SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT
(PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
EQUINOX SYSTEMS INC.
----------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
EQUINOX SYSTEMS INC.
----------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Parties:
(4) Date Filed:
<PAGE>
EQUINOX SYSTEMS INC.
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 19, 1997
----------------------------------
To the shareholders of
Equinox Systems Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders of
Equinox Systems Inc., a Florida corporation (the "Company"), will be held at The
Bankers Club, One Biscayne Tower, Miami, Florida on June 19, 1997 at 9:30 A.M.,
local time, for the following purposes:
1. To elect four Directors of the Company, to serve until the
annual meeting of shareholders to be held in 1998 or until
their respective successors are duly elected and qualified;
2. To consider and vote upon a proposal to amend the Company's
1993 Stock Option Plan (the "Plan") to increase the number of
shares of the Company's Common Stock reserved for issue and
grant under the Plan from 800,000 to 1,050,000; and
3. To transact such other business as may properly come before
the Meeting and any adjournments thereof.
All shareholders are cordially invited to attend, although only
shareholders of record at the close of business on May 9, 1997 will be entitled
to notice of, and to vote at, the Annual Meeting and any adjournment thereof.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
MARK KACER
SECRETARY
Ft. Lauderdale, Florida
May 12, 1997
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
OF
EQUINOX SYSTEMS INC.
------------------------
PROXY STATEMENT
------------------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Equinox Systems Inc., a Florida
corporation (the "Company"), to be voted at the 1997 Annual Meeting of
Shareholders of the Company (the "Meeting") to be held at 9:30 A.M., local time,
June 19, 1997 at The Bankers Club, One Biscayne Tower, Miami, Florida, for the
purposes set forth in the preceding notice.
The complete mailing address of the Company's principal executive
headquarters is Equinox Systems Inc., One Equinox Way, Sunrise, Florida
33351-6709. The approximate date on which this proxy statement and the form of
proxy were first sent or given to the shareholders of the Company was May 13,
1997.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Meeting or by filing with the Secretary of the
Company at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective unless
written notice of the revocation is received by the Company at or prior to the
Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy will be borne by
the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone and facsimile. They will receive no
compensation therefor in addition to their regular salaries. Arrangements will
be made with banks, brokers and other custodians, nominees and fiduciaries to
forward copies of the proxy material to their principals and to request
authority for the execution of proxies. The Company will reimburse such persons
for their expenses in so doing. To assist the Company in obtaining proxies from
such brokers, banks and other custodians or fiduciaries, the Company has engaged
Corporate Investor Communications, Inc. for a fee of approximately $4,000 plus
out-of-pocket expenses.
<PAGE>
PURPOSES OF THE MEETING
At the Meeting, the Company's shareholders will consider and vote upon
the following matters:
1. The election of four Directors of the Company, to serve until
the annual meeting of shareholders to be held in 1998 or until
their respective successors are duly elected and qualified;
2. A proposal to amend the Company's 1993 Stock Option Plan (the
"Plan") to increase the number of shares of the Company's
Common Stock reserved for issue and grant under the Plan from
800,000 to 1,050,000; and
3. Such other business as may properly come before the Meeting
and any adjournments thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (i) FOR the nominees for Director named herein and (ii) FOR the
proposed amendment to the Plan and (iii) in their discretion upon such other
business as may be properly brought before the meeting and each adjournment
thereof.
OUTSTANDING SHARES AND VOTING RIGHTS
Only the holders of shares of the Company's common stock, $.01 par
value per share (the "Common Stock") at the close of business on May 9, 1997
(the "Record Date") are entitled to notice of, and to vote at, the Meeting. At
the close of business on April 9, 1997, there were 3,689,833 shares of the
Common Stock outstanding. The presence in person or by proxy of a majority of
the shares entitled to vote at the Meeting shall constitute a quorum at the
Meeting. To be elected, a Director must receive a plurality of the votes cast by
the shares of Common Stock represented in person or by proxy at the meeting. The
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy at the Meeting is required for the approval of the proposal to amend
the Plan and any other matter that may be submitted to a vote of the
shareholders. Abstentions are considered as shares present and entitled to vote
for purposes of determining the presence of a quorum and for purposes of
determining the outcome of any matter submitted to the shareholders for a vote,
but are not counted as votes "for" or "against" any matter. The inspector of
elections will treat shares referred to as "broker or nominee non-votes" (shares
held by brokers or nominees as to which instructions have not been received from
the beneficial owners or persons entitled to vote and the broker or nominee does
not have discretionary voting power on a particular matter) as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. For purposes of determining the outcome of any matter as to which the
proxies reflect broker or nominee non-votes, shares represented by such proxies
will be treated as not present and not entitled to vote on that subject matter
and therefor would not be considered by the inspectors when counting votes cast
on the matter (even though those shares are considered entitled to vote for
quorum purposes and may be entitled to vote on other matters). If less than a
majority of the outstanding shares of Common Stock are represented at the
Meeting, a majority of the shares so represented may adjourn the Meeting from
time to time without further notice.
- 2 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock of
the Company which were owned beneficially by (i) each person who is known by the
Company to own beneficially more than 5% of its Common Stock, (ii) each
Director, (iii) each Named Executive Officer (see "Management -Executive
Compensation") and (iv) the Directors and Executive Officers of the Company as a
group:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER (1) COMMON STOCK BENEFICIALLY OWNED
- ----------------------------------------------------------- ------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS SHARES PERCENT
- -------------------------------- ----------- ---------
<S> <C> <C>
William A. Dambrackas (2) (3) 520,937 13.8%
Thomas E. Garrett (2) 17,250 *
Robert F. Gintz (2) 146,567 3.9%
Mark Kacer (2) 107,067 2.8%
Robert S. Sowell (2) 47,966 1.3%
Charles A. Reid (2) 10,245 *
Robert F. Williamson, Jr. (2) (4) 12,000 *
All directors and executive officers as a group (7 persons)
(2) (3) (4) 862,032 21.4%
5% BENEFICIAL OWNERS
- --------------------
Thomson Hortsmann & Bryant, Inc.
Park 80 West Plaza Two
Saddlebrook, NJ 07663 (5) 379,900 10.3%
Kennedy Capital Management, Inc.
425 N. New Ballas Rd., Suite 181
St. Louis, MO 63141 (6) 207,907 5.6%
</TABLE>
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(*) Less than 1%.
(1) Unless otherwise indicated, (i) the address of each of the beneficial
owners is c/o Equinox Systems Inc., One Equinox Way, Sunrise, FL
33351-6709, (ii) all shares are owned directly, (iii) each person has
sole investment and voting power, and (iv) the share ownership is as of
April 9, 1997.
(2) Includes shares of Common Stock subject to stock options exercisable
within 60 days of April 9, 1997 in the following amounts: William A.
Dambrackas (86,558), Thomas E. Garrett (11,750), Robert F. Gintz
(116,567), Mark Kacer (86,567), Robert S. Sowell (24,692), Charles Reid
(10,000), Robert F. Williamson, Jr. (10,000), and all directors and
executive officers as a group 346,134.
(3) Includes 20,000 shares held by Mr. Dambrackas as custodian for his
children.
(4) Includes 500 shares held by Mr. Williamson's spouse.
