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:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Lasergate Systems, 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)(1) 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:
5) 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.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
LASERGATE SYSTEMS, INC.
28050 U.S. 19 NORTH
CORPORATE SQUARE
SUITE 502
CLEARWATER, FLORIDA 34621
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July ___, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders (the
"Meeting") of LASERGATE SYSTEMS, INC., a Florida corporation (the "Company"),
will be held on Thursday, September 5, 1997 at 2:00 P.M. at The Holiday Inn
Clearwater Central, 20967 U.S. 19 North, Clearwater, Florida, to consider and
act upon the following:
I. The election of two Class I Directors to serve until the 1999 Annual
Meeting of Shareholders or until the election and qualification of
their successors and the election of two Class II Directors to serve
until the 2000 Annual Meeting of Shareholders or until their
successors are duly elected and qualified;
II. A proposal to adopt amendments to the Company's Articles of
Incorporation to increase the number of authorized shares of common
stock, par value $.03 per share (the "Common Stock"), from 20,000,000
to 40,000,000 shares;
III. A proposal to adopt amendments to the Company's 1994 Stock Option Plan
(the "1994 Plan") to increase the number of shares of Common Stock
which may be issued thereunder from 58,333 to 900,000 shares and to
eliminate the non-employee Director formula option grants and certain
provisions relating thereto currently set forth in the 1994 Plan;
IV. A proposal to approve the grant of stock options to certain of the
Company's Executive Officers; and
V. The transaction of such other business as may properly come before the
Meeting or any adjournments thereof.
Only shareholders of record of Common Stock of the Company at the close of
business on July 20, 1997 are entitled to receive notice of, to vote at and to
attend the Meeting. At least 10 days prior to the Meeting, a complete list of
the shareholders entitled to vote will be available for
<PAGE>
inspection by any shareholder, for any purpose germane to the Meeting, during
ordinary business hours, at the offices of the Company, 28050 U.S. 19 North,
Corporate Square, Suite 502, Clearwater, Florida 34621.
You are cordially invited to attend the Meeting. Whether or not it is your
intention to attend the Meeting, you are urged to complete, sign and date the
enclosed form of proxy, and return it promptly in the enclosed reply envelope.
Returning your proxy does not deprive you of your right to attend the Meeting
and to vote your shares in person. This solicitation is being made on behalf of
the Company's Board of Directors.
By Order of the Board of Directors,
PHILIP P. SIGNORE
Secretary
Dated: July __, 1997
IMPORTANT
---------
The return of your signed Proxy as promptly as possible will greatly
facilitate arrangements for the Meeting. No postage is required if the Proxy is
returned in the envelope enclosed for your convenience and mailed in the United
States.
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<PAGE>
LASERGATE SYSTEMS, INC.
28050 U.S. 19 North
Corporate Square
Suite 502
Clearwater, Florida 34621
------------------------------
PROXY STATEMENT
Annual Meeting of Shareholders
September 5, 1997
------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lasergate Systems, Inc., a Florida
corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
of the Company (the "Meeting") which will be held at The Holiday Inn Clearwater
Central, 20967 U.S. 19 North, Clearwater, Florida, on September 5, 1997 at 2:00
P.M., local time, and any adjournment or adjournments thereof, for the purposes
set forth in the accompanying Notice of Annual Meeting of Shareholders and in
this Proxy Statement. The approximate date on which this Proxy Statement and
accompanying Proxy will first be sent or given to shareholders is July __, 1997.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked, will be voted in accordance with the
instructions contained therein and, in the absence of specific instructions,
will be voted in favor of all proposals and in accordance with the judgment of
the person or persons voting the proxies on any other matter that may be brought
before the Meeting. Each such Proxy granted may be revoked at any time
thereafter by writing to the Secretary of the Company prior to the Meeting, by
execution and delivery of a subsequent proxy or by attendance and voting in
person at the Meeting, except as to any matter or matters upon which, prior to
such revocation, a vote shall have been cast pursuant to the authority conferred
by such Proxy. The cost of soliciting proxies will be borne by the Company.
Following the mailing of the proxy materials, solicitation of proxies may be
made by Officers and employees of the Company, or anyone acting on their behalf,
by mail, telephone, telegram or personal interview.
VOTING SECURITIES
Shareholders of record as of the close of business on July 20, 1997 (the
"Record Date") will be entitled to notice of, and to vote at, the Meeting or any
adjournments thereof. As of the Record Date, there were issued and outstanding
7,462,061 of common stock, par value $.03 per share (the "Common Stock"). Each
holder of Common Stock is entitled to one vote for each share held by such
holder. The presence, in person or by proxy, of the holders of a majority of the
shares entitled to vote
<PAGE>
at the Meeting will constitute a quorum for the transaction of business. Proxies
submitted which contain abstentions or broker non-votes will be deemed present
at the Meeting in determining the presence of a quorum. The affirmative vote of
the holders of a majority of the votes cast at the Meeting at which a quorum is
present will be required for the election of Directors, for the amendment to the
Company's Articles of Incorporation and for the amendments to the 1994 Stock
Option Plan (the "1994 Plan"). Shares of Common Stock that are voted to abstain
and shares which are subject to broker non-votes with respect to any matter will
not be considered cast with respect to that matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information as of July ___, 1997
regarding the beneficial ownership of shares of Common Stock by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) who is known by the Company to be
the beneficial owner of more than five percent of the Common Stock, its only
class of voting securities (ii) each Director and nominee, (iii) each current
and former Executive Officer named in the Summary Compensation table herein
titled "Executive Compensation" and (iv) all Directors and Executive Officers of
the Company as a group.
Name and Address Amount and Nature
of Beneficial Owner of Beneficial Ownership(1) Percent of Class
- ------------------- -------------------------- ----------------
Jacqueline E. Soechtig 398,500(2) 5.4%
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34621
Bruce D. Barrington 92,500(3)(4) 1.3%
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34621
John J. Chluski 95,827(3) 1.3%
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34621
Frank W. Swacker 15,000(5) *
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34616
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<PAGE>
Name and Address Amount and Nature
of Beneficial Owner of Beneficial Ownership(1) Percent of Class
- ------------------- -------------------------- ----------------
Eric T. Jager 139,000(6) 1.9%
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34616
James H. Moore 16 *
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34616
Glenn W. Phillips 0 *
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34616
Philip P. Signore 0 *
c/o Lasergate Systems, Inc.
28050 U.S. 19 Highway North
Suite 502
Clearwater, FL 34621
All directors and executive officers 740,843(7) 9.9%
of the Company as a group
(10 persons)
- -------------------
* Less than 1%.
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
(2) Includes 375,000 shares of Common Stock which Ms. Soechtig has the right to
acquire pursuant to presently exercisable stock options.
(3) Includes 42,500 shares of Common Stock which each of Messrs. Barrington and
Chluski has the right to acquire pursuant to presently exercisable stock
options.
(4) Includes 50,000 shares of Common Stock owned by a trust of which Mr.
Barrington acts as trustee.
(5) Includes 10,000 shares of Common Stock which Mr. Swacker has the right to
acquire pursuant to presently exercisable stock options.
(6) Includes (i) 124,000 shares of Common Stock owned by a mutual fund which
Mr. Jager manages and with respect to which Mr. Jager has voting power,
(ii) 10,000 shares of Common Stock owned by Mr. Jager's wife as to which
Mr. Jager disclaims beneficial ownership, and (iii) 5,000 shares of Common
Stock which Mr. Jager has the right to acquire pursuant to presently
exercisable stock options.
(7) Includes shares of Common Stock which such Directors and Executive Officers
have the right to acquire pursuant to presently exercisable stock options.
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<PAGE>
ACTION TO BE TAKEN AT THE MEETING
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Articles of Incorporation and By-Laws provide for a
classified Board of Directors. The Board is divided into three classes
designated Class I, Class II and Class III. The nominees below are being
presented for election as Class I and Class II Directors to hold office until
the 1999 and 2000 Annual Meeting of Shareholders, respectively. The term of each
Class III Director is to expire at the 1998 Annual Meeting of Shareholders.
Unless instructed to the contrary, the persons named in the enclosed Proxy
intend to cast all votes pursuant to Proxies received in favor of the persons
listed under the heading "Nominees" below as Directors. The nominees, each of
whom presently serves as a Director, have indicated to the Company their
availability for election. In the event that the nominees should not continue to
be available for election, the holders of the Proxies may exercise their
discretion to vote for substitutes. Directors hold office until their respective
successors are elected and duly qualified, or until death, resignation or
removal. Officers hold office until the meeting of the Board of Directors
following each Annual Meeting of Shareholders and until their successors have
been chosen and qualified.
