SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] 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
IFS INTERNATIONAL, 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:
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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:____________________________________________________________
Copies of all communications to:
Donald G. Johnson , Jr., Esq.
Pollet Law
10900 Wilshire Boulevard, Suite 500
Los Angeles, CA 90024
<PAGE>
February 1, 1999
To Our Stockholders:
The Annual Meeting of Stockholders of IFS International, Inc., a
Delaware corporation (the "Company") will be held at 10:00 a.m. on Tuesday,
March 16, 1999, at the offices of the Company located at 300 Jordan Road, Troy,
New York.
Enclosed is the Company's Notice of the Annual Meeting of Stockholders,
Proxy Statement and Proxy Card. The enclosed Proxy Statement and Proxy Card
contain details concerning the business to come before the meeting, including
(i) the approval of the 1998 IFS International, Inc. Stock Plan; (ii) amendment
of the Certificate of Designation regarding the Company's Series A Convertible
Preferred Stock to make the Series A Convertible Preferred Stock automatically
convert to Common Stock on April 1, 1999, instead of February 21, 2002 and to
change the Conversion Number from 1 share of Common Stock to 1.1 shares of
Common Stock; (iii) approval of changing the name of the Company to "IFS
Holdings, Inc."; (iv) the ratification of the selection of Urbach Kahn & Werlin
PC as the Company's independent auditors for the fiscal year ending April 30,
1999; and (v) election of Directors of the Company. You should note that the
Board of Directors of the Company unanimously recommend a vote "FOR" each of the
aforesaid proposals.
If you were a record holder of the Company's common stock on January
29, 1999, you are eligible to vote with respect to these matters, either
personally at the meeting or by proxy. It is important that your shares be
voted, whether or not you plan to attend the meeting, to ensure the presence of
a quorum. For that reason we request that you sign and return the Proxy Card
now. A postage paid envelope is enclosed for your convenience in replying. If
you attend the meeting and wish to vote your shares personally, you may revoke
your proxy.
We look forward to reviewing the activities of the Company with you at
the meeting. We hope you can be with us.
Sincerely,
/s/David L. Hodge
-----------------
David L. Hodge
President and Chief Executive Officer
<PAGE>
IFS INTERNATIONAL, INC.
Rensselaer Technology Park
300 Jordan Road
Troy, New York 12180
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 16, 1999
To the Stockholders of IFS International, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of IFS International, Inc., a Delaware corporation (the "Company"),
will be held at 10:00 a.m. local time, on Tuesday, March 16, 1999, at the
offices of the Company located at 300 Jordan Road, Troy, New York, to consider
and to vote on the following matters as more fully described in the accompanying
Proxy Statement:
To approve the 1998 IFS International, Inc. Stock Plan;
To approve amendment of the Certificate of Designation regarding the
Company's Series A Preferred Stock to make the Series A Preferred Stock
automatically convert to Common Stock on April 1, 1999, instead of
February 21, 2002 and to change the Conversion Number from 1 share of
Common Stock to 1.1 shares of Common Stock;
To approve changing the name of the Company to "IFS Holdings, Inc.";
To ratify the selection of Urbach Kahn & Werlin PC as the Company's
independent auditors for the fiscal year ending April 30, 1999;
To elect eight Directors of the Company; and
To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on January 29,
1999, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Meeting and any adjourned meetings thereof.
All stockholders are cordially invited to attend the Meeting in person.
Your vote is important. Please fill in, date, sign and return the enclosed proxy
in the return envelope furnished for that purpose as promptly as possible,
whether or not you plan to attend the Meeting. Your promptness in returning the
proxy will assist in the expeditious and orderly processing of the proxies and
will assist in ensuring that a quorum is present or represented. If you return
your proxy, you may nevertheless attend the Meeting and vote your shares in
person if you wish. If you later desire to revoke your proxy for any reason, you
may do so in the manner described in the attached Proxy Statement.
By Order of the Board of Directors
/s/John P. Singleton
-----------------------------------
John P. Singleton
Chairman of the Board
Dated: February 1, 1999
<PAGE>
IFS INTERNATIONAL, INC.
Rensselaer Technology Park
300 Jordan Road
Troy, New York 12180
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 16, 1999
VOTING AND PROXY
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of IFS International, Inc. (the "Company") for use at
An Annual Meeting of Stockholders to be held at 10:00 a.m., local time, on
Tuesday, March 16, 1999, at the principal executive offices of the Company
located at 300 Jordan Road, Troy, New York (the "Meeting"), and any adjournments
thereof. When such proxy is properly executed, dated and returned, the shares it
represents will be voted in accordance with any directions noted thereon. If no
specification is indicated, the shares will be voted "FOR" (i) approval of the
1998 IFS International, Inc. Stock Plan, (ii) amendment of the Certificate of
Designation regarding the Company's Series A Convertible Preferred Stock to make
the Series A Convertible Preferred Stock automatically convert to Common Stock
on April 1, 1999, instead of February 21, 2002 and to change the Conversion
Number from 1 share of Common Stock to 1.1 shares of Common Stock; (iii)
approval of changing the corporate name to "IFS Holdings Inc"; (iv) the
ratification of the selection of Urbach Kahn & Werlin PC as the Company's
independent auditors for the fiscal year ending April 30, 1999; and, (v) for the
named nominees to the Company's Board of Directors and for the terms indicated.
Any holder of record giving a proxy has the power to revoke it at any time
before it is voted by written notice to the Secretary of the Company, by
issuance of a later dated proxy, or by voting in person at the meeting.
At the close of business on January 29, 1999, the record date for determining
stockholders entitled to notice of and to vote at the Meeting, the total number
of shares of the Company's Common Stock and Series A Convertible Preferred Stock
(the "Preferred Stock") outstanding was 1,336,424 shares and 1,271,019 shares,
respectively. The Common Stock and Preferred Stock are the only classes of
securities of the Company entitled to vote, each share being entitled to one
non-cumulative vote. Only stockholders of record as of the close of business on
January 29, 1999, will be entitled to vote. A majority of the aggregate number
of shares of Common Stock and Preferred Stock outstanding and entitled to vote
must be present at the Meeting in person or by proxy in order to constitute a
quorum for the transaction of business. Abstentions and broker nonvotes will be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Assuming the presence of a quorum, a plurality of the
aggregate votes cast by the holders of Common Stock and Preferred Stock voting
as a single group is required for the election of the named nominees to the
Board of Directors. A vote of a majority of the shares of Common Stock and
Preferred Stock outstanding, voting by class, is required to pass upon each of
the proposals which require amendment of the Company's Articles of Incorporation
(Proposals 2 and 3). A vote of a majority of the shares of Common Stock present
and voting, in person or by proxy, at the Meeting and a vote of a majority of
the shares of Preferred Stock present and voting, in person or by proxy, at the
Meeting is required to pass upon each of the other matters presented.
Abstentions with respect to shares present and voting, in person or by proxy, at
the Meeting will be counted in tabulations of the votes cast, except that broker
nonvotes will not be counted. "Broker nonvotes" are proxies received from
brokers who, in the absence of specific voting instructions from beneficial
owners of shares held in brokerage name, have declined to vote such shares in
those instances where discretionary voting by brokers is permitted.
A list of stockholders entitled to vote at the Meeting will be available at the
Company's offices, 300 Jordan Road, Troy, New York for a period of ten days
prior to the Meeting and at the Meeting itself for examination by any
stockholder.