(5) Based on information included on Schedule 13 G, which reports share
ownership as of December 31, 1996. The beneficial owner reported on
Schedule 13 G that it had the sole power and shared power to direct the
vote of all the shares.
(6) Based on information included on Schedule 13 G, which reports share
ownership as of December 31, 1996.
- 3 -
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINEES
The Articles of Incorporation of the Company provide that the Board of
Directors shall consist of at least one director, with the exact number of
directors to be fixed from time to time by resolution of the Board of Directors.
The Board of Directors has fixed the number of directors at a minimum of four
and a maximum of five for the ensuing year. Each director elected at the Meeting
will serve for a term expiring at the 1998 Annual Meeting of Shareholders,
expected to be held in June 1998, or until his successor has been duly elected
and qualified.
The Board of Directors has no reason to believe that any nominee will
refuse to act or be unable to serve; however, in the event that a nominee for a
directorship to be elected by the holders of Common Stock is unable to serve or
if any other unforeseen contingencies should arise, it is intended that proxies
will be voted for the remaining nominees and for such other persons as may be
designated by the Board of Directors, unless directed by a proxy to do
otherwise.
The following table sets forth certain information with respect to each
nominee for election to the Board of Directors of the Company:
<TABLE>
<CAPTION>
DIRECTOR
NAME (1) POSITION(S) WITH THE COMPANY SINCE
-------- ---------------------------- ---------
<S> <C> <C>
William A. Dambrackas President, Chief Executive Officer and Chairman 1983
of the Board of Directors
Mark Kacer Vice President Finance and Administration, 1993
Chief Financial Officer and Director
Charles A. Reid (2) Director 1996
Robert F. Williamson, Jr.(2) Director 1995
</TABLE>
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(1) See "Management - Executive Officers and Directors" for biographical
information.
(2) Member of the Audit Committee and the Compensation Committee of the
Board of Directors.
- 4 -
<PAGE>
COMMITTEES
The principal standing committees of the Board of Directors include the
following:
AUDIT COMMITTEE. The Audit Committee is currently comprised of Messrs.
Reid and Williamson. The Audit Committee meets with management regarding the
internal controls of the Company and the objectivity of its financial reporting.
The Committee also meets with the Company's independent auditors and with
appropriate Company financial personnel concerning these matters. Other
functions of the Audit Committee include recommending to the directors the
appointment of the independent auditors and reviewing the Company's audited
financial statements and the auditors' report thereon with the auditors and the
Company's management. The Audit Committee met once during the year ended
December 31, 1996.
COMPENSATION COMMITTEE. The Compensation Committee is currently
comprised of Messrs. Reid and Williamson. The Compensation Committee's
responsibilities consist of recommending, reviewing and approving the salary and
fringe benefits policies of the Company, reviewing compensation policies for
directors and reviewing and approving the compensation of officers of the
Company. The Compensation Committee's responsibilities include administering the
Company's Stock Option Plans and recommending and approving stock options
granted under those plans. The Compensation Committee also reviews the Company's
employee benefit plans and recommends amendments to the plans, subject to
approval by the Company's Board of Directors and the shareholders of the
Company, where appropriate. The Compensation Committee met three times during
the year ended December 31, 1996.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
The Company pays each director who is not an officer or employee of the
Company a fee of $2,000 for attendance at each regular meeting of the Board of
Directors, up to a maximum of $16,000 per year. In addition, the Company's
directors will be reimbursed by the Company for their travel expenses incurred
in connection with their attendance at meetings. The Company has established for
its independent directors the Directors Stock Option Plan, which provides for an
automatic grant of an option to purchase 10,000 shares of Common Stock upon a
person's election as a director and an automatic grant of an option to purchase
an additional 2,500 shares of Common Stock upon such person's re-election as a
director of the Company, in both instances at an exercise price equal to the
fair market value of the Common Stock on the date of the grant. A total of
80,000 shares of Common Stock have been reserved for issuance upon exercise of
options granted under the Directors Stock Option Plan. Options granted under the
Directors Stock Option Plan generally become exercisable, in full, six months
after the date of grant and expire five years after the date of grant. The Board
of Directors, in its discretion, may cancel all options granted under the
Directors Stock Option Plan that remain unexercised on the date of consummation
of certain corporate transactions described in the Plan. Directors of the
Company who are also employees of the Company do not receive additional
compensation for their services as directors.
The Board of Directors of the Company held a total of six meetings
during the year ended December 31, 1996. Each current Director attended all of
the meetings of the Board of Directors and the meetings of the committees, if
any, on which they served.
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<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
EXECUTIVE DIRECTOR
NAME AGE POSITION(S) WITH THE COMPANY OFFICER SINCE SINCE
- ------------------------------ ----------- ---------------------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
William A. Dambackas 53 President, Chief Executive 1983 1983
Officer and Chairman of the
Board of Directors
Mark Kacer 40 Vice President Finance & 1990 1993
Administration, Chief Financial
Officer and Director
Robert F. Gintz 40 Vice President, Development 1988 N/A
Thomas E. Garrett 61 Vice President, Sales 1996 N/A
Robert S. Sowell 50 Vice President, Technical 1995 N/A
Operations
Charles A. Reid 53 Director N/A 1996
Robert F. Williamson, Jr. 52 Director N/A 1995
</TABLE>
WILLIAM A. DAMBRACKAS founded the Company in February 1983 and has
served as President, Chief Executive Officer and a director since its inception.
Mr. Dambrackas has also served as Chairman of the Board of Directors since
February 1993.
MARK KACER joined the Company in 1986 as Manager of Financial
Accounting. Since that time he has held several positions at the Company,
including Director, Sales and Service Administration. Since April 1992, Mr.
Kacer has served as Vice President, Finance and Administration and Chief
Financial Officer. Mr. Kacer has also served as a member of the Board of
Directors since February 1993.
ROBERT F. GINTZ joined the Company in 1985 as Director of Marketing.
Since that time he has held several positions at the Company, including Vice
President, Marketing. Since April 1993, Mr. Gintz has served as Vice President,
Development.
THOMAS E. GARRETT joined the Company in 1995 as Director of
Distribution Sales. Since August 1996, Mr. Garrett has served as Vice President,
Sales.
ROBERT S. SOWELL joined the Company in 1984 as Manager of Sales
Support. Since that time he has held several positions at the Company, including
Director, Technical Services. Since February 1995, Mr. Sowell has served as Vice
President, Technical Operations.
CHARLES A. REID was appointed by the Board of Directors to serve as a
director of the Company to fill the vacancy created by the retirement of a board
member in February 1996. Mr. Reid has been a principal of Alex. Brown & Sons
Incorporated, an investment banking firm, since 1980. Mr. Reid previously served
as a Director of the Company from March 1987 through June 1995.
