of Albrecht, Viggiano, Zureck & Company, P.C. has audited the
financial statements of the Company for the past four years and the Board of
Directors has, subject to ratification by stockholders, appointed that firm to
act as its independent public accountants for the Company's fiscal year ending
September 30, 1998. Accordingly, management will present to the Meeting a
resolution proposing the ratification of the appointment of Albrecht, Viggiano,
Zureck & Company, P.C. as the Company's independent public accountants for the
fiscal year ending September 30, 1998.
A representative of Albrecht, Viggiano, Zureck & Company, P.C. is expected
to be present at the Meeting and will be given the opportunity to make a
statement and to respond to appropriate questions addressed by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR"
THE ADOPTION OF PROPOSAL 3.
4. OTHER BUSINESS
The Board of Directors has no knowledge of any other business which may
come before the Meeting and does not intend to present any other business.
However, if any other business shall properly come before the Meeting or any
adjournment thereof, the persons named as proxies will have discretionary
authority to vote the shares of Common Stock represented by the accompanying
proxy in accordance with their best judgment.
Stockholder's Proposals
Any stockholder of the Company who wishes to present a proposal to be
considered at the next annual meeting of stockholders of the Company and who
wishes to have such proposal presented in the Company's proxy statement for such
Meeting must deliver such proposal in writing to the Company at 275 Marcus
Boulevard, Hauppauge, New York 11788, on or before August 23, 1998. In order to
curtail controversy as to the date on which the proposal was received by the
Company, it is suggested that proponents submit their proposals by certified
mail, return receipt requested.
By Order of the Board of Directors
Dennis Wilson, Secretary
The Company will furnish without charge to each person whose proxy is being
solicited by this proxy statement, on the written request of such person, a copy
of the Company's Annual Report on Form 10-K, for its fiscal year ended September
30, 1997. Such request should be addressed to Stockholder Relations, SysComm
International Corporation, 275 Marcus Boulevard, Hauppauge, New York 11788.
Dated: January 29, 1998
EXHIBIT "A"
SYSCOMM INTERNATIONAL CORPORATION
1998 STOCK OPTION PLAN
1. Plan; Purpose; General. The purpose of this Stock Option Plan (the
"Plan") is to advance the interests of SysComm International Corporation and any
present and future subsidiaries (as defined below) of SysComm International
Corporation (hereinafter inclusively referred to as the "Company") by enhancing
the ability of the Company to attract and retain selected employees,
consultants, advisors and directors (collectively the "Participants") by
creating for such Participants incentives and rewards for their contributions to
the success of the Company, and by encouraging such Participants to become
owners of shares of the Company's Common Stock, $.01 par value per share, as the
title or par value may be amended (the "Shares").
Options granted pursuant to the Plan may be incentive stock options
("Incentive Options") as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), or non-qualified options, or both. The proceeds received
from the sale of Shares pursuant to the Plan shall be used for general corporate
purposes.
2. Effective Date of Plan. The Plan will become effective upon approval by
the Board of Directors (the "Board"), and shall be subject to the approval by
the shareholders of the Company as provided under the Securities Act of 1933, as
amended (the "Act").
----------------------
3. Administration of the Plan. The Plan will be administered by the Board
of the Company. The Board will have authority, not inconsistent with the express
provisions of the Plan, to take all action necessary or appropriate thereunder,
to interpret its provisions, and to decide all questions and resolve all
disputes which may arise in connection therewith. Such determinations of the
Board shall be conclusive and shall bind all parties.
--------------------------
The Board may, in its discretion, delegate its powers with respect to the
Plan to an employee benefit plan committee or any other committee (the
"Committee"), in which event all references to the Board hereunder, including
without limitation the references in Section 9, shall be deemed to refer to the
Committee. The Committee shall consist of not fewer than two (2) members
provided, however, that if the Company is subject to the reporting requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each of
the members of the Committee must be a "non-employee director" as that term is
defined in Rule 16b-3 adopted pursuant to the Exchange Act. A majority of the
members of the Committee shall constitute a quorum, and all determinations of
the Committee shall be made by the majority of its members present at a meeting.
Any determination of the Committee under the Plan may be made without notice or
meeting of the Committee by a writing signed by all of the Committee members.
Subject to the foregoing, from time to time the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution thereof, or fill
vacancies however caused.
The Board and the Committee, if any, shall have the authority, consistent
with the terms of the Plan, to determine eligibility, the number of Options
granted and the exercise price of Options. 4. Eligibility. The Participants in
the Plan shall be all employees, consultants, advisors and directors of the
Company whether or not they are also officers of the Company provided, however,
that Incentive Options shall only be granted to employees of the Company.