The Company will pay the expenses of soliciting proxies for the Meeting,
including the cost of preparing, assembling, and mailing the proxy solicitation
materials. Proxies may be solicited personally, or by mail or by telephone, by
directors, officers and regular employees of the Company who will not be
additionally compensated therefor, or by a proxy solicitation agent who is
compensated . The Company has engaged Shareholder Communications Corporation, 17
State Street, 28th Floor, New York, NY 10004, a proxy solicitation agent, to
solicit proxies on behalf of the Board of Directors. The estimated cost of such
services is $11,000. All expenses of preparing and soliciting such proxies will
be paid by the Company. It is anticipated that this Proxy Statement and
accompanying Proxy Card will be mailed on or shortly after February 1, 1999, to
all stockholders entitled to vote at the Meeting.
PROPOSAL NO. 1
APPROVAL OF 1998 IFS INTERNATIONAL, INC. STOCK PLAN
The stockholders are being asked to approve the 1998 IFS International, Inc.
Stock Plan (the "Plan", or the "1998 Plan") which was approved by the Board of
Directors on May 12, 1998. The purpose of the Plan is to provide the Company
with a vehicle to attract, compensate and motivate selected Eligible Persons (as
such persons are defined below), and to appropriately compensate them for their
efforts, by creating a broad-based stock plan which will enable the Company, in
its sole discretion and from time to time, to offer to or provide such Eligible
Persons with incentives or inducements in the form of Awards (as such term is
defined below), thereby affording such persons with an opportunity to share in
potential capital appreciation in the common stock, par value $0.001, of the
Company ("Common Stock"). If approved, a total of 1,400,000 shares of Common
Stock ("Plan Shares") will be available for issuance under the Plan. (See note 7
to Principal Stockholders table.)
The Company presently has two option plans: the 1996 Stock Option Plan (the
"1996 Plan") and the 1988 Stock Option Plan (the "1988 Plan"). It is intended
that the 1998 Plan will replace the 1996 Plan, the last broad-based plan
approved by the stockholders of the Company. If the Plan is approved by the
stockholders, pursuant to prior Board of Directors' action, the Company will
offer to the holders of the 1996 Plan Options the opportunity to exchange their
1996 Plan Options for 1998 Plan Options.
As of January 29, 1999, the Company had 300,000 shares subject to the existing
1996 Stock Option Plan. In connection with such succession described above, the
Company has authorized the exchange of the options to purchase 300,000 shares at
an exercise price of $1.25 for all of the 1996 outstanding Options under the
1996 Plan. The foregoing is conditioned on the 1996 Option holder exchanging the
outstanding 1996 Options for new Options. Because the exercise price of the 1996
Options are generally higher than the 1998 Plan Options granted, it is likely
all of the 1996 Options will be exchanged. If any 1996 Plan options are not
exchanged, then the 1996 Plan will be continued so long as the options remain
outstanding, then terminated; no additional options would be granted under the
1996 Plan after approval of the 1998 Plan by the stockholders. The Company has
granted replacement options with an exercise price of $1.25 under the 1996 Plan
to be issued to all holders of 1996 options in the event the 1998 Plan is not
approved by the stockholders.
As of January 29, 1999, there were commitments to grant Options for the purchase
of 520,100 shares of Common Stock under the 1998 Plan. Of these shares, 300,000
are shares subject to Options to be exchanged for outstanding 1996 Options at
lower exercise prices, as described above, including 110,000 Options to be
issued to officers and directors. In September, 1998, the Company granted,
subject to Plan approval by stockholders, additional Options to purchase 220,100
shares under the 1998 Plan, with exercise prices ranging from $1.25 to $2.81, of
which options to purchase 25,000 shares have been granted to one director. If
the 1998 Plan is not approved by the stockholders, options to purchase 300,000
shares under the 1996 plan will remain outstanding, and the options to purchase
220,100 shares under the 1998 Plan will be outstanding and will become
non-qualified options. Options to purchase an additional minimum of 270,000,
150,000, and 150,000 shares under the 1998 Plan will be required to fulfill the
Company's obligations to David Hodge, Frank Pascuito, and Simon Theobald,
respectively, under their existing employment agreements.
The 1988 Plan provides for the issuance of options to purchase Common Stock to
key employees, officers, directors and consultants. As of December 31, 1998,
there were options outstanding to purchase 216,140 shares of Common Stock under
the 1988 Plan. All options are exercisable at prices ranging from $.66 to $4.88
per share and expire in various years between 1999 and 2008. As of January 14,
1999, there were no options available for grant to purchase shares of Common
Stock under the 1988 Plan. The approval of the 1998 Plan is not intended to have
any effect upon the 1988 Plan.
See: EXECUTIVE COMPENSATION - Stock Option Plans and - Employment Agreements.
Holders of proxies solicited by this Proxy Statement will vote the proxies
received by them as directed on the proxy card or, if no direction is made, in
favor of the approval of the Plan. The Plan must be approved by the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Annual Meeting, assuming that a
quorum is present.
The following description of the Plan is qualified in its entirety by reference
to the full text of the Plan, as well as the terms and conditions of any Award
Agreement governing the grant of an Award under the Plan. A copy of the full
text of the Plan is attached as Appendix 1 to this Proxy Statement.
Who May Receive Grants of Awards Under the Plan
Any Eligible Person may be granted an Award under the Plan. The term "Eligible
Person" means any person who, at the applicable time of the grant or award of an
Award under the Plan, is an employee, a director and/or a consultant or advisor
to the Company, or of any parent or subsidiary of the Company. The term "Awards"
refers to the following types of grants under the Plan: (i) an outright grant of
shares of Common Stock ("Grant Shares"), and (ii) the grant of options
("Options") to purchase shares of Common Stock ("Option Shares").
Grant Shares may be either fully vested, or subject to vesting or other
forfeiture conditions (in which latter event such Grant Shares are referred to,
until such time as such conditions lapse, as "Forfeitable Grant Shares").
Options granted may be either (i) "Incentive Options," which qualify under
Section 422 of the Internal Revenue Code of 1986 (the "Code") for preferable
income tax treatment, and are specifically granted as Incentive Options under
the Plan; or (ii) options not so eligible for such preferable income tax
treatment ("Non-Qualified Options"). Should a Recipient exercise an Option
through the tender of shares of Common Stock, certain Non-Qualified Options
known as "Replacement Options" may be granted entitling the Recipient to
purchase a number of Plan Shares equal to the number of shares of Common Stock
tendered in payment.
Incentive Options may only be granted to persons who are employees or who
provide bona fide consulting services to the Company or such Affiliate. No Award
may be granted to a consultant in connection with the provision of any services
incident to the raising of capital for the Company. An Eligible Person
ordinarily will be a natural person, such as in the case of employees, officers
or directors; however, an Eligible Person may also be an entity or fiduciary in
certain cases, such as a consultant or advisor which is a corporation,
partnership or limited liability company. Each Eligible Person who, at a
particular time, receives the grant of an Award under the Plan, is referred to
as a "Recipient."
As of January 14, 1999, the Company had a total of 99 employees, officers and
directors, all of whom are eligible to receive grants of Awards under the Plan.
Common Stock Available for Issuance Under Plan; Adjustments
A total of 1,400,000 shares of Common Stock are authorized for issuance under
the Plan. Any shares of Common Stock which are reserved for issuance pursuant to
the terms of a pending Award, but are not issued because the terms and
conditions of the Award are not satisfied, or any shares of Common Stock which
are used by Recipients to pay all or part of the purchase price for an Award,
may again be used for Awards under the Plan. In the event of any change in the
Common Stock by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like,
the Plan Administrator will, in its sole discretion, make appropriate
adjustments to the number of shares of Common Stock that may be issued under the
Plan or in connection with any Award.