ROBERT F. WILLIAMSON, JR. has served as a director of the Company since
June 1995. Mr. Williamson is a founder of Data Net Corporation, a privately-held
manufacturer of computerized data collection systems used in factories and
warehouses. Mr. Williamson has been Vice President-Finance and Chief Financial
Officer of Data Net since its inception in 1984.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table summarizes the
compensation paid by the Company during the years ended December 31, 1996, 1995
and 1994 to its Chief Executive Officer and the other executive officers of the
Company whose aggregate compensation exceeded $100,000 (the Chief Executive
Officer and such other executive officers are sometimes hereinafter collectively
referred to as the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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LONG-TERM
ANNUAL COMPENSATION (1) COMPENSATION
---------------------------- ----------------
OPTIONS ALL OTHER
BONUS GRANTED COMPENSATION
NAME PRINCIPAL POSITION YEAR SALARY ($) ($) (2) ( #) (3) ($) (4)
- ------------------------ ----------------------- -------- ------------ ------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
William A. Dambrackas Chief Executive Officer 1996 $198,290 $ 127,000 110,000 $19,750
1995 179,429 172,000 90,000 1,000
1994 167,610 65,000 35,000 20,344
- ---------------------------------------------------------------------------------------------------------------------------------
Mark Kacer Vice President, 1996 120,667 37,000 55,000 1,000
Finance & 1995 110,250 48,000 35,000 1,000
Administration 1994 103,411 30,000 20,000 1,000
- ---------------------------------------------------------------------------------------------------------------------------------
Robert F. Gintz Vice President, 1996 140,283 37,000 55,000 1,000
Development 1995 126,751 48,000 35,000 1,000
1994 122,637 30,000 20,000 1,000
- ---------------------------------------------------------------------------------------------------------------------------------
Thomas E. Garrett Vice President, 1996 118,961 - 16,000 1,000
Sales
- ---------------------------------------------------------------------------------------------------------------------------------
Robert S. Sowell Vice President, 1996 100,548 13,000 20,000 1,000
Technical Operations 1995 93,475 17,000 15,000 1,000
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</TABLE>
(1) Except as noted in Footnote (4), the amounts reflected in the above
table do not include any amounts for perquisites and other personal
benefits extended to the Named Executive Officers. The aggregate amount
of such compensation for each Named Executive Officer is less than 10%
of the total of annual salary and bonus of such officer.
(2) Represents bonuses paid during the year indicated. Does not include
amounts for 1996 bonuses, which were determined and paid during 1997.
The Compensation Committee has the authority to grant discretionary
annual bonuses to its executive officers and employees. The
Compensation Committee intends to continue such policy in the future.
During February 1997, the Company paid approximately $348,000 for
bonuses for all Named Executive Officers with respect to 1996, all of
which had been accrued at December 31, 1996.
(3) See the table under "Stock Options Granted in 1996" below for
additional information about these options.
(4) Represents $1,000 matching contributions to the accounts of each Named
Executive Officer under the Company's 401(k) savings plan. With respect
to William A. Dambrackas, the 1996 and 1994 amounts include payments of
$19,750 and $19,344 for earned but unused vacation pay.
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<PAGE>
OPTION GRANTS TABLE
STOCK OPTIONS GRANTED IN 1996. The following table sets forth certain
information concerning grants of stock options made during 1996 to the Named
Executive Officers. (A total of 243,568 options granted to the Named Executive
Officers were granted pursuant to the 1993 Stock Option Plan while 12,432
options were granted pursuant to stock option plans in effect prior to the 1993
plan). The Board of Directors did not grant any stock appreciation rights in
1996.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1996 FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
FULL OPTION TERM (3)
------------------------------
% OF TOTAL OPTIONS EXERCISE
NUMBER OF OPTIONS GRANTED TO EMPLOYEES PRICE PER EXPIRATION 5% ($) 10% ($)
NAME GRANTED (#) (1) IN 1996 (2) SHARE ($/SH) DATE
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William A. Dambrackas 90,000 27.4% $11.44 6-21-06 $ 647,510 $ 1,640,917
20,000 6.1 8.56 12-14-06 201,491 422,248
Robert F. Gintz 35,000 10.6 11.44 6-21-06 251,809 638,134
20,000 6.1 8.56 12-14-06 201,491 422,248
Mark Kacer 35,000 10.6 11.44 6-21-06 251,809 638,134
20,000 6.1 8.56 12-14-06 201,491 422,248
Robert Sowell 20,000 6.1 11.44 6-21-06 143,891 364,648
Thomas E. Garrett 10,000 3.0 11.44 6-21-06 71,946 182,324
6,000 1.8 8.56 12-14-06 60,447 126,674
</TABLE>
(1) Options granted in 1996 become exercisable six months after the date of
grant with respect to 3/16 of the total number of shares granted and
become exercisable in 13 equal quarterly installments thereafter.
(2) Options to purchase 341,500 shares were granted in the year ended
December 31, 1996. Of such amount, 12,500 options were granted to
non-employee directors pursuant to the Company's Directors Stock Option
Plan. The percentage shown in this column represents the percentage
arrived at by dividing the number of options granted to the Named
Executive Officers by the total number of options (329,000) granted to
employees.
(3) The potential realizable value portion of the foregoing table
illustrates the value that might be realized upon exercise of the
options immediately prior to the expiration of their term, assuming an
initial value of $8.56 and $11.44 per share, respectively, and the
specified compound rates of appreciation of the Common Stock over the
term of the options. These numbers do not take into account the terms
of such options providing for forfeiture of unexercised options
following termination of employment, nontransferability or applicable
vesting schedules.
- 8 -
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning (i)
options exercised during 1996 by the Named Executive Officers and (ii) the
number and value of unexercised stock options held by the Named Executive
Officers as of December 31, 1996, assuming a value per share of Common Stock of
$8.69 (the average of the high and low sales price for the Common Stock on the
Nasdaq National Market System on December 31, 1996).
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
VALUE DECEMBER 31, 1996 (#) DECEMBER 31, 1996 ($)
NUMBER OF SHARES REALIZED [EXERCISABLE (E) / [EXERCISABLE (E) /
NAME ACQUIRED ON EXERCISE (#) ($) UNEXERCISABLE (U)] UNEXERCISABLE (U)]
- ---------------------------- -------------------------------------------- ----------------------- ------------------------
<S> <C> <C> <C> <C>
William A. Dambrackas -- $ -- 65,934 (E) $ 220,569 (E)
97,810 (U) 217,688 (U)
Mark Kacer -- $ -- 75,943 (E) 337,364 (E)
54,057 (U) 100,111 (U)
Robert F. Gintz -- $ -- 106,569 (E) 576,936 (E)
53,431 (U) 98,114 (U)
Thomas E. Garrett -- $ -- 8,000 (E) 10,705 (E)
28,000 (U) 27,895 (U)
Robert S. Sowell -- $ -- 21,568 (E) 107,829 (E)
13,432 (U) 38,471 (U)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than 10 percent of the Company's Common Stock, to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock. Officers, directors and greater
than 10 percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and representations that no other reports
were required during the last fiscal year, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10 percent beneficial
owners were complied with.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Company is required to provide a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting the
Company's executive officers (including the Named Executive Officers) during the
past fiscal year. The report of the Compensation Committee is set forth below.
The Compensation Committee's general philosophy with respect to the
compensation of its executive officers is to offer competitive compensation
programs designed to attract and retain key executives critical to the long-term
success of the Company and to recognize an individual's contribution and
personal performance. Such compensation programs include a base salary and
annual bonus as well as a stock option plan designed to provide long-term
incentives.
