SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
INFODATA SYSTEMS INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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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 determined):
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(4) Proposed maximum aggregate value of transaction:
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(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
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INFODATA SYSTEMS INC.
Corporate Headquarters
12150 Monument Drive
Fairfax, Virginia 22033
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NOTICE OF THE 1998 ANNUAL MEETING OF SHAREHOLDERS
May 28, 1998
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The Annual Meeting of the Shareholders of Infodata Systems Inc. (the
"Company") will be held at The Penn Club of New York, 30 West 44th Street, New
York, NY 10036, on Thursday, May 28, 1998, at 10:00 a.m. for the following
purposes:
1. To elect nine directors to serve until their respective successors are
elected and qualified;
2. To approve an amendment to the Company's 1995 Stock Option Plan that
would permit the Company to grant stock options with durations of up to
ten years;
3. To approve an amendment to the Company's 1995 Stock Option Plan that
would reserve 500,000 additional shares of the Company's common stock,
par value $.03 per share (the "Common Stock"), for issuance thereunder;
4. To approve an amendment to the Company's Articles of Incorporation that
would increase the number of shares of common stock the Company has
authority to issue from 6,666,666 to 12,000,000; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record as of the close of business on April 3, 1998, are
entitled to notice of and to vote at the meeting. You are requested to sign,
date, and return the accompanying proxy card in the enclosed, self-addressed
envelope. You may withdraw your Proxy at the meeting if you are present and
desire to vote your shares in person.
By order of the Board of Directors
James A. Ungerleider, President & CEO
Dated: Fairfax, Virginia
April 10, 1998
YOUR VOTE IS IMPORTANT, PLEASE RETURN YOUR SIGNED PROXY PROMPTLY.
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INFODATA SYSTEMS INC.
PROXY STATEMENT
GENERAL INFORMATION
The enclosed Proxy is solicited by the Company's Board of Directors. It
may be revoked in writing at any time by written notice delivered to the
President of the Company before it is voted or it may be withdrawn at the
meeting and voted in person. If not revoked or withdrawn, the shares
represented by the Proxy will be voted in the manner directed therein. If a
choice is not specified, the Proxy will be voted FOR the election of the Board
of Directors' nominees, FOR the proposed amendments to the Company's 1995
Stock Option Plan, and FOR the proposed amendment to the Company's Articles of
Incorporation.
A majority of the vote of shareholders present in person or by proxy is
required for the election of the nominees to the Board of Directors and to
approve the proposed amendments to the 1995 Stock Option Plan. The affirmative
vote of the holders of more than two-thirds of the outstanding shares of
Common Stock on the record date is required to approve the proposed amendment
to the Company's Articles of Incorporation. On April 3, 1998, the record date
for eligibility to vote, the Company had 4,400,100 outstanding shares of
Common Stock, par value $.03 per share. Each share of Common Stock outstanding
is entitled to one vote. No other class of securities is issued or
outstanding.
A majority of the votes entitled to be cast on matters to be considered
at the meeting constitutes a quorum. If a share is represented for any purpose
at the meeting, it is deemed to be present for quorum purposes for the
remainder of the meeting or adjournments thereof. Abstentions and broker
non-votes (where a nominee holding shares for a beneficial owner has not
received voting instructions from the beneficial owner with respect to a
particular matter and such nominee does not possess or choose to exercise
discretionary authority with respect thereto) are counted only for purposes of
determining whether a quorum is present.
Votes cast by proxy or in person at the annual meeting will be tabulated
by the inspectors of election appointed by the Company for the meeting. The
number of shares represented at the meeting in person or by proxy will
determine whether or not a quorum is present. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the shareholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares
will not be considered as present and entitled to vote by the inspectors of
election with respect to that matter.
BOARD COMMITTEES
The Board of Directors is responsible for the overall affairs of the
Company and held seven meetings either in-person or by telephone during the
year ended December 31, 1997. To assist it in carrying out this
responsibility, the Board has delegated certain authority to several
committees.
The Executive Committee members are Richard T. Bueschel, Harry
Kaplowitz, Robert M. Leopold, Richard M. Tworek and James A. Ungerleider. The
Executive Committee may exercise any of the powers and perform any of the
duties of the Board of Directors, subject to the provisions of the law and
certain limits imposed by the Board of Directors. During the year ended
December 31, 1997, either in-person or telephonic meetings of the Executive
Committee were held on the average of once per month.
The Audit Committee members, Messrs. Leopold, Laurence C. Glazer and
Millard H. Pryor, Jr., are assigned responsibility for recommending the
accounting firm to be engaged as independent auditors; consulting with the
independent auditors regarding the adequacy of internal accounting controls;
and reviewing the scope of the audit and the results of the audit examination.
During 1997, the Audit Committee held two meetings.
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The Finance Committee members, Messrs. Alan S. Fisher, Glazer, Leopold
and Pryor are responsible for overseeing the Company's financing activities.
During 1997, the Finance Committee held two meetings.
The Nominating Committee held one meeting in 1997. The Committee reviews
and makes recommendations to the Board of Directors regarding the selection of
nominees to serve as committee members of the Board as well as directors of
the Company. Messrs. Bueschel, Leopold, and Isaac M. Pollak are members of the
Nominating Committee.
The Compensation Committee held four meetings either in-person or by
telephone in 1997. The Compensation Committee reviews and makes
recommendations to the Board of Directors regarding the compensation and
benefits policies and practices of the Company. The Committee is also assigned
responsibility for reviewing and approving the compensation of officers of the
Company. Messrs. Pryor, Glazer and Pollak are the members of the Compensation
Committee.
During 1997, each director attended at least 75% of the aggregate of the
total meetings of the Board of Directors and the Committees of the Board on
which he served.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Nine directors are to be elected by the shareholders, each director so
elected to hold office until the next Annual Meeting of Shareholders and until
his successor is elected and qualified. The persons named as proxies in the
enclosed form intend to cast all votes for the election of the nine nominees
of the Board of Directors listed below, unless the proxy instructs otherwise.
In the event that any of the nine nominees should not continue to be available
for election, discretionary authority will be exercised to seek a substitute.
No circumstances are now known which would render any nominee unavailable.
INFORMATION ABOUT NOMINEES
The ages, principal occupations, and employment during the past five
years for each nominee for director are set forth below:
RICHARD T. BUESCHEL AGE 65 DIRECTOR SINCE 1992
Mr. Bueschel has been the Chairman of the Board of Directors and the
Chairman of the Executive Committee of the Company since January 1993 and was
acting Chief Executive Officer of the Company from April 1997 to November
1997. Since 1988, he has been the Chief Executive Officer of Northern
Equities, Inc., an investment and management firm. Mr. Bueschel is Chairman of
the Board of Communications Management Systems, Inc. and a director of
Study.Net Corporation, a provider of internet-based software applications for
university students, instructors and alumni.
ALAN S. FISHER AGE 37 DIRECTOR SINCE 1997
Mr. Fisher has been a director of the Company since July 1997. In July
1994, he co-founded ONSALE, Inc., a company engaged in electronic retail. Mr.
Fisher has been the Chief Technology Officer of ONSALE, Inc. since that time.
Mr. Fisher was a co-founder, and, from 1988 to July 1997, President and
Chairman of Software Partners, Inc., a software development company and parent
of Ambia Corporation.
LAURENCE C. GLAZER AGE 52 DIRECTOR SINCE 1993
Mr. Glazer has been a director of the Company since August 1993. In
1970, Mr. Glazer founded Buckingham Properties, a real estate development firm
specializing in redevelopment and enhancement of urban property in Rochester,
New York. Since 1970, he has been a Partner of Buckingham Properties. Mr.
Glazer is a member of the Board of Directors of Rochester Institute of
Technology College of Business.
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HARRY KAPLOWITZ AGE 54 DIRECTOR SINCE 1980
Mr. Kaplowitz, a founder of the Company, has been Executive Vice
President of the Company since November 1997 and a director since 1980. From
1991 to 1993, Mr. Kaplowitz served as the Chairman of the Board of Directors
and from 1991 to November 1997 he served as President of the Company.
ROBERT M. LEOPOLD AGE 72 DIRECTOR SINCE 1992
Mr. Leopold has been a director of the Company since 1992. Since 1977,
Mr. Leopold has been President of Huguenot Associates, Inc., a financial and
business consulting firm and wholly owned subsidiary of International Asset
Management Group, Inc. Currently, he is Chairman of the Board of International
Asset Management Group, Inc., a director of Standard Security Life Insurance
Company of New York, a wholly owned subsidiary of Independence Holding
Company, Inc., H.E.R.C. Products Incorporated, and Dental Services of America,
Inc. From 1988 to 1997, he was a director of Windsor Capital.
ISAAC M. POLLAK AGE 47 DIRECTOR SINCE 1993
Mr. Pollak has been a director of the Company since 1993. Since 1980,
Mr. Pollak has been President and Chief Executive Officer of LGP Ltd., a
developer and marketer of promotional items.
MILLARD H. PRYOR, JR. AGE 64 DIRECTOR SINCE 1992
Mr. Pryor has been a director of the Company since 1992. He has been
Managing Director of Pryor & Clark Company, an investment holding company,
since September 1970. He is a Director of CompuDyne Corporation, a
manufacturing and engineering firm; Wiremold Company, a manufacturer of wire
management products; Hoosier Magnetics, Inc., a producer of hard ferrite
magnetic powders; and The Hartford Funds, an investment company.
