SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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 Rule 14a-12
ION NETWORKS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(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.
Section 1.01 Title of each class of securities to which transaction
applies:
----------
Section 1.02 Aggregate number of securities to which transaction applies:
----------
Section 1.03 Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------
<PAGE>
Section 1.04 Proposed maximum aggregate value of transaction:
----------
Section 1.05 Total fee paid:
----------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Section 1.06 Amount Previously Paid:
----------
Section 1.07 Form, Schedule or Registration Statement No.:
----------
Section 1.08 Filing Party:
----------
Section 1.09 Date Filed:
-2-
<PAGE>
ION NETWORKS, INC.
1551 SOUTH WASHINGTON AVENUE
PISCATAWAY NEW JERSEY 08854
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 2000
To the Stockholders of ION NETWORKS, INC.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders
(the "Meeting") of Ion Networks, Inc., a Delaware corporation (the "Company"),
will be held at the offices of the Company at Washington Plaza, 1551 South
Washington Avenue, Piscataway, New Jersey, on Monday, November 20, 2000, at
10:30 A.M., Eastern Daylight Time, for the following purposes:
1. To elect a board of six (6) directors to serve until the next annual
meeting of stockholders and until their respective successors are duly elected
and qualified;
2. To approve the Company's 2000 stock option plan and 2000 U.K.
sub-plan; and
3. To transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Management is aware of no other business
which will come before the Meeting.
The Board of Directors has fixed the close of business on October 19,
2000 as the record date for the determination of stockholders entitled to notice
of and to vote at the Meeting or any adjournment or postponement thereof.
Holders of a majority of the outstanding shares must be present in person or by
proxy in order for the Meeting to be held.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. YOU ARE
URGED TO SIGN, DATE AND OTHERWISE COMPLETE THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH TO DO
SO, EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors,
Jane Kaufman, Secretary
Piscataway, New Jersey
October 23, 2000
<PAGE>
ION NETWORKS, INC.
1551 SOUTH WASHINGTON AVENUE
PISCATAWAY NEW JERSEY 08854
PROXY STATEMENT
------------
This Proxy Statement is furnished in connection with the solicitation
by the board of directors ("Board of Directors" or the "Board") of Ion Networks,
Inc., a Delaware corporation (the "Company"), of proxies to be voted at the
Annual Meeting of Stockholders of the Company to be held on Monday, November 20,
2000 (the "Meeting"), at 10:30 A.M., Eastern Daylight Time, at Washington Plaza,
1551 South Washington Avenue, Piscataway, New Jersey and at any adjournment or
postponement thereof.
A form of proxy is enclosed for use at the Meeting. The proxy may be
revoked by a stockholder at any time before it is voted by execution of a proxy
bearing a later date or by written notice to the Secretary before the Meeting,
and any stockholder present at the Meeting may revoke his or her proxy at the
Meeting and vote in person if he or she desires. When such proxy is properly
executed and returned, the shares it represents will be voted at the Meeting in
accordance with any instructions noted thereon. If no direction is indicated,
all shares represented by valid proxies received pursuant to this solicitation
(and not revoked prior to exercise) will be voted (i) FOR the election of the
nominees for director named in this Proxy Statement, (ii) FOR the approval of
the Company's 2000 stock option plan and 2000 U.K. sub-plan, (iii) in accordance
with the judgment of the persons named in the proxy as to such other matters as
may properly come before the Meeting and any adjournment or postponement
thereof.
The cost for soliciting proxies on behalf of the Board of Directors, if
any, will be borne by the Company. In addition to solicitation by mail, proxies
may be solicited in person or by telephone, telefax or cable by personnel of the
Company who will not receive any additional compensation for such solicitation.
The Company may reimburse brokers or other persons holding stock in their names
or the names of their nominees for the expenses of forwarding soliciting
material to their principals and obtaining their proxies. This Proxy Statement
and the accompanying form of proxy will be first mailed to stockholders on or
about October 24, 2000.
The close of business on October 19, 2000 has been fixed as the record
date (the "Record Date") for the determination of stockholders entitled to
notice of and to vote at the Meeting. On that date there were 18,133,435 shares
of common stock, par value $.001 per share, of the Company ("Common Stock")
outstanding. The required vote for each proposal is further described under the
heading of the relevant proposals. The holders of a majority of the shares of
Common Stock outstanding on the Record Date and entitled to be voted at the
Meeting, present in person or by proxy, will constitute a quorum for the
transaction of business at the Meeting and at any adjournment or postponement
thereof.
-2-
<PAGE>
------------------------------------------------------
PROPOSAL NO. 1
ELECTION OF DIRECTORS
------------------------------------------------------
At the Meeting, the stockholders will elect six directors to serve
until the next annual meeting of stockholders and until their respective
successors are elected and qualified. Unless otherwise directed, the persons
named in the Proxy Statement intend to cast all proxies received for the
election of Messrs. Stephen M. Deixler, Baruch Halpern, Alexander C. Stark, Jr.,
Alan Hardie, William Martin Ritchie, and Frank S. Russo, (the "nominees") to
serve as directors upon their nomination at the Meeting. At the Meeting, a total
of six nominees will stand for election. Proxies cannot be voted for a greater
number of persons than the number of nominees named. Directors are elected by a
plurality of the votes present in person or represented by proxy at the Meeting
and entitled to vote on the election of directors.
Each of the nominees has consented to serve as a director if elected.
Each of the nominees, except for Mr. Russo, currently serves as a director of
the Company. Unless authority to vote for any director is withheld in a proxy,
it is intended that each proxy will be voted FOR each of the nominees. In the
event that any of the nominees for director should, before the Meeting, become
unable to serve or for good cause will not serve if elected, it is intended that
shares represented by proxies which are executed and returned will be voted for
such substitute nominees as may be recommended by the Company's existing Board
of Directors, unless other directions are given in the proxies. To the best of
the Company's knowledge, all the nominees will be available to serve.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, their ages and
present positions with the Company are as follows:
<TABLE>
<CAPTION>
Director
Name Age Position Held with the Company Since
---- --- ------------------------------ ------
<S> <C> <C>
Stephen M. Deixler(1)(2)(3)(4) 65 Chairman of the Board of Directors 1985
Alexander C. Stark, Jr. (1)(2) (3)(4) 67 Director 1997
Alan Hardie (3) 60 Director 1999
William Martin Ritchie(4) 51 Director 1999
</TABLE>
----------
(1) Member of Compensation/Stock Option Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Strategic Steering Committee
-3-
<PAGE>
<TABLE>
<CAPTION>
Director
Name Age Position Held with the Company Since
---- --- ------------------------------ ------
<S> <C> <C>
Baruch Halpern 49 Director 1999
Frank S. Russo 57 Director Nominee N/A
Ronald C. Sacks 42 Chief Executive Officer N/A
Jane Kaufman 52 Executive Vice President - Marketing and N/A
Business Development and Secretary
</TABLE>
INFORMATION ABOUT NOMINEES
Set forth below is certain information with respect to each nominees:
STEPHEN M. DEIXLER has been Chairman of the Board of Directors since
1985 and served as Chief Executive Officer of the Company from April 1996 to May
1997. He was President of the Company from May 1982 to June 1985 and served as
Treasurer of the Company from its formation in 1982 until September 1993. Mr.
Deixler was the Chairman of Princeton Credit Corporation until April 1995.
ALEXANDER C. STARK, JR. has been a director of the Company since 1997.
Mr. Stark is the President of AdCon, Inc., a consulting firm organized to advise
and council senior officers of global telecom companies. Mr. Stark previously
worked for 40 years at AT&T, where he most recently served as a Senior Vice
President.
ALAN HARDIE has served as a director of the Company since April 1,
1999. Mr. Hardie has served as a General Manager of BT Global Communications
since 1994, where he provides leadership and strategic direction for such
entity's Global Customer Service division.*
WILLIAM MARTIN RITCHIE has served as a director of the Company since
April 1, 1999. Mr. Ritchie currently acts as a consultant in his own consulting
entity, Mr. Ventures, where he provides various start-up companies with
management assistance and early stage investment. Mr. Ritchie was a founder of
Spider Systems, a Scottish electronics company, where he served in several
capacities, including the Managing Director, from 1984 to 1995. Mr. Ritchie
currently serves on the board of directors of various companies in Scotland.*
BARUCH HALPERN has served as a director of the Company since October
1999. From January 1995 to the present, Mr. Halpern has been an institutional
research analyst with Goldsmith & Harris Incorporated, where he has advised
institutions about investment opportunities. He has also been an advisor in
connection with a leveraged buy-out of a public company and several private
placements. Mr. Halpern is a Chartered Financial Analyst.
----------
* Each of Messrs. Hardie and Ritchie was elected to serve as a director in
connection with an agreement among the Company and the shareholders of SolCom
Systems Limited ("SolCom") in March 1999 to nominate two nominees to the Board
of Directors upon the closing of the acquisition of SolCom by the Company.
-4-
<PAGE>
FRANK RUSSO was with AT&T Corporation for nearly 20 years, most
recently (since 1995) as Vice President - Corporate Strategy and Business
Development. While at AT&T Solutions, Mr. Russo helped architect and launch
AT&T's entry into the global network outsourcing and professional services
business. He also served as General Manager - Network Management Services,
General Manager - Satellite Transponder and VSAT Services, and General Manager -
AT&T Consumer Direct Products and Services. Mr. Russo retrieved from AT&T this
year. Prior to joining AT&T, Mr. Russo was employed by IBM Corporation, in
engineering and sales positions. Mr. Russo served as a director of Oak
Industries, Inc., a manufacturer of highly engineered components, in 1999 and
2000. He holds a BS from the State University of New York at Oswego.
NON-DIRECTOR EXECUTIVE OFFICERS
Set forth below is certain information with respect to each executive
officer of the Company who is not also a director of the Company:
RON SACKS has been Chief Executive Officer of the Company since October
9, 2000. Prior to joining the Company, Mr. Sacks was and continues to be the
President of Venture Consulting Group, Inc., a consulting firm that he founded
in 1994 to serve corporate ventures and new business start-ups. Mr. Sacks spent
1982 - 1996 at AT&T Corporation where he played a leading role in the start-up
of AT&T's Network Management Services Division in 1989, and guided it through
its initial five years. He also directed national sales and engineering teams
that addressed the wide-range of network service and product needs of global
enterprises. Mr. Sacks began his career in marketing at TCI. He holds an MBA
degree from the Stern School of Management at New York University and a BS from
State University of New York at Plattsburgh.