- -----------
5. Grant of Options.
(a) The Board shall grant Options to Participants that it, in its sole
discretion, selects. Options shall be granted in accordance with the terms and
conditions set forth in Section 6 hereof and on such other terms and conditions
as the Board shall determine. Such terms and conditions may include a
requirement that a Participant sell to the Company any Shares acquired upon
exercise of Options upon the Participant's termination of employment upon such
terms and conditions as the Board may determine. Incentive Options shall be
granted on terms that comply with the Code and Regulations thereunder.
(b) No Options shall be granted after February 28, 2008 but Options
previously granted may extend beyond that date.
6. Terms and Conditions of Options
(a) Exercise Price. The purchase price per share for Shares issuable upon
exercise of Options shall be a minimum of 100% of fair market value on the date
of grant as determined by the Board. For this purpose, "fair market value" will
be determined as set forth in Section 8 hereof. Notwithstanding the foregoing,
if any person to whom an Option is to be granted owns in excess of ten (10%)
percent of the outstanding capital stock of the Company (a "Principal
Shareholder"), then no Option may be granted to such person for
less than 110% of the fair market value on the date of grant as determined by
the Board.
(b) Period of Options. The expiration of each Option shall be fixed by the
Board, in its discretion, at the time such Option is granted. No Option shall be
exercisable after the expiration of ten (10) years from the date of its grant,
or after the expiration of five (5) years from the date of its grant in the case
of an Incentive Option granted to a Principal Shareholder who was such on the
date of grant, and each Option shall be subject to earlier termination as
expressly provided in Section 6 hereof or as determined by the Board, in its
discretion, on the date such Option is granted.
(c) Payment for Delivery of Shares. Shares which are subject to Options
shall be issued only upon receipt by the Company of full payment of the purchase
price for the Shares as to which the Option is exercised. Payment for Shares may
be made (as determined by the Board at the time the Option is granted) (i) in
cash, (ii) by certified or bank check payable to the order of the Company in the
amount of the purchase price, (iii) by delivery of Shares owned by the
Participant having a fair market value equal to the purchase price, or (iv) by
any combination of the methods of payment described in (i) through (iii) above,
as determined by the Board at the time the Option is granted.
The Company shall not be obligated to deliver any Shares unless and until,
in the opinion of the Company's counsel, all applicable federal and state laws
and regulations have been complied with and until all other legal matters in
connection with the issuance and delivery of Shares have been approved by the
Company's counsel. Without limiting the generality of the foregoing, the Company
may require from the person exercising an Option such investment representation
or such agreement, if any, as counsel for the Company may consider necessary in
order to comply with the Act and applicable state securities laws.
(d) Rights as Shareholder. A Participant or a transferee of an Option shall
have no rights as a Shareholder with respect to any Shares covered by the Option
until the date of the issuance of a stock certificate to him for such Shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distribution of other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 7 hereof.
(e) Vesting. The Board may impose such vesting restrictions as it sees fit
at the time of grant.
(f) Non-Transferability of Options. Options may not be sold, assigned or
otherwise transferred or disposed of in any manner whatsoever except as provided
in Section 6(h) hereof.
(g) Termination of Relationship. Except as otherwise provided in an Option
or other agreement between the Company and a Participant, upon the termination
of a Participant's status as an employee, consultant, advisor or director, for
any reason other than as set forth in subsections (ii) and (iii) below, at a
time when the Shares are then Publicly Traded (as defined below), then the
following provisions shall apply:
(i) Such Participant may exercise Options to the extent exercisable on the
date of termination within three (3) months (or such shorter time as may be
specified in the grant), after the date of such termination. To the extent that
the Participant was not entitled to exercise the Option at the date of such
termination, or does not exercise such Option within the time specified herein,
such Option shall terminate.
(ii) Notwithstanding the provisions of subsection (i) above, in the event
of termination of a Participant's status as an employee as a result of
"permanent disability" (as such term is defined in any contract of employment
between the Company and the Participant or, if not defined, then such term shall
mean the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of twelve (12) months), the Participant may exercise the
Option, but only to the extent such Option was exercisable on the date the
Participant ceased working as the result of the permanent disability. Such
exercise must occur within eighteen (18) months (or such shorter time as is
specified in the grant) from the date on which the Participant ceased working as
a result of the permanent disability. To the extent that the Participant was not
entitled to exercise such Option on the date the Participant ceased working, or
does not exercise such Option within the time specified herein, such Option
shall terminate.