The following information is furnished with respect to the nominees and
each other continuing member of the Company's Board of Directors.
Year First Present Position
Name Age Became Director Class with the Company
- ---- --- --------------- ----- ----------------
Nominees:
Bruce D. Barrington 54 1996 II Director
John J. Chluski 73 1996 II Director
Eric T. Jager 54 1997 I Director
Philip P. Signore 38 1996 I Vice President, Chief
Financial Officer,
Treasurer, Secretary
and Director
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<PAGE>
Year First Present Position
Name Age Became Director Class with the Company
- ---- --- --------------- ----- ----------------
Directors Whose
Terms of Office
Continue after the
Meeting:
Jacqueline E. 47 1994 III President, Chief
Soechtig Executive Officer and
Chairman of the Board
Frank W. Swacker 74 1995 III Vice Chairman of the
Board
Background of Nominees
Bruce D. Barrington has been a member of the Board of Directors of the
Company since November 1, 1996. From 1973 to 1980 Mr. Barrington served as Vice
President of Research and Development for HBO & Company, a publicly-held
software solutions provider to the health care industry which he co-founded in
1973. From 1980 to 1983 Mr. Barrington served as a Director of HBO & Company. In
1982 Mr. Barrington formed Top Speed Corporation (formerly Clarion Software
Corporation and prior thereto Barrington Systems, Inc.), a software company
which develops and markets a sophisticated line of software development tools
aimed at the Windows(R) environment. Mr. Barrington served as a Systems Analyst
for Caterpillar Tractor Company from 1965 to 1967 and as a Manager of Hospital
Systems Development for McDonnel Douglas Automation Company from 1967 to 1973.
Mr. Barrington serves as the Company's Chief Technology Advisor and will
contribute to the direction of future products.
John J. Chluski has been a member of the Board of Directors of the Company
since November 1, 1996. Since 1988 Mr. Chluski has been an international
business consultant and advisor. He has served as an active Board Member of
several ITT subsidiaries and is presently a Director of ITT Composants (France).
Mr. Chluski is also a Director of Howmet S.A. (France), and serves as Advisor to
the Chairman of Marceau Investissements, a Paris-based investment fund, and
Advisor to Monitor Company, a global strategy consulting firm based in
Cambridge, Massachusetts. From 1972 to 1988, Mr. Chluski held several executive
management positions at ITT Corporation, including Group Executive-Engineered
Products-Europe, and Senior Vice President and Executive Representative of the
Chairman.
Eric T. Jager has been a member of the Board of Directors of the Company
since May 28, 1997. Mr. Jager is the Executive Vice President - Investments of
Bartlett & Company ("Bartlett") and President of Windcrest Investment
Management, a division of Bartlett involved in diversified
-5-
<PAGE>
portfolio management. Mr. Jager has served in these positions since 1983 and
prior thereto he served as a Senior Vice President, Investment Analyst and
Director of Investment Research at Eppler, Guerin & Turner, an investment
banking firm in Dallas, Texas. Mr. Jager is a Director of Nygaard Corporation,
Bartlett Futures, Scout Mutual Funds, Johnson County Business Tech Center and
Tech- Industry Consultants. Mr. Jager is also the Chairman of the Board of
Shawnee Mission Education Foundation and a Director and Co-Chairman of Kansas
Inc.
Philip P. Signore has been the Company's Vice President - Finance, Chief
Financial Officer, Treasurer and Secretary since May 1996 and has been a member
of the Board of Directors since June 1996. Mr. Signore served as Chief Financial
Officer of Commercial Design Services, Inc., an office furniture dealership,
from March 1993 to May 1996. From July 1989 to March 1993, Mr. Signore was the
Operations Controller for Briggs Industries, Inc., a plumbing fixtures
manufacturer. Previously, Mr. Signore held various financial management
positions in the areas of financial planning and analysis while at Paradyne
Corporation from 1983 to 1988 as well as internal auditing at Moore McCormack
Resources from 1981 to 1983. He began his career working as a CPA at the
international accounting firm of Peat Marwick Mitchell & Co. from 1979 to 1981.
Background of Continuing Directors
Jacqueline E. Soechtig has been a Director of the Company and the Company's
President and Chief Executive Officer since October 31, 1994. From September
1994 until immediately prior to her employment by the Company, Ms. Soechtig was
a consultant to the Company. During the ten-month period prior thereto, Ms.
Soechtig purchased and operated a restaurant in Clearwater, Florida together
with her spouse. From February 1992 through December 1993, Ms. Soechtig was the
President and Chief Executive Officer of Precision Systems, Inc. ("PSI"), a
company engaged in the production and sales of voice and call processing
systems. Prior to her employment with PSI, Ms. Soechtig served as Vice President
of Business Development for Sprint Corp. (May 1990 through February 1992). She
also held the position of Vice President of MCI Telecommunications Corporation
where she served in various sales, marketing and technical capacities from May
1984 through May 1990. Both Sprint and MCI are engaged in the telecommunications
industry. Additionally, from 1970 to 1983, Ms. Soechtig was employed by
International Business Machines Corp. in various technical and sales positions.
Frank W. Swacker has been a member of the Board of Directors of the Company
since May 3, 1995. Mr. Swacker has been engaged in the practice of law for the
past 46 years, more than the last five of such years in private practice.
Between 1968 and 1978, he was the International Counsel for Allis-Chalmers
Corporation in Milwaukee, Wisconsin. Mr. Swacker has published articles focusing
on international foreign trade and the financial, antitrust and cross-cultural
aspects of transnational business and is the lead author of the 1996 two volume
work entitled "World Trade Without Barriers," a comprehensive treatise on the
World Trade Organization and dispute resolution. Additionally, he has advised
the United States House of Representatives on international trade treaties
-6-
<PAGE>
and has served as Special Assistant Deputy Attorney General for the State of New
York. Since 1960, Mr. Swacker has been a member of the National Panel of
Arbitrators of the American Arbitration Association.
Meetings of the Board of Directors and Committees of the Board
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee recommends to the Board of Directors the appointment of
independent auditors to audit the Company's consolidated financial statements,
reviews the Company's internal control procedures and advises the Company on tax
and other matters connected with the growth of the Company. The Audit Committee
also reviews with management the annual audit and other work performed by the
independent auditors. The Compensation Committee administers the Company's 1994
Plan Stock Option Plan and recommends to the Board of Directors the nature and
amount of compensation to be paid to the Company's Executive Officers.
On June 28, 1996, three members of the Board of Directors resigned as
Directors of the Company (in connection with the redemption of the Company's
Series A Convertible Preferred Stock). On the same day, Philip P. Signore, the
Company's Vice President and Chief Financial Officer was appointed to the Board
of Directors. As a result, there was only one non-employee Director on the Board
of Directors from June 28, 1996 until October 31, 1996. During this period, the
duties normally performed by the audit committee and compensation committee were
assumed by the sole remaining non-employee Director, Frank W. Swacker. On
December 16, 1996, the Company established new audit and compensation
committees. The Audit Committee consists of Messrs. Barrington, Chluski and
Swacker. The Compensation Committee consists of Messrs. Barrington, Chluski and
Swacker.
During the fiscal year ended December 31, 1996, the Board of Directors of
the Company held 18 meetings, the Audit Committee held one meeting and the
Compensation Committee held four meetings. Each Director attended at least 75%
of the aggregate number of meetings of the Board of Directors and the
committees, which were held during the period the Director served as a Director
during the fiscal year ended December 31, 1996.
Remuneration of Non-Employee Directors
Effective January 1, 1996, the Company commenced paying non-employee
Directors fees equal to $1,000 per meeting attended in person, and $500 per
meeting attended by telephone. The Company ceased paying such fees effective
September 6, 1996.
In addition, upon the initial election and upon each re-election of an
outside Director to serve a term as a Director of the Company, such Director is
entitled under the Company's 1994 Plan, to be granted a non-qualified stock
option to purchase 5,000 shares of Common Stock for each year of
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<PAGE>
such term (the "Formula Grants"), with 5,000 of such options to vest at the
beginning of each year of such term provided that the Director continues to
serve in such capacity at the time of the scheduled vesting. The exercise price
of such options is set at 85% of market value at time of grant. During the
fiscal year ended December 31, 1996, each of Messrs. Barrington and Chluski were
granted options to purchase 5,000 shares under the Company's 1994 Plan at
exercise prices of $.5578 per share and $.425 per share respectively (85% of the
market value at time of grant). As a further inducement to their agreeing to
serve on the Board, Messrs. Barrington and Chluski were each granted additional
options to purchase 37,500 shares outside of the 1994 Plan at average exercise
prices of $.656 per share and $.625 per share, respectively (the market value at
time of grant). All such options are exercisable for ten years. One of the
proposed amendments to the 1994 Plan is to delete the Formula Grants.