Administration of Plan
The Plan is administered exclusively by the Plan Administrator, which is defined
under the Plan as the Board of Directors of the Company or, to the extent
authorized pursuant to the Plan, a committee of two (2) or more members of the
Board or certain designated Director-Officers. The Board has designated the
Compensation Committee of the Board as the Plan Administrator. Subject to the
terms and conditions of the Plan, the Plan Administrator is empowered to
determine which persons are Eligible Persons; which Eligible Persons will be
recipients of Awards; the type of the Award; the time or times at which such
Awards shall be granted; the number of shares of Common Stock subject to each
Award; the time and manner in which each Award which is an Option may be
exercised, including the exercise price and option period; whether an Option or
Grant Shares are subject to vesting conditions; and all other terms and
conditions of Awards. The Plan Administrator has sole discretion to interpret
and administer the Plan, and its decisions regarding the Plan are final.
Amendment and Termination of Plan; Modification of Awards
The Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time and from time to time by the Board of Directors. Neither
the Board of Directors nor the Plan Administrator may materially impair any
outstanding Awards without the express consent of the Recipient. The Plan
Administrator may also modify the terms of outstanding Options or the vesting
conditions placed upon Forfeitable Grant Shares set forth in the Award
Agreement. However, such modifications may not impair the Recipient's rights
under the Award Agreement without the express consent of the Recipient.
Description of Awards
As stated above, the Plan Administrator is authorized, in general, to grant or
award to Eligible Persons either (i) an outright grant of Grant Shares, or (ii)
the grant of an Option to purchase Option Shares. Awards under the Plan will be
evidenced by certificates or agreements evidencing or confirming the grant of
the Award in the form prescribed from time-to-time by the Plan Administrator
("Award Agreements"), namely, (i) a "Stock Award Agreement" in the case of the
grant of Grant Shares, and (ii) a "Stock Option Certificate" in the case of the
grant of an Option. Each Award Agreement will contain more specific terms and
conditions pertaining to the grant of Awards to the Recipient as the Plan
Administrator, in its sole discretion, may determine to be appropriate. The
Company reserves the right, in its sole discretion, to evidence or confirm the
grant of an Award in a written employment or consulting agreement in lieu of the
form of any of the foregoing Award Agreements.
Grant Shares
Grant Shares may be awarded in the following different circumstances:
1. As a "bonus" or "reward" for services previously rendered and
otherwise compensated. This type of Award is comparable to a gift
since the Company has no legal obligation to grant the Grant
Shares, and would do so only in its discretion to recognize
extraordinary services.
2. As "compensation" for the previous performance or future
performance of services or attainment of goals. This type of Award
would commonly occur in a situation in which the Recipient enters
into an agreement with the Company to be paid Grant Shares (in lieu
of cash) for the provision of past or future services.
3. In "consideration" for the payment of a purchase price for the
Grant Shares. This alternative would ordinarily apply where the
Recipient desires to purchase the Common Stock (usually Forfeitable
Grant Shares at a discounted value as discussed below), and the
Company is willing to sell the Common Stock to the Recipient.
Where payment is required to purchase the Grant Shares, the purchase price shall
be such price (including at a premium or discount to the current fair market
value of the Common Stock) as determined by the Plan Administrator in its sole
discretion.
Forfeitable Grant Shares
Once Grant Shares are issued, the Plan Administrator reserves the right to
subject or condition the issuance of such shares to the satisfaction of certain
vesting conditions based on services to be provided by the Recipient after the
shares have been issued or the attainment of specific goals by the Recipient
after the shares have been issued. These vesting conditions must be expressly
set forth in the Award Agreement at the date of grant of the underlying Award.
In the event the Recipient does not satisfy the vesting conditions, the Company
may require the Recipient to forfeit any unvested Grant Shares. The Plan uses
the term "Forfeitable Grant Shares" to refer to Grant Shares which are subject
to such vesting conditions. There generally are no limitations on vesting
conditions the Plan Administrator may impose on Forfeitable Grant Shares.
In addition, whenever there is a forfeiture of Forfeitable Grant Shares, the
Company must pay the Recipient, within ninety (90) days of the forfeiture, an
amount equal to the higher of: (i) the Recipient's "original cost" to purchase
or acquire the forfeited Grant Shares; or (ii) the "book value" of such
forfeited Grant Shares as determined by the Company's independent certified
public accountant. Any payment for the forfeited Grant Shares shall be either in
cash or, if applicable, by cancellation of any debt originally incurred by the
Recipient in order to purchase the forfeited Grant Shares from the Company.
If the Plan Authority attaches vesting conditions to Forfeitable Grant Shares
which are based upon continued performance of services to the Company, then the
following special rules apply (unless otherwise expressly provided in the
underlying Award Agreement) in the event of Termination Of Recipient:
1. Unvested Forfeitable Grant Shares shall immediately vest (i.e.,
become non-forfeitable) in the event such termination: (A) is made
by the Recipient and constitutes Termination By Recipient For Good
Reason (as such term is defined in the Plan); or (B) such
termination is made by the Company but does not constitute
Termination By Company For Cause (as such term is defined in the
Plan). In these situations, the Recipient will be deemed fully
vested with respect to these previously unvested Forfeitable Grant
Shares.
2. Unvested Forfeitable Grant Shares shall become immediately
forfeitable in the event such termination: (A) is made by the
Recipient but does not constitute Termination By Recipient For Good
Reason; or (B) such termination is made by the Company and
constitutes Termination By Company For Cause.
Options
An "option" is the right, which continues over a period of time, to acquire
property on terms agreed upon by the parties. In the case of the Plan, it is the
right to acquire, over a period of time, shares of Common Stock, or Option
Shares, in exchange for the purchase price determined by the Company. The grant
of an Option to purchase Option Shares is a variation of the last (third)
alternative presented above, except that the purchase period extends for a
significantly longer period.
The Plan authorizes the issuance of two types of Options, namely, Incentive
Options and Non-Qualified Options. Unless expressly characterized upon grant as
an Incentive Option, all Options are considered to be Non-Qualified Options.
Incentive Options result, in general, in more favorable income tax consequences
than Non-Qualified Options (see "Certain Federal Income Tax Consequences"
below); however, they also contain more restrictive terms than those of
Non-Qualified Options.
The exercise or "Option Price" to purchase Option Shares shall be such price
(including at a premium or discount to the current fair market value of the
Common Stock) as determined by the Plan Administrator in its sole discretion. In
certain circumstances, however, the Option Price cannot be less than certain
amounts. For example, an Incentive Option cannot have an Option Price which is
less than 100% of the fair market value of the Common Stock on the date the
Incentive Option is granted (unless the Incentive Option is granted to a
Recipient who owns more than 10% of the total voting securities of the Company
on the date the Option is granted, in which case such Option Price cannot be
less than 110% of the fair market value of the Common Stock).
Options must be exercised during the period of time specified in the Award
Agreement. No Option may be exercised more than ten (10) years after the date
the Option is granted. An Incentive Option granted to a Recipient who owns more
than 10% of the total voting securities of the Company on the date the Option is
granted must be exercised no later than five (5) years after the date of grant.
Vesting of Options
The term "vest" means that a person has acquired absolute ownership in the right
to acquire property. In the case of a Recipient of an Option, the right to
exercise the Option in order to purchase the Common Stock may not be fully
vested at the time of grant of the Option. For example, the Plan Administrator
has the right to attach certain conditions to the Option, such as requiring the
Recipient to continue to provide services to the Company for a period of time or
to attain specified goals, before the right to exercise the Option will vest.
These "vesting conditions" must be expressly set forth in the Award Agreement.
In the event the Recipient does not satisfy the vesting conditions, the
Recipient will not be entitled to exercise the Option. There generally are no
limitations on vesting conditions the Plan Administrator may impose on Options.