The Chief Executive Officer's 1996 compensation was established by the
Compensation Committee in February 1996, and is comprised of a base salary,
discretionary bonus and the grant of stock options pursuant to the Company's
stock option plans. The Compensation Committee determined the base salary based
upon a number of factors including the Chief Executive Officer's contribution to
the Company since its inception, his level of base salary in prior years, his
accomplishments in the prior year in relation to objective goals and the
compensation of chief executives in similarly situated companies. The bonus
determined and paid in 1996 related to the Chief Executive Officer's performance
in the prior year. The amount of the bonus was discretionary on the part of the
Compensation Committee and was based upon prior years' bonuses, accomplishments
of the Chief Executive Officer in 1995 toward goals established in 1995, and the
compensation paid to chief executive officers in similarly situated companies.
The 1996 compensation of the other Named Executive Officers was
established in February 1996, and also comprised a base salary, a discretionary
bonus and the grant of stock options pursuant to the Company's stock option
plans. The base salaries and bonuses of the other Named Executive Officers were
determined by considering a number of factors including the individual officer's
years of service with the Company, prior year compensation, responsibilities and
importance to the Company, accomplishments in relation to specific goals, and
the compensation of similarly-situated officers in similarly-situated companies.
The bonuses determined and paid in 1996 related to the executive officers'
performance in the prior year. The amounts of the bonuses were discretionary on
the part of the Compensation Committee. One of the most significant factors
considered was the input of the Chief Executive Officer as to the performance of
the other executive officers.
While the Compensation Committee does review the Named Executive
Officers' performance against objective goals and in light of similarly-situated
officers in similarly-situated companies, the review and analysis is informal
and subjective. The Compensation Committee does not review formal analyses or
documentation, but instead relies on the business experience and judgement of
its individual members.
- 10 -
<PAGE>
The Company maintains the 1993 Stock Option Plan, which is designed to
attract and retain qualified and competent persons who are involved in the
business of the Company or its subsidiaries, including key employees and
officers and directors, upon whose efforts and judgment the success of the
Company and its subsidiaries is largely dependent, through the encouragement of
stock ownership in the Company by such persons. In 1996 Mr. Dambrackas, the
other Named Executive Officers and other key employees of the Company were
granted an aggregate of 329,000 stock options, of which 316,568 stock options
were granted under the 1993 Stock Option Plan and 12,432 stock options were
granted under plans in effect prior to the 1993 Stock Option Plan.
In December 1993, the Internal Revenue Service issued proposed
regulations concerning compliance with Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). Section 162(m) generally disallows a
public company's deduction for compensation to any one employee in excess of
$1.0 million per year unless the compensation is pursuant to a plan approved by
the public company's shareholders. None of the Named Executive Officers
presently receives, and the Compensation Committee does not anticipate that such
persons will receive, annual cash compensation in excess of the $1.0 million cap
provided in Section 162(m).
CHARLES A. REID
ROBERT F. WILLIAMSON, JR.
CHANGE IN CONTROL ARRANGEMENTS
Each of the Named Executive Officers holds options to purchase Common
Stock granted pursuant to the Company's stock option plans. See "Management -
Executive Compensation." To the extent not already exercisable, options granted
prior to February 24, 1996 under the 1993 Plan, generally become exercisable (i)
if there occurs any transaction (or series of transactions occurring within 60
days or pursuant to a plan) that has the result that shareholders immediately
before such transaction cease to own at least 51% of the Common Stock or 51% of
the voting stock of any entity that results from the participation of the
Company in a reorganization, consolidation, merger, liquidation or other form of
corporate transaction; (ii) if the shareholders of the Company approve a plan of
merger, consolidation, reorganization, liquidation or dissolution in which the
Company does not survive (unless such plan is subsequently abandoned); or (iii)
if the shareholders of the Company approve a plan for the sale, lease, exchange
or other disposition of all or substantially all the property and assets of the
Company (unless the plan is subsequently abandoned).
- 11 -
<PAGE>
PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on
the Company's Common Stock since April 16, 1993, the first day on which the
Common Stock was publicly traded, compared to the returns of Nasdaq Composite
Index and the Nasdaq Computer Manufacturer Index. The graph assumes $100 was
invested on April 16, 1993 in the Company's Common Stock, and on March 31, 1993
for the Nasdaq Index and the Nasdaq Computer Manufacturer Index, and assumes
reinvestment of dividends.
<TABLE>
<CAPTION>
COMPARISON OF 44 MONTH CUMULATIVE TOTAL RETURN
AMONG EQUINOX SYSTEMS INC., THE NASDAQ STOCK MARKET - US INDEX AND THE NASDAQ COMPUTER INDEX
[GRAPHIC OMITTED]
4/93 12/93 12/94 12/95 12/96
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Equinox Systems Inc. $100 $40 $59 $68 $80
- --------------------------------------------------------------------------------------------------------------------
Nasdaq Stock market - US $100 $113 $111 $157 $193
- --------------------------------------------------------------------------------------------------------------------
Nasdaq Computer Manufacturer $100 $105 $116 $182 $244
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- 12 -
<PAGE>
PROPOSAL TO APPROVE AMENDMENT TO THE COMPANY'S
1993 STOCK OPTION PLAN
(PROPOSAL NO. 2)
On March 1, 1997, the Compensation Committee of the Company's Board of
Directors adopted, subject to approval by the Company's shareholders, an
amendment to the 1993 Stock Option Plan ("the 1993 Plan" or "the Plan") to
increase the number of shares eligible for grant under the Plan from 800,000 to
1,050,000. The material features of the Plan, as amended by the foregoing
amendment (the "Amendment") are discussed below, but the description is subject
to, and is qualified in its entirety by, the full text of the Plan, including
the Amendment, attached hereto as Exhibit A. The bold faced portions of the Plan
reflect the proposed Amendment to be voted on at the Annual Meeting. Unless the
context otherwise requires, the "Plan" refers to the Plan as amended by the
Amendment.
Approval of the Amendment to the 1993 Plan by the Company's
shareholders is one of the conditions of Rule 16b-3, a rule promulgated by the
SEC that provides an exception from the operation of the "short-swing profit"
recovery provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to the acquisition of options and
certain other transactions by officers and directors of the Company. The Board
of Directors believes that stock options are an important incentive to attract
and retain qualified and competent personnel. Substantially all shares
previously reserved under the Plan have been granted by the Board of Directors
to key employees and officers of the Company. The Compensation Committee has
determined that, from time to time, additional grants of stock options to key
employees and officers will further the interest of the Company. Accordingly,
shareholder approval of the Amendment is being sought in connection with this
Proxy Statement.