-8-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain summary information concerning
compensation with respect to each person who served as the Company's Chief
Executive Officer during the fiscal year ended December 31, 1996 and each of the
Company's Executive Officers whose total cash compensation for the year ended
December 31, 1996 exceeded $100,000:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Name and Securities
Principal Underlying All Other
Position Year Salary $ Bonus $ Options(#) Compensation
--------- ---- -------- -------- ---------- ------------
Jacqueline E. Soechtig (1) 1996 220,000 100,000 -- --
President and Chief 1995 220,000 20,170 -- --
Executive Officer 1994 54,347 -- 375,000 --
Glenn W. Phillips(2) 1996 130,950 50,000 -- --
Vice President - Sales 1995 -- -- -- --
& Marketing 1994 -- -- -- --
James H. Moore, Jr. (3) 1996 100,000 50,000 -- --
Vice President - 1995 100,000 -- -- --
Operations, Assistant 1994 -- -- -- --
Secretary
- --------------
(1) Ms. Soechtig has been employed by the Company since October 31, 1994. Ms.
Soechtig's annual salary is currently $220,000. During the year ended
December 31, 1994, Ms. Soechtig was awarded stock options to purchase
375,000 shares of Common Stock, all of which are presently exercisable. In
addition, a $20,170 bonus payable in 1994 upon Ms. Soechtig's employment
with the Company was paid during 1995 and during the year ended December
31, 1996, Ms. Soechtig was awarded a bonus of $100,000.
(2) Mr. Phillips has been employed by the Company since January, 1996. Mr.
Phillips' annual salary is currently $150,000. During the year ended
December 31, 1996, Mr. Phillips was awarded a bonus of $50,000.
(3) Mr. Moore has been employed by the Company since January, 1995. Mr. Moore's
annual salary is currently $100,000. During the year ended December 31,
1996, Mr. Moore was awarded a bonus of $50,000.
-9-
<PAGE>
No options were granted during the Company's 1996 fiscal year to the
current and former Executive Officers named in the Summary Compensation Table
above.
The following table sets forth certain information concerning the number of
shares of Common Stock acquired upon the exercise of stock options during the
year ended December 31, 1996 by, and the number and value at December 31, 1996
of shares of Common Stock subject to unexercised options held by, the
individuals listed in the Summary Compensation Table.
<TABLE>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Value Options/SARs Options/SARs
Realized at FY-End (#) at FY-End ($)
Name On Exercise (#) ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- -------- ------------------------- -------------------------
<S> <C> <C> <C>
Jacqueline E. -- -- 375,000/0 0/0
Soechtig
- ---------------------
</TABLE>
Employment Agreement
Jacqueline E. Soechtig, President and Chief Executive Officer of the
Company, is a party to an employment agreement with the Company, which commenced
on October 31, 1994 for a term of three years and is automatically renewed for
two years (unless terminated by either party). Ms. Soechtig's base salary of
$220,000 per annum. Pursuant to the Agreement and as a signing bonus, Ms.
Soechtig was paid $20,170 and was granted ten-year stock options to purchase
375,000 shares of Common Stock, which are all presently exercisable at an
exercise price of $2.00 per share. Ms. Soechtig was granted certain registration
rights with respect to the shares of Common Stock underlying all of such
options.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Act"), as
amended, requires the Company's Executive Officers and Directors, and any
persons who own more than 10% of any class of the Company's equity securities
which are registered under the Act to file certain reports relating to their
ownership of such securities and changes in such ownership with the Securities
and Exchange Commission and NASDAQ, and to furnish the Company with copies of
such reports. To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company, all Section 16(a) filing requirements
applicable to such Officers, Directors and owners of over 10% of the Company's
equity securities registered under the Act, during the year ended December 31,
1996, have been complied with except as follows: Bruce D. Barrington (a current
Director of the Company) and John J. Chluski (a current Director of the Company)
were each inadvertently late in filing a report upon becoming a Director and in
filing one report of transactions;
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<PAGE>
Philip P. Signore (a current Officer and Director of the Company) was
inadvertently late in filing a report upon becoming an Officer and a Director of
the Company; and Frank W. Swacker (a current Director of the Company) and
Jacqueline E. Soechtig (a current Officer and Director of the Company) were each
inadvertently late in filing one report of transactions. Fred R. Maglione (a
former Officer of the Company) was inadvertently late in filing a report upon
the termination of his employment with the Company. To the Company's knowledge,
John P. Warnick (a former Officer of the Company) did not file a report upon the
termination of his employment with the Company. To the Company's knowledge,
Timothy E. Mahoney, Lawrence W. Umstadter and Stewart L. Krug (former Directors
of the Company) did not file reports upon resigning as Directors of the Company.
1994 Stock Option Plan
The Company's 1994 Plan was adopted by the Board of Directors on February
5, 1994 and approved by the Shareholders at the 1994 Annual Meeting of
Shareholders. The 1994 Plan was amended by the Board of Directors on March 23,
1995 and September 30, 1996 and was amended by the Shareholders at the 1995
Annual Meeting of Shareholders. The purpose of the 1994 Plan is to provide an
incentive to key employees (including Officers and Directors who are key
employees), non-employee Directors and consultants of the Company, and its
subsidiary corporations, and to offer an additional inducement in obtaining the
services of such individuals.
The 1994 Plan is administered by the Company's Board of Directors, which
may delegate its powers with respect to the administration of the 1994 Plan to a
committee of the Board of Directors consisting of not less than two Directors,
each of whom must be a non-employee Director within the meaning of regulations
promulgated by the Securities and Exchange Commission. The Board of Directors
has delegated its powers with respect to the administration of the 1994 Plan to
the Compensation Committee. The Compensation Committee has the authority under
the 1994 Plan to determine the terms of options granted under the 1994 Plan,
including, among other things, the individuals who shall receive options, the
times when they shall receive them, whether an incentive stock option and/or
non-qualified option shall be granted, the number of shares to be subject to
each option and the date or dates each option shall become exercisable.
No options may be granted under the 1994 Plan after February 4, 2004. The
Board of Directors, without further approval of the Shareholders of the Company,
may amend, suspend or terminate the 1994 Plan, in whole or in part, at any time
and from time to time in such respects as it deems advisable (including without
limitation to conform with applicable law or the regulations or rulings
thereunder), but may not without the approval of the Company's shareholders make
any alteration or amendment thereof which would (i) increase the maximum number
of shares of Common Stock for which options may be granted under the 1994 Plan
(except for anti-dilution adjustments) or (ii) materially increase the benefits
to participants under the 1994 Plan or (iii) change the eligibility requirements
for individuals entitled to receive options under the 1994 Plan. No termination,
suspension or amendment of the 1994 Plan shall, without the consent of the
holder of an existing
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<PAGE>
option affected thereby, adversely affect the option holders rights under such
option. The power of the Committee to construe and administer any options
granted under the 1994 Plan prior to the termination or suspension of the 1994
Plan nevertheless shall continue after such termination or during such
suspension.
During the fiscal year ended December 31, 1996, each of Messrs. Barrington
and Chluski were granted non-qualified stock options to purchase 5,000 shares
under the Company's 1994 Plan at an exercise price of $.425 per share (85% of
the market value at time of grant). All such options are exercisable for 10
years.
401(k) Retirement Plan
Effective July 1, 1995, the Company adopted the Lasergate Systems, Inc.
Profit Sharing 401(k) Plan (the "401k Plan") covering all eligible employees.
Effective January 1, 1996, the Company began using an employee leasing company
which offered a 401k plan to the Company's employees, at which time the
Company's employees ceased making contributions to the 401k Plan. The Company
made no contributions to the 401k Plan during the fiscal years ended 1995 and
1996.