If the Plan Authority attaches vesting conditions to an Option which are based
upon continued performance of services to the Company, then the following
special rules apply (unless otherwise expressly provided in the Award Agreement)
in the event of Termination of Recipient (as such term is defined in the Plan):
1. The expiration date for vested Options shall be the following
applicable date if earlier than the expiration date specified in
the Option:
A. Thirty (30) days after the effective date of Termination
Of Recipient in the event such termination: (i) is made by
the Recipient and does not constitute Termination By
Recipient For Good Reason (as such term is defined in the
Plan); or (ii) such termination is made by the Company and
constitutes Termination By Company For Cause (as such term
is defined in the Plan) other than death or Disability of
the Recipient (as the term "Disability" is defined in the
Plan); or
B. Six (6) months after the effective date of Termination Of
Recipient in the event such termination: (i) is made by
the Recipient and constitutes Termination By Recipient For
Good Reason; (ii) such termination is made by the Company
but does not constitute Termination By Company For Cause;
or (iii) such termination is made by the Company by reason
of the death or Disability of the Recipient.
2. Unvested Options shall immediately vest in the event the
termination: (A) is made by the Recipient and constitutes
Termination By Recipient For Good Reason; or (B) the termination is
made by the Company but does not constitute Termination By Company
For Cause. In these situations, the Recipient will be deemed fully
vested with respect to these previously unvested Options.
3. The expiration date for unvested Options shall be upon Termination
Of Recipient if earlier than the expiration date specified in the
Option in the event the termination: (A) is made by the Recipient
but does not constitute Termination By Recipient For Good Reason;
or (B) the termination is made by the Company and constitutes
Termination By Company For Cause. In these situations, the
expiration date is immediately accelerated so that the Recipient
will effectively lose the Recipient's prospective right to exercise
these unvested Options.
Payment Terms for Grant Shares or Options
The Recipient shall purchase the Grant Shares, or exercise the Option, by
delivery of payment (where payment is required) in cash. The Plan Administrator
retains the right to require the Recipient to also deliver a Recipient's
Representative's Letter from an independent investment advisor. The Recipient's
Representative's Letter confirms that the Recipient's independent investment
advisor has reviewed the merits of the Award as an investment by the Recipient,
and such investment is suitable for the Recipient and he or she can bear the
risks of the investment. The Plan Administrator also retains the right, in its
sole discretion, to permit Grant Shares or Option Shares to be purchased by: (i)
the delivery of other shares of the Common Stock; (ii) the surrender or
relinquishment of rights to shares of the Common Stock; (iii) a reduction in the
amount of any Company liability to a Recipient; (iv) the delivery of a secured
full-recourse promissory note; or (v) a combination of the foregoing.
Assignment
Unless expressly provided in the applicable underlying Award Agreement, a
Recipient may not "Dispose" of Forfeitable Grant Shares or Options without the
prior written consent of the Company, which consent the Company may withhold in
its sole and absolute discretion. Since Grant Shares (or Forfeitable Grant
Shares which have become vested) do not remain subject to further vesting
conditions, there is no prohibition against their assignment once they are
issued (or become vested). The term "Dispose" means any transfer which directly
or indirectly changes legal or beneficial ownership of such applicable Award,
whether voluntary or by operation of law, or with or without the payment or
provision of consideration. This would include, for example: (i) a sale,
assignment, bequest or gift; (ii) any transaction that creates or grants an
option, warrant, or right to obtain an interest in the applicable Award; (iii)
any transaction that creates a form of joint ownership in the applicable Award
between the Recipient and one or more other persons; (iv) any Disposition of the
applicable Award to a creditor of the Recipient, including the hypothecation,
encumbrance or pledge thereof, or an attachment or imposition of a lien; or (v)
any distribution of the applicable Award by a Recipient which is an entity to
its stockholders, partners, co-venturers or members, as the case may be, or any
distribution thereof by a Recipient which is a fiduciary such as a trustee or
custodian to its settlers or beneficiaries.
United States Federal Income Tax Consequences For Persons Who Are Citizens Or
Residents Of The United States
The following summary discusses certain of the United States federal income tax
consequences to persons who are citizens or residents of the United States
associated with: (i) the grant of an Award under the Plan; (ii) the exercise of
an Option granted under the Plan; and (iii) the disposition of Shares issued
under the Plan.
Options
Non-Qualified Options
If the Recipient receives a grant of a Non-Qualified Option, the Recipient, if a
United States citizen or resident (a "U.S. Taxpayer"), will be taxed pursuant to
the rules of Section 83 of the Code. Non-Qualified Options are ordinarily known,
for tax purposes, as "non-qualified" or "non-statutory" options. Non-Qualified
Options are identified by the Plan as any Option other than an Option expressly
designated as an Incentive Option. Incentive Options are subject to different
and, in general, more favorable income tax consequences than Non-Qualified
Options (see "Incentive Options" below).
Under the rules of Section 83, the grant of non-statutory options to a Recipient
who is a U.S. Taxpayer is taxable at date of exercise, as opposed to date of
grant, unless certain technical requirements are satisfied. Upon the exercise of
a Non-Qualified Option, the Recipient generally must recognize compensation
income (which is taxable at ordinary income tax rates) equal to the "spread"
between the exercise price and the fair market value of the Common Stock on the
date of exercise.
In order to be taxable at date of grant pursuant to an election under Section
83(b) of the Code, the Non-Qualified Options must have a "readily ascertainable
fair market value," which is defined by the Internal Revenue Service as being an
option which, among other things, is actively traded on an established
securities market. The Company's stock is publicly traded. Accordingly,
Non-Qualified Options granted under the Plan may be taxable at date of grant.
Thus, Section 83(b) of the Code which, as discussed below, is available to
accelerate the timing of taxation of Forfeitable Grant Shares, is also available
to accelerate the taxation of Non-Qualified Options.
The amount and character of any gain or loss realized on a subsequent
disposition of Option Shares by the Recipient of a Non-Qualified Option who is a
U.S. Taxpayer generally would depend on, among other things, the length of time
such shares were held by the Recipient.
Incentive Options
Pursuant to Section 422 of the Code, if a Recipient who is a U.S. Taxpayer
receives the grant of an Incentive Option, the Recipient will not be considered
to have received taxable income upon either the grant of the Incentive Option or
its exercise (as is ordinarily the case with a Non-Qualified Option). Instead,
the Recipient will generally recognize taxable income (presumably as a capital
gain) upon the sale or other taxable disposition of the Option Shares acquired
by the exercise of the Incentive Option, on the full amount of the difference
between the amount realized and the option exercise price paid. Any loss upon
the taxable disposition of the Option Shares generally would be characterized as
a capital loss.
There are several special rules that a Recipient of Incentive Options who is a
U.S. Taxpayer must satisfy in order to receive the special income tax benefits
afforded under Section 422 of the Code. Failure to satisfy these conditions will
result in a partial or entire loss of the intended income tax benefits. These
rules are as follows:
1. Only the first $100,000 in Incentive Options granted in any one year will
be eligible for the more favorable tax treatment afforded to options
granted under the incentive stock option tax rules. Option Shares granted
in excess of this threshold amount shall be taxed as Non-Qualified Options.
2. Should the Recipient sell or dispose of the Option Shares acquired by
exercise of the Incentive Option within either: (a) two years from the date
of grant of the Incentive Option, or (b) one year from the date of transfer
of the Option Shares to the Recipient upon the Recipient's exercise of the
Incentive Option (a "Disqualifying Disposition"), the Recipient will be
required to include the gain realized as ordinary income to the extent of
the lesser of: (i) the fair market value of the Option Shares minus the
option price; or (ii) the amount realized minus the option price. Any gain
in excess of these amounts, presumably, will be treated as capital gain.
Furthermore, Option Shares that the Recipient acquires by surrendering
Option Shares previously acquired through the exercise of an Incentive
Option will be treated as having been acquired by the Recipient, for
purposes of the one and two year holding periods, as of the date the
Incentive Option for the surrendered Option Shares was originally
exercised.