RICHARD M. TWOREK AGE 41 DIRECTOR SINCE 1996
Mr. Tworek was elected Senior Vice President of the Company in October
1995. He has been an Executive Vice President and a director since July 1996
and Chief Technology Officer since April 1997. Mr. Tworek was the founder of
Merex, Inc. (a company primarily engaged in internet and client/server
document management technology that was acquired by Infodata in October 1995),
and served as its President from April 1987 to October 1995.
JAMES A. UNGERLEIDER AGE 48 DIRECTOR SINCE 1997
Mr. Ungerleider has been the President, Chief Executive Officer and a
director of the Company since November 1997. From 1973 until joining the
Company, Mr. Ungerleider was associated with American Management Systems,
Inc., a consulting services firm, and served as its Vice President, European
Finance Industry Business Area from 1991 to November 1997.
PROPOSALS NO. 2 & 3 - AMENDMENTS TO THE 1995 STOCK OPTION PLAN
The shareholders of the Company are being asked to approve two
amendments to the Company's 1995 Stock Option Plan (the "1995 Plan" or the
"Plan"). Proposal 2 asks shareholders to approve an amendment to the Plan that
would permit the Company to grant stock options with durations of up to ten
years from the date such option is granted. The current limitation is five
years. An option with a ten year duration has a greater value than an
equivalent option with only a five year term. Therefore, this amendment would
serve to enable the Company to grant fewer options and still provide the same
level of value to the recipient in addition to providing valuable employees
with an incentive to remain with the Company over a longer period.
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Proposal 3 asks the shareholders to approve an increase in the number of
shares of Common Stock reserved for issuance under the Plan from 1,511,000 to
2,011,000. The demand for highly qualified technical, sales, and marketing
professionals in high-technology industries currently outpaces the supply.
Stock options are an integral part of the compensation package needed to
attract and retain these individuals.
The following description of the 1995 Plan is qualified in its entirety
by reference to the 1995 Plan, a copy of which is attached as Exhibit A.
BACKGROUND
In 1995, the Board of Directors adopted and the Company's shareholders
approved the 1995 Plan, which (i) consolidated the Company's 1991 Incentive
Stock Option Plan and 1992 Non-Qualified Stock Option Plan and (ii) provided
for the automatic grant of stock options to the members of the Compensation
Committee of the Company's Board of Directors. A total of 1,511,000 shares of
Common Stock have been authorized for issuance under options granted pursuant
to the 1995 Plan at exercise prices which are not less than 100% of the fair
market value of the underlying shares on the date of grant of the option. As
of April 3, 1998, there were 237,640 shares available for the granting of
additional options in the future.
The purpose of the 1995 Plan is to attract, retain and motivate selected
employees, officers, consultants and directors of the Company, as well as
officers and selected employees of any subsidiary thereof, by affording them
an opportunity to acquire a proprietary interest in the Company and to thereby
create in such persons an increased interest and a greater concern for the
welfare of the Company. The approval of the amendments to the Plan will enable
the Company to continue offering valuable, long-term incentives to existing
and future personnel and representatives of the Company in addition to
enhancing our ability to attract and retain high-quality technical, sales, and
marketing employees in a fiercely competitive job market.
The Plan is unfunded, is not a "qualified plan" within the meaning of
Section 401(a) of the Internal Revenue Code and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974.
PLAN ADMINISTRATION
The 1995 Plan is administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), which consists of not less
than two members of the Board of Directors who qualify as "non-employee
directors" of the Company within the meaning of Rule 16b-3 promulgated by the
Securities and Exchange Commission pursuant to Section 16(b) of the Securities
Exchange Act of 1934 (the "Exchange Act"). The present members of the
Committee are Laurence C. Glazer, Isaac M. Pollak and Millard H. Pryor, Jr.
The Committee administers the 1995 Plan so as to conform with the provisions
of Rule 16b-3.
AUTHORIZED SHARES
Subject to possible adjustment in the event of a recapitalization, stock
split or similar transaction, a total of 1,511,000 shares of Common Stock may
be issued upon the exercise of options granted under the 1995 Plan. Proposal 3
to the 1995 Plan calls for the authorization of an additional 500,000 shares
of Common Stock over the amount previously authorized for issuance under the
1995 Plan. Options to purchase an aggregate of 1,413,844 shares of Common
Stock under the 1995 Plan have been issued in the past, of which options to
purchase 295,814 shares have been exercised and options to purchase 140,484
shares have either terminated or lapsed. As of April 3, 1998, options to
purchase a total of 977,546 shares of Common Stock under the 1995 Plan, at
prices ranging from $1.085 to $11.00 per share, were outstanding.
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The 1995 Plan provides that if any shares underlying outstanding options
cease to be subject to purchase thereunder due to expiration or termination of
the options, such shares thereafter will be available to underlie newly
granted options under the 1995 Plan.
ELIGIBILITY AND PARTICIPATION
Options may be granted under the 1995 Plan to four categories of
optionees: (i) certain selected employees and officers of the Company or any
subsidiary thereof who are regularly employed on a salaried basis (the
"Officer/Employee Participants"); (ii) directors of the Company, other than
members of the Committee, who are not officers or employees of the Company
(the "Director Participants"); (iii) consultants or advisors to the Company,
provided that the services rendered by such persons are not in connection with
the offer or sale of securities in a capital-raising transaction (the
"Consultant Participants"); and (iv) members of the Committee (the "Committee
Participants").
The Committee has the authority and discretion to determine the
Officer/Employee Participants, the Director Participants and the Consultant
Participants and the terms of the options to be granted under the 1995 Plan to
such persons. Those three categories of optionees are hereinafter referred to
as the "Grant Participants." The Committee has no authority or discretion
under the 1995 Plan with respect to options granted to Committee Participants,
as the identity of such optionees and the terms of the options granted to them
are fixed by the terms of the 1995 Plan.
OPTIONS FOR GRANT PARTICIPANTS
Options granted to Grant Participants may either be incentive stock
options within the meaning of Section 422 of the Code ("Incentive Options") or
options that do not meet the requirements for Incentive Options
("Non-Qualified Options"), provided that Incentive Options may be granted only
to Officer/Employee Participants. The Committee has the authority to grant
options to Grant Participants during the ten-year period following the date on
which the 1995 Plan was approved by the holders of a majority of the Company's
outstanding shares of Common Stock and Preferred Stock voting as a single
class. Grant Participants receiving options may not sell or otherwise dispose
of any Common Stock acquired upon the exercise of such options for a period of
six months following the date of grant of the options.
The terms of each option will be set forth in a stock option agreement
entered into by the Company with the optionee. The exercise price will be not
less than 100% of the fair market value per share of the Common Stock on the
date of grant; provided, however, that in the case of an Incentive Option
granted to a person who owns more than 10% of the Company's outstanding
shares, the exercise price will be not less than 110% of the fair market value
per share on the date of grant. The fair market value of the Common Stock is
the average of the high and low sale prices of the Common Stock on the date of
such determination or, if there are no sales on such date, the average
reported closing bid and asked prices for a share on such date. If the shares
are not listed on a national securities exchange or quoted by NASDAQ, the fair
market value of the Common Stock will be determined in good faith by the
Committee.
The exercise price of an option is payable upon the exercise thereof and
may be made (i) in cash; (ii) by a commitment by a broker-dealer to pay to the
Company that portion of any sale proceeds receivable by the optionee upon
exercise of the option and sale of underlying shares; or (iii) in the
discretion of the Committee, by delivery to the Company of shares of Common
Stock owned by the optionee and valued as of the business day immediately
preceding the date of exercise of the option.
Options vest and become exercisable upon the dates and in the amounts
set forth in the particular stock option agreement between the Company and the
optionee. Currently, options expire not later than five years from the date of
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grant of the option under the 1995 Plan. Proposal 2 asks that the Plan be
amended to permit options to expire not later than ten years from the date of
grant of the option.
In the event of the death or termination of employment due to disability
of an optionee, the option vests in full and becomes immediately exercisable
and remains exercisable for one year after the date of such death or
termination of employment (but not after the expiration or termination of the
option). In the event an Officer/Employee Participant retires, the options
held by such optionee vest in full and become immediately exercisable and
remain exercisable for three months after such termination of employment (but
not after the expiration or termination of the option). If the employment of
an Officer/Employee Participant is terminated for any reason other than death,
disability or retirement, such optionee has the right to exercise the option,
to the extent it is exercisable, for 30 days after such termination of
employment (but not after the expiration or termination of the option). In the
event a Director Participant ceases to be a director of the Company, such
optionee has the right to exercise the option, to the extent it is
exercisable, for 90 days after the date of such cessation of directorship (but
not after the expiration or termination of the option).
OPTIONS FOR COMPENSATION COMMITTEE MEMBERS
During the ten-year term of the 1995 Plan, a Non-Qualified Option to
purchase 2,000 (4,666 adjusted) shares of Common Stock will be granted to each
member of the Compensation Committee (i) on the date that such director
commences service on the Committee and (ii) on the date of any subsequent
Annual Meeting of Shareholders of the Company at which the director is elected
and appointed or reappointed to serve on the Committee. Such grants occur
automatically under the 1995 Plan and the options become fully exercisable
immediately upon grant as to all of the shares covered thereby. Committee
Participants may not sell or otherwise dispose of any Common Stock acquired
upon the exercise of an option for a period of six months following the date
of grant.