Compensation and Audit Committees
As of January 1, 1996, the Compensation Committee and the Audit Committee
of the Board of Directors were each comprised of three non-employee Directors of
the Company. On June 28, 1996, three members of the Board of Directors resigned
as Directors of the Company (in connection with the redemption of the Company's
Series A Convertible Preferred Stock.) On the same day, Philip P. Signore, the
Company's Vice President and Chief Financial Officer was appointed to the Board
of Directors. As a result, there was only one non-employee Director on the Board
of Directors from June 28, 1996 until October 31, 1996. During this period, the
duties normally performed by the Audit Committee and the Compensation Committee
were assumed by the sole remaining non-employee Director, Frank W. Swacker. On
December 16, 1996, the Company established a new Audit Committee and a new
Compensation Committee. The Audit Committee currently consists of Messrs.
Barrington, Chluski and Swacker. The Compensation Committee currently consists
of Messrs. Barrington, Chluski and Swacker.
Compensation Committee Report
The Compensation Committee of the Board of Directors, which is now
comprised of three non-employee Directors of the Company, determines, to the
extent not fixed pursuant to the terms of applicable employment agreements, the
compensation of the Chief Executive Officer, other employee members of the Board
of Directors, and all other employees whose annual compensation exceeds $50,000.
The compensation levels of such Officers, Directors and employees are subject to
the approval of the Board of Directors.
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The Compensation Committee, being responsible for overseeing and approving
executive compensation and grants of stock options, is in a position to
appropriately balance the current cash compensation considerations with the
longer-range incentive-oriented growth outlook associated with stock options.
The main objectives of the Company's compensation structure include
rewarding individuals for their respective contributions to the Company's
performance, providing Executive Officers with a stake in the long-term success
of the Company and providing compensation programs and policies that will
attract and retain qualified executive personnel.
The Compensation Committee considers, among other things, the performance
of the Company, compensation levels in competing companies, individual
contributions to the Company and the length of service with the Company. The
Compensation Committee also reviews independent surveys of executive
compensation of similarly situated companies.
COMPENSATION COMMITTEE
Frank W. Swacker, Chairman
Bruce D. Barrington
John J. Chluski
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<PAGE>
PROPOSAL II
PROPOSAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
On March 13, 1997, the Board of Directors adopted a resolution approving a
proposal to amend Article III of the Company's Articles of Incorporation to
increase the number of shares of Common Stock which the Company is authorized to
issue from to 20,000,000 to 40,000,000. The Board of Directors determined that
such amendment is advisable and directed that the proposed amendment be
considered at the Meeting. The amendment will not affect the number of shares of
preferred stock authorized, which is 2,000,000 shares, par value $.03 per share.
Purposes and Effects of Increasing the Number of Authorized Shares of Common
Stock
The proposed amendment will increase the number of shares of Common Stock
which the Company is authorized to issue from 20,000,000 to 40,000,000. The
additional 20,000,000 shares will be a part of the existing class of Common
Stock and, if and when issued, will have the same rights and privileges as the
shares of Common Stock presently issued and outstanding. Each share of Common
Stock entitles the holder to one vote. The holders of Common Stock of the
Company are not entitled to preemptive rights or cumulative voting.
The following summary of the terms of the increase in the number of
authorized shares of Common Stock does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the portion of the proposed
amendment to Article III of the Company's Articles of Incorporation which is set
forth under the heading "Proposed New Article III to the Company's Articles of
Incorporation" in Exhibit A to this Proxy Statement.
The Board of Directors believes that the adoption of the proposed amendment
is advantageous to the Company and its shareholders. The Company currently
contemplates reserving 1,475,000 shares of the additional Common Stock which it
is seeking to authorize pursuant to this proposal for issuance upon the exercise
of options proposed to be granted to certain of its Executive Officers as set
forth in Proposal IV. Additionally, the Company will be obligated to reserve
247,667 shares for issuance upon exercise of options which have been granted
pursuant to the 1994 Plan subject to shareholder approval of Proposal III below.
During June 1996, the Company completed a private placement of 8,000 shares
of convertible Series F Preferred Stock to RBB Bank AG. The Company received
$5,172,500, net of commissions and offering expenses from the private placement
and used $300,000 of the proceeds to pay off the notes payable to related
parties and $1,000,000 to redeem 95,950 shares of Series A Convertible Preferred
Stock held by the same parties. The shares of Series A Convertible Preferred
Stock were potentially convertible into 2,636,126 shares of Common Stock had
they not been
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<PAGE>
redeemed. On January 27, 1997, 55 shares of the Series F Preferred Stock were
converted into 100,000 shares of Common Stock at a conversion price of $.55 per
share.
The Company will be obligated to reserve a sufficient number of shares of
Common Stock for issuance upon the conversion of the 7,945 outstanding shares of
Series F Preferred Stock upon approval of the proposed amendment. The number of
shares of Common Stock issuable upon conversion of the Series F Preferred Stock
will be determined by multiplying the number of shares being converted by 1,000
and dividing that factor by the conversion price. The conversion price will be
the average closing bid price of the Company's Common Stock for the five trading
days immediately preceding the date the Company receives written notice of
conversion; provided, however, that with respect to any conversion effected
prior to June 6, 1998, the conversion price will be reduced to an amount
calculated by multiplying the conversion price by .96, and with respect to any
conversion effected on or after June 6, 1998, the conversion price will be
reduced to an amount calculated by multiplying the conversion price by .94; and
provided further, that, in no event will the conversion price be less than $0.45
nor greater than $1.00. Based upon the foregoing, the Company will be required
to issue upon conversion of all of the remaining outstanding shares of Series F
a minimum of 7,945,000 shares of Common Stock (based on a 1.00 conversion price)
and a maximum of 17,655,556 shares of Common Stock (based on a .45 conversion
price). Of this amount, only 7,900,000 shares of Common Stock are currently
reserved for issuance.
If the issuances described above are made, the current shareholders of the
Company will experience a dilutive effect on their voting rights and, depending
upon the consideration received for such issuances, their shareholders' equity
in the Company.
Besides the issuances discussed above, the Company has no current plans,
understandings or agreements involving the issuance of any of the Common Stock
proposed to be authorized. The Company intends to seek and actively pursue a
possible relationship with a strategic partner, which might include an equity
investment in the Company and may review other financing opportunities. The
proposed amendment will provide additional authorized shares of Common Stock
that could be used from time to time, without further action or authorization by
the shareholders (except as may be required by law or by any stock exchange on
which the Company's securities may then be listed), for corporate purposes which
the Board of Directors may deem desirable, including, without limitation,
private or public financings, acquisitions, stock splits, stock dividends or
other distributions, stock grants, stock options and employee benefit plans.
The authority of the Board of Directors to issue Common Stock could also
potentially be used to discourage attempts by others to obtain control of the
Company through merger, tender offer, proxy contest or otherwise by making such
attempts more difficult or costly to achieve.
As of the Record Date, the Company had 7,462,061 shares of Common Stock
issued and 10,851,067 shares of Common Stock reserved for issuance upon the
exercise of certain options,
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warrants and the conversion of the Series F Preferred Stock. If the proposed
amendment is adopted, giving effect to the potential conversion of the shares of
Series F Preferred Stock into the 7,900,000 shares of Common Stock which have
been previously reserved for that purpose, there will be 21,686,872 authorized
shares of Common Stock that are not outstanding or reserved for issuance or held
in the treasury of the Company. Of this amount, 9,755,556 shares will be
reserved for issuance upon conversion of the Series F Preferred Stock into the
maximum number of shares of Common Stock discussed above, and 1,475,000 shares
will be reserved for issuance upon exercise of options which will be granted
upon shareholder approval of Proposals III and IV below. Assuming approval of
this Proposal II by the shareholders, this will leave 10,456,316 shares of
Common Stock authorized which are not outstanding or reserved for issuance.
No Dissenter's Rights
Under Florida law, shareholders are not entitled to dissenter's rights with
respect to the proposed Amendment.
The Board of Directors recommends that shareholders vote FOR this proposal.
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PROPOSAL III
PROPOSAL TO AMEND THE 1994 STOCK OPTION PLAN
The Company's 1994 Plan was adopted by the Board of Directors on February
5, 1994 and approved by the Shareholders at the 1994 Annual Meeting of
Shareholders. The 1994 Plan was amended by the Board of Directors on March 23,
1995 and September 30, 1996. As of May 29, 1997, no options had been exercised
and options to purchase 36,000 shares held by five optionees were outstanding at
a weighted average per share exercise price of $1.49; 22,333 shares are
available for future grants under the 1994 Plan.