JANE KAUFMAN has been the Executive Vice President-Marketing and
Business Development of the Company since January, 2000, and the Secretary of
the Company since October, 2000. From 1996, and prior to joining the Company,
she worked as a consultant with small technology companies to develop new
business opportunities and restructure operations. From 1995 to 1996, Ms.
Kaufman served as President and COO of Ware Systems Corp., an e-commerce
company. From 1990 to 1994 she was President of NYNEX Venture Company, an
incubator of high-tech start-up companies. Ms. Kaufman has a doctoral degree in
experimental psychology and an MSOR, both from New York University. She has a BA
from Bennington College.
The officers of the Company are elected by the Board of Directors at
its first meeting after each annual meeting of the Company's stockholders and
hold office until their successors are chosen and qualified, until their death,
or until they resign or have been removed from office. No family relationship
exists between any director or executive officer and any other director or
executive officer.
BOARD MEETINGS AND COMMITTEES
During the Company's fiscal year ended March 31, 2000 there were 9
meetings of the Board of Directors. Each of the members of the Board of
Directors who is currently a director attended 75% or more of the meetings of
the Board of Directors during fiscal 2000 and attended all meetings held by the
committees on which such nominee served.
-5-
<PAGE>
The Board of Directors has a Compensation/Stock Option Committee which
currently consists of Messrs. Deixler and Stark. The function of the
Compensation/Stock Option Committee is to review and establish policies,
practices and procedures relating to compensation of key employees, including
officers and directors who are key employees, outside directors and consultants,
to grant cash and non-cash bonuses to employees and grant non-plan stock options
and warrants to employees, outside directors and consultants and to administer
employee benefit plans, including all stock option plans of the Company. During
the fiscal year ended March 31, 2000, the Compensation/Stock Option Committee
held no meetings and took no action by unanimous written consent.
The Company's Audit Committee currently consists of Messrs. Stark,
Hardie and Deixler. The function of the Audit Committee is to nominate
independent auditors, subject to approval of the Board of Directors, and to
examine and consider matters related to the audit of the Company's accounts, the
financial affairs and accounts of the Company, the scope of the independent
auditors' engagement and their compensation, the effect on the Company's
financial statements of any proposed changes in generally accepted accounting
principles, disagreements, if any, between the Company's independent auditors
and management, and matters of concern to the independent auditors resulting
from the audit, including the results of the independent auditors' review of
internal accounting controls. During the fiscal year ended March 31, 2000, the
Audit Committee held 1 meeting and took no action by unanimous written consent.
The Nominating Committee of the Board of Directors currently consists
of Messrs. Deixler and Stark. The Nominating Committee nominates members of the
Board of Directors and it will consider nominees recommended by stockholders..
Any nominations should be made in writing and sent to: c/o Nominating Committee,
Ion Networks, Inc.,. 1551 South Washington Avenue, Piscataway, NJ 08854, Attn:
Stephen M. Deixler. The Nominating Committee held no meetings during fiscal
2000.
The Company formed a Strategic Steering Committee during the fiscal
year ended March 31, 1998, which currently consists of Messrs. Deixler and
Stark. The function of the Strategic Steering Committee is to discuss and
establish policy with respect to the Company's corporate direction and future
growth strategies. The Strategic Steering Committee held no meetings during the
fiscal year ended March 31, 2000.
COMPENSATION OF DIRECTORS
Each of the members of the Board of Directors who is not also an
employee of the Company ("Non-Employee Directors") receives options to purchase
10,000 shares of Common Stock at exercise prices per share equal to the fair
market value of the Common Stock on the date of grant on an annual basis.
Non-Employee Directors are also granted options to purchase an additional 1,500
shares of Common Stock for each meeting of the Board of Directors attended by
such Non-Employee Director. Non-Employee Directors serving on committees of the
Board of Directors are granted, on an annual basis, options to purchase 1,500
shares of Common Stock for each committee served thereby.
In addition, the Company reimburses all Non-Employee Directors
traveling more than fifty miles to a meeting of the Board of Directors for all
reasonable travel expenses.
-6-
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are Ronald C. Sacks, Chief
Executive Officer and Jane Kaufman, Executive Vice President-Marketing and
Business Development and Secretary.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following persons have failed to file on a timely basis certain
reports required by Section 16(a) of the Securities Exchange Act of 1934 as
follows: Each of Messrs., Stephen B. Gray, Jane Kaufman, Alfred M. Leonardi,
Baruch Halpern, Stephen M. Deixler and William M. Ritchie failed to timely file
an Annual Statement of Changes in Beneficial Ownership of Securities on Form 5.
Each of Messrs. Stephen B. Gray, Stephen M. Deixler, Peter A. Wilson and Michael
Radomsky failed to timely file a Statement of Changes in Beneficial Ownership on
Form 4. Each of Messrs. Jane Kaufman and Baruch Halpern failed to timely file a
Statement of Initial Beneficial Ownership of Securities on Form 3. During the
fiscal year ended March 31, 2000, the Company is not aware of other late
filings, or failure to file, any other reports required by Section 16(a) of the
Exchange Act.
EXECUTIVE COMPENSATION.
The following table summarizes the compensation paid or accrued by the
Company during the past three fiscal years, including the fiscal year ended
March 31, 2000, to the Company's Chief Executive Officer and to the Company's
three other most highly compensated officers who earned salary and bonus
compensation of at least $100,000 during the fiscal year ended March 31, 2000
(two of which were not serving as officers of the Company at the end of the last
completed fiscal year), and to other key executive officers (these executive
officers being hereinafter referred to as the "Named Executive Officers").
-7-
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term Compensation
----------------------------------------- -----------------------------------------------------------------
Awards Payouts
-------------------------- -------------------------
Other
Annual All Other
Compen- Restricted Securities Compen-
Principal sation Stock Underlying LTIP satio
Position Year Salary($) Bonus($) ($) nAward(s)($) Options (#) Payouts($) ($)(1)
-------- ---- --------- -------- --- ------------ ----------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Stephen B. Gray(2) 2000 261,076 54,616 36,000 132,966 -- 11,106
President, Chief 1999 265,750 -- -- 60,000 -- 779
Executive Officer, 1998 252,829 -- -- 75,000 -- --
Chief Operating
Officer
Michael Radomsky(3) 2000 149,577 -- -- 22,710 -- 8,259
Executive Vice- 1999 164,392 -- -- 43,823 -- 2,781
President 1998 139,858 -- -- 42,839 -- 2,526
Alfred M. Leonardi(4) 2000 45,983 -- -- 46,292 -- --
Chief Financial
Officer
Kevin B. Latraverse(5) 2000 258,715 -- -- 23,442 -- 12,811
Executive Vice- 1999 82,307 -- -- 300,000 -- --
President Sales
Jane Kaufman(6) 2000 36,115 -- 10,000 153,376 -- 1,083
Executive
Vice-President
Marketing
And Business
Development
Peter A. Wilson(7) 2000 107,840 -- -- 352,197 -- --
Executive
Vice-President
Marketing
</TABLE>
------------------------------
(1) Represents contribution of the Company under the Company's 401(k) Plan.
(2) Mr. Gray resigned as a director and officer of the Company effective as of
September 29, 2000.
(3) Mr. Radomsky resigned as a director and officer of the Company effective as
of December 10, 1999.
(4) Mr. Leonardi joined the Company in December 1999 and was appointed as an
officer effective as of January 17, 2000. Mr. Leonardi resigned as an
executive officer of the Company as of August 31, 2000.
(5) Mr. Latraverse joined the Company in November of 1998, became an officer of
the Company in February 1999, and resigned as an executive officer of the
Company as of April 20, 2000.
(6) Ms. Kaufman joined the Company in January 2000 and was appointed as an
officer effective as of March 20, 2000.
(7) Mr. Wilson joined the Company in April 1999 and resigned as an officer of
the Company effective as of February 25, 2000.
-8-
<PAGE>
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2000
The following table sets forth certain information concerning stock
option grants during the fiscal year ended March 31, 2000 to the Named Executive
Officers:
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------------------------
Percent
Number of of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date
---- ---------- ----------- ------ ----
<S> <C> <C> <C> <C>
Stephen B. Gray 32,966(1) 1.1% 2.28 3/31/09
100,000 3.5% 2.28 4/1/04
Michael Radomsky 22,710(1) 0.8% 2.28 3/31/09
Alfred M. Leonardi 6,292(1) 0.2% 15.97 3/31/09
40,000 1.4% 7.70 11/5/04
Kevin B. Latraverse 23,442(1) 0.8% 2.28 3/31/09
Jane Kaufman 3,376(1) 0.1% 20.94 3/31/09
150,000 5.3% 20.94 1/3/05
Peter A. Wilson 139,710 5.2% .4826 12/31/03
25,770 .9% 1.8016 3/31/09
120,000 4.5% 2.28 3/31/09
50,000 1.9% 2.28 3/31/03
16,717(1) 0.6% 2.28 3/31/09
</TABLE>
----------------------------
(1) Represents options granted pursuant to the Company's Time Accelerated
Restricted Stock Award Program (TARSAP).
-9-
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2000
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended March 31, 2000 by each of
the Named Executive Officers and the number and value of unexercised options
held by each of the Named Executive Officers on March 31, 2000.