The exercise price of options granted to Committee Participants will be
equal to the fair market value per share of the Common Stock as of the date
the option is granted. The exercise price may be paid by any of the methods
described above with respect to options exercised by Grant Participants.
Options granted to Committee Participants expire five years from the date of
grant; provided, however, that such options will earlier expire 90 days after
the Committee Participant ceases to be a director of the Company. In the event
of the death of any Committee Participant, however, the estate of the
Committee Participant will have the right for one year after the date of death
(but not after the expiration or termination of the option) to exercise such
Committee Participant's options.
OPTIONS FOR EMPLOYEES AND CONSULTANTS OF AMBIA CORPORATION
On July 22, 1997, the Company acquired 100% of the issued and
outstanding capital stock of Ambia Corporation, a California corporation
("Ambia"), through the issuance of 400,000 shares of the Company's common
stock, par value $.03 per share (the "Common Stock"), to Ambia's shareholders,
Alan Fisher and Razi Mohiuddin (collectively, the "Ambia Shareholders"). The
acquisition was accomplished by means of a merger (the "Merger") of Ambia
Acquisition Corporation, a Delaware corporation ("Acquisition") and
wholly-owned subsidiary of the Company, with and into Ambia, pursuant to the
terms of the Agreement of Merger and Plan of Reorganization, dated as of July
22, 1997 (the "Agreement"), by and among the Company, Ambia, the Ambia
Shareholders, Software Partners, Inc., a Delaware corporation ("SPI"), and
Acquisition.
As a result of the Merger, all of the issued and outstanding shares of
Ambia were exchanged for and converted into 400,000 shares of the Company's
Common Stock, with one share paid to the Ambia Shareholders in cash in lieu of
a fractional share, 339,999 shares delivered to the Shareholders and 60,000
shares delivered to an escrow agent. In addition, each outstanding option
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("Ambia Stock Option") to purchase shares of Ambia common stock under the
former Ambia Equity Incentive Plan (as defined in the Merger Agreement) was
converted into an option ("Replacement Option") to acquire, on the same terms
and conditions as were applicable under such Ambia Stock Option, 4/45 of a
share of Common Stock of the Company, at an exercise price of $1.69 per share
with the same expiration date as each such Ambia Stock Option. Replacement
Options to purchase a total of 34,665 shares of the Company's Common Stock
were granted to replace the previously granted Ambia Stock Options. Pursuant
to the Merger Agreement, each Replacement Option is to be treated as a
non-qualified stock option under the Code and, if possible, as granted
pursuant to the terms and conditions of the 1995 Plan and the Ambia Stock
Option agreement entered into by Ambia and the participant in the Ambia Equity
Incentive Plan. The 34,665 shares of the Company's Common Stock underlying the
outstanding Replacement Options are not included in the 1,511,000 shares
presently authorized (or 2,011,000 shares proposed to be authorized) under the
Plan.
CHANGE OF CONTROL
The 1995 Plan provides that upon the occurrence of an event constituting
a "change of control," all options granted under the 1995 Plan immediately
become fully exercisable. A "change of control" will be deemed to have
occurred under the 1995 Plan if any person or organization becomes the
beneficial owner, directly or indirectly, of either (i) a majority of the
Company's outstanding shares of Common Stock or (ii) securities of the Company
representing a majority of the combined voting power of the Company's then
outstanding voting securities.
NON-TRANSFERABILITY
Options granted under the 1995 Plan may not be assigned or transferred
by an optionee except by will or the laws of descent and distribution or,
except as to Incentive Options, pursuant to a qualified domestic relations
order as defined in the Code. During the lifetime of the optionee, options
granted under the 1995 Plan will be exercisable only by the optionee or the
optionee's guardian or legal representative.
AMENDMENT OF THE 1995 PLAN
The Board of Directors of the Company has the right to amend, modify,
suspend or terminate the 1995 Plan at any time, provided that no amendment may
be made without shareholder approval to (i) increase the number of shares of
Common Stock which may be issued pursuant to the 1995 Plan, (ii) materially
increase the benefits accruing to participants under the 1995 Plan, (iii)
decrease the minimum exercise price in the case of an Incentive Option or (iv)
materially modify the provisions of the 1995 Plan relating to eligibility to
receive options. The 1995 Plan provides that no amendment, modification,
suspension or termination of the 1995 Plan may, without the consent of the
optionee, adversely alter or impair any previously granted option.
FEDERAL INCOME TAX TREATMENT
The following is a brief description of the federal income tax treatment
which generally applies to options granted under the 1995 Plan, based on
federal income tax laws in effect on the date hereof.
INCENTIVE STOCK OPTIONS
Pursuant to the 1995 Plan, Officer/Employee Participants may be granted
options which are intended to qualify as Incentive Options under the
provisions of Section 422 of the Code. Generally, the optionee is not taxed
and the Company is not entitled to a deduction on the grant or the exercise of
an Incentive Option. However, if the optionee disposes of the shares acquired
upon the exercise of an Incentive Option at any time within (i) one year after
the date the shares are transferred to the optionee pursuant to the exercise
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of such Incentive Option or (ii) two years after the date of grant of such
Incentive Option (a "disqualifying disposition"), the optionee will recognize
ordinary income in an amount equal to the excess, if any, of the lesser of the
amount realized on the date of such disposition or the fair market value of
the Company's stock on the date of exercise, over the exercise price of such
Incentive Option (with any remaining gain being taxed as a capital gain). In
such an event, the Company generally will be entitled to a deduction in an
amount equal to the amount of ordinary income recognized by such optionee. If
the optionee does not dispose of the option shares within the above described
time limits, there will be no ordinary income recognized upon any subsequent
sale or other disposition of the shares, but rather capital gain or loss will
be recognized in an amount equal to the difference between the amount realized
on the sale or disposition and the exercise price. The Company will not be
entitled to any deduction in this event. Finally, exercise of an Incentive
Option may result in alternative minimum tax liability for the optionee. Any
excess of the fair market value of the stock on the date the Incentive Option
is exercised over the option exercise price will be included in the
calculation of the optionee's alternative minimum taxable income, which may
subject the optionee to the alternative minimum tax. The portion of any such
alternative minimum tax attributable to the exercise of an Incentive Stock
Option can be credited against the optionee's regular tax liability in later
years to the extent that in any such year the optionee's regular tax liability
exceeds the alternative minimum tax.
NON-QUALIFIED STOCK OPTIONS
The grant of an option which does not qualify for treatment as an
Incentive Option generally is not a taxable event for the optionee. However,
upon exercise, the optionee generally will recognize ordinary income in an
amount equal to the excess of the fair market value of the stock acquired upon
exercise (determined as of the date of exercise) over the exercise price of
such option, and the Company will generally be entitled to a deduction equal
to such amount. Upon the later disposition of the option shares acquired upon
exercise, appreciation (or depreciation) after the date of exercise will be
treated as capital gain (or loss) to the optionee and will have no tax effect
as to the Company.
SPECIAL RULES FOR SECTION 16 INSIDERS
If a Non-Qualified Option has been held for less than six months at the
time of exercise, and the exercise price of the option is equal to or less
than the fair market value of the acquired shares at the time of exercise, an
officer, director or more than 10% shareholder of the Company subject to the
provisions of Section 16 of the Exchange Act (an "Insider") will not be taxed
until the earlier of (i) the expiration of the six-month holding period
beginning on the date of grant of the Non-Qualified Option, or (ii) the sale
of the acquired shares, at which time the Insider will recognize ordinary
income in an amount equal to the excess, if any, of the then fair market value
of the acquired shares over the exercise price of the Non-Qualified Option.
Alternatively, pursuant to Section 83(b) of the Code, the Insider may file a
written election with the IRS within 30 days after exercise of the
Non-Qualified Option to recognize ordinary income equal to the excess, if any,
of the fair market value of the Common Stock on the date of exercise over the
exercise price. The capital gains holding period for the acquired shares will
commence immediately following the date on which the optionee is required to
recognize ordinary income, and any appreciation (or depreciation) realized
following such date will be taxed as a capital gain (or loss).
SECTION 162(M)
Section 162(m) of the Code precludes a public corporation from taking an
income tax deduction for certain compensation in excess of $1 million paid to
its chief executive officer or any of its four other highest paid executive
officers. This limitation does not apply to certain performance-based
compensation. Based upon the Code and the regulations under Section 162(m),
the Company believes that any compensation expense generated upon the exercise
9
<PAGE>
of stock options granted under the Plan will be deductible by the Company for
federal income tax purposes to the extent the options are tied to
performance-based criteria.
PLAN BENEFITS
The table below shows the number of shares underlying stock options that
were granted during the following periods to the following individuals and
groups under the Plan:
<TABLE>
<CAPTION>
Year Ended December 31, Year Ended December 31,
NAME AND POSITION/GROUP 1996 1997
----------------------- -----------------------
<S> <C> <C>
James A. Ungerleider,
President & Chief
Executive Officer and
Director -- 250,000
Harry Kaplowitz,
Executive Vice President
and Director 20,000 7,500(5)
Richard M. Tworek,
Executive Vice President
and Director 20,000 20,000
Dr. Robert Loane, Senior
Vice President 6,000(1) --(6)
Christopher P. Dettmar,
Chief Financial Officer -- 15,000
Current executive
officer group
(5 persons) 46,000(2) 292,500(7)
Current directors who
are not executive
officers as a group
(6 persons) 93,998(3) 56,498(8)
All employees (other
than current executive
officers) as a group (64
persons) 214,764(4) 186,387(9)
<FN>
(1) During 1996, Dr. Loane exercised an option to purchase 5,444 shares at
an exercise price of $1.085 per share.