Proposed Amendments
On March 13, 1997, the Board of Directors unanimously adopted and
recommended for submission to shareholders for their approval at the Meeting,
amendments to the 1994 Plan (the "Amendments") to:
(i) Increase the aggregate number of shares of Common Stock for which
options may be granted under the 1994 Plan from 58,333 shares to 900,000 shares.
The Board of Directors believes that the Plan has been instrumental in
attracting and retaining employees, Officers and consultants of outstanding
ability and that this objective will be furthered by providing additional shares
for future option grants; and
(ii) Delete the sections in the 1994 Plan that provide that (a) each
individual who becomes a non-employee Director shall on the date of the
Director's initial election and on the date of each re-election to the Board of
Directors be granted a non-qualified stock option to purchase 5,000 shares of
Common Stock for each year of the term to which the Director is elected or
re-elected at a price equal to 85% of the fair market value of the Common Stock
on the date of election or re-election determined in accordance with the
provision of the 1994 Plan; (b) such options be for a term of 10 years, and (c)
such options vest at the beginning of each year of such term provided that the
Director continues to serve in such capacity at the time of the scheduled
vesting. These provisions had been required in order for such option grants to
be exempt from the six-month short swing profit provisions of Section 16(b) of
the Act. Recent amendments to Rule 16b-3 promulgated under the Act no longer
require that the terms of such grants be specified in the Plan ("formula
grants") in order for the exemption to be available. The Board of Directors
believes that by deleting the provision for formula grants, the Company will
have greater flexibility in granting options to non-employee Directors which
will facilitate its attracting and retaining qualified non-employee Directors.
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The following is a description of the 1994 Plan which incorporates the
Amendments:
Shares Subject to the 1994 Plan
The maximum number of shares as to which options may be granted under the
1994 Plan (subject to adjustment as described below) is 58,333 shares of the
Company's Common Stock. One of the proposed amendments to the 1994 Plan is to
increase the number of shares for which options may be granted under the 1994
Plan to 900,000 shares. The closing bid price of the Company's Common Stock on
NASDAQ on June 10, 1997 was $0.375. Any shares subject to an option which for
any reason expires, is canceled, terminates unexercised or otherwise ceases to
be exercisable will again be available for grant under the 1994 Plan.
Administration
The 1994 Plan is to be administered by a committee (the "Committee") which
is required to consist of not less than two Directors, each of whom must be a
"non-employee Director" within the meaning of Rule 16b-3 promulgated under the
Act. The Board of Directors has designated the Compensation Committee of the
Board consisting of Messrs. Barrington, Chluski and Swacker to administer the
1994 Plan.
Eligibility
All employees (including Officers and Directors who are employees),
consultants (who are neither employees nor Directors) and outside Directors of
the Company or any of its subsidiaries are eligible to receive options under the
1994 Plan.
Option Grants
Options may be granted by the Committee to eligible employees or
consultants in such numbers and at such times as the Committee shall determine.
Option Contracts
Each grant of an option will be evidenced by a written contract between the
Company and the employee, consultant or outside Director receiving the grant,
containing such terms and conditions not inconsistent with the 1994 Plan as may
be determined by the Committee (the "Contract").
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Terms and Conditions of Options
The options granted under the 1994 Plan will be subject to, among other
things, the following terms and conditions:
(a) Options may be granted for terms determined by the Committee,
provided, however, that the term of an incentive stock option ("ISO") may not
exceed 10 years (five years if the option holder owns (or is deemed to own)
stock possessing more than 10% of the voting power of the Company).
(b) The exercise price for each option granted will be determined by
the Committee, provided, however, that the exercise price of an ISO may not be
less than the fair market value of the Common Stock on the date of grant (110%
in the case of an ISO granted to an optionee who owns (or is deemed to own) more
than 10% of the voting power of the Company). With respect to non-qualified
stock options ("NQSO") granted to employees and consultants, the exercise price
may not be less than 25% of the fair market value on the date of grant. The
exercise price of options is payable in full upon exercise or, if the Contract
permits, in installments. Payment of the exercise price of an option may be made
in cash, certified check, shares of Common Stock or any combination thereof,
depending on the terms of the Contract.
(c) Options may not be transferred other than by will or by the laws
of descent and distribution, and may be exercised during the option holder's
lifetime only by him or his legal representatives.
(d) With respect to options granted to employees, if the employment of
such employee is terminated for any reason other than death or a permanent and
total disability, the option may be exercised, to the extent exercisable by the
holder at the time of termination of employment, within three months thereafter,
but in no event after expiration of the term of the option. However, if such
employment was terminated either for cause or without the consent of the
Company, such option shall terminate immediately. In the case of the death of
the optionee while employed (or within three months after termination of
employment or within one year after termination of employment by reason of
disability), his executor, administrator or other 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. An optionee whose employment was terminated by
disability may exercise his 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.
(e) With respect to options granted to consultants, such options may
be exercised at any time during their term and shall not be affected by a change
in the optionee's relationship with the Company or its Subsidiaries.
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(f) The Company may withhold cash and/or shares of Common stock having
an aggregate value equal to the amount which the Company determines is necessary
to meet its obligation to withhold federal, state and local taxes 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 holder to pay the Company such amount, in cash, promptly upon
demand.
As to options granted to non-employee Directors:
(a) Prior to giving effect to the proposed amendments, NQSOs granted
to non- employee Directors vest at the beginning of each year of such term
provided that the Director continues to serve in such capacity at the time of
the scheduled vesting, has a term of ten years, and an exercise price equal to
85% of the fair market value of the Common Stock on the date of the grant and,
once vested will not be affected by a change in the optionee's relationship with
the Company or its Subsidiaries. The selection of Directors for participation
in, and the amount, the price or the timing of, non-employee Director Options
shall not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act or the rules thereunder. One of the proposed amendments to the 1994 Plan is
to delete the provisions described in this paragraph (a).
(b) The term of a non-employee Director option shall not be affected
by the death or Disability of the optionee. In such case, the option may be
exercised at any time during its term by his executor, administrator or other
person at the time entitled by law to the optionee's rights under such option.
(c) Options may not be transferred other than by will or by the laws
of descent and distribution, and may be exercised during the option holder's
lifetime only by the optionee or the optionee's legal representatives.
(d) The foregoing notwithstanding, in no case may options be exercised
later than the expiration date specified in the grant.
Adjustment in Event of Capital Changes
Appropriate adjustments shall be made in the number and kind of shares
available under the 1994 Plan, in the number and kind of shares subject to each
outstanding option, in the maximum number and kind of shares that may be granted
to any employee in any one calendar year and in the exercise prices of such
options in the event of any change in the Common Stock by reason of any stock
dividend, recapitalization, merger in which the Company is the surviving
corporation, split-up, combination or exchange of shares or the like.
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In the event of the Company's (a) liquidation or dissolution, (b) merger in
which the Company is not the surviving corporation or consolidation or (c) any
other capital reorganization in which more than 50% of the Company's Common
Stock are exchanged, any outstanding options shall terminate, unless otherwise
provided in the transaction.
Duration and Amendment of the Amended Plan
No option may be granted pursuant to the 1994 Plan after February 4, 2004.
The Board of Directors may at any time suspend, terminate or amend the Amended
Plan, provided, however, that, without the approval of the Company's
shareholders, no amendment may be made which would (a) increase the maximum
number of shares available for the grant of options (except the anti-dilution
adjustments described above), (b) otherwise materially increase the benefits
accruing to participants under the 1994 Plan or (c) change the eligibility
requirements for individuals who may receive options.
Federal Income Tax Treatment
The following is a general summary of the federal income tax consequences
under current tax law of NQSOs and ISOs. It does not purport to cover all of the
special rules, including special rules relating to optionees subject to Section
16(b) of the Exchange Act and the exercise of an option with previously-acquired
shares, or the state or local income or other tax consequences inherent in the
ownership and exercise of stock options and the ownership and disposition of the
underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of a NQSO or an ISO.
Upon the exercise of a NQSO, the optionee will recognize ordinary income in
an amount equal to the excess, if any, of the fair market value of the shares
acquired on the date of exercise over the exercise price thereof, and the
Company will generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired pursuant to the exercise of a NQSO,
he or she will recognize long-term or short-term capital gain or loss, depending
on the period for which the shares were held. Long-term capital gain is
generally subject to more favorable tax treatment than ordinary income or
short-term capital gain. Proposed legislation would treat long-term capital gain
even more favorably.
Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to him or her, the optionee will recognize
long-term capital gain or loss and the Company will not be entitled to a
deduction. However, if the optionee disposes of such shares within the required
holding period, all or a portion
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of the gain will be treated as ordinary income and the Company will generally be
entitled to deduct such amount.
In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an ISO, the excess of the fair market value of the shares over the
exercise price therefor is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative minimum tax purposes. If an 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 allowed as a credit
against the optionee's regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.
The Board of Directors recommends that shareholders vote FOR this proposal.
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PROPOSAL IV
PROPOSAL TO APPROVE GRANT OF OPTIONS TO EXECUTIVE OFFICERS
On March 13, 1997, the Board of Directors, with Ms. Soechtig abstaining
from the vote, granted a stock option to Ms. Soechtig, subject to shareholder
approval of this proposal. The option entitles Ms. Soechtig to purchase 575,000
shares of Common Stock, with 275,000 shares to vest on the date of the Meeting
and 300,000 shares to vest over three years - 100,000 on each December 31, 1997,
1998 and 1999. The exercise price per share shall be the average of the highest
and lowest sales prices on the day of the Meeting of the Common Stock of the
Company as reported by NASDAQ (the "Fair Market Value").
Additionally, on March 13, 1997, the Board of Directors, with Philip P.
Signore, abstaining from the vote in respect of the grant of stock option to Mr.
Signore, granted a non-qualified stock option to each of, Mr. Signore, Glenn W.
Phillips and James H. Moore, subject to shareholder approval of this proposal.
The options entitle Messrs. Signore, Phillips and Moore to each purchase 300,000
shares of Common Stock, with 100,000 shares to vest on the date of the
Shareholders Meeting and 200,000 shares to vest over three years - 66,667 on
each December 31, 1997 and 1998 and 66,666 on December 31, 1999. The exercise
price of the shares shall be the average of the mean between the highest bid and
the lowest ask prices of the five business days prior to the Shareholders
Meeting of the common stock of the Company as reported by NASDAQ. Assuming that
the Fair Market Value per share on the date of the Meeting is $.36 or less, all
of the options proposed to be granted hereunder will be incentive stock options.
If the Fair Market Value is greater than $.36, the number of options which will
be incentive stock options will be such number as results in the Fair Market
Value (as of the Meeting date) of the shares issuable upon exercise of the
incentive stock options held by any person which first become exerciseable in
any calendar year being $100,000. The balance of such options will be
non-qualified stock options.
The proposed grant to each of Ms. Soechtig and Messrs. Signore, Phillips
and Moore (the "Optionees") will be for a term of ten years. The option exercise
price may be paid in cash, by check or by any other form of consideration
permitted by law. Additionally, the Optionees were granted certain registration
rights with respect to the shares of Common Stock underlying such options.
In the event that the number of outstanding shares of Common Stock is
increased or decreased or changed into a different number or kind of shares or
securities by reason of any merger, share exchange, consolidation,
reorganization, recapitalization, reclassification, stock split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company, an adjustment will be made to the
remaining outstanding options so that the proportional interest of each of the
Optionees after such an event will be, to the extent practicable, the same as
before the event.
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The tax consequences to the Company and to the optionees with respect to
these options are the same as those described under the caption "Proposal to
Amend the 1994 Stock Option Plan" above with respect to non-qualified stock
options.
The Board of Directors recommends that shareholders vote FOR this proposal.
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MISCELLANEOUS
Voting Requirements
Directors are elected by a plurality of the votes cast at the Meeting at
which a quorum is present (Proposal I). The affirmative vote of the holders of a
majority of the votes cast at the Meeting at which a quorum is present will be
required to approve the amendment to the Company's Articles of Incorporation to
increase the number of authorized shares of Common Stock to 40,000,000 (Proposal
II), the amendments to the Company's 1994 Plan (Proposal III) and the grant of
options to certain of the Executive Officers (Proposal IV). Abstentions and
broker non-votes with respect to any matter are not considered cast with respect
to that matter.
Independent Auditors
The Audit Committee of the Board of Directors of the Company selected Grant
Thornton LLP to serve as the Company's independent auditors for the year ended
December 31, 1996 and for the year ending December 31, 1997. Representatives of
Grant Thornton LLP will be present at the Meeting.
Shareholder Proposals
From time to time shareholders may present proposals for consideration at a
meeting which may be proper subjects for inclusion in the proxy statement and
form of proxy related to that meeting. Shareholder proposals intended to be
included in the Company's proxy statement and form of proxy relating to the
Company's 1998 Annual Meeting of Shareholders must be received by the Company at
its principal offices, 28050 U.S. Highway North, Suite 502, Clearwater, Florida
34621 by February 2, 1998. Any such proposals, as well as any questions relating
thereto, should be directed to the Secretary of the Company at such address.
Additional Information
The cost of solicitation of Proxies, including the cost of reimbursing
banks, brokers and other nominees for forwarding Proxy solicitation material to
the beneficial owners of shares held of record by them and seeking instructions
from such beneficial owners, will be borne by the Company. The Company has
engaged McCormick & Pryor, Ltd. ("McCormick") to solicit proxies and has agreed
to pay McCormick a fee of $3,000 plus their accountable expenses in connection
with this solicitation. Proxies may be also solicited without extra compensation
by certain Officers and regular employees of the Company. Proxies may be
solicited by mail, and if determined to be necessary, by telephone, telegraph or
personal interview.
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Other Matters
The Board of Directors does not intend to bring before the Meeting any
matters other than those specifically described above and knows of no matters
other than the foregoing to come before the Meeting. If any other matters or
motions properly come before the Meeting, it is the intention of the persons
named in the accompanying Proxy to vote such Proxy in accordance with their
judgment on such matters or motions, including any matters dealing with the
conduct of the Meeting.
By Order of the Board of Directors,
PHILIP P. SIGNORE
Secretary
Clearwater, Florida
July ___, 1997
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LASERGATE SYSTEMS, INC.
ANNUAL MEETING OF SHAREHOLDERS - SEPTEMBER 5, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned, Jacqueline
E. Soechtig and Philip P. Signore and each of them, with full power of
substitution, to vote all shares of Common Stock of the undersigned in Lasergate
Systems, Inc. (the "Company") at the Annual Meeting of Shareholders of the
Company to be held at The Holiday Inn Clearwater Central, 20967 U.S. 19 North,
Clearwater, Florida on September 5, 1997, at 2:00 P.M., local time (the receipt
of Notice of which meeting and the Proxy Statement accompanying the same being
hereby acknowledged by the undersigned), or at any adjournments thereof, upon
the matters described in the Notice of Annual Meeting and Proxy Statement and
upon such other business as may properly come before such meeting or any
adjournments thereof, hereby revoking any proxies heretofore given.
Each properly executed proxy will be voted in accordance with the
specifications made on the reverse side hereof. If no specifications are made,
the shares represented by this proxy will be voted "FOR" the listed nominees,
"FOR" the approval of the amendment to the Company's Articles of Incorporation
to increase the number of shares of Common Stock, "FOR" the approval of the
amendments to the Company's 1994 Stock Option Plan and "FOR" the approval of the
grant of stock options to the Company's Executive Officers.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
A-1
<PAGE>
Please mark boxes |x| in blue or black ink.
Election of Directors:
FOR ALL NOMINEES |_| WITHHOLD AUTHORITY |_|
to vote for all nominees
(Bruce D. Barrington, John J. Chluski, Eric T. Jager and Philip P. Signore)
(INSTRUCTION: To withhold authority for any individual nominee, strike a line
through the nominee's name on the list above.)
Approval of an amendment to the Company's Articles of Incorporation increasing
the number of shares of Common Stock, $.03 par value, authorized for issuance
from 20,000,000 to 40,000,000 shares of Common Stock.
FOR |_| AGAINST |_| ABSTAIN |_|
Approval of amendments to the Company's 1994 Stock Option Plan to (i) increase
the number of shares of Common Stock which may be issued thereunder from 58,333
to 900,000 shares of Common Stock and (ii) eliminate the non-employee Director
formula option grants and certain provisions relating thereto currently set
forth in the Company's 1994 Stock Option Plan.
FOR |_| AGAINST |_| ABSTAIN |_|
Approval of the grant of options to certain of the Company's Executive Officers.
FOR |_| AGAINST |_| ABSTAIN |_|
NOTE: Please date and sign your name or names exactly as set
forth hereon. If signing as attorney, executor, administrator,
trustee or guardian, please indicate the capacity in which you
are acting. Proxies by corporations should be signed by a duly
authorized officer and should bear the corporate seal.