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexer- In-the-Money
Shares cised Options Options at
Acquired on Value at FY-End(#) FY-End($)(1)
Name Exercise (#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Stephen B. Gray 42,309 600,784/132,966 $17,134,660/$3,677,840
Alfred M. Leonardi -- -- 20,000/26,292 $444,800/$532,699
Jane Kaufman -- -- 0/153,376 $0/$1,380,384
Michael Radomsky -- -- 142,239/66,533 $4,055,020/$1,808,750
Kevin B. Latraverse -- -- 200,000/123,442 $5,538,000/$3,417,405
Peter A. Wilson 115,648 -- 49,832/186,717 $1,467,890/$5,164,592
</TABLE>
------------------
(1) The average price for the Common Stock as reported by the Nasdaq Stock
Market on March 31, 2000 was $29.94 per share. Value is calculated on
the basis of the difference between the option exercise price and
$29.94 multiplied by the number of shares of Common Stock underlying
the options.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Company has no employment agreements with any of its executive
officers. The Company entered into a consulting agreement with Venture
Consulting Group, Inc. ("VCGI") on October 5, 2000 (the "Consulting Agreement").
VCGI is currently performing certain management services for the Company and is
providing the services of Ronald C. Sacks, William Gilbert, George Jarrold and
Daniel Hunt. Pursuant to the terms of the Consulting Agreement, Mr. Sacks has
been appointed as the Chief Executive Officer of the Company and is to provide
his services on a full time, exclusive basis. The other persons specified above
will provide 10 days per quarter each, with respect to such services. The
Consulting Agreement is terminable at will on thirty days written notice by
either party, and provides for a fee of $500,000, payable over twelve (12)
months to VCGI. The Company does not pay salaries to any of the management team
members provided by VCGI. In addition, the Company has granted options to the
persons performing services on behalf of VCGI to purchase an aggregate of
240,000 shares of Common Stock, at an exercise price of $2.00 per share which
vest
-10-
<PAGE>
over a period of 1 year, or immediately upon a change in control event (as
described in the Company's 1998 Stock Option Plan).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation/Stock Option Committee of the Board of Directors
consists of Messrs. Stephen M. Deixler and Alexander C. Stark, Jr. Mr. Deixler
previously served as the Company's Chief Executive Officer until May 1997. No
executive officer of the Company serves as a member of the board of directors or
compensation committee of any other entity which has one or more executive
officers serving as a member of the Company's Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the number of shares of the Company's
Common Stock owned by each person or institution who, as of October 19, 2000,
owns of record or is known by the Company to own beneficially, more than five
(5%) percent of such securities, and by the Company's executive officers and by
its directors, both individually and as a group, and the percentage of such
securities owned by each such person and the group. Unless otherwise indicated,
such persons have sole voting and investment power with respect to shares listed
as owned by them.
<TABLE>
<CAPTION>
Name and Address Shares Owned Percent of Class
----------------- ------------ ----------------
<S> <C> <C>
Stephen M. Deixler(1) 986,702 5.4%
371 Eagle Drive
Jupiter, Florida 33477
Alexander C. Stark, Jr.(2) 269,500 1.5%
356 Jupiter Drive
Jupiter, Florida 33477
Alan Hardie(3) 64,500 *
PP318 Westgate
#11 Hope Street
Glasgow G2 6AB
Scotland
William Martin Ritchie(4) 25,500 *
Keston
4 Buckstane Park
Edinburgh EH10 6PA
Scotland
Jane Kaufman(9) 0 *
Baruch Halpern(5)(9) 239,500 1.3%
Ronald C. Sacks(6)(9) 29,850 *
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Name and Address Shares Owned Percent of Class
----------------- ------------ ----------------
<S> <C> <C>
Special Situations Fund III, L.P. 1,990,287(7) 11.0%
153 East 53rd Street
New York, NY 10022
Zesiger Capital Group LLC 2,971,130(8) 16.4%
320 Park Avenue, 30th Floor
New York, NY 10022
Directors and Named Executive Officers as 1,615,552 8.5%
a group (7 persons)
----------------
</TABLE>
(1) Does not include 8,824 shares of Common Stock owned by Mr. Deixler's
wife, mother, children and grandchildren as to which shares Mr. Deixler
disclaims beneficial ownership. Includes 120,406 shares of Common Stock
held by Merrill Lynch Pierce Fenner & Smith custodian f/b/o Stephen M.
Deixler, IRA. Includes 317,000 shares of Common Stock which may be
acquired pursuant to currently exercisable options.
(2) Includes 219,500 shares of Common Stock which may be acquired pursuant
to currently exercisable options.
(3) Consists of 64,500 shares of Common Stock which may be acquired
pursuant to currently exercisable options.
(4) Includes 20,500 shares of Common Stock which may be acquired pursuant
to currently exercisable options.
(5) Includes 139,500 shares of Common Stock which may be acquired pursuant
to currently exercisable options. Includes 100,000 shares of Common
Stock which may be acquired pursuant to currently exercisable warrants.
(6) Consists of 29,850 shares of Common Stock which may be acquired
pursuant to currently exercisable options.
(7) Based on Schedule 13G as filed by such beneficial owner with the SEC on
September 11, 2000.
(8) Based on Schedule 13G as filed by such beneficial owner with the SEC on
September 5, 2000.
(9) The address of such person is c/o the Company, 1551 S. Washington
Avenue, Piscataway, New Jersey 08854.
------------------------
*Indicates ownership of Common Stock of less than one (1%) percent of the total
issued and outstanding Common Stock on the Record Date.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On June 7, 1999, the Company issued an aggregate of 1,000,000 shares of
Common Stock and warrants to purchase an aggregate of 500,000 shares of Common
Stock to Special Situations Private Equity Fund, L.P. ("Special Situations") and
certain affiliated entities of Special Situations for an aggregate consideration
of $3,000,000. The securities issued were "restricted securities" under the
Securities Act of 1933, as amended (the "Act"). Pursuant to the transaction, the
Company has registered the shares of Common Stock (including those shares
underlying the warrants) under the Act pursuant to a form S-3, which was
declared effective in September 1999. The warrants expire in three years and the
exercise prices thereof are $4.50 per share for 250,000 warrants and $6.00 per
share for the remaining 250,000 warrants.
On August 5, 1999, the Company issued an aggregate of 2,000,000 shares
of Common stock to Zesiger Capital Group LLC and certain of its affiliates for
an aggregate consideration of $9,500,00. The securities issued were "restricted
securities" under the Act. Pursuant to the transaction, the Company registered
the shares of Common Stock under the Act pursuant to a form S-3, which was
declared effective in September, 1999.
In April 2000, the Company made a loan of $750,000 pursuant to a
promissory note to Steve Gray, its former Chief Executive Officer. The loan bore
interest at the rate of Libor + 1% per annum. The loan had an original maturity
date of the earlier of (i) April 2005, or (ii) thirty days after Mr. Gray was no
longer employed by the Company for any reason. Mr. Gray resigned his position at
the Company effective as of September 29, 2000. On October 5, the Company
entered into an agreement with Mr. Gray pursuant to which the $750,000
promissory note was amended to extend the due date to April 30, 2001, and to
provide that interest on such note shall accrue through September 29, 2000.
Pursuant to this agreement, Mr. Gray also agreed to reimburse the Company for
certain expenses totaling $163,000, to be paid over a period of six months
ending March 31, 2001.
On June 29, 2000, the Company made an advance of $135,000 to Steve Gray
its former Chief Executive Officer. The advance was subsequently repaid in full
on July 26, 2000.
On August 18, 2000, the Company issued an aggregate of 1,739,130 and
869,565 shares of Common Stock to Zesiger Capital Group LLC and certain of its
affiliates and to Special Situations and certain affiliated entities of Special
Situations, for aggregate consideration of $3,043,478 and $1,521,739,
respectively. Pursuant to the transaction, the Company has undertaken to
register the shares of Common Stock under the Act.
On October 5, 2000, the Company entered into a consulting agreement
with Venture Consulting Group, Inc. ("VCGI"), whereby VCGI is to provide the
services of Mr. Ronald C. Sacks as Chief Executive Officer of the Company, and
the services of three additional consultants. The fees for Mr. Sacks' and the
consultants' services are $500,000 over a period of 1 year. In addition Mr.
Sacks was granted options to purchase up to 119,400 shares of the Company's
Common Stock, vesting over a period of 1 year, at an exercise price of $2.00 per
share. The three consultants were granted options to purchase an aggregate total
of 120,600 options, upon the same terms and conditions. Mr. Sacks is the
President and a principal of VCGI.
On October 16, 2000, the Company granted Special Situations Fund III,
L.P. ("Special Situations"), a stockholder of the Company, the right to nominate
one (1) director to the
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Company's Board of Directors, such right to continue for a period of two (2)
years, provided that at all times during such period Special Situations and its
affiliates own at least two (2%) percent of the Company's outstanding and issued
Common Stock.
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PROPOSAL NO. 2
APPROVAL OF THE COMPANY'S 2000 STOCK
OPTION PLAN
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On October 16, 2000, the Board of Directors adopted, subject to
stockholder approval at the Annual Meeting, the Company's 2000 Stock Option
Plan, (the 2000 Stock Option Plan is herein referred to as the "Plan") and the
Company's 2000 United Kingdom ("U.K.") Sub-Plan (the "Sub-Plan" and together
with the Plan, the "Plans"). The Plans are designed to provide an incentive to
key employees and non-employee directors of, and consultants to, the Company and
to offer an additional inducement in obtaining the services of such persons. The
proceeds derived from the sale of shares subject to options will be used for
general corporate purposes of the Company.
The following summary of certain material features of the Plans does not
purport to be complete and is qualified in its entirety by reference to the text
of the Plans, copies of which are set forth as Exhibit A and Exhibit B to this
Proxy Statement.
SHARES SUBJECT TO THE OPTION PLANS AND ELIGIBILITY
The Plans authorize the grant of options to purchase a maximum of
3,000,000 shares of the Company's Common Stock (subject to adjustment as
described below) to employees (including officers and directors who are
employees) and non-employee directors of, and consultants to, the Company.