The purpose of the 1993 Plan is to advance the interests of the Company
and its subsidiaries by providing an additional incentive to attract and retain
qualified and competent persons who provide management services, and upon whose
efforts and judgment the success of the Company and its subsidiaries is largely
dependent, through the encouragement of stock ownership in the Company by such
persons. In furtherance of this purpose, the 1993 Plan authorizes the granting
of incentive or nonqualified stock options to purchase Common Stock to persons
satisfying the description above, to be selected from the class of all regular
employees of the Company or its subsidiaries, including directors and officers,
the financing of the exercise of options and the amount of taxes payable in
connection therewith, and the use of already owned Common Stock as payment of
the exercise price for options granted under the 1993 Plan (such provisions
being at times referred to herein as the "Stock Swap"). As of April 9, 1997,
options to purchase 799,651 shares of Common Stock had been granted under the
1993 Plan.
The 1993 Plan is administered by a committee consisting of two or more
directors designated by the Board of Directors (the "Committee"). The Board has
designated its Compensation Committee to administer the 1993 Plan. The Committee
in its sole discretion, determines the persons to be awarded options, the number
of shares subject thereto and the exercise price and other terms thereof. In
addition, the Committee has full power and authority to construe and interpret
the 1993 Plan, and the acts of the Committee are final, conclusive and binding
upon all interested parties, including the Company, its shareholders, its
officers and employees, recipients of grants under the 1993 Plan and all persons
or entities claiming by or through such persons.
TERMS AND CONDITIONS
All options granted under the Plan are to be evidenced by a written
agreement between the Company and the grantee. Such agreements are to contain
such terms and conditions, consistent with the Plan, relating to the grant, the
time or times of exercise and other terms of the options as the Committee
prescribes.
The Board has determined that all options granted subsequent to July
31, 1996 will require the optionee to enter into a "Trade Secrets and
Non-Compete Agreement." Should the optionee be found to be in violation of that
agreement, the optionee will be required to return to the Company any profit
realized from the exercise of options (granted subsequent to July 31, 1996) and
after the violation or up to one year before the violation.
- 13 -
<PAGE>
Under the 1993 Plan, the option price per share is the amount
determined in the discretion of the Committee, provided that the option price
per share for incentive stock options may not be less than the fair market value
of the underlying shares on the date of grant. As long as the Common Stock is
approved for quotation on the Nasdaq National Market, then for purposes of the
Plans, the term "fair market value" is defined as the mean of the closing bid
and asked prices for the Common Stock quoted on the Nasdaq National Market. On
April 9, 1997, the closing bid and asked prices per share of Common Stock as
reported on the Nasdaq National Market were $8.50 and $8.88 respectively. The
exercise price of an option may be paid in cash, or at the sole discretion of
the Committee, by delivery of already owned shares of Common Stock having a fair
market value equal to the exercise price, or by a combination of the foregoing.
The 1993 Plan also authorizes the Company to make loans to optionees to enable
them to exercise their options. Such loans must (i) provide for recourse to the
optionee, (ii) bear interest at a rate no less than the prime rate of interest
of the Company's principal lender, and (iii) be secured by the shares of Common
Stock purchased. Cash payments will be used by the Company for general corporate
purposes. Payments made in Common Stock must be made by delivery of stock
certificates in negotiable form.
The use of already owned shares of Common Stock applies to payment for
the exercise of an option in a single transaction and to the "pyramiding" of
already owned shares in successive, simultaneous option exercises. In general,
pyramiding permits an option holder to start with as little as one share of
Common Stock and exercise an entire option to the extent then exercisable (no
matter what the number of shares subject thereto). By utilizing already owned
shares of Common Stock, no cash (except for fractional share adjustments) is
needed to exercise an option. Consequently, the optionee would receive Common
Stock equal in value to the spread between the fair market value of the shares
subject to the option and the exercise price of the option.
No option granted under the Plan is assignable or transferable, other
than by will or by the laws of descent and distribution. During the lifetime of
an optionee, an option is exercisable only by such optionee. The expiration date
of an option granted pursuant to the 1993 Plan will be determined by the
Committee at the time of the grant, but in no event will an option be
exercisable after the expiration of 10 years from the date of grant. An option
may be exercised at any time or from time to time or only after a period of time
or in installments, as the Committee determines. Options granted prior to
February 24, 1996 also become exercisable immediately upon the occurrence of
certain events or transactions. See "Changes in Control Arrangements." On
February 24, 1996, the Compensation Committee amended the Plan to eliminate this
automatic vesting for options granted after that date. The Committee may in its
sole discretion accelerate the date on which any option may be exercised.
The unexercised portion of any option granted under the Plan shall
automatically be terminated (a) three months after the date on which the
optionee's employment is terminated for any reason other than (i) Cause (as
defined in the Plans); or (ii) death; (b) immediately upon the termination of
the optionee's employment for Cause; (c) one year after the date on which the
optionee's employment is terminated by reason of mental or physical disability;
or (d) (i) one year after the date on which the optionee's employment is
terminated by reason of the death of the employee; or (ii) three months after
the date on which the optionee shall die if such death shall occur during the
one year period following the termination of the optionee's employment by reason
of mental or physical disability.
To prevent dilution of the rights of a holder of an option, the Plan
provides for adjustment of the number of shares for which options may be
granted, the number of shares subject to outstanding options and the exercise
price of outstanding options in the event of any subdivision or consolidation of
shares, any stock dividend, recapitalization or other capital adjustment of the
Company. Provisions governing the effect upon options of a merger, consolidation
or other reorganization of the Company are also included in the Plan.
AMENDMENTS
The Plan will expire on February 22, 2003, and any option outstanding
on such date will remain outstanding until it has either expired or has been
exercised. The Committee may amend, suspend or terminate the 1993 Plan at any
time, provided that such amendment may not adversely affect the rights of an
optionee under an outstanding option without the affected optionee's written
consent. In addition, the Committee may not amend the 1993 Plan to (a) increase
the number of shares of Common Stock reserved for issuance or change the class
of persons eligible to receive options, without first obtaining shareholder
approval, (b) permit the granting of options that expire beyond the maximum
10-year period, or (c) extend the termination date of the 1993 Plan.
- 14 -
<PAGE>
FEDERAL INCOME TAX EFFECTS
The Plan is not qualified under the provisions of Section 401(a) of the
Code, nor is it subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
INCENTIVE STOCK OPTIONS. Incentive stock options are "incentive stock
options" as defined in Section 422 of the Code. Under the Code, an optionee
generally is not subject to ordinary income tax upon the grant or exercise of an
incentive stock option. However, an employee who exercises an incentive stock
option by delivering shares of Common Stock previously acquired pursuant to the
exercise of an incentive stock option is treated as making a disqualifying
disposition (defined below) of such shares if the employee delivers such shares
before the expiration of the holding period applicable to such shares. The
applicable holding period is the longer of two years from the date of grant or
one year from the date of exercise. The effect of this provision is to prevent
"pyramiding" the exercise of an incentive stock option (i.e., the exercise of
the incentive stock option for one share and the use of that share to make
successive exercises of the incentive stock option until it is completely
exercised) without the imposition of current income tax.
If, subsequent to the exercise of an incentive stock option (whether
paid for in cash or in shares), the optionee holds the shares received upon
exercise for a period that exceeds (a) two years from the date such incentive
stock option was granted or, if later, (b) one year from the date of exercise
(the "Required Holding Period"), the difference (if any) between the amount
realized from the sale of such shares and the tax basis to the holder will be
taxed as long-term capital gain or loss.