(2) During 1996, the current executive officers as a group exercised options
to purchase a total of 5,444 shares at an exercise price of $1.085 per
share.
(3) During 1996, the current directors who are not executive officers as a
group exercised options to purchase a total of 124,530 shares at an
average exercise price of $1.197 per share.
(4) During 1996, the current employees who are not executive officers as a
group exercised options to purchase a total of 46,880 shares at an
average exercise price of $1.905 per share.
(5) During the period from January 1, 1997 through December 31, 1997, Mr.
Kaplowitz exercised options to purchase a total of 2,332 shares at an
exercise price of $5.619 per share.
10
<PAGE>
(6) During the period from January 1, 1997 through December 31, 1997, Dr.
Loane exercised an option to purchase 8,550 shares at an average
exercise price of $2.818 per share.
(7) During the period from January 1, 1997 through December 31, 1997,
current executive officers as a group exercised options to purchase a
total of 10,882 shares at an average exercise price of $3.418 per share.
(8) During the period from January 1, 1997 through December 31, 1997, the
current directors who are not executive officers as a group exercised
options to purchase a total of 9,332 shares at an average exercise price
of $3.172 per share.
(9) During the period from January 1, 1997 through December 31, 1997, the
current employees who are not executive officers as a group exercised
options to purchase a total of 41,873 shares at an average exercise
price of $3.499 per share.
</FN>
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENTS TO THE 1995 PLAN.
PROPOSAL NO. 4 - AMENDMENT TO THE ARTICLES OF INCORPORATION PROVIDING
FOR AN INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Articles of Incorporation of the Company currently provide that a
total of 7,006,666 shares of capital stock are authorized to be issued, of
which 6,666,666 shares are authorized shares of Common Stock and 340,000
shares are authorized shares of Preferred Stock. ARTICLE 2 of the Company's
Articles of Incorporation currently provides as follows:
"2. The total number of shares of capital stock which the
Corporation has authority to issue is 7,006,666 shares."
The first two sentences of ARTICLE 3 of the Company's Articles of
Incorporation currently provide as follows:
"3. The Corporation shall be authorized to issue two classes of
capital stock to be designated Common Stock, par value $.03 per
share, and Preferred Stock, par value $1.00 per share. There shall
be 6,666,666 authorized shares of Common Stock and 340,000
authorized shares of Preferred Stock."
As of April 3, 1998, there were 4,400,100 issued and outstanding shares
of Common Stock, with an additional 1,511,000 authorized shares of Common
Stock reserved for issuance pursuant to options granted and to be granted
under the 1995 Plan, 34,665 authorized shares of Common Stock reserved for
issuance under the Replacement Options granted to replace the previously
granted AMBIA Stock Options, 200,000 authorized shares of Common Stock
reserved for issuance under the Company's Employee Stock Purchase Plan, and
240,000 authorized shares of Common Stock reserved for issuance under an
option granted by the Company to GKN Securities Corp. and Southeast Research
Partners, Inc., the underwriters of the Company's public offering of 1,600,000
shares of Common Stock in February 1998.
The Company desires to increase the number of shares of Common Stock
available for issuance at the discretion of the Board of Directors and without
further authorization by the shareholders to 12,000,000 shares in order to
facilitate proper corporate purposes of the Company, including, for example,
acquisitions, stock dividends, stock splits, raising additional capital,
capital expenditures or in connection with employee benefit plans. The
availability of such additional shares will enable the Board of Directors to
act with flexibility and expedition when opportunities or needs arise to
expand, finance or strengthen the Company's business. No agreements or
understandings have been
11
<PAGE>
reached and no plans formulated in connection with the issuance of any
additional authorized shares.
The holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters to be voted on by shareholders. There is
no cumulative voting with respect to the election of directors, with the
result that the holders of more than 50% of the shares voted can elect all of
the directors then being elected. The holders of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefor. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining available for distribution to them after
payment of liabilities and after provision has been made for each class of
stock, if any, having preference over the Common Stock. Holders of shares of
Common Stock, as such, have no redemption, preemptive or other subscription
rights, and there are no conversion provisions applicable to the Common Stock.
No shares of the Company's authorized Preferred Stock are outstanding.
The Preferred Stock may be issued in one or more series. The Board of
Directors is expressly vested with the authority to fix by resolution the
designations, powers, preferences, qualifications, limitations or restrictions
of and upon shares of each series, including, without limitation, voting,
dividend, conversion, redemption and liquidation rights. In addition, the
Board of Directors may fix the number of shares constituting any such series
and increase or decrease the number of shares in any such series.
If the proposed increase in the number of authorized shares of Common
Stock is approved by the shareholders of the Company, then ARTICLE 2 of the
Company's Articles of Incorporation, as amended, will read as follows:
"2. The total number of shares of capital stock which the
Corporation has authority to issue is 12,340,000 shares."
If the proposed increase in the number of authorized shares of Common
Stock is approved by the shareholders of the Company, then the first two
sentences of ARTICLE 3 of the Company's Articles of Incorporation, as amended,
will read as follows:
"3. The Corporation shall be authorized to issue two classes of
capital stock to be designated Common Stock, par value $.03 per
share, and Preferred Stock, par value $1.00 per share. There shall
be 12,000,000 authorized shares of Common Stock and 340,000
authorized shares of Preferred Stock."
The affirmative vote of the holders of more than two-thirds of the
outstanding shares of Common Stock on April 3, 1998, the record date for this
Annual Meeting of Shareholders, is required to approve the proposed amendment
to the Company's Articles of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION PROVIDING FOR
THE INCREASE IN THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF THE
COMPANY.
12
<PAGE>
EXECUTIVE COMPENSATION, TRANSACTIONS AND EMPLOYEE BENEFIT PLANS
The following Summary Compensation Table sets forth for the Company's
President and all other executive officers whose total annual salary and
bonuses exceeded $100,000, the amount and nature of all compensation awarded
to, earned by or paid to such individual for the fiscal year indicated for
services rendered in all capacities.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
---------------------------------------- --------------------------------------------------------------
Awards Payouts
--------------------------- -----------
Securities Long-Term
Restricted Underlying Incentive All Other
Name and Stock Options/SARs Plan Compensation
Principal Position Year Salary($) Bonus($) Other($) Awards(s)($) (#) Payouts($) ($)
------------------ ---- --------- -------- -------- ------------ ----- ----------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James A. Ungerleider(1) 1997 $ 11,427 $50,000 -- -- 250,000 -- --
President and Chief
Executive Officer
Harry Kaplowitz(2) 1997 $144,000 $27,500 -- -- 7,500 -- --
Executive Vice 1996 $138,000 $ -- -- -- 20,000 -- --
President 1995 $132,000 $10,251 -- -- -- -- --
Richard M. Tworek(3) 1997 $149,000 $55,000 -- -- 20,000 -- --
Executive Vice 1996 $131,000 -- -- -- 20,000 -- --
President and Chief 1995 $22,277 -- -- -- -- -- --
Technology Officer
Dr. Robert J. Loane(4) 1997 $100,000 $ -- -- -- -- -- --
Senior Vice President 1996 $100,000 $ -- -- -- 6,000 -- --
1995 $100,000 $ 2,238 -- -- -- -- --
Christopher P. 1997 $73,000 $ -- -- -- 15,000 -- --
Dettmar(5)
Chief Financial
Officer
<FN>
(1) - The employment of James A. Ungerleider commenced on November 5, 1997.
The amount reported above for the 1997 bonus was paid in 1998.
(2) - With respect to the 1997 bonus amount reported above, $18,000 was paid
in 1997 and the balance of $9,500 was paid in March 1998. The amount
reported above for the 1995 bonus was paid in April 1996. Mr. Kaplowitz
served as the Company's president from 1991 to November 5, 1997.
(3 )- With respect to the 1997 bonus amount reported above, $40,000 was paid
in 1997 and the balance of $15,000 was paid in March 1998. The
employment of Richard M. Tworek commenced on October 11, 1995.
(4) - The amount reported above for the 1995 bonus was paid in 1996.
(5) - The employment of Christopher P. Dettmar commenced on May 5, 1997.
</FN>
</TABLE>
13
<PAGE>
STOCK OPTIONS
The following tables set forth certain information regarding the grant
and exercise of options to purchase the Company's Common Stock with respect to
the named executive officers during 1997.