Options under the Sub-Plan may only be granted to those individuals who are
employees and/or directors of the Company's U.K. subsidiary and who reside in
the U.K. Upon expiration, cancellation or termination of unexercised options,
the shares of the Company's Common Stock subject to such options will again be
available for the grant of options under the Plans. All of the employees of the
Company are currently eligible to receive grants of options under the Plans.
No options have been granted under the Plan.
TYPE OF OPTIONS
Options granted under the Plans may either be incentive stock options
("ISOs"), within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or nonqualified stock options which do not
qualify as ISOs ("NQSOs").
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ADMINISTRATION
The Plans will be administered by a committee of the Board of Directors
(the "Administrators") consisting of at least two members of the Board, each of
whom is a "non-employee director" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934. It is also intended that each
Administrator will be an "outside director" within the meaning of Section 162(m)
of the Code.
Among other things, the Administrators are empowered to determine,
within the express limits contained in the Plans: the employees, directors and
consultants to be granted options, the times when options shall be granted,
whether an option is to be an ISO or a NQSO, the number of shares of Common
Stock to be subject to each option, the exercise price of each option, the term
of each option, the date each option shall become exercisable as well as any
terms, conditions or installments relating to the exercisability of each option,
whether and under what conditions to accelerate the date of exercise of any
option or installment, the form of payment of the exercise price, the amount, if
any, required to be withheld with respect to an option and, with the consent of
the optionee, to modify an option. The Administrators are also authorized to
prescribe, amend and rescind rules and regulations relating to the Plans and to
make all other determinations necessary or advisable for administering the Plans
and to construe the Plans.
DIFFERENCES BETWEEN PLAN AND SUB-PLAN
In order to comply with certain rules and regulations of the U.K.
Inland Revenue, the Plan and the Sub-Plan differ in certain material respects,
including without limitation, the following:
1. Certain powers reserved for the Committee in the Plan are prohibited
in the Sub- Plan, including the Committee's discretion to determine the fair
market value of a share of Common Stock; whether and under what conditions to
restrict the sale or other disposition of the shares of Common Stock acquired
upon the exercise of an Option and if so whether and under what circumstances to
waive such restriction; whether to accelerate the date of exercise of any option
or installment; whether shares of Common Stock may be issued upon the exercise
of an option as partly paid, and, if so, the dates when future installments of
the exercise price shall become due and the amounts of such installment; and
with the consent of the optionee, to cancel or modify an option, provided that
the modified provision is permitted to be included in an Option granted under
the terms of the Plan.
2. In connection with the exercise of stock options, installment
payments and payments with shares of Common Stock is prohibited in the Sub-Plan.
3. The Sub-Plan does not differentiate between "incentive stock
options" and "non-qualified stock options."
4. The Sub-Plan does not allow the Board of Directors to substitute new
options for previously issued options of a party to a merger, consolidation,
exchange of shares or similar combination of without compliance with certain
rules of U.K. Inland Revenue.
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TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plans will be subject to, among other things,
the following terms and conditions:
(a) The exercise price of each option will be determined by the
Administrators; provided, however, that the exercise price of an
ISO may not be less than the fair market value of the Company's
Common Stock on the date of grant (110% of such fair market
value if the optionee owns (or is deemed to own) more than 10%
of the voting power of the Company).
(b) Options may be granted for terms determined by the
Administrators; provided, however, that the term of an ISO may
not exceed 10 years (5 years if the optionee owns (or is deemed
to own) more than 10% of the voting power of the Company).
(c) The maximum number of shares of the Company's Common Stock for
which options may be granted to an employee in any calendar year
is 400,000. In addition, the aggregate fair market value of
shares with respect to which ISOs may be granted to an employee
which are exercisable for the first time during any calendar
year may not exceed $100,000.
(d) The exercise price of each option is payable in full upon
exercise or, if the applicable stock option contract
("Contract") entered into by the Company with an optionee
permits, in installments. Payment of the exercise price of an
option may be made in cash, certified check or, if the
applicable Contract permits, in previously acquired shares of
the Company's Common Stock in an amount having an aggregate fair
market value, on the date of exercise, equal to the aggregate
exercise price of all options being exercised, or any
combination thereof.
(e) Options may not be transferred other than by will or by the laws
of descent and distribution, and may be exercised during the
optionee's lifetime only by the optionee or his or her legal
representatives.
(f) Except as may otherwise be provided in the applicable Contract,
if the optionee's relationship with the Company as an employee,
director or consultant is terminated for any reason (other than
the death or disability of the optionee), the option may be
exercised, to the extent exercisable at the time of termination
of such relationship, within three months thereafter, but in no
event after the expiration of the term of the option. However,
if the relationship is terminated either for cause or without
the consent of the Company, the option will terminate
immediately. In the case of the death of an optionee while an
employee, director or consultant (or, generally, within three
months after termination of such relationship, or within one
year after termination of such relationship by reason of
disability), except as
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otherwise provided in the Contract, his or her legal
representative or beneficiary may exercise the option, to the
extent exercisable on the date of death, within one year after
such date, but in no event after the expiration of the term of
the option. Except as otherwise provided in the Contract, an
optionee whose relationship with the Company was terminated by
reason of his or her disability may exercise the option, to the
extent exercisable at the time of such termination, within one
year thereafter, but not after the expiration of the term of the
option. Options are not affected by a change in the status of an
optionee so long as he or she continues to be an employee of, or
a consultant to, the Company.
(g) The Company may withhold cash and/or shares of the Company's
Common Stock having an aggregate value equal to the amount which
the Company determines is necessary to meet its obligations to
withhold any federal, state and/or local taxes or other amounts
incurred by reason of the grant or exercise of an option, its
disposition or the disposition of shares acquired upon the
exercise of the option. Alternatively, the Company may require
the optionee to pay the Company such amount, in cash, promptly
upon demand.
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments will be made in the number and kind of shares
available under the Plans, in the number and kind of shares subject to each
outstanding option and the exercise prices of such options, as well as the
number of shares subject to future grants to non-employee directors and
limitation on the number of shares that may be granted to any employee in any
calendar year, in the event of any change in the Company's Common Stock by
reason of any stock dividend, split-up, spin off, combination, reclassification,
recapitalization, merger in which the Company is not the surviving corporation,
exchange of shares or the like. In the event of (i) the liquidation or
dissolution of the Company; (ii) a proposed sale of all or substantially all of
the assets or outstanding equity of the Company; or (iii) the merger or
consolidation of the Company with or into another entity or any other corporate
reorganization if persons who were not shareholders of the Company immediately
prior to such merger, consolidation or other reorganization own immediately
after such merger, consolidation or other reorganization fifty percent (50%) or
more of the voting power of the outstanding securities of each of (A) the
continuing or surviving entity and (B) any direct or indirect parent corporation
of such surviving entity, the Board of Directors of the Company shall, as to
outstanding options, either (1) make appropriate provisions for the protection
of any such outstanding options by the substitution on an equitable basis of
appropriate stock of the Company or of the merged, consolidated or otherwise
reorganized corporation which will be issuable in respect to one share of Common
Stock of the Company; provided that the excess of the aggregate fair market
value of the shares subject to the options immediately after such substitution
over the purchase price thereof is not more than the excess of the aggregate
fair market value of the shares subject to such options immediately before such
substitution over the purchase price thereof, or (2) upon written notice to an
optionee, provide that all unexercised options must be exercised within a
specified number of days of the date of such notice or they will be terminated.
In any such case, the Board of Directors may, in its discretion, advance the
lapse of any waiting or installment periods and exercise dates.
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DURATION AND AMENDMENT OF THE PLAN
No option may be granted under the Plans after October 15, 2010. The
Board of Directors may at any time terminate or amend the Plan; provided,
however, that, without the approval of the Company's stockholders, no amendment
may be made which would (a) except as a result of the anti-dilution adjustments
described above, increase the maximum number of shares available for the grant
of options or increase the maximum number of options that may be granted to an
employee in any calendar year, (b) change the eligibility requirements for
persons who may receive options or (c) make any changes for which applicable law
or regulatory authority requires stockholder approval. No termination or
amendment may adversely affect the rights of an optionee with respect to an
outstanding option without the optionee's consent.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain material federal income
tax consequences of the grant and exercise of the options under the Plans and
the sale of any underlying security. This description is based on current law
which is subject to change, possibly with retroactive effect. This discussion
does not purport to address all tax considerations relating to the grant and
exercise of the options or resulting from the application of special rules to a
particular optionee (including an optionee subject to the reporting and
short-swing profit provisions under Section 16 of the Securities Exchange Act of
1934, as amended), and state, local, foreign and other tax consequences inherent
in the ownership and exercise of stock options and the ownership and disposition
of the underlying securities. An optionee should consult with the optionee's own
tax advisors with respect to the tax consequences inherent in the ownership and
exercise of stock options and the ownership and disposition of any underlying
security.
ISOS EXERCISED WITH CASH
No taxable income will be recognized by an optionee upon the grant or
exercise of an ISO. The optionee's tax basis in the shares acquired upon the
exercise of an ISO with cash will be equal to the exercise price paid by the
optionee for such shares.
If the shares received upon exercise of an ISO are disposed of more than
one year after the date of transfer of such shares to the optionee and more than
two years from the date of grant of the option, the optionee will recognize
long-term capital gain or loss on such disposition equal to the difference
between the selling price and the optionee's basis in the shares, and the
Company will not be entitled to a deduction. Long-term capital gain is generally
subject to more favorable tax treatment than short-term capital gain or ordinary
income.
If the shares received upon the exercise of an ISO are disposed of prior
to the end of the two-years-from-grant/one-year-after-transfer holding period (a
"disqualifying disposition"), the excess (if any) of the fair market value of
the shares on the date of transfer of such shares to the optionee over the
exercise price (but not in excess of the gain realized on the sale of the
shares) will be taxed as ordinary income in the year of such disposition, and
the Company generally will be entitled to a deduction in the year of disposition
equal to such amount. Any additional gain or any loss recognized by the optionee
on such disposition will be short-term or long-term capital gain or loss, as the
case may be, depending upon the period for which the shares were held.