In general, if, after exercising an incentive stock option, an employee
disposes of the shares so acquired before the end of the Required Holding Period
(a "Disqualifying Disposition"), such optionee would be deemed in receipt of
ordinary income in the year of the Disqualifying Disposition, in an amount equal
to the excess of the fair market value of the shares at the date the incentive
stock option was exercised over the exercise price. If the Disqualifying
Disposition is a sale or exchange which would permit a loss to be recognized
under the Code (were a loss in fact to be sustained), and the sales proceeds are
less than the fair market value of the shares on the date of exercise, the
optionee's ordinary income would be limited to the gain (if any) from the sale.
If the amount realized upon disposition exceeds the fair market value of the
shares on the date of exercise, the excess would be treated as short-term or
long-term capital gain, depending on whether the holding period for such shares
exceeded one year.
The amount by which the fair market value of the shares acquired at the
time of exercise of an incentive stock option exceeds the exercise price of such
shares under such option generally will be treated as an item of adjustment
included in the optionee's alternative minimum taxable income for purposes of
the alternative minimum tax for the year in which the option is exercised. If,
however, there is a Disqualifying Disposition of the shares in the year in which
the option is exercised, there will be no item of adjustment for purposes of the
alternative minimum tax as a result of the exercise of the option with respect
to those shares. If there is a Disqualifying Disposition in a year after the
year of exercise, the income on the Disqualifying Disposition will not be
considered income for purposes of the alternative minimum tax in that subsequent
year. The optionee's tax basis for shares acquired pursuant to the exercise of
an incentive stock option will be increased for purposes of determining his
alternative minimum tax by the amount of the item of adjustment recognized with
respect to such shares in the year the option was exercised.
An income tax deduction is not allowed to the Company with respect to
the grant or exercise of an incentive stock option or the disposition, after the
Required Holding Period, of shares acquired upon exercise. In the event of a
Disqualifying Disposition, a Federal income tax deduction will be allowed to the
Company in an amount equal to the ordinary income to be recognized by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and the Company satisfies any
applicable withholding obligation with respect to such income.
NONQUALIFIED STOCK OPTIONS. An optionee granted a nonqualified stock
option will generally recognize, at the date of exercise of such nonqualified
stock option, ordinary income equal to the difference between the exercise price
and the fair market value of the shares of Common Stock subject to the
nonqualified stock option. This taxable ordinary income will be subject to
Federal income tax withholding. A Federal income tax deduction will be allowed
to the Company in an amount equal to the ordinary income to be recognized by the
optionee, provided that such amount constitutes an ordinary and necessary
business expense to the Company and is reasonable, and the Company satisfies any
applicable withholding obligation with respect to such income.
- 15 -
<PAGE>
The Federal income tax treatment is somewhat different for officers and
directors of the Company ("Reporting Persons") as a result of the short-swing
profit recovery provisions of Section 16(b) of the Exchange Act. If a Reporting
Person exercises an option prior to the expiration of the holding period
required by Rule 16b-3 (which holding period lasts for six months following the
acquisition of the option), unless the Reporting Person makes an 83(b) Election,
as described below, the Reporting Person will recognize ordinary income upon the
expiration of the holding period or such earlier date on which the person ceases
to be a Reporting Person. The amount of ordinary income will be equal to the
difference between the exercise price of the option and the fair market value of
the shares at the time that the income is recognized. A Reporting Person,
however, is entitled to elect under Section 83(b) of the Code (the "83(b)
Election"), within 30 days after exercising an option, to treat as ordinary
income the excess of the fair market value of the shares covered by the option
on the date of exercise over the exercise price and no further ordinary income
will be recognized irrespective of whether the fair market value of the shares
has increased or decreased at the expiration of the applicable period under
Section 16(b). The Company's deduction is dependent upon when a Reporting Person
recognizes ordinary income.
If an optionee exercises a nonqualified stock option by delivering
other shares, the optionee will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the optionee's tax basis. The optionee, however, will be taxed as described
above with respect to the exercise of the nonqualified stock option as if he had
paid the exercise price in cash, and the Company likewise generally will be
entitled to an equivalent tax deduction. Provided a separate identifiable stock
certificate is issued therefor, the optionee's tax basis in that number of
shares received on such exercise (which is equal to the number of shares
surrendered on such exercise) will be equal to his tax basis in the shares
surrendered and his holding period for such number of shares received will
include his holding period for the shares surrendered. The optionee's tax basis
and holding period for the additional shares received on exercise of a
nonqualified stock option paid for, in whole or in part, with shares will be the
same as if the optionee had exercised the nonqualified stock option solely for
cash.
OPTIONS GRANTED UNDER THE PLAN
As of April 9, 1997, the Board of Directors had granted nonqualified
stock options to purchase an aggregate of 799,651 shares of Common Stock to 26
employees (including the Named Executive Officers). Grants of options are
further described in the following table. All of the options granted pursuant to
the 1993 Plan have an exercise price equal to the fair market value of the
Common Stock as determined by the Compensation Committee as of the date of the
grant and have a term of ten (10) years. Options granted to employees other than
the Named Executive Officers will become exercisable in 16 equal quarterly
installments beginning with the date of grant until fully exercisable. Options
granted to the Named Executive Officers become exercisable six months after the
date of grant with respect to 3/16 of the total number of shares granted and
become exercisable in 13 equal quarterly installments thereafter. For additional
information about such option grants, see "Management - Executive Compensation"
above.
- 16 -
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
OPTION GRANTEES SUBJECT TO OPTIONS
- --------------- ------------------
<S> <C>
William A. Dambrackas (1)
President, Chief Executive Officer and Director 275,000
Mark Kacer (2)
Vice President, Chief Financial Officer and Director 127,568
Robert F. Gintz (1)
Vice President, Development 135,000
Thomas E. Garrett
Vice President, Sales 46,000
Robert S. Sowell (1)
Vice President, Technical Operations 35,000
All current executive officers as a group (5 persons) 618,568
All employees as a group, including all executive and non-executive officers (26
persons) 799,651
</TABLE>
- ------------------------
(1) Options granted to these executive officers were granted pursuant
to the 1993 Plan.
(2) In addition to 42,568 options granted in 1996 pursuant to the 1993
plan, 12,432 options were granted in 1996 to Mr. Kacer pursuant to stock option
plans in effect prior to the 1993 plan.
Because persons to whom future grants of options under the 1993 Plan,
as amended, are to be made will be determined from time to time by the
Compensation Committee in its discretion, it is impossible at this time to
indicate the precise number, name or position of persons who will hereafter
receive options or the number of shares for which options will be granted under
the 1993 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL TO
AMEND THE COMPANY'S 1993 STOCK OPTION PLAN.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountant for the year ended December
31, 1996 was, and for the year ended December 31, 1997 will be, the firm of
Arthur Andersen LLP. Representatives of such firm are expected to attend the
Meeting.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be presented at the 1998
Annual Meeting of Shareholders must be received by the Company no later than
January 15, 1998 for inclusion in the Company's proxy statement and form of
proxy relating to such meeting.
- 17 -
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
Meeting. Should any unanticipated business properly come before the Meeting,
however, it is intended that the holders of proxies solicited hereby will vote
thereon at their discretion.
The Company's Annual Report to its shareholders is being mailed with
this proxy statement; however, the Annual Report does not form a part of this
proxy statement or the Company's solicitation of proxies.