Dated: __________________________, 1997
-------------------------------------
-------------------------------------
Signature of Shareholder(s)
-------------------------------------
Print Name(s)
Please Sign and Return the Proxy Promptly in the Enclosed Envelope.
A-2
Exhibit A
---------
PROPOSED NEW ARTICLE III TO THE
ARTICLES OF INCORPORATION
OF
LASERGATE SYSTEMS, INC.
ARTICLE III. CAPITAL STOCK
--------------------------
The total number of shares of all classes of stock which the
Corporation has authority to issue is Forty Two Million (42,000,000), consisting
of Forty Million (40,000,000) shares of Common Stock, par value $.03 per share
(the "Common Stock"), and Two Million (2,000,000) shares of Preferred Stock, par
value $.03 per share (the "Preferred Stock"). All or any part of the Common
Stock may be paid for in cash, in property, in formulas, copyrights, patents,
trade names, equipment, or in labor or services at a fair valuation to be fixed
by the incorporators or by the Board of Directors at a meeting called for said
purpose. All stock when issued shall be non-assessable. The stockholders of the
Corporation shall not, solely by virtue of being stockholders, have preemptive
rights to acquire the Corporation's stock, including unissued or treasury shares
of the Corporation or securities of the Corporation convertible into or carrying
a right to subscribe to or acquire shares of the Corporation's stock. The
Preferred Stock shall be issuable in series with such designations, terms,
limitations and relative rights and preferences as may be fixed from time to
time by the Board of Directors.
The designations, terms, limitations and relative rights and
preferences of the shares of Common Stock and Preferred Stock (unless otherwise
fixed by the Board of Directors) are as follows:
(I) COMMON STOCK
1. Dividends. Subject to the prior and superior right of the
Preferred Stock, the holders of outstanding shares of Common Stock (the "Common
Stock Holders") shall be entitled to receive dividends as, when and in the
amount declared by the Board of Directors, out of any funds legally available
therefor.
2. Liquidation, Dissolution and Winding Up. Subject to the prior and
superior right of the Preferred Stock, in the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the Common Stock Holders shall be entitled to receive, out of
the net assets of the Corporation, after payment or provision for payment of the
debts and other liabilities of the Corporation, that portion of the remaining
funds to be distributed. Such funds shall be paid to the Common Stock Holders on
the basis of the number of shares of Common Stock held by each of them. Neither
the consolidation nor merger of the Corporation into
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or with any other corporation nor the sale or transfer by the Corporation of all
or any part of its assets shall be deemed a liquidation, dissolution or winding
up of the affairs of the Corporation within the meaning of the provisions of
this Section (a)(2).
3. Voting. Shares of Common Stock shall entitle the holder thereof
to one vote for each share held with respect to all matters voted on by the
stockholders of the Corporation.
4. Reverse Stock Split. Effective 12:01 a.m. on June 23, 1994, each
twelve (12) shares of Common Stock then issued shall be automatically
reclassified into one share of Common Stock of the Corporation. There shall be
no fractional shares issued. In lieu thereof, each fraction of a share that
would otherwise be issued to holders of record thereof shall be entitled to
receive scrip upon the request of such holders. At such time as any shareholder
has sufficient scrip equal to a full share, such scrip may be exchanged with the
Company for a full share.
(II) PREFERRED STOCK
1. Series. The shares of Preferred Stock may be divided into and
issued in one or more series, and each series shall be so designated so as to
distinguish the shares thereof from the shares of all other series. All shares
of Preferred Stock shall be identical except in respect of particulars which may
be fixed by the Board of Directors as hereinafter provided pursuant to authority
which is hereby expressly vested in the Board of Directors. Each share of a
series shall be identical in all respects with all other shares of such series,
except as to the date from which dividends thereon shall be cumulative on any
series as to which dividends are cumulative. Shares of Preferred Stock of any
series which have been retired in any manner, including shares redeemed or
reacquired by the Corporation and shares which have been converted into or
exchanged for shares of any other class, or any series of the same or any other
class shall have the status of authorized but unissued shares of Preferred Stock
and may be reissued as shares of the series of which they were originally a part
or may be issued as shares of a new series or any other series of the same
class.
2. Provisions. Before any shares of Preferred Stock of any series
shall be issued, the Board of Directors, pursuant to authority hereby expressly
vested in it, shall fix by resolution or resolutions the following provisions in
respect of the shares of each such series so far as the same are not
inconsistent with the provisions of this Article III applicable to all series of
Preferred Stock:
(a) the distinctive designations of such series and the number
of shares which shall constitute such series, which number may be increased
(except where otherwise provided by the Board of Directors in creating such
series) or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of Directors;
(b) the annual rate or amount of dividends, if any, payable on
shares of such series (which dividends would be payable in preference to any
dividends on Common Stock), whether such dividends shall be cumulative or
non-cumulative and the conditions upon which and/or the dates when such
dividends shall be payable;
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(c) whether the shares of such series shall be redeemable and,
if so, the terms and conditions of such redemption, including the time or times
when and the price or prices at which shares of such series may be redeemed;
(d) the amount, if any, payable on shares of such series in the
event of liquidation, dissolution or winding up of the affairs of the
Corporation;
(e) whether the shares of such series shall be convertible into
or exchangeable for shares of any other class, or any series of the same or any
other class, and, if so, the terms and conditions thereof, including the date or
dates when such shares shall be convertible into or exchangeable for shares of
any other class, or any series of the same or any other class, the price or
prices or the rate or rates at which shares such series shall be so convertible
or exchangeable, and the adjustments which shall be made, and the circumstances
in which such adjustments shall be made, in such conversion or exchange prices
or rates; and
(f) whether such series shall have any voting rights in
addition to those prescribed by law and, if so, the terms and conditions of
exercise of voting rights; and
(g) any other preferences and relative, participating, optional
or other special rights, and any qualifications, limitations and restrictions
thereof.
A. DESIGNATION OF THE SERIES F PREFERRED STOCK. There shall be a series
of Preferred Stock designated as "Series F Preferred Stock." Each share of such
series shall be referred to herein as a "Series F Share." The authorized number
of such Series F Shares is eight thousand (8,000).
1. Dividends. The holders of record of Series F Preferred Stock
shall be entitled to receive, when and if declared by the Board of Directors of
the Corporation, out of funds legally available therefor, dividends paid in
cash, stock or otherwise. When dividends become so payable, the Board of
Directors of the Corporation shall declare such dividends and cause them to be
paid, to the full extent of any funds legally available therefor. In the event
that the Corporation shall pay on the Corporation's Common Stock, $.03 par value
per share, any dividend, whether in cash, property or otherwise, the Corporation
shall pay a dividend on the Series F Shares in an amount per share which is
equal to that which holders of the Series F Shares would have been entitled had
they converted such shares into Common Stock immediately prior to the payment of
such dividend.
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding-up
of the Corporation, either voluntary or involuntary (a "Liquidation"), the
holders of shares of the Series F Preferred Stock then issued and outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders, whether from capital, surplus or earnings,
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before any payment shall be made to the holders of shares of the Common Stock or
upon any other series of Preferred Stock of the Corporation with a liquidation
preference subordinate to the liquidation preference of the Series F Preferred
Stock, and amount equal to one thousand dollars ($1,000) per share. If, upon any
Liquidation of the Corporation, the assets of the Corporation available for
distribution to its shareholders shall be insufficient to pay the holders of
shares of the Series F Preferred Stock and the holders of any other series of
Preferred Stock with liquidation preference equal to the liquidation preference
of the Series F Preferred Stock the full amounts to which they shall
respectively be entitled, the holders of shares of the Series F Preferred Stock
and the holders of any other series of Preferred Stock with a liquidation
preference equal to the liquidation preference of the Series F Preferred Stock
shall receive all of the assets of the Corporation available for distribution
and each such holder of shares of the Series F Preferred Stock and the holders
of any other series of Preferred Stock with a liquidation preference equal to
the liquidation preference of the Series F Preferred Stock shall share ratably
in any distribution in accordance with the amounts due such shareholders. After
payment shall have been made to the holders of shares of the Series F Preferred
Stock of the full amount to which they shall be entitled, as aforesaid, the
holders of shares of the Series F Preferred Stock shall be entitled to no
further distributions thereon and the holders of shares of the Common Stock and
of shares of any other series of stock of the Corporation shall be entitled to
share, according to their respective rights and preferences, in all remaining
assets of the Corporation available for distribution to its shareholders.