3. The Recipient must be an employee of the Company (or a subsidiary) within
the three-month period prior to the Recipient's exercise of the Incentive
Option in order to be eligible for Incentive Option income tax benefits.
This period is extended to one year in the event the Recipient is
permanently and totally disabled under Section 22(e)(3) of the Code, which
defines such disability as when the Recipient is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which condition has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. Upon exercise of an Incentive
Option by a Recipient who is a U.S. Taxpayer, the alternative minimum
taxable income of the Recipient will be determined as if such Incentive
Option were a Non-Qualified Option in the manner described above.
Accordingly, the Recipient will be required to include as alternative
minimum taxable income the excess (if any) of the value of the Option
Shares received upon exercise as of the date such Option Shares are vested
over the amount paid for such shares. The Recipient would then be required
to pay the greater of the Recipient's regular or alternative minimum tax
liability computed with respect to such year. If the Option Shares so
acquired are Disposed of as part of a Disqualifying Disposition, there
should be no "item of tax preference" arising from the exercise of the
Incentive Option.
Grant Shares
For purposes of the following discussion pertaining to federal income taxes, the
term "Non-forfeitable Grant Shares" shall refer to Grant Shares which are not
deemed to be Forfeitable Grant Shares under the terms of the Plan.
Non-forfeitable Grant Shares
If a Recipient who is a U.S. Taxpayer receives a grant of Non-forfeitable Grant
Shares, the Recipient will be taxed pursuant to the rules of Section 83 of the
Code and the interpretive regulations thereto promulgated by the Internal
Revenue Service. Pursuant to such rule, the Recipient must recognize
compensation income (which is taxable at ordinary income tax rates) equal to the
"spread" between the fair market value of the Non-forfeitable Grant Shares on
the date of grant and any consideration paid by the Recipient for such shares.
In the case where the Recipient receives Non-forfeitable Grant Shares as
"compensation" for the previous performance or future performance of services or
attainment of goals, the grant of such shares will be deemed payment of ordinary
compensation to the Recipient for the performance of such services. Accordingly,
the Recipient will recognize as compensation income an amount equal to the full
fair market value of such Non-forfeitable Grant Shares on the date of grant.
In the case where the Recipient receives Non-forfeitable Grant Shares as a
"bonus" or "reward" for services previously rendered and compensated, the
Recipient will not be required to pay any consideration for such shares, and
thus there will be no offset for consideration paid. Accordingly, the Recipient
will recognize as compensation income an amount equal to the full fair market
value of such Non-forfeitable Grant Shares on the date of grant.
In the case where the Recipient purchases Non-forfeitable Grant Shares, the
Recipient will be required to pay consideration for such shares, and there will
be an offset for consideration paid. Accordingly, the Recipient will recognize
as ordinary compensation income an amount equal to the full difference between
the fair market value of such Grant Shares on the date of grant and the
consideration paid by the Recipient for such shares.
Forfeitable Grant Shares
If a Recipient who is a U.S. Taxpayer receives a grant of Forfeitable Grant
Shares, the Recipient will also be taxed pursuant to the rules of Section 83 of
the Code. As stated above, the general tax rule is that the Recipient generally
must recognize compensation income (taxable at ordinary income tax rates) equal
to the "spread" between the fair market value of the Forfeitable Grant Shares on
the date of grant and any consideration paid by the Recipient for such shares.
However, since the Forfeitable Grant Shares are subject to certain vesting
conditions - that is, the Recipient's right to enjoy the full benefits of
ownership of the Forfeitable Grant Shares is conditioned on rendering further
services or is subject to other conditions that constitute a substantial risk of
forfeiture - then the Recipient would not recognize compensation income until
such time as the applicable conditions lapse or are satisfied, at which time the
Recipient would recognize ordinary compensation income equal to the "spread"
between the fair market value of the Forfeitable Grant Shares as of the date of
lapse or satisfaction of the underlying conditions and the amount of any
consideration paid by the recipient. For example, if the Forfeitable Grant
Shares are subject to the condition that the total number of such shares granted
will only vest one-third each year of continued provision of services by the
Recipient, then the Recipient will recognize one-third of the total number of
Forfeitable Grant Shares granted as taxable income on each of the one-, two- and
three-year anniversaries of the date of grant, based upon the respective fair
market value of such shares as of such vesting dates.
In the event of such vesting conditions, the Recipient may elect, pursuant to
the special (but somewhat complicated) rules of Section 83(b) of the Code, to
recognize compensation income at the time of grant of the Forfeitable Grant
Shares, even though the vesting conditions have not lapsed or been satisfied
(see "Section 83(b) Election" below).
The amount and character of any gain or loss realized on a subsequent
disposition of the Forfeitable Grant Shares by the Recipient generally would
depend on, among other things, whether such disposition occurred before or after
such Forfeitable Grant Shares vested, whether an election under Section 83(b) of
the Code with respect to such shares had been made, and the length of time such
shares were held by the Recipient.
Section 83(b) Election
In the event of the imposition of vesting conditions on Forfeitable Grant Shares
acquired by exercise of a Non-Qualified Option, the Recipient may elect,
pursuant to the special (but somewhat complicated) rules of Section 83(b) of the
Code, to recognize compensation income at the time of the grant of such
Forfeitable Grant Shares, even though the vesting conditions have not lapsed or
been satisfied. Thus, if the Recipient anticipates an increase in the fair
market value of such shares, the Recipient may accelerate the date of taxation
to the date of grant of the Forfeitable Grant Shares in order to limit the taxes
the Recipient pays to the spread at the date of grant. This may make sense in
the event the Recipient intends or is required to hold such shares for a long
period of time. Please note that the Section 83(b) election must be made within
30 days of receipt, as the case may be, of the Forfeitable Grant Shares, and
generally cannot be revoked. Please also note that, if the election is made, and
the Recipient subsequently forfeits the Forfeitable Grant Shares before they are
vested, the Recipient will not be eligible to recognize any loss on the
forfeiture except for the amount, if any, actually paid by the Recipient for
such shares. Due to the complexity of Section 83(b) of the Code, any Recipient
who receives Forfeitable Grant Shares should consult with such Recipient's tax
advisor regarding the advisability of making an election under Section 83(b).
Payment With Other Shares of Common Stock Owned by Recipient
The Recipient may, if permitted by the Plan Administrator or the terms of the
underlying Award Agreement, pay for Grant Shares or Option Shares through
delivery of already-owned shares of Common Stock in lieu of cash. In this case
differing tax consequences may result. In published rulings and proposed
regulations, the Internal Revenue Service has taken the position that: (i) to
the extent an equivalent number of shares is acquired, the Recipient will
recognize no gain and the Recipient's basis in the shares acquired upon such
exercise will be equal to the Recipient's basis in the surrendered shares; and
(ii) any additional shares acquired upon such exercise are compensation to the
Recipient taxable under the rules described above and the Recipient's basis in
any such additional shares is their then fair market value.
Determination of Fair Market Value of Shares
As discussed above, taxation of Plan Shares is based upon the fair market value
of such shares at certain applicable dates. The appropriate fair market value
will be determined in accordance with the terms of the Plan.
In the event the Plan Shares constitute Non-forfeitable Grant Shares, the Plan
provides that the applicable fair market value of such shares, assuming the
Common Stock is then traded on the NASDAQ National Market System, will be equal
to the last sales price of the Common Stock on NASDAQ as of the applicable
valuation date.