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NQSOS EXERCISED WITH CASH
No taxable income will be recognized by an optionee upon the grant of a
NQSO. Upon the exercise of a NQSO, the excess of the fair market value of the
shares received at the time of exercise over the exercise price therefor will be
taxed as ordinary income, and the Company will generally be entitled to a
corresponding deduction. The optionee's tax basis in the shares acquired upon
the exercise of such NQSO will be equal to the exercise price paid by the
optionee for such shares plus the amount of ordinary income so recognized.
Any gain or loss recognized by the optionee on a subsequent disposition
of shares purchased pursuant to a NQSO will be short-term or long-term capital
gain or loss, depending upon the period during which such shares were held, in
an amount equal to the difference between the selling price and the optionee's
tax basis in the shares.
EXERCISES OF OPTIONS USING PREVIOUSLY ACQUIRED SHARES
If previously acquired shares are surrendered in full or partial
payment of the exercise price of an option (whether an ISO or a NQSO), gain or
loss generally will not be recognized by the optionee upon the exercise of such
option to the extent the optionee receives shares which on the date of exercise
have a fair market value equal to the fair market value of the shares
surrendered in exchange therefor ("Replacement Shares"). If the option exercised
is an ISO or if the shares used were acquired pursuant to the exercise of an
ISO, the Replacement Shares are treated as having been acquired pursuant to the
exercise of an ISO.
However, if an ISO is exercised with shares which were previously
acquired pursuant to the exercise of an ISO but which were not held for the
required two-years-from-grant/one-year-after-transfer holding period, there is a
disqualifying disposition of such previously acquired shares. In such case, the
optionee would recognize ordinary income on such disqualifying disposition equal
to the difference between the fair market value of such shares on the date of
exercise of the prior ISO and the amount paid for such shares (but not in excess
of the gain realized). Special rules apply in determining which shares are
considered to have been disposed of and in allocating the basis among the
shares. No capital gain is recognized.
The optionee will have an aggregate basis in the Replacement Shares
equal to the basis of the shares surrendered, increased by any ordinary income
required to be recognized on the disposition of the previously acquired shares.
The optionee's holding period for the Replacement Shares generally includes the
period during which the surrendered shares were held.
Any shares received by the optionee on such exercise in addition to the
Replacement Shares will be treated in the same manner as a cash exercise of an
option for no consideration.
ALTERNATIVE MINIMUM TAX
In addition to the federal income tax consequences described above, an
optionee who exercises an ISO may be subject to the alternative minimum tax,
which is payable only to the extent it exceeds the optionee's regular tax
liability. For this purpose, upon the exercise of an ISO, the excess of the fair
market value of the shares over the exercise price is an adjustment
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which increases the optionee's alternative minimum taxable income. In addition,
the optionee's basis in such shares is increased by such amount for purposes of
computing the gain or loss on disposition of the shares for alternative minimum
tax purposes. If the optionee is required to pay an alternative minimum tax, the
amount of such tax which is attributable to deferral preferences (including the
ISO adjustment) is allowable as a tax credit against the optionee's regular tax
liability (net of other non-refundable credits) in subsequent years. To the
extent the credit is not used, it is carried forward. A holder of an ISO should
consult with the optionee's tax advisors concerning the applicability and effect
of the alternative minimum tax.
REQUIRED VOTE
Approval of the Plans requires the affirmative vote of the holders of a
majority of the shares of Common Stock present, in person or by proxy, at the
Annual Meeting and entitled to vote on this proposal. If the Plans are not
approved by stockholders on or before October 15, 2001, the Plans will
terminate. The Board of Directors recommends a vote "FOR" approval of the Plans.
STOCKHOLDER PROPOSALS
Stockholders who wish to include proposals for action at the Company's
2001 Annual Meeting of Stockholders in next year's proxy statement and proxy
card must cause their proposals to be received in writing by the Company at its
address set forth on the first page of this Proxy Statement no later than June
26, 2001. Such proposals should be addressed to the Company's Secretary.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters that are to be presented for action at the Meeting. Should any other
matters properly come before the Meeting or any adjournments thereof, the
persons named in the enclosed proxy will have the discretionary authority to
vote all proxies received with respect to such matters in accordance with their
judgment.
ANNUAL REPORT TO STOCKHOLDERS
The Company's 2000 Annual Report to Stockholders has been mailed to
stockholders simultaneously with the mailing of this Proxy Statement, but except
as herein stated, such report is not incorporated herein and is not deemed to be
a part of this proxy solicitation material.
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WITHOUT EXHIBITS, WILL BE FURNISHED WITHOUT
CHARGE TO ANY PERSON FROM WHOM THE ACCOMPANYING PROXY IS SOLICITED UPON WRITTEN
REQUEST TO THE COMPANY'S SECRETARY, JANE KAUFMAN, ION NETWORKS, INC., 1551 SOUTH
WASHINGTON AVENUE, PISCATAWAY, NEW JERSEY 08854.
By Order of the Board of Directors
Jane Kaufman
Secretary
Piscataway, New Jersey
October 23, 2000
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
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EXHIBIT A
---------
2000 STOCK OPTION PLAN
OF
ION NETWORKS, INC.
1. Purposes of the Plan. This stock option plan (the "Plan") is intended
to provide an incentive to employees (including directors and officers who are
employees), and to consultants and directors who are not employees, of Ion
Networks, Inc., a Delaware corporation (the "Company"), or any of its
Subsidiaries (as such term is defined in Paragraph 19), and to offer an
additional inducement in obtaining the services of such individuals. The Plan
provides for the grant of "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and nonqualified stock options which do not qualify as ISOs ("NQSOs"). The
Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.
2. Stock Subject to the Plan. Subject to the provisions of Paragraph 12,
the aggregate number of shares of the Company's Common Stock, par value $.001
per share ("Common Stock"), for which options may be granted under the Plan
shall not exceed 3,000,000 shares. Such shares of Common Stock may, in the
discretion of the Board of Directors of the Company (the "Board of Directors"),
consist either in whole or in part of authorized but unissued shares of Common
Stock or shares of Common Stock held in the treasury of the Company. Subject to
the provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable shall again become available for the
granting of options under the Plan. However, should the exercise price of an
option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Company in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised, and not by the net number of shares of Common Stock issued
to the holder of such option. The Company shall at all times during the term of
the Plan reserve and keep available such number of shares of Common Stock as
will be sufficient to satisfy the requirements of the Plan.
3. Administration of the Plan. The Plan will be administered by the
Board of Directors, or by a committee (the "Committee") consisting of two or
more directors appointed by the Board of Directors. Those administering the Plan
shall be referred to herein as the "Administrators." Notwithstanding the
foregoing, if the Company is or becomes a corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to the extent
necessary to preserve any deduction under Section 162(m) of the Code or to
comply with Rule 16b-3 promulgated under the Exchange Act, or any successor rule
("Rule 16b-3"), any Committee appointed by the Board of Directors to administer
the Plan shall be comprised of two or more directors each of whom shall be a
"non-employee director," within the meaning of Rule 16b-3, and an "outside
director," within the meaning of Treasury Regulation Section 1.162-27(e)(3), and
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the delegation of powers to the Committee shall be consistent with applicable
laws and regulations (including, without limitation, applicable state law and
Rule 16b-3). Unless otherwise provided in the By-Laws of the Company, by
resolution of the Board of Directors or applicable law, a majority of the
members of the Board or the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
and any acts approved in writing by all members without a meeting, shall be the
acts of the Board or the Committee.
Subject to the express provisions of the Plan, the Administrators shall
have the authority, in their sole discretion, to determine the persons who shall
be granted options; the times when they shall receive options; whether an option
granted to an employee shall be an ISO or a NQSO; the type (i.e., voting or
non-voting) and number of shares of Common Stock to be subject to each option;
the term of each option; the date each option shall become exercisable; whether
an option shall be exercisable in whole or in installments, and, if in
installments, the number of shares of Common Stock to be subject to each
installment; whether the installments shall be cumulative; the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any option or installment; whether shares
of Common Stock may be issued upon the exercise of an option as partly paid,
and, if so, the dates when future installments of the exercise price shall
become due and the amounts of such installments; the exercise price of each
option; the form of payment of the exercise price; the fair market value of a
share of Common Stock; whether and under what conditions to restrict the sale or
other disposition of the shares of Common Stock acquired upon the exercise of an
option and, if so, whether and under what conditions to waive any such
restriction; whether and under what conditions to subject the exercise of all or
any portion of an option to the fulfillment of certain restrictions or
contingencies as specified in the contract referred to in Paragraph 11 (the
"Contract"), including without limitation restrictions or contingencies relating
to (a) entering into a covenant not to compete with the Company, its Parent (if
any) (as such term is defined in Paragraph 19) and any Subsidiaries, (b)
financial objectives for the Company, any of its Subsidiaries, a division, a
product line or other category and/or (c) the period of continued employment of
the optionee with the Company or any of its Subsidiaries, and to determine
whether such restrictions or contingencies have been met; the amount, if any,
necessary to satisfy the obligation of the Company, any of its Subsidiaries or
any Parent to withhold taxes or other amounts; whether an optionee has a
Disability (as such term is defined in Paragraph 19); with the consent of the
optionee, to cancel or modify an option, provided, however, that the modified
provision is permitted to be included in an option granted under the Plan on the
date of the modification; provided, further, however, that in the case of a
modification (within the meaning of Section 424(h) of the Code) of an ISO, such
option as modified would be permitted to be granted on the date of such
modification under the terms of the Plan; to construe the respective Contracts
and the Plan; to prescribe, amend and rescind rules and regulations relating to
the Plan (including the rules and regulations of the Company's 2000 U.K.
sub-plan); to approve any provision of the Plan or any option granted under the
Plan or any amendment to either which, under Rule 16b-3 or Section 162(m) of the
Code, requires the approval of the Board of Directors, a committee of
non-employee directors or the stockholders, in order to be exempt under Section
16(b) of the Exchange Act (unless otherwise specifically provided herein) or to
preserve any deduction under Section 162(m) of the Code; and to make all other
determinations necessary or advisable for administering the Plan. Any
controversy or claim arising out of or relating to the Plan, any option granted
under the Plan or any Contract shall be determined unilaterally by the
Administrators in their sole discretion. The determinations of the
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Administrators on matters referred to in this Paragraph 3 shall be conclusive
and binding on all parties. No Administrator or former Administrator shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted hereunder.