(iii) Notwithstanding the provisions of subsection (i) above, in the event
of the death of a Participant, the Option may be exercised, at any time within
six (6) months following the date of death (or such shorter time as may be
specified in the grant), by the Participant's estate or by a person who acquired
the right to exercise the Option by will or the applicable laws of descent or
dissolution, but only to the extent such Option was exercisable on the date of
the Participant's death. To the extent that the Participant was not entitled to
exercise such Option on the date of death, or the Option is not exercised within
the time specified herein, such Option shall terminate.
(iv) Notwithstanding subsections (i), (ii), and (iii) above, the Board
shall have the authority to extend the expiration date of any outstanding Option
in circumstances in which it deems such action to be appropriate (provided that
no such extension shall extend the term of an Option beyond the date on which
the Option would have expired if no termination of the Participant's
relationship's with the Company had occurred).
(h) Financial Assistance. The Company is vested with authority under this
Plan to assist any employee to whom an Option is granted hereunder (including,
to the extent permitted by law, any director or officer of the Company who is
also an employee of the Company) in the payment of the purchase price payable on
exercise of that Option, by lending the amount of such purchase price to such
employee on such terms and at such rates of interest and upon such security (or
unsecured) as shall have been authorized by or under authority of the Board.
(i) Withholding Taxes. To the extent required by applicable federal, state,
local or foreign law, a Participant shall make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise by
reason of an Option exercise or any sale of Shares. The Company shall not be
required to issue Shares until such obligations are satisfied. The Board may
permit these obligations to be satisfied by having the Company withhold a
portion of the Shares that otherwise would be issued to the Participant upon
exercise of the Option, or to the extent permitted, by tendering Shares
previously acquired.
7. Shares Subject to Plan.
(a) Number of Shares and Stock to be Delivered. Shares delivered pursuant
to this Plan shall in the discretion of the Board be authorized but unissued
Shares or previously issued Shares acquired by the Company. The unexercised
portion of any expired, terminated or cancelled Option shall again be available
for the grant of Options under the Plan. Subject to adjustment as described
below, the aggregate number of Shares which may be delivered under this Plan
shall not exceed 500,000 Shares.
(b) Changes in Stock. In the event of a stock dividend, stock split or
combination of Shares, recapitalization, merger in which the Company is the
surviving Company or other change in the Company's capital stock, the number and
kind of Shares of stock or securities of the Company to be subject to the Plan
and to Options then outstanding or to be granted thereunder, the maximum number
of Shares or securities which may be delivered under the Plan, the Option price
and other relevant provisions shall be appropriately adjusted by the Board,
whose determination shall be binding on all persons. In the event of a
consolidation or merger in which the Company is not the surviving Company or
which results in the acquisition of substantially all the Company's outstanding
stock by a single person or entity, or in the event of the sale or transfer of
substantially all the Company's assets, all outstanding Options, whether or not
then exercisable, shall immediately become exercisable. The Board shall notify
the Participants that the Option shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option will terminate
upon the expiration of such period.
The Board may also adjust the number of Shares subject to outstanding
Options, the exercise price of outstanding Options and the terms of outstanding
Options to take into consideration material changes in accounting practices or
principles, consolidations or mergers (except those described in the immediately
preceding paragraph), acquisitions or dispositions of stock or property or any
other event if it is determined by the Board that such adjustment is appropriate
to avoid distortion in the operation of the Plan.
8. Certain Definitions.
Certain terms used in the Plan have been defined above. In addition, as
used in the Plan, the following terms shall have the following meanings:
(a) A "subsidiary" is any company (i) in which the Company owns, directly
or indirectly, stock possessing fifty (50%) percent or more of the total
combined voting power of all classes of stock or (ii) over which the Company has
effective operating control.
(b) The "fair market value" of the Shares shall mean the closing price of
the Shares as of the day in question (or, if such day is not a trading day in
the principal securities market or markets for such Shares, on the nearest
preceding trading day), as reported with respect to the market (or the composite
of markets, if more than one) in which Shares are then traded, or, if no such
closing prices are reported, on the basis of the mean between the high bid and
low asked prices that day on the principal market or quotation system on which
Shares are then quoted, or, if not so quoted, as furnished by a professional
securities dealer making a market in such Shares selected by the Board.