<TABLE>
OPTION GRANTS IN 1997
Individual Grants
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED (#) DURING YEAR PRICE($/SH) DATE
---- ----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
James A. Ungerleider 250,000 (1) 48.6% $ 9.50 11/4/02
Harry Kaplowitz 7,500 (2) 1.5% $11.00 2/5/02
Richard M. Tworek 20,000 (2) 3.9% $11.00 2/5/02
Christopher P. Dettmar 15,000 (3) 2.9% $ 7.0625 5/27/02
<FN>
(1) Exercisable as follows: 30% on November 5, 1997, 20% on November 5,
1998, 20% on November 5, 1999, and 30% on November 5, 2000
(2) Exercisable in three equal annual installments commencing February 6,
1997
(3) Exercisable in three equal annual installments commencing May 28, 1997
</FN>
</TABLE>
<TABLE>
AGGREGATE OPTION EXERCISES IN 1997 AND
DECEMBER 31, 1997 OPTION VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12/31/97 ($) 12/31/97 ($) (1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
James A. Ungerleider -- -- 75,000/175,000 $112,500/$262,500
Harry Kaplowitz 2,332 $10,946 103,547/14,176 $890,241/$47,913
Richard M. Tworek -- -- 13,333/26,667 $95,833/$47,917
Dr. Robert J. Loane 8,550 $60,771 14,886/2,000 $107,940/$14,374
Christopher P. Dettmar -- -- 5,000/10,000 $19,688/$39,375
<FN>
(1) Fiscal year ended December 31, 1997. The closing market price on that
date for the Company's Common Stock was $11.00.
</FN>
</TABLE>
AGREEMENTS WITH EXECUTIVES
The Company entered into a letter employment agreement ("Letter
Agreement") with James Ungerleider on November 5, 1997. Pursuant to the Letter
Agreement, Mr. Ungerleider is serving as the Company's President and Chief
Executive Officer, and receives an annual base salary of $200,000 plus an
annual incentive bonus based on the achievement of certain management
objectives and financial performance measures. In addition, Mr. Ungerleider
14
<PAGE>
received options to acquire 250,000 shares of the Company's Common Stock at a
price of $9.50 per share, vesting over a three year period from the date of
the Letter Agreement, a $50,000 hiring bonus to be paid on January 2, 1998,
health insurance and life insurance. Mr. Ungerleider's employment with the
Company is terminable at will and is not for a definite term. However, if Mr.
Ungerleider is terminated by the Company, other than "for cause", as defined
in the Letter Agreement, he will continue to be paid his base salary in
monthly increments for a period of 18 months, and he will continue to receive
various insurance benefits during such period. These insurance and salary
benefits will cease should Mr. Ungerleider begin employment elsewhere with a
new employer during such 18 month period. The Letter Agreement also provides
that, if during Mr. Ungerleider's first 12 months of employment with the
Company, Mr. Bueschel is no longer Chairman of the board and during that same
12-month period Mr. Ungerleider is terminated other than for cause, the
aforementioned salary and benefit provision will apply for a 24- month period.
On December 17, 1997, the Company and Mr. Ungerleider entered into an
Agreement on Confidential Information, Inventions and Ideas (the
"Confidentiality Agreement"). The Confidentiality Agreement provides that Mr.
Ungerleider will not disclose any confidential information during and after
his employment and, if his employment is terminated by the Company with cause
or if he terminates his employment without cause, for a period of one year
following the termination of his employment with the Company, he will not
solicit clients, consultants or suppliers of the Company or otherwise compete
with the Company on the sale or licensing of any products or services that are
competitive with the products or services developed or marketed by the Company
in the United States. The Confidentiality Agreement also provides that Mr.
Ungerleider will not solicit any employee of the Company for a period of one
year following the date of termination of his employment.
As part of the acquisition by the Company of Merex, Inc. in October
1995, the Company entered into an Employment and Non-Compete Agreement
("Employment Agreement", dated October 11, 1995, with Richard M. Tworek.
Pursuant to the Employment Agreement, Mr. Tworek is serving as Executive Vice
President of the Company until October 11, 1999, and receives a minimum base
salary of $125,000 per year, plus any bonus compensation as may be determined
by the Company's Board of Directors. The Employment Agreement also provides
that Mr. Tworek may terminate his employment upon 60 days' written notice. The
Employment Agreement also provides that, unless Mr. Tworek's employment is
terminated by the Company without cause, for a period of two years following
the expiration or termination of the Employment Agreement or his earlier
resignation, Mr. Tworek may not (i) induce any then existing client, customer,
or supplier of the Company to curtail business with the Company, (ii) disturb
any business relationship between the Company and any third party, or (iii)
make statements to any third party likely to result in adverse publicity for
the Company. The Employment Agreement also provides that, unless Mr. Tworek's
employment is terminated by the Company without cause, he may not solicit any
employee of the Company, and for a period of one year following his
termination may not employ any person who is or was an employee of the Company
or Merex.
As part of the acquisition of Ambia, on July 22, 1997, the Company and
Ambia entered into a two-year employment agreement with Razi Mohiuddin
("Mohiuddin Employment Agreement"). Pursuant to the Mohiuddin Employment
Agreement, Mr. Mohiuddin is serving as Vice President of the Company and
manager of the Company's West Coast facilities for a term of 24 months, unless
extended by the mutual agreement of the Company and Mr. Mohiuddin, with a base
salary of $110,000 per year, subject to adjustment based on performance
reviews. The Mohiuddin Employment Agreement provides that Mr. Mohiuddin may
terminate his employment with 60 days' written notice. The Mohiuddin
Employment Agreement also provides that Mr. Mohiuddin will be subject to a
non-competition provision for a period of two years and a non-solicitation
provision for a period of one year following the date of termination unless
Mr. Mohiuddin's employment is terminated by the Company without cause.
During 1986, the Company entered into Executive Separation Agreements
with Mr. Kaplowitz and Dr. Loane. In the event that either officer's
employment is terminated involuntarily, without cause, following a change in
control of the Company, as defined, that officer is entitled to separation pay
equal to two years base salary and continuation of life and health insurance
15
<PAGE>
coverage for two years. Additionally, any type of pension or profit-sharing
credited service will be extended for two years. There were no separation
payments accrued or paid under the Executive Separation Agreements in 1997.
DIRECTOR COMPENSATION
During 1997, Laurence C. Glazer, Isaac M. Pollak and Millard H. Pryor,
Jr., as the members of the Compensation Committee, were each granted a
non-qualified option under the Company's 1995 Stock Option Plan to purchase
4,666 shares of Common Stock at an exercise price of $7.0625 per share. During
1997, non-employee directors received an annual fee amounting to $10,000,
payable quarterly in shares of the Company's Common Stock. The Company plans
to compensate its non-employee directors on the same basis in 1998. Any
director who is an employee of the Company receives no additional compensation
for serving as a director. During 1997, no Executive Committee meeting fees
were accrued or paid to Executive Committee members.
STOCK OPTION PLAN
In 1995, the Board of Directors adopted and the Company's shareholders
approved the 1995 Stock Option Plan (the "1995 Plan"), which (i) consolidated
the Company's 1991 Incentive Stock Option Plan and 1992 Non-Qualified Stock
Option Plan and (ii) provided for the automatic grant of stock options to the
members of the Compensation Committee of the Company's Board of Directors. A
total of 1,511,000 shares of Common Stock have been authorized for issuance
under options granted and to be granted under the 1995 Plan at exercise prices
which will not be less than 100% of the fair market value of the underlying
shares on the date of grant of the option. As of April 3, 1998, options to
purchase a total of 977,546 shares of Common Stock under the 1995 Plan, at
prices ranging from $1.085 to $11.00 per share, were outstanding, including
the 13,998 shares referred to above which underlie options granted in 1997 to
members of the Compensation Committee. As of April 3, 1998, a total of 237,640
shares were available for options not yet granted.
STOCK WARRANT PURCHASE PLAN
During 1987, the Board of Directors adopted a Stock Warrant Purchase
Plan. The stock subject to this plan is authorized but unissued shares of
Common Stock. On January 1, 1997, the Stock Warrant Purchase Plan expired. As
of April 3, 1998, no warrants were outstanding.
OTHER INFORMATION
For the year ended December 31, 1997, the Company made business
management consulting fee payments totaling $120,000 to Bermuda Capital for
the services of Mr. Richard T. Bueschel, the Company's Chairman.
For the year ended December 31, 1997, the Company made payments totaling
$85,000 to Huguenot Associates, Inc. for the consulting services of its
President, Robert M. Leopold, a director of the Company.
On October 3, 1996, the Company extended a loan to Richard M. Tworek, a
director and executive officer of the Company, in the principal amount of
$70,000. The loan, proceeds of which were used by Mr. Tworek for personal
reasons, bears annual interest of prime plus 1% and is payable by him on or
before October 2, 1999. The principal amount of the loan outstanding as of
April 3, 1998, was $70,000.
REPORTS UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than 10% of the Company's outstanding Common Stock, to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission. A Statement of Changes of Beneficial Ownership of
16
<PAGE>
Securities on Form 4 is required to be filed by the tenth day of the month
following the month during which a change in a reporting person's beneficial
ownership of securities occurred. An Annual Statement of Changes in Beneficial
Ownership on Form 5 is required to be filed by February 15th of each year to
report certain specified transactions, including transactions occurring during
the prior year that were not timely reported on a Form 4.
Based solely on its review of the reports filed under Section 16(a) of
the Exchange Act, the Company believes that all reports of securities
ownership and changes in such ownership required to be filed during 1997 were
timely filed.
BENEFICIAL OWNERSHIP OF SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to each person or
group known to be a beneficial owner of more than five percent of the Common
Stock of the Company as of April 3, 1998. Each beneficial owner has sole
voting and investment power with respect to such shares, unless otherwise
specified below.