4. Eligibility. The Administrators may from time to time, consistent
with the purposes of the Plan, grant options to such employees (including
officers and directors who are employees) of, or consultants to, the Company or
any of its Subsidiaries, and to such directors of the Company who, at the time
of grant, are not common law employees of the Company or of any of its
Subsidiaries, as the Administrators may determine in their sole discretion. Such
options granted shall cover such number of shares of Common Stock as the
Administrators may determine in their sole discretion; provided, however, that
if on the date of grant of an option, any class of common stock of the Company
(including without limitation the Common Stock) is required to be registered
under Section 12 of the Exchange Act, the maximum number of shares subject to
options that may be granted to any employee during any calendar year under the
Plan shall be 400,000 shares; provided, further, however, that the aggregate
market value (determined at the time the option is granted) of the shares of
Common Stock for which any eligible employee may be granted ISOs under the Plan
or any other plan of the Company, or of a Parent or a Subsidiary of the Company,
which are exercisable for the first time by such optionee during any calendar
year shall not exceed $100,000. The $100,000 ISO limitation amount shall be
applied by taking ISOs into account in the order in which they were granted. Any
option (or portion thereof) granted in excess of such ISO limitation amount
shall be treated as a NQSO to the extent of such excess.
5. Exercise Price. The exercise price of the shares of Common Stock
under each option shall be determined by the Administrators in their sole
discretion; provided, however, that the exercise price of an ISO shall not be
less than the fair market value of the Common Stock subject to such option on
the date of grant; and provided, further, however, that if, at the time an ISO
is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
exercise price of such ISO shall not be less than 110% of the fair market value
of the Common Stock subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be
(a) if the principal market for the Common Stock is a national securities
exchange, the average of the highest and lowest sales prices per share of the
Common Stock on such day as reported by such exchange or on a consolidated tape
reflecting transactions on such exchange, (b) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is
quoted on the Nasdaq Stock Market ("Nasdaq"), and (i) if actual sales price
information is available with respect to the Common Stock, the average of the
highest and lowest sales prices per share of the Common Stock on such day on
Nasdaq, or (ii) if such information is not available, the average of the highest
bid and the lowest asked prices per share for the Common Stock on such day on
Nasdaq, or (c) if the principal market for the Common Stock is not a national
securities exchange and the Common Stock is not quoted on Nasdaq, the average of
the highest bid and lowest asked prices per share for the Common Stock on such
day as reported on the OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; provided,
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however, that if clauses (a), (b) and (c) of this Paragraph 5 are all
inapplicable because the Company's Common Stock is not publicly traded, or if no
trades have been made or no quotes are available for such day, the fair market
value of a share of Common Stock shall be determined by the Administrators by
any method consistent with any applicable regulations adopted by the Treasury
Department relating to stock options.
6. Term. Each option granted pursuant to the Plan shall be for such term
as is established by the Administrators, in their sole discretion, at or before
the time such option is granted; provided, however, that the term of each option
granted pursuant to the Plan shall be for a period not exceeding 10 years from
the date of grant thereof, and provided further, that if, at the time an ISO is
granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
term of the ISO shall be for a period not exceeding five years from the date of
grant. Options shall be subject to earlier termination as hereinafter provided.
7. Exercise. An option (or any installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the Company at its
principal office stating which option is being exercised, specifying the number
of shares of Common Stock as to which such option is being exercised and
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the applicable Contract permits installment payments)
(a) in cash and/or by certified check, (b) with the authorization of the
Adminstrators, with previously acquired shares of Common Stock having an
aggregate fair market value (determined in accordance with Paragraph 5), on the
date of exercise, equal to the aggregate exercise price of all options being
exercised, or (c) some combination thereof; provided, however, that in no case
may shares be tendered if such tender would require the Company to incur a
charge against its earnings for financial accounting purposes. The Company shall
not be required to issue any shares of Common Stock pursuant to the exercise of
any option until all required payments with respect thereto, including payments
for any required withholding amounts, have been made.
The Administrators may, in their sole discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of the optionee's irrevocable instructions to a
broker acceptable to the Administrators to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.
An optionee shall not have the rights of a stockholder with respect to
such shares of Common Stock to be received upon the exercise of an option until
the date of issuance of a stock certificate to the optionee for such shares or,
in the case of uncertificated shares, until the date an entry is made on the
books of the Company's transfer agent representing such shares; provided,
however, that until such stock certificate is issued or until such book entry is
made, any optionee using previously acquired shares of Common Stock in payment
of an option exercise price shall continue to have the rights of a stockholder
with respect to such previously acquired shares.
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In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. Termination of Relationship. Except as may otherwise be expressly
provided in the applicable Contract, any optionee whose employment or consulting
relationship with the Company, its Parent and any of its Subsidiaries, has
terminated for any reason other than the death or Disability of the optionee may
exercise any option granted to the optionee as an employee or consultant, to the
extent exercisable on the date of such termination, at any time within three
months after the date of termination, but not thereafter and in no event after
the date the option would otherwise have expired; provided, however, that if
such relationship is terminated either (a) for Cause (as defined in Paragraph
19), or (b) without the consent of the Company, such option shall terminate
immediately.
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an employee of such corporation for purposes
of Section 422(a) of the Code. As a result, an individual on military leave,
sick leave or other bona fide leave of absence shall continue to be considered
an employee for purposes of the Plan during such leave if the period of the
leave does not exceed 90 days, or, if longer, so long as the individual's right
to re-employment with the Company, any of its Subsidiaries or a Parent is
guaranteed either by statute or by contract. If the period of leave exceeds 90
days and the individual's right to re-employment is not guaranteed by statute or
by contract, the employment relationship shall be deemed to have terminated on
the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable
Contract, an optionee whose directorship with the Company has terminated for any
reason other than the optionee's death or Disability may exercise the options
granted to the optionee as a director who was not an employee of or consultant
to the Company or any of its Subsidiaries, to the extent exercisable on the date
of such termination, at any time within three months after the date of
termination, but not thereafter and in no event after the date the option would
otherwise have expired; provided, however, that if the optionee's directorship
is terminated for Cause or without the consent of the Company, such option shall
terminate immediately.
Nothing in the Plan or in any option granted under the Plan shall
confer on any person any right to continue in the employ or as a consultant of
the Company, its Parent or any of its Subsidiaries, or as a director of the
Company, or interfere in any way with any right of the Company, its Parent or
any of its Subsidiaries to terminate such relationship at any time for any
reason whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. Death or Disability of an optionee. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is employed by, or a consultant to, the Company, its Parent or any of its
Subsidiaries, (b) within three months after the termination of the optionee's
employment or consulting relationship with the Company, its Parent and its
Subsidiaries (unless such termination was for Cause or without the consent of
the Company) or (c) within one year following the termination of such employment
or consulting relationship by reason of the optionee's Disability, the options
granted to the optionee as an employee of, or consultant to, the Company or any
of its Subsidiaries, may be exercised, to the
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extent exercisable on the date of the optionee's death, by the optionee's Legal
Representative (as such term is defined in Paragraph 19), at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired. Except as may otherwise be expressly provided in
the applicable Contract, any optionee whose employment or consulting
relationship with the Company, its Parent and its Subsidiaries has terminated by
reason of the optionee's Disability may exercise such options, to the extent
exercisable upon the effective date of such termination, at any time within one
year after such date, but not thereafter and in no event after the date the
option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable
Contract, if an optionee dies (a) while the optionee is a director of the
Company, (b) within three months after the termination of the optionee's
directorship with the Company (unless such termination was for Cause) or (c)
within one year after the termination of the optionee's directorship by reason
of the optionee's Disability, the options granted to the optionee as a director
who was not an employee of or consultant to the Company or any of its
Subsidiaries, may be exercised, to the extent exercisable on the date of the
optionee's death, by the optionee's Legal Representative at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired. Except as may otherwise be expressly provided in
the applicable Contract, an optionee whose directorship with the Company has
terminated by reason of Disability, may exercise such options, to the extent
exercisable on the effective date of such termination, at any time within one
year after such date, but not thereafter and in no event after the date the
option would otherwise have expired.
10. Compliance with Securities Laws. It is a condition to the exercise
of any option that either (a) a Registration Statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.
The Administrators may require, in their sole discretion, as a
condition to the grant or exercise of an option, that the optionee execute and
deliver to the Company the optionee's representations and warranties, in form,
substance and scope satisfactory to the Administrators, which the Administrators
determine is necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirements, including without limitation,
that (a) the shares of Common Stock to be issued upon exercise of the option are
being acquired by the optionee for the optionee's own account, for investment
only and not with a view to the resale or distribution thereof, and (b) any
subsequent resale or distribution of shares of Common Stock by such optionee
will be made only pursuant to (i) a Registration Statement under the Securities
Act which is effective and current with respect to the shares of Common Stock
being sold, or (ii) a specific exemption from the registration requirements of
the Securities Act, but in claiming such exemption, the optionee, prior to any
offer of sale or sale of such shares of Common Stock, shall provide the Company
with a favorable written opinion of counsel satisfactory to the Company, in
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form, substance and scope satisfactory to the Company, as to the applicability
of such exemption to the proposed sale or distribution.
In addition, if at any time the Administrators shall determine that the
listing or qualification of the shares of Common Stock subject to such option on
any securities exchange, Nasdaq or under any applicable law, or that the consent
or approval of any governmental agency or regulatory body, is necessary or
desirable as a condition to, or in connection with, the granting of an option or
the issuance of shares of Common Stock thereunder, such option may not be
granted or exercised in whole or in part, as the case may be, unless such
listing, qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Administrators.