By Order of the Board of Directors,
MARK KACER
SECRETARY
Ft. Lauderdale, Florida
May 12, 1997
- 18 -
<PAGE>
EXHIBIT A
(AMENDMENT IN BOLD)
EQUINOX SYSTEMS INC.
-----------------------------------------------------
1993 STOCK OPTION PLAN, AS AMENDED
-----------------------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of
EQUINOX SYSTEMS INC., a Florida corporation (the "Company"), by providing an
additional incentive to attract and retain qualified and competent persons who
are key employees of the Company, and upon whose efforts and judgment the
success of the Company is largely dependent, through the encouragement of stock
ownership in the Company by such persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the stock option committee appointed
by the Board pursuant to Section 13 hereof or, if not appointed, the Board.
(c) "Common Stock" shall mean the Company's Common Stock, par
value $0.01 per share.
(d) "Director" shall mean a member of the Board.
(e) "Disinterested Person" shall mean a Director who is not,
during the one year prior to his or her service as an administrator of this
Plan, or during such service, granted or awarded equity securities pursuant to
this Plan or any other plan of the Company or any of its affiliates, except
that:
(i) participation in a formula plan meeting the conditions
in paragraph (c)(2)(ii) of Rule 16b-3 promulgated under the Securities Exchange
Act shall not disqualify a Director from being a Disinterested Person; and
(ii) participation in an ongoing securities acquisition plan
meeting the conditions in paragraph (d)(2)(i) of Rule 16b-3 promulgated under
the Securities Exchange Act shall not disqualify a Director from being a
Disinterested Person; and
(iii) An election to receive an annual retainer fee in
either cash or an equivalent amount of securities, or partly in cash and partly
in securities, shall not disqualify a director from being a Disinterested
Person.
(f) "Fair Market Value" of a Share on any date of reference shall
be the "Closing Price" (as defined below) of the Common Stock on the business
day immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair and uniform manner. For the purpose of
determining Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be (i) if the common Stock is listed or admitted for trading
on any United States national securities exchange, or if actual transaction are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated Quotations
System ("NASDAQ"), or any similar system of automated dissemination of
quotations of securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of Common Stock on such system, or
(iii) if neither clause (i) or (ii) is applicable, the mean between the high bid
and low asked quotations for the Common Stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have inserted
both bid and asked quotations for common Stock on at least five of the ten
preceding days.
A-1
<PAGE>
(g) "Incentive Stock Option" shall mean an incentive stock option
as defined in Section 422 of the Internal Revenue Code.
(h) "Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(i) "Non-Statutory Stock Option" shall mean an Option which is
not an Incentive Stock Option.
(j) "Officer" shall mean the company's president, principal
financial officer, principal accounting officer and any other person who the
Company identifies as an "executive officer" for purposes of reports or proxy
materials filed by the Company pursuant to the Securities Exchange Act.
(k) "Option" (when capitalized) shall mean any option granted
under this Plan.
(l) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(m) "Plan" shall mean this Stock Option Plan for the company.
(n) "Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(o) "Share(s)" shall mean a share or shares of the Common Stock.
3. SHARES AND OPTIONS. The Company may grant to Optionees from time to
time Options to purchase an aggregate of up to ONE MILLION AND FIFTY THOUSAND
(1,050,000) Shares from Shares held in the Company's treasury or from authorized
and unissued Shares. If any Option granted under the Plan shall terminate,
expire, or be canceled or surrendered as to any Shares, new Options may
thereafter be granted covering such Shares. An Option granted hereunder shall be
either an Incentive Stock Option or a Non-Statutory Stock Option as determined
by the Committee at the time of grant of such Option and shall clearly state
whether it is an Incentive Stock Option or Non-Statutory Stock Option. All
Incentive Stock Options shall be granted within 10 years from the effective date
of this Plan.
4. DOLLAR LIMITATION. Options otherwise qualifying as Incentive Stock
Options hereunder will not be treated as Incentive Stock Options only to the
extent that the aggregate fair market value (determined at the time the Option
is granted) of the Shares, with respect to which Options meeting the
requirements of Internal Revenue Code Section 422(b) are exercisable for the
first time by an individual during any calendar year (under all plans of the
Company), exceeds $100,000. Notwithstanding any other provision of this Plan, no
Plan participant may be granted options for more than 40% of the aggregate
number of shares available under the Plan.
5. CONDITIONS FOR GRANT OF OPTIONS
(a) Each Option shall be evidenced by an option agreement that
may contain any term deemed necessary or desirable by the Committee, provided
such terms are not inconsistent with this Plan or any applicable law. Optionees
shall be those persons selected by the Committee from the class of all regular
employees of the Company, including employees who are also Directors or
Officers. Any person who files with the Committee, in a form satisfactory to the
Committee, a written waiver of eligibility to receive any Option under this Plan
shall not be eligible to receive any Option under this Plan for the duration of
such waiver.
(b) In granting Options, the Committee may take into
consideration the contribution the person has made to the success of the Company
and such other factors as the Committee shall determine. The Committee shall
also have the authority to consult with and receive recommendations from
officers and other personnel of the Company with regard to these matters. The
Committee may from time to time in granting Options under the Plan prescribe
such other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) relating an Option to the continued
A-2
<PAGE>
employment of the Optionee for a specified period of time, provided that such
terms and conditions are not more favorable to an Optionee than those expressly
permitted herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company. Neither the Plan nor any Option granted
under the Plan shall confer upon any person any right to employment or
continuance of employment by the Company.
(d) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, Options may not be granted to a
Director or Officer unless the grant of such Options is authorized by, and all
of the terms of such Options are determined by, a Committee that is appointed in
accordance with Section 13 of this Plan and all of whose members are
Disinterested Persons.
6. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; provided, however, that in no event shall the option price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company employing the Optionee to withhold in accordance with applicable Federal
or state tax withholding requirements. Unless further limited by the Committee
in any Option, the option price of any Shares purchased shall be paid in cash,
by certified or official bank check, by money order, with Shares or by a
combination of the above; provided further, however, that the Committee in its
sole discretion may accept a personal check in full or partial payment of any
Shares. If the exercise price is paid in whole or in part with Shares, the value
of the Shares surrendered shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole discretion may, on an individual
basis or pursuant to a general program established by the Committee in
connection with this Plan, lend money to an Optionee to exercise all or a
portion of an Option granted hereunder. If the exercise price is paid in whole
or part with Optionee's promissory note, such note shall (i) provide for full
recourse to the maker, (ii) be collateralized by the pledge of the Shares that
the Optionee purchases upon exercise of such Option, (iii) bear interest at a
rate no less than the rate of interest payable by the Company to its principal
lender, and (iv) contain such other terms as the Committee in its sole
discretion shall require. No Optionee shall be deemed to be a holder of any
Shares subject to an Option unless and until a stock certificate or certificates
for such Shares are issued to such person(s) under the terms of this Plan. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 8.
(a) The expiration date of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of 10 years from the date of grant of the Option.
(b) Unless otherwise provided in any Option, each outstanding
Option granted prior to February 24, 1996 shall become immediately fully
exercisable.