In the event the Plan Shares constitute Forfeitable Grant Shares, the Plan
provides that the applicable fair market value of such shares will not be equal
to the NASDAQ trading price for the Common Stock since the Shares are not
immediately tradable. In this case the Recipient may discount the fair market
value from the NASDAQ trading price to reflect the impaired value of the
underlying vesting conditions. The amount of the impairment will, in general,
reflect the term and restrictions imposed by such vesting conditions. Pursuant
to the terms of the Plan, the Plan Administrator reserves the right in its sole
discretion to determine what the amount of the appropriate discount would be for
the Company's financial and income tax purposes, including the determination of
the basis for its compensation deduction for financial and income tax purposes
and, accordingly, the amount of payroll taxes the Company should withhold from
the Recipient.
The foregoing is only a summary of the effect of United States federal income
taxation upon Recipients who are U.S. Taxpayers, and does not purport to be a
complete description of such federal income consequences. The foregoing does not
address tax consequences attributable to the death of a Recipient, nor does it
discuss the income tax laws of any municipality, state or foreign country in
which the Recipient may reside.
The Board of Directors unanimously recommends that you vote "FOR" the proposal
(item 1 on the Proxy Card) approving the 1998 IFS International, Inc. Stock
Plan. Holders of proxies solicited by this Proxy Statement will vote the proxies
received by them as directed on the proxy card or, if no direction is made, in
favor of the proposed approval of the 1998 IFS International, Inc. Stock Plan.
Approval of the Stock Plan will require the affirmative vote of the holders of a
majority of the shares of Common Stock and the Preferred Stock, voting by class,
present in person or represented by proxy and casting votes with respect to this
proposal.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT OF CERTIFICATE OF DETERMINATION CONCERNING SERIES A
PREFERRED STOCK.
The stockholders are being asked to approve amendment of the Certificate of
Designation regarding the Company's Series A Convertible Preferred Stock (the
Preferred Stock") to make the Preferred Stock automatically convert to Common
Stock on April 1, 1999, instead of February 21, 2002 and to change the
Conversion Number from 1 share of Common Stock to 1.1 shares of Common Stock. A
copy of the proposed amendment is attached hereto as Appendix 2.
The Company believes that it would be beneficial to the Company and to
prospective investors to convert the Preferred Stock into Common Stock because
it would simplify the Company's capitalization structure. Historically, two
separate classes of stock has caused confusion in the investment community, and
this confusion has hindered corporate financing activity. The Company believes
that combining the two classes into one would prevent this confusion.
The change of the Conversion Number from 1 share to 1.1 shares will have the
effect of causing the holders of the Preferred Stock to receive approximately
ten percent more stock upon conversion than they would under the present terms.
This increase is intended as an incentive to the holders of the Preferred Stock
to vote in favor of this proposal.
The Preferred stockholders currently have a liquidation preference of $5 per
share. Upon mandatory conversion, the holders of the Preferred Stock will
receive Common Stock and would no longer have any preferential liquidation
rights. In all matters other than the election of directors, the affirmative
vote of the Preferred stockholders is required for stockholder approval of any
corporate action. Upon mandatory conversion, the former holders of the Preferred
Stock would no longer have any special voting rights. The Certificate of
Designation regarding the Preferred Stock also contains provisions which adjust
the Conversion Number if the Company issues certain securities below the
conversion price of $5. Upon mandatory conversion, the former holders of the
Preferred Stock would no longer have the benefit of this dilution protection.
The Company believes the benefits of eliminating dual stock classes outweighs
the benefit of these rights.
In the recent past, the price differential in the public market between the
Common Stock and the Preferred Stock has sometimes been small, and in some
instances, the Common Stock has traded at slightly higher prices than the
Preferred Stock.
The Board of Directors unanimously recommends that you vote "FOR" the proposal
(item 2 on the Proxy Card) approving amendment of the Certificate of
Determination concerning the Series A Preferred Stock. Holders of proxies
solicited by this Proxy Statement will vote the proxies received by them as
directed on the proxy card or, if no direction is made, in favor of the proposed
approval of the amendment of the Certificate of Determination concerning the
Series A Preferred Stock. The amendment must be approved by the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock and the
Preferred Stock, voting by class.
PROPOSAL NO. 3
APPROVAL OF CHANGE OF CORPORATE NAME TO IFS HOLDINGS, INC.
The stockholders are being asked to approve the change of the name of the
Company to IFS Holdings, Inc., which was approved by the Board of Directors on
August 18, 1998. The purpose of the name change is to establish a clear
distinction between parent and subsidiary. The change would require amendment of
the Corporation's Certificate of Incorporation, as set forth in the proposed
amendment which is attached hereto as Appendix 3.
The Board of Directors unanimously recommends that you vote "FOR" the proposal
(item 3 on the Proxy Card) approving the change of the Company's name to IFS
Holdings Inc. Holders of proxies solicited by this Proxy Statement will vote the
proxies received by them as directed on the proxy card or, if no direction is
made, in favor of the proposed approval of the change of the Company's name to
IFS Holdings Inc. The amendment must be approved by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock and the
Preferred Stock, voting by class.
PROPOSAL NO. 4
APPROVAL OF THE SELECTION OF URBACH KAHN & WERLIN PC AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING APRIL 30, 1999.
The Board of Directors has selected Urbach Kahn & Werlin PC to audit the
accounts of the Company for the fiscal year ending April 30, 1999. Such firm,
which has served as the Company's independent auditor since April 1993, has
reported to the Company that none of its members has any direct financial
interest or material indirect financial interest in the Company.
A representative of Urbach Kahn & Werlin PC is expected to attend the meeting
and will be afforded the opportunity to make a statement and/or respond to
appropriate questions from stockholders.
The Board of Directors unanimously recommends that you vote "FOR" the proposal
(item 4 on the Proxy Card) approving the ratification of Urbach Kahn & Werlin PC
as the Company's independent auditors for the fiscal year ending April 30, 1999.
Holders of proxies solicited by this Proxy Statement will vote the proxies
received by them as directed on the proxy card or, if no direction is made, in
favor of the proposed approval of the ratification of Urbach Kahn & Werlin PC as
the Company's independent auditors. The ratification must be approved by the
affirmative vote of the holders of a majority of the shares of Common Stock and
the Preferred Stock, voting by class, present in person or represented by proxy
and casting votes with respect to this proposal.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Common Stock and Preferred Stock as of January 14, 1999, by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the outstanding Common Stock and Preferred Stock, (ii) each director of the
Company, (iii) each Named Officer, and, (iv) all directors and executive
officers as a group. Except as otherwise indicated, the Company believes that
the beneficial owners of the Common Stock and Preferred Stock listed below,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable.
The table below does not reflect the number of shares of Common Stock which may
be acquired by an individual upon conversion of Preferred Stock which such
person may own.
Name and Address of Number Of Shares Percentage
Beneficial Owner Title of Class Beneficially Owned of Class
- ----------------------- ---------------- -------------------- ----------
Frank A. Pascuito.................Common 375,938 (1) 24.6%
Rensselaer Technology Park
300 Jordan Road
Troy, NY 12180
Simon J. Theobald.................Common 62,484 (2) 4.5%
Little Elms, 12 Green Lane,
Croxley Green, Rickmansworth,
Hertfordshire, WD3 3HR England
Arnold Wells......................Common 10,500 (3) .8%
1100 Madison Avenue
New York, NY 10028
John P. Singleton.................Common 60,000 (3) 4.5%
4331 Rosecliff Drive Preferred 11,000 .9%
Charlotte, NC 28277
DuWayne J. Peterson...............Common 42,700 (3) 3.2%
225 South Lake Ave.
Pasadena, Ca. 91101
David L. Hodge....................Common 24,205 (4) 1.8%
300 Jordan Road Preferred 5,000 .4%
Troy, NY 12180
Per Olof Ezelius..................Common 55,738 (5) 4.5%
Nine Woodlawn Green Preferred 87,094 6.9%
Charlotte, NC 28217
John Shahda.......................Common 150,000 11.2%
30 S. Pearl Street
Albany, NY 12207
C. Rex Welton.....................Common 60,000 4.5%
P. O. Box 6127
Charlotte, NC 28207-0001
All directors, executive officers, and known 5%
or more shareholders as a group
(9 persons).......................Common 841,565 (6) (7) 53.1%
Preferred 103,094 8.1%
- --------
(1) Includes 189,307 shares issuable upon exercise of stock options.