11. Stock Option Contracts. Each option shall be evidenced by an
appropriate Contract which shall be duly executed by the Company and the
optionee. Such Contract shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Administrators in their sole
discretion. The terms of each option and Contract need not be identical.
12. Adjustments upon Changes in Common Stock. Notwithstanding any other
provision of the Plan, in the event of any change in the outstanding Common
Stock by reason of a stock dividend, recapitalization, spin-off, split-up,
combination or exchange of shares or the like which results in a change in the
number or kind of shares of Common Stock which are outstanding immediately prior
to such event, the aggregate number and kind of shares subject to the Plan, the
aggregate number and kind of shares subject to each outstanding option and the
exercise price thereof, and the maximum number of shares subject to options that
may be granted to any employee in any calendar year, shall be appropriately
adjusted by the Board of Directors, whose determination shall be conclusive and
binding on all parties. Such adjustment may provide for the elimination of
fractional shares that might otherwise be subject to options without payment
therefor. Notwithstanding the foregoing, no adjustment shall be made pursuant to
this Paragraph 12 if such adjustment (a) would cause the Plan to fail to comply
with Section 422 of the Code or with Rule 16b-3 of the Exchange Act (if
applicable to such option), or (b) would be considered as the adoption of a new
plan requiring stockholder approval.
Except as may otherwise be expressly provided in the applicable
Contract, in the event of (i) a proposed dissolution or liquidation of the
Company, or (ii) a proposed sale of all or substantially all of the assets or
outstanding equity of the Company, or (iii) the merger or consolidation of the
Company with or into another entity or any other corporate reorganization if
persons who were not shareholders of the Company immediately prior to such
merger, consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization fifty percent (50%) or more of the voting
power of the outstanding securities of each of (A) the continuing or surviving
entity and (B) any direct or indirect parent corporation of such continuing or
surviving entity, the Board of Directors of the Company shall, as to outstanding
options, either (1) make appropriate provision for the protection of any such
outstanding options by the substitution on an equitable basis of appropriate
stock of the Company or of the merged, consolidated or otherwise reorganized
corporation which will be issuable in respect to one share of Common Stock of
the Company; provided that the excess of
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the aggregate fair market value of the shares subject to the options immediately
after such substitution over the purchase price thereof is not more than the
excess of the aggregate fair market value of the shares subject to such options
immediately before such substitution over the purchase price thereof, or (2)
upon written notice to an optionee, provide that all unexercised options must be
exercised within a specified number of days of the date of such notice or they
will be terminated. In any such case, the Board of Directors may, in its
discretion, advance the lapse of any waiting or installment periods and exercise
dates.
13. Amendments and Termination of the Plan. The Plan was adopted by the
Board of Directors on October 16, 2000. No option may be granted under the Plan
after October 15, 2010. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, or to comply
with the provisions of Rule 16b-3 or Section 162(m) of the Code or any change in
applicable laws or regulations, ruling or interpretation of any governmental
agency or regulatory body; provided, however, that no amendment shall be
effective, without the requisite prior or subsequent stockholder approval, which
would (a) except as contemplated in Paragraph 12, increase the maximum number of
shares of Common Stock for which options may be granted under the Plan or change
the maximum number of shares for which options may be granted to employees in
any calendar year, (b) change the eligibility requirements for individuals
entitled to receive options hereunder, or (c) make any change for which
applicable law or any governmental agency or regulatory body requires
stockholder approval. No termination, suspension or amendment of the Plan shall
adversely affect the rights of an optionee under any option granted under the
Plan without such optionee's consent. The power of the Administrators to
construe and administer any option granted under the Plan prior to the
termination or suspension of the Plan shall continue after such termination or
during such suspension.
14. Non-Transferability. No option granted under the Plan shall be
transferable other than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the optionee, only by the
optionee or the optionee's Legal Representatives. Except to the extent provided
above, options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process, and any such attempted
assignment, transfer, pledge, hypothecation or disposition shall be null and
void ab initio and of no force or effect.
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15. Withholding Taxes. The Company, or its Subsidiary or Parent, as
applicable, may withhold (a) cash or (b) with the consent of the Administrators
(in the Contract or otherwise), shares of Common Stock to be issued upon
exercise of an option or a combination of cash and shares, having an aggregate
fair market value (determined in accordance with Paragraph 5) equal to the
amount which the Administrators determine is necessary to satisfy the obligation
of the Company, a Subsidiary or Parent to withhold Federal, state and local
income taxes or other amounts incurred by reason of the grant, vesting, exercise
or disposition of an option or the disposition of the underlying shares of
Common Stock. Alternatively, the Company may require the optionee to pay to the
Company such amount, in cash, promptly upon demand.
16. Legends; Payment of Expenses. The Company may endorse such legend or
legends upon the certificates for shares of Common Stock issued upon exercise of
an option under the Plan and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as it determines, in its sole
discretion, to be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the Securities Act,
applicable state securities laws or other legal requirements, (b) implement the
provisions of the Plan or any agreement between the Company and the optionee
with respect to such shares of Common Stock, or (c) permit the Company to
determine the occurrence of a "disqualifying disposition," as described in
Section 421(b) of the Code, of the shares of Common Stock transferred upon the
exercise of an ISO granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under the Plan,
as well as all fees and expenses incurred by the Company in connection with such
issuance.
17. Use of Proceeds. The cash proceeds to be received upon the exercise
of an option under the Plan shall be added to the general funds of the Company
and used for such corporate purposes as the Board of Directors may determine, in
its sole discretion.
18. Substitutions and Assumptions of Options of Certain Constituent
Corporations. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options of a Constituent Corporation (as such term is defined
in Paragraph 19) or assume the prior options of such Constituent Corporation.
19. Definitions.
(a) "Cause", in connection with the termination of an optionee, shall
mean (i) "cause," as such term (or any similar term, such as "with cause") is
defined in any employment, consulting or other applicable agreement for services
between the Company and such optionee, or (ii) in the absence of such an
agreement, "cause" as such term is defined in the Contract executed by the
Company and such optionee pursuant to Paragraph 11, or (iii) in the absence of
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both of the foregoing, (A) indictment of such optionee for any illegal conduct,
(B) failure of such optionee to adequately perform any of the optionee's duties
and responsibilities in any capacity held with the Company, any of its
Subsidiaries or any Parent (other than any such failure resulting solely from
such optionee's physical or mental incapacity), (C) the commission of any act or
failure to act by such optionee that involves moral turpitude, dishonesty,
theft, destruction of property, fraud, embezzlement or unethical business
conduct, or that is otherwise injurious to the Company, any of its Subsidiaries
or any Parent or any other affiliate of the Company (or its or their respective
employees), whether financially or otherwise, (D) any violation by such optionee
of any Company rule or policy, or (E) any violation by such optionee of the
requirements of such Contract, any other contract or agreement between the
Company and such optionee or this Plan (as in effect from time to time); in each
case, with respect to subsections (A) through (E), as determined by the Board of
Directors.
(b) "Constituent Corporation" shall mean any corporation which engages
with the Company, its Parent or any Subsidiary in a transaction to which Section
424(a) of the Code applies (or would apply if the option assumed or substituted
were an ISO), or any Parent or any Subsidiary of such corporation.
(c) "Disability" shall mean a permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
(d) "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under the
Plan.
(e) "Parent" shall mean a "parent corporation" within the meaning of
Section 424(e) of the Code.
(f) "Subsidiary" shall mean a "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
20. Governing Law. The Plan, such options as may be granted hereunder,
the Contracts and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
or choice of law provisions.
Neither the Plan nor any Contract shall be construed or interpreted
with any presumption against the Company by reason of the Company causing the
Plan or Contract to be drafted. Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.
21. Partial Invalidity. The invalidity, illegality or unenforceability
of any provision in the Plan, any option or Contract shall not affect the
validity, legality or enforceability of any other provision, all of which shall
be valid, legal and enforceable to the fullest extent permitted by applicable
law.
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22. Stockholder Approval. The Plan shall be subject to approval by (a)
the holders of a majority of the votes present in person or by proxy entitled to
vote hereon at a duly held meeting of the Company's stockholders at which a
quorum is present or (b) the Company's stockholders acting in accordance with
the provisions of Section 228 of the Delaware General Corporation Law. No
options granted hereunder may be exercised prior to such approval, provided,
however, that the date of grant of any option shall be determined as if the Plan
had not been subject to such approval. Notwithstanding the foregoing, if the
Plan is not approved by a vote of the stockholders of the Company on or before
October 15, 2001, the Plan and any options granted hereunder shall terminate.
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EXHIBIT B
---------
ION NETWORKS, INC.
2000 STOCK OPTION PLAN
2000 U. K. SUB-P1AN/U.K. APPROVED RULES
In pursuance of its powers under the Ion Networks, Inc. 2000 Stock Option Plan
(the "Plan"), the Board of Directors, or a duly appointed committee of the Board
of Directors (the "Committee") of Ion Networks, Inc. (the "Company") has adopted
these rules (the "UK Rules") for the purposes of operating the Plan with regard
to such options ("Options") which the UK Rules are expressed to extend at the
time when the Option is granted. Unless the context requires otherwise, all
expressions used in the UK Rules have the same meaning as the Plan. The Plan, as
supplemented by the UK Rules, is referred to hereinafter as the "Sub-Plan". For
the avoidance of doubt, the terms of the Plan (insofar as they have not been
disapplied by Rule p of the UK Rules) shall form part of the Sub-Plan.
(1) The shares over which Options may be granted under the
Sub-Plan form part of the ordinary share capital (as defined
in Section 832 (1) Income and Corporation Taxes Act 1988) ("
ICTA 1988") of the Company and must at all times, including
the time of grant and the time of exercise, comply with the
terms of the Plan and comply with the requirements of
paragraphs 10 to 14 Schedule 9 ICTA 1988.