9. Indemnification of Board. In addition to and without affecting such
other rights of indemnification as they may have as members of the Board or
otherwise, each member of the Board shall be indemnified by the Company to the
extent legally possible against reasonable expenses, including attorney's fees,
actually and reasonably incurred in connection with any appeal therein, to which
he may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any Option granted thereunder, and against all
judgments, fines and amounts paid by him in settlement thereof; provided that
such payment of amounts so indemnified is first approved by a majority of the
members of the Board who are not parties to such action, suit or proceedings, or
by independent legal counsel selected by the Company, in either case on the
basis of a determination that such member acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company; and except that no indemnification shall be made in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Board member is liable for a breach of the duty of loyalty, bad faith or
intentional misconduct in his duties; and provided further, that the Board
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend same.
10. Amendments. The Board may at any time discontinue granting Options
under the Plan. The Board may at any time or times amend the Plan or amend any
outstanding Option or Options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that (except to the extent explicitly
required or permitted hereinabove) no such amendment will, without the approval
of the shareholders of the Company, (a) increase the maximum number of Shares
available under the Plan, (b) reduce the Option price of outstanding Options or
reduce the price at which Options may be granted, (c) extend the time within
which Options may be granted, (d) amend the provisions of this Section 10 of the
Plan, (e) extend the period of an outstanding Option beyond ten (10) years from
the date of grant (five (5) years for Incentive Options granted to Principal
Shareholders), (f) adversely affect the rights of any Participant (without his
consent) under any Options theretofore granted or (g) be effective if
shareholder approval is required by applicable statute, rule or regulation.
11. Miscellaneous Provisions.
(a) Rule 16b-3. With respect to Participants subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable provisions of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the Plan or action by the Plan administrators fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Board.
(b) Underscored References. The underscored references contained in the
Plan and in any Option agreement are included only for convenience, and they
shall not be construed as a part of the Plan or Option agreement or in any
respect affecting or modifying its provisions.
(c) number and Gender. The masculine, feminine and neuter, wherever used in
the Plan or in any Option agreement, shall refer to either the masculine,
feminine or neuter and, unless the context otherwise requires, the singular
shall include the plural and the plural the singular.
(d) Governing Law. The place of administration of the Plan and each Option
agreement shall be in the State of New York. The corporate law of the Company's
state of incorporation shall govern issues related to the validity and issuance
of Shares. Otherwise, this Plan and each Agreement shall be construed and
administered in accordance with the laws of the State of New York, without
giving effect to principles relating to conflict of laws.
(e) No Employment Contract. Neither the adoption of the Plan nor any
benefit granted hereunder shall confer upon any employee any right to continued
employment nor shall the Plan or any benefit interfere in any way with the right
of the Company to terminate the employment of any of its employees at any time.
<PAGE>
COMMON STOCK PROXY
----------------------------------
SYSCOMM INTERNATIONAL CORPORATION
275 Marcus Boulevard
Hauppauge, NY 11788
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned, revoking all previous proxies, hereby appoints John H.
Spielberger, Thomas J. Baehr and Dennis R. Wilson, and each of them, proxies
with power of substitution to each, for and in the name of the undersigned to
vote all shares of Common Stock of SysComm International Corporation (the
"Company"), held of record by the undersigned on January 15, 1998 which the
undersigned would be entitled to vote if present at the Annual Meeting of
Stockholders of the Company to be held on February 24, 1998, at 10:00 a.m. at
The Smithtown Sheraton, 110 Motor Parkway, Hauppauge, New York 11788, and any
adjournments thereof, upon the matters set forth in the Notice of Annual
Meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting, Proxy
Statement and the Company's 1997 Annual Report.
1. ELECTION OF DIRECTORS
FOR all nominees listed Withhold Authority to vote
below (except as marked for all nominees listed
to the contrary below) ______ below ______
(Instruction: To withhold authority to vote for an individual nominee
strike a line through such nominee's name in the list below.)
DENNIS WILSON
CORNELIA ELDRIDGE
LEE ADAMS
2. ADOPTION OF 1998 STOCK OPTION PLAN
FOR ______ AGAINST ______ ABSTAIN ______
3. RATIFICATION OF THE APPOINTMENT OF ALBRECHT, VIGGIANO, ZURECK & COMPANY,
P.C. AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER
30, 1998
FOR ______ AGAINST ______ ABSTAIN ______
4. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF
FOR ______ AGAINST ______ ABSTAIN ______
PLEASE SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and when
properly executed will be voted as directed herein. If no direction is given,
this Proxy will be voted FOR Proposals 1, 2, 3 and 4.
- --------------------------------
(Date)
- ---------------------------------
(Signature)
- ---------------------------------
(Signature, if held jointly)
Please sign exactly as name appears below. If shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please list full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Please sign, date and return promptly in the enclosed envelope. No postage
need be affixed if mailed in the United States.