(2) Includes 62,464 shares issuable upon exercise of stock options.
(3) Includes 10,000 shares issuable upon exercise of stock options.
(4) Includes 19,162 shares issuable upon exercise of stock options.
(5) Includes 30,738 shares issuable upon exercise of stock options.
(6) Includes 346,714 shares issuable upon exercise of stock options.
(7) The above table does not include any options which may be issued pursuant
to the approval of the 1998 Stock Plan.
ELECTION OF DIRECTORS
Eight directors are to be elected at the Meeting. The nominees proposed by the
Board of Directors are listed below. Information Concerning Nominees The
following table sets forth the positions and offices presently held with the
Company by each nominee, his age
and his tenure as a director:
Positions Presently Held Director
Name Age with the Company Since
- ---------------- ----- -------------------------------------------- --------
Frank A. Pascuito....42 Executive Vice President and Director 1989
David L. Hodge.......60 President, Chief Executive Officer and Director 1997
Simon J. Theobald....35 Senior Vice President of Worldwide Sales & 1994
Marketing and Director
Arnold Wells.........78 Director 1986
John P. Singleton....61 Chairman of the Board of Directors 1997
DuWayne J. Peterson..66 Director 1997
Per Olof Ezelius.....49 Director 1998
C. Rex Welton........65 Director 1998
Frank A. Pascuito is currently Executive Vice President and a director. Mr.
Pascuito was the Chief Executive Officer and Chairman of the Board of the
Company from 1989 to 1998. Mr. Pascuito co-founded the Company's predecessor
company, IFS International, Inc. (formerly named Avant-Garde Computer Systems,
Inc.), a New York corporation engaged in the development and marketing of
software (the "Predecessor"), in 1981 and served as its President until November
1987 and as its Vice President of Product Planning until 1989. Prior to 1981, he
was employed by NCR Corporation's ATM software development team. As a consultant
to NCR in 1979, he assisted in the development and performed the installation of
the first on-line/off-line ATM system for NCR in the United States. Mr. Pascuito
has over ten years of operating and marketing experience in EFT system design,
sales and service. Mr. Pascuito is a graduate of the State University of New
York at Potsdam with a B.S. degree in Computer Science. He is active in several
area organizations dealing with technology, software, and world trade.
David L. Hodge has been President and CEO of the Company since February 1998.
Mr. Hodge has been a director of the Company since September 1997. Mr. Hodge is
a graduate of West Point, and has over 30 years experience in software
development. His last position was vice president in charge of product
development for the Cable and Broad band Solutions Group of Cincinnati Bell
Information Systems (CBIS). Prior to CBIS, Mr. Hodge held various senior
management positions at Ernst & Young, CBS/Newtrend, Anacomp and Great Western
Bank. Notable projects completed by Mr. Hodge include the development and
delivery for production of the client/server-based Precedent 2000 system
currently used to provide customer care and billing services to a large segment
of the Telecommunications personal communication systems (PCS) market, a
client/server based Centrex provisioning system for British Telecom in the
United Kingdom and several products for the banking industry for advanced
imaging and document management. In addition to his technical management
responsibilities at CBIS, Mr. Hodge led initial CBIS efforts to attain ISO 9000
compliance. This initiative led to the ISO 9000 certification of a major
international data system serving British Telecom.
Simon J. Theobald has been a director of the Company since December 1994 and
Executive Vice President of IFS International, Inc. (New York Corporation) since
October 1998. Previously, Mr. Theobald served as Managing Director of Europe,
Middle East and Africa ("EMEA") since July, 1997. From 1986 to April 1992, he
was employed by Applied Communications Inc., a subsidiary of Transaction Systems
Architects, Inc. Mr. Theobald has more than fifteen years experience in the
electronic funds transfer industry. Mr. Theobald is a graduate of De-Havilland
College with qualifications in computer studies and technology.
Arnold Wells has been a director of the Company since 1986. Since 1976, Mr.
Wells has been a private investor and consultant in the health and
communications fields. Mr. Wells organized Wells Television (subsequently named
Wells National Services). In 1978, Mr. Wells formed WellsArt Limited, a company
which is engaged in the publishing and licensing work of prominent artists. Mr.
Wells is a graduate of Western Reserve University with a B.A. degree.
John P. Singleton has been a director of the Company since April 1997, and
Chairman of the Board of Directors since December, 1998. In July 1997 he was
appointed Chairman of its Executive Committee. . From 1992 until 1995, Mr.
Singleton was General Manager, Business Development of IBM/Integrated Systems
Solution Corporation. From 1982 to 1992, he held several positions with Security
Pacific Corporation ranging from Senior Vice President Central Information Group
to Vice Chairman and Chief Operating Officer and member of the Office of the
Chairman. Mr. Singleton is a graduate of Arizona State University with a B.S.
degree in Business Management.
DuWayne J. Peterson has been a director of the Company since July 1997. Mr.
Peterson is President of DuWayne Peterson Associates, a consulting firm
specializing in the effective management of information technology. Prior to
forming his firm in 1991, he held the position of Executive Vice President,
Operations, Systems and Telecommunications at Merrill Lynch. Mr. Peterson holds
a B.S. degree from M.I.T. and an MBA from UCLA.
Per Olof Ezelius has been a director of the Company since May 1998. Mr. Ezelius
has held the office of President and CEO of NCI since October 1992. Since
starting with NCI in 1986 where he launched the European Sales operation, Mr.
Ezelius has also held positions of Vice President of Worldwide sales and Chief
Operating Officer. Prior to NCI, Mr. Ezelius held the position of Vice President
of Marketing and Project Management for Inter Innovation AB in Stockholm,
Sweden. Mr. Ezelius started his career in 1971 with systems design and
application software development for the first generation of programmable branch
automation systems.
C. Rex Welton has been a director of the Company since December, 1998. Until his
recent retirement, Mr. Welton was employed as the President of Parnell-Martin
Company, LLC, a family-owned plumbing wholesale company located in Charlotte,
North Carolina. He continues as a director of that company as well as of Park
Meridian Bank and First LandMark, USA, a real estate development company, both
of which are located in Charlotte, North Carolina.
<PAGE>
Identification of Executive Officers (Excludes Executive Officers who are also
Directors)
Name Age Position(s) Principal Occupation
- ------------------ --- -------------- ---------------------------------------
Carmen A. Pascuito 39 Controller Carmen A. Pascuito has been Secretary
and Secretary of the Company since December 1996 and
its Controller since 1989. Mr. Pascuito
joined the Predecessor in 1985 as a
staff accountant and became its
Controller in 1988. Mr. Pascuito is a
graduate of Siena College with a B.B.A.
degree in Accounting.
Frank A. Pascuito and Carmen A. Pascuito are brothers.
Executive officers are elected annually by the Company's Board of Directors to
hold office until the first meeting of the Company's Board of Directors
following the next annual meeting of stockholders and until their successors are
chosen and qualified.
Information Concerning the Board
The Board of Directors held 7 meetings during the year ended April 30, 1998.
The Company has appointed an audit committee consisting of Directors Arnold
Wells, John P. Singleton, and DuWayne J. Peterson. John P. Singleton and DuWayne
Peterson are independent directors.