(b) A merger or consolidation of the Corporation with or into
any other corporation, or a sale, lease, exchange, or transfer of all or any
part of the assets of the Corporation which shall not in fact result in the
liquidation (in whole or in part) of the Corporation and the distribution of its
assets to its shareholders shall not be deemed to be a voluntary or involuntary
liquidation (in whole or in part), dissolution, or winding-up of the
Corporation.
3. Conversion of Series F Preferred Stock. The holders of Series F
Preferred Stock shall have the following conversion rights:
(a) Right to Convert. Each share of Series F Preferred Stock
shall be convertible, on the Conversion Dates and at the Conversion Prices set
forth below, into fully paid and nonassessable shares of Common Stock.
(b) Mechanics of Conversion. Each holder of Series F Preferred
Stock who desires to convert the same into shares of Common Stock shall provide
written notice ("Conversion Notice") via telecopy, hand delivery, or overnight
delivery service to the Corporation. The original Conversion Notice and the
certificate or certificates representing the Series F Preferred Stock for which
conversion is elected, shall be delivered to the Corporation by international
courier, duly endorsed. The date upon which a Conversion Notice is properly
received by the Corporation shall be a "Notice Date."
The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after the Notice Date, to such holder of Series F
Preferred Stock at the address of the holder on
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the stock books of the Corporation, a certificate or certificates for the number
of shares of Common Stock to which the holder shall be entitled as aforesaid;
provided that the original shares of Series F Preferred Stock to be converted
are received by the transfer agent or the Corporation within three business days
after the Notice Date and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock on such date. If
the original shares of Series F Preferred Stock to be converted are not received
by the transfer agent or the Corporation within three business days after the
Notice Date, the Conversion Notice shall become null and void.
(c) Conversion Dates. The Series F Preferred Stock shall become
convertible into shares of Common Stock at any time commencing forty-five (45)
days after the last day on which there is an original issuance of the Series F
Preferred Stock (the "Conversion Date").
(d) Conversion Price. Each share of Series F Preferred Stock
shall be convertible into the number of shares of Common Stock according to the
following formula:
N x 1,000
Conversion Price
N = the number of shares of the Series F Preferred Stock for which
conversion is being elected.
Conversion
Price = the average closing bid price of the Corporation's Common Stock
for the five (5) trading days immediately preceding the Notice
Date; provided, however, that with respect to any conversion
effected on or after June 6, 1997 but prior to June 6, 1998,
the Conversion Price shall be reduced to an amount calculated
by multiplying the Conversion Price by .96, and with respect to
any conversion effected on or after June 6, 1998, the
Conversion Price shall be reduced to an amount calculated by
multiplying the Conversion Price by .94; and provided further,
however, in no event shall the Conversion Price be less than
$0.45 nor greater than $1.00.
(e) Fractional Shares. No fractional share shall be issued upon
the conversion of any shares, share or fractional share of Series F Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of shares (or fractions thereof) of Series F Preferred Stock by a
holder thereof shall be aggregated for purposes of determining whether the
conversion would result in the issuance of any fractional share. If, after the
aforementioned aggregation, the conversion would result in the issuance of a
fraction of a share of Common Stock, the Corporation shall, in lieu of issuing
any fractional share, pay the holder otherwise entitled to such fraction a sum
in cash equal to the closing bid price of the Corporation's Common Stock on the
Notice Date Multiplied by such fraction.
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(f) Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series F Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all then outstanding shares of the Series F Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series F Preferred Stock, the Corporation will take such corporate action
as may be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(g) Adjustment to Conversion Price.
(i) If, prior to the conversion of all shares of Series
F Preferred Stock, the number of outstanding shares of Common Stock
is increased by a stock split, stock dividend, or other similar
event, the Conversion Price shall be proportionately reduced, or if
the number of outstanding shares of Common Stock is decreased by a
combination or reclassification of shares, or other similar event,
the Conversion Price shall be proportionately increased.
(ii) If, prior to the conversion of all shares of Series
F Preferred Stock, there shall be any merger, consolidation,
exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the
Corporation shall be changed into the same or a different number of
shares of the same or another class or classes of stock or
securities of the Corporation or another entity, then the holders of
Series F Preferred Stock shall thereafter have the right to purchase
and receive upon conversion of shares of Series F Preferred Stock,
upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Common Stock immediately theretofore
issuable upon conversion, such shares of stock and/or securities as
may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore purchasable
and receivable upon the conversion of shares of Series F Preferred
Stock held by such holders had such merger, consolidation, exchange
of shares, recapitalization or reorganization not taken place, and
in any such case appropriate provisions shall be made with respect
to the rights and interests of the holders of the Series F Preferred
Stock to the end that the provisions hereof (including, without
limitation, provisions for adjustment of the Conversion Price and of
the number of shares issuable upon conversion of the Series F
Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities
thereafter deliverable upon the exercise hereof. The Corporation
shall not effect any transaction described in this subsection unless
the resulting successor or acquiring entity (if not the Corporation)
assumes by written instrument the obligation to deliver to the
holders of the Series F Preferred Stock such shares of stock and/or
securities as, in accordance with the foregoing provisions, the
holders of the Series F Preferred Stock may be entitled to purchase.
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(iii) If any adjustment under this subsection would
create a fraction share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable upon
conversion shall be the next higher number of shares.
4. Redemption of Series F Preferred Stock.
(a) At any time on or after June 7, 1999, the Corporation may
redeem, at its option, from any source of funds legally available therefor, the
Series F Preferred Stock, as a whole. The Corporation shall effect such
redemption by paying in cash in exchange for each outstanding share of Series F
Preferred Stock a sum equal to $1.00 per share of Preferred Stock (the
"Redemption Price").
(b) At least 30 but no more than 40 days prior to the date
fixed for redemption pursuant hereto by the Corporation (the "Redemption Date"),
written notice of the redemption to be effected shall be transmitted by the
Corporation to each holder of record of outstanding Series F Shares (at the
close of business on the business day next preceding the day on which notice is
given), at the address last shown on the records of the Corporation for such
holder (the "Redemption Notice"). The Redemption Notice shall be mailed by the
Corporation to each holder via United States mail, first class postage or
international air mail postage, as applicable, prepaid, and the Corporation
shall transmit a copy of such notice to each holder via a recognized courier
service (such as Federal Express of DHL) that guarantees delivery of such notice
within a maximum of seven (7) days from deposit of such notice with such courier
service. The Redemption Notice shall specify the Redemption Date. On or after
the Redemption Date each holder of Series F Preferred Stock shall surrender to
the Corporation the certificate or certificates representing such shares at the
principal executive office of the Corporation and in the manner designated in
the Redemption Notice, and thereupon the Redemption Price of such share shall be
payable to the order of the person whose name appears on such certificate as the
owner thereof and each surrendered certificate shall be canceled.
(c) Any shares of Preferred Stock specified for redemption
shall continue to be convertible during the period from the date of the
Redemption Notice through the day before the Redemption Date in accordance with
the conversion provisions hereof.
5. Voting. Except as otherwise provided by the General Corporation
Law of the State of Florida, the holders of the Series F Preferred Stock shall
have no voting power whatsoever, and no holder of Series F Preferred Stock shall
vote or otherwise participate in any proceeding in which action shall be taken
by the Corporation or the shareholders thereof or be entitled to notification as
to any meeting of the Board of Directors or the shareholders.
6. Protective Provisions. So long as shares of Series F Preferred
Stock are outstanding, the Corporation shall not without first obtaining the
approval (by vote or written
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consent, as provided by law) of the holders of at least a majority of the then
outstanding shares of Series F Preferred Stock:
(a) alter or change the rights, preferences or privileges of
the shares of Series F Preferred Stock so as to affect adversely the Series F
Preferred Stock;
(b) create any new class or series of stock having a preference
over the Series F Preferred Stock with respect to dividends, to payments upon
Liquidation (as provided for in Section B of this Designation) or to redemption;
or
(c) do any act or thing not authorized or contemplated by this
Designation which would result in taxation of the holders of shares of the
Series F Preferred Stock under Section 305 of the Internal Revenue Code of 1986,
as amended (or any comparable provision of the Internal Revenue Code as
hereafter from time to time amended).
7. Status of Converted Stock. In the event any shares of Series F
Preferred Stock shall be converted as contemplated by this Designation, the
shares so converted shall be canceled, shall return to the status of authorized
but unissued Preferred Stock of no designated class or series, and shall not be
issuable by the Corporation as Series F Preferred Stock.
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