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENT
OF BENEFICIAL OWNER NUMBER OF SHARES OF CLASS
------------------------------------------------------------------------------------------------
<S> <C> <C>
Alan S. Fisher 313,366(1) 7.14%
ONSALE, Inc.
1350 Willow Road
Menlo Park, CA 94025
<FN>
(1) Includes 37,931 shares subject to an Escrow Agreement, dated July 22,
1997, by and among Alan Fisher, Razi Mohiuddin, the Company and
SETTLEMENT CORP., as escrow agent, pursuant to which Mr. Fisher shall be
entitled to vote such shares.
</FN>
</TABLE>
17
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's shares of Common Stock owned on April 3,
1998, by each of the Company's directors and by all directors and executive
officers as a group. Each person has sole voting and investment power with
respect to such securities, unless otherwise specified below.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF INDIVIDUAL BENEFICIAL OWNERSHIP OF CLASS
------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard T. Bueschel 188,193(1) 4.15%
Curtis D. Carlson 3,087(2) 0.07%
Christopher P. Dettmar 10,160(3) 0.23%
Alan S. Fisher 313,883(4) 7.13%
Laurence C. Glazer 89,741(5) 2.04%
Harry Kaplowitz 158,500(6) 3.51%
Robert M. Leopold 130,353(7) 2.92%
Robert J. Loane 69,355(8) 1.57%
Razi Mohiuddin 172,121(9) 3.91%
Isaac M. Pollak 155,125(10) 3.50%
Millard H. Pryor, Jr. 46,999(11) 1.06%
Richard M. Tworek 203,750(12) 4.61%
James A. Ungerleider 80,000(13) 1.79%
All directors and
Executive officers as a group (13
persons) 1,621,267(14) 33.12%
<FN>
(1) Includes 138,718 shares subject to presently exercisable stock options.
(2) Includes 2,612 shares subject to presently exercisable stock options.
(3) Includes 10,000 shares subject to presently exercisable stock options.
(4) Includes 37,931 shares subject to an Escrow Agreement, dated July 22,
1997, by and among Alan S. Fisher, Razi Mohiuddin, the Company and
SETTLEMENT CORP., as escrow agent, pursuant to which Mr. Fisher shall be
entitled to vote such shares.
(5) Includes 9,332 shares subject to presently exercisable stock options.
(6) Includes 110,214 shares subject to presently exercisable stock options
or stock options exercisable within 60 days.
(7) Includes 69,270 shares subject to presently exercisable stock options.
(8) Includes 14,886 shares subject to presently exercisable stock options.
(9) Includes 22,069 shares subject to an Escrow Agreement, dated July 22,
1997, by and among Alan S. Fisher, Razi Mohiuddin, the Company and
SETTLEMENT CORP., as escrow agent, pursuant to which Mr. Mohiuddin shall
be entitled to vote such shares.
(10) Includes 12,200 shares owned by LGP Ltd. Profit Sharing Trust for which
Mr. Pollak has sole voting and investment power. Includes 31,106 shares
subject to presently exercisable stock options.
18
<PAGE>
(11) Includes 13,998 shares subject to presently exercisable stock options.
(12) Includes 20,000 shares subject to presently exercisable stock options or
stock options exercisable within 60 days.
(13) Includes 75,000 shares subject to presently exercisable stock options.
(14) Includes 495,136 shares subject to presently exercisable stock options
or stock options exercisable within 60 days.
</FN>
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP was engaged to perform an audit of the Company's
financial statements for the year ended December 31, 1997. A representative of
Arthur Andersen LLP is expected to be available during the Company's Annual
Meeting of Shareholders via telephone and will be available to respond to
appropriate questions. The Audit Committee of the Board of Directors has not
yet recommended an independent public accounting firm to audit the Company's
financial statements for the year ending December 31, 1998.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. In addition
to solicitation by the use of mails, some officers, without extra
compensation, may solicit proxies personally and by telephone and telegraph.
The Company may request banks, brokers, nominees, custodians, and fiduciaries
to forward soliciting material to the beneficial owners of shares registered
in their names. The Company will reimburse such persons for their expense
incurred in such assistance.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting must be received at the Company's Corporate Headquarters, 12150
Monument Drive, Fairfax, Virginia 22033, for inclusion in the Company's Proxy
Statement and form of proxy relating to that Annual Meeting, no later than
December 10, 1998.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, to shareholders at the Annual Meeting, any matter other than those
specifically referred to in this Proxy Statement. If any other matters
properly come before the Annual Meeting, it is intended that the holders of
the proxies will act in respect thereto in accordance with their best
judgment. Abstentions, broker non-votes, and withheld votes are voted neither
"for" nor "against" a proposal, but are counted in the determination of a
quorum.
In accordance with the terms of indemnification agreements with each of
its directors and officers, the Company maintained directors and officers
liability insurance, $1,000,000 in the aggregate for the policy year, under an
agreement with Genesis Insurance Company effective June 3, 1997. This policy
covered each director and officer of the Company and required the payment of
annual premiums totaling $41,000. During 1997, no sums were paid under this or
any other indemnification insurance contract.
By order of the Board of Directors
James A. Ungerleider, President & CEO
Dated: Fairfax, Virginia
April 10, 1998
19
<PAGE>
EXHIBIT A
INFODATA SYSTEMS INC.
1995 STOCK OPTION PLAN
1. PURPOSE
Infodata Systems Inc. (the "Company"), by means of this 1995 Stock
Option Plan (the "Plan"), desires to afford certain of its directors, officers
and certain selected employees, consultants and the officers and certain
selected employees of any subsidiary thereof now existing or hereafter formed
or acquired, an opportunity to acquire a proprietary interest in the Company,
and thus to create in such persons an increased interest in and a greater
concern for the welfare of the Company and any subsidiary. The Plan is the
successor to the Company's Incentive Stock Option Plan and Non-Qualified Stock
Option Plan that were approved by the Company's shareholders in 1991 and 1992,
respectively (the "Prior Plans"). As used in the Plan, the term "subsidiary"
shall mean any entity in which the Company, directly or indirectly, owns a
controlling interest.
The stock options described in Sections 6 and 7 hereof (the "Options"),
and the shares of common stock, par value $.03 per share, of the Company (the
"Common Stock") acquired pursuant to the exercise of such Options are a matter
of separate inducement and are not in lieu of any salary or other compensation
for services.
The Options granted under Section 6 hereof are intended to be either
incentive stock options ("Incentive Options") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), or options
that do not meet the requirements for Incentive Options ("Non-Qualified
Options"), but the Company makes no warranty as to the qualification of any
Option as an Incentive Option.
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee, or any
successor thereto, of the Board of Directors of the Company or by such other
committee as determined by the Board (the "Committee"). The Committee shall
consist of not less than two members of the Board of Directors of the Company,
each of whom shall qualify as a "disinterested person" to administer the Plan
within the meaning of Rule 16b-3, as amended, or other applicable rules under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). The Committee shall administer the Plan so as to conform at
all times with the provisions of Rule 16b-3 promulgated under the Exchange
Act. A majority of the Committee shall constitute a quorum, and subject to the
provisions of Section 5 hereof, the acts of a majority of the members present
at any meeting at which a quorum is present, or acts approved unanimously in
writing by the Committee, shall be the acts of the Committee.
The 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
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 Committee or such person may have under the Plan. The Committee may employ
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attorneys, consultants, accountants, or other persons and the Committee, the
Company and its officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall
be final and binding upon all persons who have received grants under the Plan,
the Company and all other interested persons. No member or agent of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan and all members and
agents of the Committee shall be fully protected by the Company in respect of
any such action, determination or interpretation.
3. SHARES AVAILABLE
Subject to the adjustments provided in Section 9 hereof, the maximum
aggregate number of shares of Common Stock which may be purchased pursuant to
the exercise of Options granted under the Plan shall not exceed 433,333. Such
amount includes the 333,333 shares (giving effect to the one-for-three reverse
split of the Common Stock effected April 27, 1994) previously authorized for
possible issuance under the Prior Plans. If, for any reason, any shares as to
which Options have been granted cease to be subject to purchase thereunder,
including without limitation the expiration of such Options, the termination
of such Options prior to exercise or the forfeiture of such Options, such
shares thereafter shall be available for grants to such individual or other
individuals under the Plan. Options granted under the Plan may be fulfilled in
accordance with the terms of the Plan with either authorized and unissued
shares of Common Stock or issued shares of such Common Stock held in the
Company's treasury or both, at the discretion of the Company.
4. ELIGIBILITY AND BASES OF PARTICIPATION
Grants under the Plan (i) may be made, pursuant to Section 6 hereof, to
certain selected employees and officers (but not to any director who is not
also an employee) of the Company or any subsidiary thereof who are regularly
employed on a salaried basis and who are so employed on the date of such grant
(the "Officer and Certain Selected Employee Participants"); (ii) may be made,
pursuant to Section 6 hereof, to directors of the Company, other than
Committee Participants (as defined below), who are not employees and who are
retained by the Company in such capacity on the date of such grant (the
"Director Participants"); (iii) may be made, pursuant to Section 6 hereof, to
consultants or advisors, provided that the services rendered by such
consultants or advisors shall not be in connection with the offer or sale of
securities in a capital- raising transaction (the "Consultant Participants")
(the Officer and Certain Selected Employee Participants, Director Participants
and Consultant Participants are hereinafter collectively referred to as the
"Grant Participants"); and (iv) may be made, pursuant to Section 7 hereof, to
individuals who serve on the Committee or have been named to serve on the
Committee in the future (the "Committee Participants").