(2) The companies participating in this Sub-Plan are the Company
and all companies controlled by the Company within the meaning
of Section 840 ICTA 1988 ("Subsidiaries").
(3) The shares of Common Stock to be acquired on exercise of the
Option in accordance with the terms of the Sub-Plan will be:
(1) fully paid up;
(2) not redeemable;
(3) not subject to any restrictions other than
restrictions which attach to all shares of the same
class. For the purpose of this clause, the term
"restrictions" includes restrictions which are deemed
to attach to the shares under any contract,
agreement, arrangement or condition as referred to in
paragraph 13 Schedule 9 ICTA 1988.
(4) An Option granted under this Sub-Plan shall not be exercisable
for more than ten years after the date of grant.
(5) To the extent any restrictions or contingencies have been
imposed by the Committee under the provisions contained in
Paragraph 3 of the Plan, these restrictions or contingencies
shall:
(1) be objective and set out in full at the time of grant
in the stock option contract
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referred to at Paragraph 11 of the Plan;
(2) be such that rights to exercise such Option after the
fulfillment or attainment of any restrictions or
contingencies so specified shall not be dependent on
the further discretion of any person; and
(3) not be capable of amendment, variation or waiver
unless an event occurs which causes the Committee
reasonably to consider that waived, varied or amended
restrictions or contingencies would be a fairer
measure of performance and would be no more difficult
to satisfy.
(6) No Option will be granted to an employee or director under
this Sub-Plan, or where an Option has previously been granted,
no Option shall be exercised by an optionholder if at that
time he has, or any time within the preceding 12 months has
had, a material interest for the purposes of Schedule 9 ICTA
1988 in either the Company being a close company (within the
meaning of Chapter I of Part XI of ICTA 1988) or in a company
being a close company which has control (within the meaning of
Section 840 ICTA 1988) of the Company or in a company being a
close company and a member of a consortium (as defined in
Section 187(7)ICTA 1988) which owns the Company. In
determining whether a company is a close company for this
purpose, Section 414(l)(a)ICTA 1988 (exclusion of companies
not resident in the United Kingdom) and Section 415 of ICTA
1988 (exclusion of certain companies with listed shares) shall
be disregarded.
(7) Notwithstanding any provision of the Plan, no Option will be
granted to an employee or director under this Sub-Plan in
relation to which the exercise price is manifestly less than
the fair market value (as defined in Section 187(2)ICTA 1988)
of the Company's Common Stock on the date of grant of the
Option. The exercise price shall be stated at the date of
grant of the Option and determined in accordance with
Paragraph 5 of the Plan, save that the exercise price of an
Option granted under the Sub-Plan shall be not less than one
hundred percent (100%) of the fair market value of the stock
on the date of grant, and shall be agreed in advance with the
Shares Valuation Division of the Inland Revenue or otherwise
determined with the agreement of the Shares Valuation
Division.
(8) Notwithstanding Paragraph 7 of the Plan, settlement of the
exercise price may not be in the form of previously acquired
shares of Common Stock and payment of the amount due on
exercise may not be made in installments.
(9) Any alteration or amendment to this Sub-Plan shall not have
effect unless approved by the Board of Inland Revenue. The
Company undertakes to provide details thereof to the Board of
Inland Revenue without delay for this purpose.
(10) Notwithstanding Paragraph 11 of the Plan, any material
alteration of the standard form of stock option agreement
shall not have effect unless approved by the Board of Inland
Revenue.
(11) No adjustment as a consequence of a change in share capital
pursuant to Paragraph 12 of the Plan shall be made to any
Option which has been granted under the Sub-Plan unless such
adjustment would be permitted under the Plan and is a
variation in the share capital of which the scheme
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shares form part under paragraph 29 Schedule 9 ICTA 1988.
Where so permitted, no such adjustment shall take effect until
the approval of the Board of Inland Revenue shall have been
obtained thereto. No exchange of options under this paragraph
11 will be permitted unless it complies with provisions of
paragraph 15 schedule 9 ICTA 1988.
(12) For the avoidance of doubt it is stated that the Company is
the grantor as defined in paragraph l(1) Schedule 9 ICTA 1988.
(13) Any Option granted to an employee or director under this
Sub-Plan shall be limited to take effect so that immediately
following such grant, the aggregate market value (determined
at the time prescribed by paragraph 28 Schedule 9 ICTA 1988
and calculated in accordance with the provisions of the said
Schedule 9) of shares of Common Stock which the optionholder
can acquire under this Sub-Plan and any other scheme or
schemes, not being a savings-related share option scheme,
approved under the said Schedule 9 and established by the
grantor or by any associated company (as defined in Section
416 ICTA 1988) of the grantor (and not exercised), shall not
exceed (pound)30,000 or such other sum as may be prescribed
from time to time by paragraph 28 Schedule 9 ICTA 1988,
provided always that this limit shall not exceed the
limitations set out in the Plan.
(14) An Option will only be granted under this Sub-Plan to an
employee (other than one who is a director) or a full-time
director of the Company or a subsidiary participating in this
Sub-Plan. For this purpose, a full-time director is one who is
employed by the Company required to work at least 25 hours a
week excluding meal-times in the business of the Company or
its Subsidiaries. For the avoidance of doubt an Option will
not be granted under this Sub-Plan to a consultant or director
who is not an employee of the Company or any of its
Subsidiaries, and all references in the Plan to Options
granted to consultants shall be disregarded.
(15) The Company shall, not later than 30 days after the actual
receipt of the written notice of exercise of an Option given
in accordance with the provisions of the Plan, together with
the payment of the aggregate exercise price in respect of the
shares of Common Stock to be issued or transferred pursuant to
the exercise of an Option, allot and issue credited as fully
paid or transfer to the Optionee and cause to be registered in
his name the number of shares of Common Stock specified in the
written notice.
(16) The following shall not form part of and shall therefore be
disregarded for the purposes of the Sub-Plan:
(1) in Paragraph 3 of the Plan, the words "whether to
accelerate the date of exercise of any option or
installment; whether shares of Common Stock may be
issued upon the exercise of an option as partly paid,
and, if so, the dates when future installments of the
exercise price shall become due and the amounts of
such installments;" the words "the fair market value
of a share of Common Stock; whether and under what
conditions to restrict the sale or other disposition
of the shares of Common Stock acquired upon the
exercise of an Option and if so whether and under
what circumstances to waive such restriction;" and
the words "with the consent of the optionee, to
cancel or modify an option, provided however, that
the modified provision is permitted to be included in
an Option granted under the Plan on the date of
modification";
(2) in the first paragraph of Paragraph 7, the
parenthetical that reads, "or the amount due on
exercise if the applicable Contract permits
installment payments" and the language from "(b)" to
the end of that paragraph; and
-36-
<PAGE>
(3) all references in the Plan to "Incentive Stock
Options" or "Non-Qualified Stock Options." and
(4) the terms of paragraph 18 of the Plan.
ADOPTED ON BEHALF OF THE COMPANY:
By:
------------------------------
Name:
Title:
<PAGE>
--------------------------------------------------------------------------------
PROXY PROXY
ION NETWORKS, INC.
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock of ION NETWORKS, INC., revoking all
proxies heretofore given, hereby constitutes and appoints Stephen M. Deixler and
Jane Kaufman and each of them, Proxies, with full power of substitution, for the
undersigned and in the name, place and stead of the undersigned, to vote all of
the undersigned's shares of said stock, according to the number of votes and
with all the powers the undersigned would possess if personally present, at the
2000 Annual Meeting of Stockholders of ION NETWORKS, INC. (the "Meeting") to be
held at Washington Plaza, 1551 South Washington Avenue, Piscataway, New Jersey
on Monday, November 20, 2000 at 10:30 A.M., Eastern Daylight time, and at any
adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and Proxy
Statement relating to the Meeting and hereby revokes any proxy or proxies
heretofore given.
Each properly executed Proxy will be voted in accordance with the specifications
made on this Proxy and in the discretion of the Proxies on any other matter that
may come before the Meeting. Where no choice is specified, this Proxy will be
voted (i) FOR all listed nominees to serve as directors, (ii) FOR the approval
of the Company's 2000 stock option plan and 2000 U.K. sub-plan and in accordance
with their discretion on such other matters as may properly come before the
Meeting.
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
--------------------------------------------------------------------------------
-1-
<PAGE>
--------------------------------
WHEN PROXY IS OKAYED PLEASE SIGN
& DATE IT ABOVE
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ION NETWORKS, INC.
NOVEMBER 20, 2000
Please Detach and Mail In the Envelope Provided
<TABLE>
<CAPTION>
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A |X| PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE.
For all nominees listed
at right (except as WITHHOLD AUTHORITY
marked to the to vote for all
contrary nominees listed
The Board of Directors Recommends a Vote FOR all listed nominees.
<S> <C> <C>
1. Election |_| |_| Nominees: Stephen M. FOR AGAINST ABSTAIN
of six Deixler 2. The approval of the |_| |_| |_|
directors Baruch Halpern Company's 2000 stock
Alexander C. option plan and 2000
Stark, Jr. U.K. sub-plan.
(Instruction: To withhold authority to vote Alan Hardie 3. The Proxies are authorized to vote in their discreti
for any individual nominee, circle that William Martin on upon such other matters as may properly come
nominee's name in the list provided at right.) Richie before the Meeting.
Frank S. Russo
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN
THE MANNER DIRECTED. IN THE ABSENCE OF ANY DIRECTION,
THE SHARES WILL BE VOTED FOR EACH NOMINEE LISTED
ABOVE, FOR THE APPROVAL OF THE COMPANY'S 2000 STOCK
OPTION PLAN AND 2000 U.K. SUB-PLAN AND IN ACCORDANCE
WITH THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Signature(s) Dated:
------------------------------------------------------------------------------------------ --------------, 2000
NOTE:(Signature(s) should conform to names as registered. For jointly owned
shares, each owner should sign. When signing as attorney, executor,
administrator, trustee, guardian or officer of a corporation, please give
full title.)
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</TABLE>