(i) if there occurs any transaction (which shall include a
series of transactions occurring within 60 days or occurring pursuant to a
plan), that has the result that shareholders of the Company immediately before
such transaction cease to own at least 51 percent of the voting stock of the
Company or of any entity that results from the participation of the Company in a
reorganization, consolidation, merger, liquidation or any other form of
corporate transaction;
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(ii) if the shareholders of the Company shall approve a plan
of merger, consolidation, reorganization, liquidation or dissolution in which
the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the shareholders of the company shall approve a
plan for the sale, lease, exchange or other disposition of all or substantially
all the property and assets of the Company (unless such plan is subsequently
abandoned).
(c) The Committee may in its sole discretion accelerate the date
on which any Option may be exercised and may accelerate the vesting of any
Shares subject to any Option or previously acquired by the exercise of any
Option.
(d) Options granted to Officers and Directors shall not be
exercisable until the expiration of a period of at least six months following
the date of grant.
9. TERMINATION OF OPTION PERIOD
(a) The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
(i) three months after the date on which the Optionee's
employment is terminated or, in the case of a Non-Statutory Stock Option, and
unless the Committee shall otherwise determine in writing in its sole
discretion, the date on which the Optionee's employment is terminated, in either
case for any reason other than by reason of (A) Cause, which, solely for
purposes of this Plan, shall mean the termination of the Optionee's employment
by reason of the Optionee's wilful misconduct or gross negligence, (B) a mental
or physical disability as determined by a medical doctor satisfactory to the
Committee, or (C) death;
(ii) immediately upon the termination of the Optionee's
employment for Cause;
(iii) one year after the date on which the Optionee's
employment is terminated by reason of a mental or physical disability (within
the meaning of Internal Revenue Code Section 22(e)) as determined by a medical
doctor satisfactory to the Committee; or
(iv) (A) twelve months after the date of termination of the
Optionee's employment by reason of death of the employee, or (B) three months
after the date on which the Optionee shall die if such death shall occur during
the one year period specified in Subsection 9(a)(iii) hereof.
(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections 8(b)(ii)
or(iii) hereof, any Option that remains unexercised on such date. Such
cancellation notice shall be given a reasonable period of time prior to the
proposed date of such cancellation and may be given either before or after
approval of such corporate transaction.
10. ADJUSTMENT OF SHARES
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum
number of Shares available for grant under the Plan, so that the same percentage
of the Company's issued and outstanding Shares shall continue to be subject to
being so optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price.
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(b) Subject to the specific terms of any Option, the Committee
may change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsections 8(b)(ii) or (iii) hereof.
(c) Except as otherwise expressly provided herein, the issuance
by the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
direct sale or upon the exercise of rights or warrants to subscribe therefor, or
upon conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to the number of or exercise price of Shares
then subject to outstanding Options granted under the Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS. Each Option shall provide that such
Option shall not be transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and each Option shall be exercisable during
the Optionee's lifetime only by the Optionee.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(a) a representation and warranty by the Optionee to the Company,
at the time any Option is exercised, that he is acquiring the Shares to be
issued to him for investment and not with a view to, or for sale in connection
with, the distribution of any such Share and
(b) a representation, warranty and/or agreement to be bound by
any legends that are, in the opinion of the Committee, necessary or appropriate
to comply with the provisions of any securities law deemed by the Committee to
be applicable to the issuance of the Shares and are endorsed upon the Share
certificates.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall
consist of not less than two Directors, each of whom shall be Disinterested
Persons to the extent required by Section 5(d) hereof. The Committee shall have
all of the powers of the Board with respect to the Plan. Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board and any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision of the
Plan shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
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Section 424(d) of the Internal Revenue Code) at the date of grant, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company (or of its subsidiary [as defined in Section 424 of the
Internal Revenue Code] at the date of grant) unless the option price of such
Option is at least 110% of the Fair Market Value of the Shares subject to such
Option on the date the Option is granted, and such Option by its terms is not
exercisable after the expiration of five years from the date such Option is
granted.
15. INTERPRETATION.
(a) The Plan shall be administered and interpreted so that all
Incentive Stock Options granted under the Plan will qualify as Incentive Stock
Options under Section 422 of the Internal Revenue Code. If any provision of the
Plan should be held invalid for the granting of Incentive Stock Options or
illegal for any reason, such determination shall not affect the remaining
provisions hereof, but instead the Plan shall be construed and enforced as if
such provision had never been included in the Plan.
(b) This plan shall be governed by the laws of the State of
Florida.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. Either the Board or the
Committee may from time to time amend the Plan or any Option; provided, however,
that, except to the extent provided in Section 10, no such amendment may,
without approval by the shareholders of the Company, (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan; and
provided further, that, except to the extent provided in Section 9, no amendment
or suspension of the Plan or any Option issued hereunder shall substantially
impair any Option previously granted to any Optionee without the consent of such
Optionee.
17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is the date on which the Board adopts this Plan, and the Plan shall terminate on
the 10th anniversary of the effective date.
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COMMON STOCK PROXY
EQUINOX SYSTEMS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of EQUINOX SYSTEMS
INC., a Florida corporation (the "Company"), hereby appoints William A.
Dambrackas and Mark Kacer, and each or either of them, the proxy or proxies of
the undersigned, with full power of substitution to such proxy and substitute,
to vote all shares of Common Stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at The Bankers Club, One Biscayne Tower, Miami, Florida at 9:30 A.M., local
time, June 19, 1997, and at all adjournments thereof with authority to vote said
Common Stock on the matters set forth below:
The shares of Common Stock represented by this Proxy will be voted in
the manner directed herein by the undersigned shareholder, who shall be entitled
to one vote for each share of Common Stock held. If no direction is made, this
Proxy will be voted for each item listed below.
The Board of Directors recommends a vote FOR each proposal.
1. ELECTION OF DIRECTORS. Election of
William A. Dambrackas Charles A. Reid
Mark Kacer Robert F. Williamson, Jr.
[ ] FOR nominees listed above, except withhold authority for
individual nominees, if any, whose name(s) is (are) marked
through above.
OR [ ] WITHHOLD AUTHORITY to vote for nominees listed above.
2. AMENDMENT TO 1993 STOCK OPTION PLAN.
Amendment to reserve an additional 250,000 shares of Common Stock
for issuance upon exercise of stock options under the 1993 Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may be properly
brought before the meeting and each adjournment thereof.
<PAGE>
EQUINOX SYSTEMS INC.
THIS PROXY WILL BE VOTED AS SPECIFIED, IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH OF THE MATTERS MENTIONED.
Dated:__________________, 1997
_______________________________
(Signature)
_______________________________
(Signature)
PLEASE SIGN YOUR NAME EXACTLY AS IT
APPEARS ON THE LEFT. EXECUTORS,
ADMINISTRATORS, TRUSTEES, GUARDIANS,
ATTORNEYS AND AGENTS SHOULD GIVE
THEIR FULL TITLES AND SUBMIT
EVIDENCE OF APPOINTMENT UNLESS
PREVIOUSLY FURNISHED TO THE COMPANY
OR ITS TRANSFER AGENT. ALL JOINT
OWNERS SHOULD SIGN.
PLEASE MARK, DATE, SIGN AND RETURN USING THE ENCLOSED ENVELOPE. YOUR PROMPT
ATTENTION WILL BE APPRECIATED.