5. AUTHORITY OF COMMITTEE
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Subject to and not inconsistent with the express provisions of the Plan
and the Code, the Committee shall have plenary authority, in its sole
discretion, to:
a. other than with respect to Committee Participants, determine the
persons to whom Options shall be granted, the time when such
Options shall be granted, the number of shares of Common Stock
underlying each Option, the purchase price or exercise price of
each Option, the restrictions to be applicable to Options and the
other terms and provisions thereof (which need not be identical);
b. provide an arrangement through registered broker-dealers whereby
temporary financing may be made available to an optionee by the
broker-dealer for the purpose of assisting the optionee in the
exercise of an Option;
c. establish procedures for an optionee to pay the exercise price of
an Option in whole or in part by delivering that number of shares
of Common Stock owned by such optionee; or for the collection of
any taxes required by any government to be withheld or otherwise
deducted and paid by the Company or any subsidiary in respect of
the issuance or disposition of Common Stock acquired pursuant to
the exercise of an Option granted hereunder, which procedures may
include payment in whole or in part through the delivery of shares
of Common Stock owned by the optionee valued on the basis of the
Fair Market Value (as defined in Section 11 hereof) on the date
preceding such exercise;
d. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
e. make all determinations specified in or permitted by the Plan or
deemed necessary or desirable for its administration or for the
conduct of the Committee's business; and
f. establish any procedures determined to be appropriate in
discharging its responsibilities under the Plan.
6. STOCK OPTIONS FOR GRANT PARTICIPANTS
The Committee shall have the authority, in its sole discretion, to grant
Incentive Options or Non-Qualified Options or both Incentive Options and
NonQualified Options to Grant Participants (any such Options are hereinafter
collectively referred to as the "Participant Options") during the period
beginning on the date on which the Plan is approved by the holders of a
majority of the Company's outstanding shares of Common Stock and Preferred
Stock, voting as a class (the "Effective Date") and ending on the tenth
anniversary of the Effective Date (the "Termination Date"). Notwithstanding
anything contained herein to the contrary, Incentive Options may be granted
only to Officer and Certain Selected Employee Participants. As a condition to
the granting of any Option, the Committee shall require that the person
receiving such Option agree not to sell or otherwise dispose of any Common
Stock acquired pursuant to such Option for a period of six months following
the date of the grant of such Option. The terms and conditions of the
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Participant Options shall be determined from time to time by the Committee;
PROVIDED, HOWEVER, that the Participant Options granted under the Plan shall
be subject to the following:
a. EXERCISE PRICE. The exercise price for each share of Common Stock
purchasable under any Participant Option granted hereunder shall
be such amount as the Committee, in its best judgment, shall
determine to be not less than 100% of the Fair Market Value (as
defined in Section 11 hereof) per share on the date the
Participant Option is granted; PROVIDED, HOWEVER, that in the case
of an Incentive Option granted to a person who, at the time such
Incentive Option is granted, owns shares of capital stock of the
Company, or of any subsidiary of the Company, having more than 10%
of the total combined voting power of all classes of shares of
capital stock of the Company or of such subsidiary, the exercise
price for each share shall be not less than 110% of the Fair
Market Value (as defined in Section 11 hereof) per share on the
date the Incentive Option is granted. In determining the stock
ownership of a person for purposes of this Section 6, the rules of
Section 424(d) of the Code shall be applied and the Committee may
rely on representations of fact made to it by such person and
believed by it to be true. The exercise price of the Participant
Options will be subject to adjustment in accordance with the
provisions of Section 9 hereof.
b. PAYMENT. The exercise price per share of Common Stock with respect
to each Participant Option shall be payable at the time the
Participant Option is exercised. Such price shall be payable in
cash, which may be paid by wire transfer in immediately available
funds, by check, by a commitment by a broker-dealer to pay to the
Company that portion of any sale proceeds receivable by the
optionee upon exercise of a Participant Option or by any other
instrument acceptable to the Company or, in the discretion of the
Committee, by delivery to the Company of shares of Common Stock.
Shares delivered to the Company in payment of the exercise price
shall be valued at the Fair Market Value (as defined in Section 11
hereof) of the Common Stock on the business day immediately
preceding the date of the exercise of the Participant Option.
c. EXERCISABILITY OF PARTICIPANT OPTIONS. Subject to this Section 6
and Section 8 hereof, each Participant Option shall vest and
become exercisable on the dates and in the amounts set forth in
the particular stock option agreement between the Company and the
optionee; PROVIDED, HOWEVER, that a Participant Option shall
expire not later than five years from the date such Option is
granted. The right to purchase shares shall be cumulative so that
when the right to purchase any shares has accrued, such shares or
any part thereof may be purchased at any time thereafter until the
expiration or termination of the Participant Option.
d. DEATH. In the event of the death of an optionee, all Participant
Options held by such optionee on the date of such death shall vest
in full and become immediately exercisable. Upon such death, the
legal representative of such optionee, or such person who acquired
such Participant Options by bequest or inheritance or by reason of
the death of the optionee, shall have the right for one year after
the date of death (but not after the expiration or termination of
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the Participant Options), to exercise such optionee's Participant
Options with respect to all or any part of the shares of Common
Stock subject thereto.
e. DISABILITY. If the employment of an optionee is terminated because
of Disability (as defined in Section 11 hereof), all Participant
Options held by such optionee on the date of such termination
shall vest in full and become immediately exercisable. Such
optionee shall have the right for one year after the date of such
termination (but not after the expiration or termination of the
Participant Options), to exercise such optionee's Participant
Options with respect to all or any part of the shares of Common
Stock subject thereto.
f. RETIREMENT. In the event the employment of an Officer and Certain
Selected Employee Participant is terminated by reason of the
Retirement (as defined in Section 11 hereof) of the optionee, all
Participant Options held by such optionee on the date of such
termination shall vest in full and become immediately exercisable.
Such optionee shall have the right for three months after the date
of such termination (but not after the expiration or termination
of the Participant Options), to exercise such optionee's
Participant Options with respect to all or any part of the shares
of Common Stock subject thereto. The Committee, in its discretion,
shall determine whether an optionee's employment was terminated by
reason of Retirement and whether such optionee is entitled to the
treatment afforded by this subsection f.
g. OTHER TERMINATION. If the employment of an Officer and Certain
Selected Employee Participant is terminated for any reason other
than those specified in subsections d, e, and f of this Section 6,
such optionee shall have the right for 30 days after the date of
such termination (but not after the expiration or termination of
the Participant Options), to exercise such optionee's Participant
Options with respect to all or any part of the shares of Common
Stock which such optionee was entitled to purchase immediately
prior to the time of such termination.
h. CESSATION OF DIRECTORSHIP. In the event a Director Participant
shall cease to be a director of the Company, such optionee shall
have the right for 90 days after the date of such cessation (but
not after the expiration or termination of the Participant
Options), to exercise such optionee's Participant Options with
respect to all or any part of the shares of Common Stock subject
thereto.
i. MAXIMUM EXERCISE. To the extent the aggregate Fair Market Value
(as defined in Section 11 hereof) of Common Stock (determined at
the time of the grant) with respect to which Incentive Options are
exercisable for the first time by an optionee during any calendar
year under all plans of the Company or any subsidiary, exceeds
$100,000, or such other amount as may be prescribed under Section
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422 of the Code or applicable regulations or rulings from time to
time, the excess thereof shall be treated as Non-Qualified Options
and not as Incentive Options.
7. STOCK OPTION GRANTS TO COMMITTEE PARTICIPANTS
During the term of the Plan, on the date that a director of the Company
commences service on the Committee (which in the case of the initial members
of the Committee shall be deemed to be the Effective Date), and on the date of
any subsequent annual meeting of the holders of the Common Stock at which a
director is elected and appointed or reappointed to serve on the Committee,
such Committee Participant automatically shall be granted a Non-Qualified
Option to purchase 2,000 shares of Common Stock, which Non-Qualified Option,
except as otherwise provided in this Section 7 or Section 8 hereof, shall
become fully exercisable immediately upon grant as to all of the shares
covered thereby. (A Non-Qualified Option granted to a Committee Participant
pursuant to this Section 7 is referred to as a "Committee Option".) As a
condition to the granting of any Committee Option, the person receiving such
Committee Option shall agree not to sell or otherwise dispose of any Common
Stock acquired pursuant to such Option for a period of six months following
the date of the grant of such Option. The terms and conditions of the
Committee Options shall be as follows:
a. OPTION PRICE. The exercise price of each share of Common Stock
purchasable under any Committee Options shall be such amount as
the Committee, in its best judgment, shall determine to be 100% of
the Fair Market Value (as defined in Section 11 hereof) per share
at the date the Committee Option is granted.
b. PAYMENT. The exercise price per share of Common Stock with respect
to each Committee Option and any withholding tax due in connection
with such exercise may be paid by any of the methods described
under Section 6b hereof.
c. EXERCISABILITY. Except as provided in subsection d of this Section
7, no Committee Option shall be exercisable after the earlier of
(i) the expiration of five years from the date such Committee
Option is granted and (ii) 90 days after such Committee
Participant ceases for any reason to be a director of the Company.
d. DEATH. In the event of the death of any Committee Participant, the
estate of the Committee Participant shall have the right for one
year after the date of death (but not after the expiration or
termination of such Committee Options), to exercise such Committee
Participant's Committee Options with respect to all or any part of
the shares of Common Stock subject thereto.
e. AMENDMENT. The provisions of this Section 7 shall not be amended
more than one time in any six-month period, other than to comport
with any amendments to the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations
thereunder.
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8. CHANGE OF CONTROL
Notwithstanding any provision herein to the contrary, upon the
occurrence of an event constituting a Change of Control (as defined in Section
11 hereof), all Options granted under the Plan immediately shall become fully
exercisable.
9. ADJUSTMENT OF SHARES
In the event the outstanding shares of Common Stock shall be increased
or decreased or changed into or exchanged for a different number of kind of
shares of stock or other securities of the Company or another corporation by
reason of any consolidation, merger, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in capital
structure of the Company, the number or kind of shares or interests subject to
an Option and the per share price or value thereof shall be appropriately
adjusted by the Committee at the time of such event. Any fractional shares or
interests resulting from such adjustment shall be eliminated. Notwithstanding
the foregoing, (i) each such adjustment with respect to an Incentive Option
shall comply with the rules of Section 424(a) of the Code and (ii) in no event
shall any adjustment be made that would result in an Incentive Option failing
to be treated as an "incentive stock option" for purposes of Section 422 of
the Code. In addition, in such event the Board of Directors of the Company
shall appropriately adjust the number of shares of Common Stock for which
Options may be granted under the Plan.
10. MISCELLANEOUS PROVISIONS
a. ASSIGNMENT OR TRANSFER. No grant of any "derivative security" (as
defined by Rule 16a-1(c) under the Exchange Act) made under the
Plan or any rights or interests therein shall be assignable or
transferable by an optionee except by will or the laws of descent
and distribution or, except as to Incentive Options, pursuant to a
qualified domestic relations order as defined in the Code. During
the lifetime of an optionee, Options granted hereunder shall be
exercisable only by the optionee or the optionee's guardian or
legal representative.
b. INVESTMENT REPRESENTATION. If a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Stock issuable upon exercise of an Option is
not in effect at the time such Option is exercised, the Company
may require, for the sole purpose of complying with the Securities
Act, that prior to delivering such Common Stock to the exercising
optionee such optionee must deliver to the Secretary of the
Company a written statement (i) representing that such Common
Stock is being acquired for investment only and not with a view to
the resale or distribution thereof, (ii) acknowledging that such
Common Stock may not be sold unless registered for sale under the
Securities Act or pursuant to an exemption from such registration
and (iii) agreeing that the certificates evidencing such Common
Stock shall bear a legend to the foregoing effect.
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c. COSTS AND EXPENSES. The costs and expenses of administering the
Plan shall be borne by the Company and shall not be charged
against any Option nor to any person receiving an Option.
d. FUNDING OF PLAN. The Plan shall be unfunded. The Company shall not
be required to make any segregation of assets to assure the
satisfaction of any Option under the Plan.
e. OTHER INCENTIVE PLANS. The adoption of the Plan does not preclude
the adoption by appropriate means of any other incentive plan for
officers, directors or employees.
f. EFFECT ON EMPLOYMENT. Nothing contained in the Plan or any
agreement related hereto or referred to herein shall affect, or be
construed as affecting, the terms of employment of any Grant
Participants except to the extent specifically provided herein or
therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as
imposing, an obligation on (i) the Company or any subsidiary to
continue the employment of any Grant Participant or (ii) any Grant
Participant to remain in the employ of the Company or any
subsidiary.
g. TERMINATION OR SUSPENSION OF THE PLAN. The Board of Directors may
at any time suspend or terminate the Plan. The Plan, unless sooner
terminated under Section 12 of the Plan or by action of the Board
of Directors, shall terminate at the close of business on the
Termination Date. Options may not be granted while the Plan is
suspended or after it is terminated. Rights and obligations under
any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Option was
granted. The power of the Committee to construe and administer any
Option granted prior to the termination or suspension of the Plan
nevertheless shall continue after such termination or during such
suspension.
h. SAVINGS PROVISION. With respect to persons subject to Section 16
of the Exchange Act, the transactions under the Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of
the Plan or action by the Committee fails so to comply, it shall
be deemed null and void to the extent permitted by law.
i. PARTIAL INVALIDITY. The invalidity or illegality of any provision
herein shall not be deemed to affect the validity of any other
provision.
11. DEFINITIONS
a. "Fair Market Value", as it relates to the Common Stock, shall mean
the average of the high and low sale prices of such Common Stock
on the date such determination is required herein, or if there
were no sales on such date, the average closing bid and asked
prices, as
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reported on the national securities exchange on which the
Company's Common Stock is listed or, in the absence of such
listing, on the NASDAQ National Market or Small Cap Market or, if
such Common Stock is not at the time listed on a national
securities exchange or traded on the NASDAQ National Market or
Small Cap Market, the value of such Common Stock on such date as
determined in good faith by the Committee.
b. "Disability" shall have the meaning set forth in Section 22(e)(3)
of the Code.
c. "Change of Control" shall be deemed to have occurred if,
subsequent to the Effective Date of this Plan, any "person" (as
such term is defined in Section 13(d) of the Exchange Act) becomes
the beneficial owner, directly or indirectly, of either (x) a
majority of the Common Stock or (y) securities of the Company
representing a majority of the combined voting power of the
Company's then outstanding voting securities.
d. "Retirement" shall mean the date upon which a Grant Participant,
having attained an age as may be determined by the Committee in
its sole discretion, terminates his employment with the Company or
any subsidiary, provided that such Grant Participant has been
employed by the Company or any subsidiary.
12. AMENDMENT OF PLAN
The Board of Directors of the Company shall have the right to amend,
modify, suspend or terminate the Plan at any time, provided that no amendment
shall be made without shareholder approval which shall (i) increase the total
number of shares of the Common Stock of the Company which may be issued and
sold pursuant to Options granted under the Plan (except for increases due to
adjustments in accordance with Section 9 hereof), (ii) materially increase the
benefits accruing to participants under the Plan, (iii) decrease the minimum
exercise price in the case of an Incentive Option or (iv) materially modify
the provisions of the Plan relating to eligibility with respect to Options. In
no event may the Plan be amended in any way that would retroactively impair
the Committee's discretion. The Board of Directors shall be authorized to
amend the Plan and the Options granted thereunder (A) to qualify such Options
as "incentive stock options" within the meaning of Section 422 of the Code or
(B) to comply with Rule 16b-3 (or any successor rule) under the Exchange Act.
No amendment, modification, suspension or termination of the Plan, without the
consent of the holder thereof, shall adversely alter or impair any Options
previously granted under the Plan.
13. EFFECTIVE DATE
The Plan shall become effective on the Effective Date. Subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Section 12 hereof, the Plan shall remain in effect until the earlier of (i)
the date that Options covering all shares of Common Stock issuable under the
Plan have been granted or (ii) the Termination Date.
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INFODATA SYSTEMS INC.
The undersigned hereby appoints JAMES A. UNGERLEIDER and HARRY
KAPLOWITZ, or either of them individually, with full power of substitution, to
act as proxy and to represent the undersigned at the 1998 annual meeting of
shareholders and to vote all shares of common stock of Infodata Systems Inc.
which the undersigned is entitled to vote and would possess if personally
present at said meeting to be held at The Penn Club of New York, 30 West 44th
Street, New York, New York 10036, on Thursday, May 28, 1998, at 10:00 a.m. and
at all adjournments thereof upon the following matters:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, AND 4
LISTED ON THE REVERSE SIDE. PROXIES ARE GRANTED THE DISCRETION TO VOTE UPON
ALL OTHER MATTERS THAT MAY PROPERLY BE BROUGHT BEFORE THE MEETING.
(Continued, and to be signed on the reverse side)
<PAGE>
Please date, sign and mail your
Proxy card back as soon as possible!
Annual Meeting of Shareholders
INFODATA SYSTEMS INC.
May 28, 1998
Please Detach and Mail in the Envelope Provided
[X] Please mark your votes as in this example.
----------------------------------------------------------------------------
The Board of Directors Recommends a vote FOR the nominees
1. Election of Directors FOR [ ] WITHHOLD [ ]
Nominees: Richard T. Bueschel
Alan S. Fisher
Laurence C. Glazer
Harry Kaplowitz
Robert M. Leopold
Isaac M. Pollak
Millard H. Pryor, Jr.
Richard M. Tworek
James A. Ungerleider
----------------------------------------------------------------------------
2. Approval of an amendment to the Company's 1995 Stock Option Plan
authorizing the Company to grant stock options with durations of up to ten
years.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
----------------------------------------------------------------------------
3. Approval of an amendment to the Company's 1995 Stock Option Plan reserving
500,000 additional shares of the Company's common stock for issuance
thereunder.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
----------------------------------------------------------------------------
4. Approval of an amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of common stock from 6,666,666
to 12,000,000
FOR [ ] AGAINST [ ] ABSTAIN [ ]
----------------------------------------------------------------------------
Change of Address [ ]
I plan to attend the meeting [ ]
I do not plan to attend the meeting [ ]
SIGNATURE(S)______________________________________________________________
DATE __________________________
NOTE: Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full titles as such.