The Company has also appointed an executive committee, a compensation committee,
an acquisition committee, a sales and marketing committee, and a strategic
planning committee. The members of the executive committee are Frank A.
Pascuito, David L. Hodge, DuWayne J. Peterson, and John P. Singleton. The
members of the compensation committee are David L. Hodge, DuWayne J. Peterson,
and John P. Singleton. The members of the acquisition committee are Frank A.
Pascuito, John P. Singleton, Simon J. Theobald, and Per Olof Ezelius. The sales
and marketing committee consists of Simon J. Theobald, C. Rex Welton, and Per
Olof Ezelius. The members of the strategic planning committee are Simon J.
Theobald, John P. Singleton, Per Olof Ezelius, and Frank A. Pascuito.
The Company does not have a nominating committee, charged with the search for
and recommendation to the Company's Board of Directors of potential nominees for
the Company's Board of Directors positions. These functions are performed by the
Company's Board of Directors as a whole.
Reporting Delinquencies
Section 16(a) of the Securities Exchange Act of 1934 ("Exchange Act") requires
the Company's officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than 10% stockholders are required by regulations promulgated under the Exchange
Act to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,or written
representations from certain reporting persons that no Forms 5 were required for
those persons, the Company believes that during the fiscal year ended April
30, 1998, no officer, director or greater than 10% beneficial owner was late
with his filings other than Mr. John Shahda, who was late in filing his Form 3.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued by the Company or its subsidiary for services rendered during the fiscal
years ended April 30, 1998, 1997 and 1996 by its Chief Executive Officer and
each of its executive officers whose compensation exceeded $100,000 during its
fiscal year end April 30, 1998.
SUMMARY COMPENSATION TABLE
----Annual Compensation---- --Long-Term--
Compensation
Other
Annual Securities
Name and Fiscal Compen- Underlying
Principal Position Year Salary Bonus sation Option(s)
- ------------------ -------- ------ ------ --------- ----------
David Hodge................1998 $41,538 $ - $10,500(1) 60,000
President and CEO
Frank Pascuito.............1998 114,810 50,000 - 18,722
Executive Vice President 1997 94,061(2) 50,305 - 87,485
1996 88,000(2) - - -
Charles Caserta............1998 119,759 - - 18,723
Former Vice President 1997 102,132(3) 70,984 - 92,463
of Business Development 1996 90,794(3) - - -
Simon Theobald.............1998 206,408 - - 15,000
Executive Vice President 1997 183,790 - - 25,000
1996 106,436 - - -
Per Olof Ezelius...........1998 55,767 - 100,000 18,000
President and CEO/NCI 1997 - - - -
1996 - - - -
- --------
(1) Amount in Other Annual Compensation represents amounts paid for board member
fees prior to appointment as President and CEO.
(2) Does not include accrued interest of $2,367 and $5,706 for the fiscal years
ended April 30, 1997, 1996, respectively, for salaries earned but deferred. The
interest rate on such deferred salaries was 12% per annum.
See "Certain Relationships and Related Transactions."
(3) Does not include accrued interest of $2,899 and $6,862 for the fiscal years
ended April 30, 1997, 1996, respectively, for salaries earned but deferred. The
interest rate on such deferred salaries was 12% per annum.
See " Certain Relationships and Related Transactions."
The following table sets forth all grants of stock options to each of
the named executive officers of the Company during the fiscal year ended April
30, 1998.
<PAGE>
Option Grants in Fiscal Year Ended April 30, 1998
Number of
Shares % of Total
of Common Stock Options
Underlying Granted to
Options Employees in Per Share Expiration
Name Granted Fiscal Year Exercise Price Date
- -------------------- --------------- ------------ -------------- ----------
Frank A. Pascuito........13,722 4.2 % $4.88 02/03/08
Charles J. Caserta(1)....13,723 4.2 % $4.88 02/03/08
David L. Hodge(2)........10,000 3.1 % $1.51 09/09/07
David L. Hodge(2)........30,000 9.3 % $1.51 03/09/08
David L. Hodge(2)........20,000 6.2 % $1.51 03/08/08
Simon J. Theobald(2).....15,000 4.6 % $1.51 02/23/08
Per Olof Ezelius(2)......18,000 5.6 % $1.51 01/29/08
(1) Pursuant to the Termination Agreement with Mr.Caserta described in Certain
Relationships and Certain Transactions, these options were subsequently
surrendered.
(2) If the 1998 Plan is approved by the stockholders, these options may be
replaced by 1998 Plan options. If the 1998 Plan is not approved by the
stockholders, these options will be replaced by non-plan options or
modified 1996 Plan options. In each case, the exercise price of these
options will be reduced to $1.25.
The following table sets forth information as to options exercised by each of
the named executives during the fiscal year ended April 30, 1998, and the value
of in-the-money options held as of April 30, 1998.
<PAGE>
<TABLE>
<CAPTION>
Option Exercises and Option Values
Number of Securities Value of Unexercised
Number of Shares Underlying Unexercised In-the-Money (1)
of Common Stock Options as of April 30, 1998 Options as of April 30, 1998
Acquired on ---------------------------- ----------------------------
Name Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ---------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David L. Hodge
President and CEO..........0 $0 12,370 47,630 $0 $0
Frank Pascuito,
Exec. Vice President .....12,445 $53,140 134,557 0 $69,238 $0
Charles Caserta,
Former Vice President of
Business Development.....7,467 $31,884 139,536 0 $69,238 $0
Simon Theobald,
Executive Vice President....0 $0 52,589 22,411 $70,004 $11,696
Per Olof Ezelius,
President and CEO/NCI.......0 $0 1,477 16,523 $0 $0
(1) Based on a market price of $2.94 per share at April 30, 1998.
</TABLE>
Employment Agreements
In May, 1998, the Company entered into employment agreements, or amended or
restated prior employment agreements, (the "Employment Agreements") with each of
Messrs. David Hodge, Frank Pascuito and Simon Theobald (each an "Executive").
The initial term of Mr. Hodge's Employment Agreement extends from February 15,
1998 to February 14, 2003, and is automatically renewed annually thereafter.
Under Mr. Hodge's Employment Agreement, Mr. Hodge will receive (i) an annual
base salary of $200,000, with an annual cost of living increase and, commencing
on June 1, 1999, an annual base salary increase in the discretion of the Board
of Directors; (ii) an annual bonus (which shall not exceed 80% of his annual
base salary) based on the achievement of performance goals agreed to by the
Executive and the Board; (iii) stock options under the Plan for the purchase of
270,000 shares of the Company's common stock, with an exercise price per share
equal to the fair market value of the stock on the date of the grant, vesting in
equal installments over five years; (iv) term life insurance or death benefits
in the amount of $500,000; and, (v) an annuity of $40,000 per year for the joint
lives of the Executive and his spouse.
The initial term of Mr. Pascuito's Employment agreement extends from January 1,
1997 to December 31, 2001, and is automatically renewed annually thereafter. Mr.
Pascuito will receive (i) an annual base salary of $130,000; (ii) an annual
performance bonus to be determined by the CEO, but which may not be more than
40% of his base salary; (iii) annual cost of living increase in his base salary;
(iv) an annual increase in his base salary in the discretion of the Board of
Directors; and, (v) stock options under the Plan for the purchase of 150,000
shares of the Company's common stock with an exercise price per share equal to
the fair market value of the stock on the date of the grant, vesting in equal
installments over five years.
The initial term of Mr. Theobald's Employment Agreement extends from February
24, 1998 to December 31, 2003, and is automatically renewed annually thereafter.
Mr. Theobald will receive: (i) an annual base salary composed of a fixed portion
totaling $130,000 per year; (ii) a commission plus commission override not to
exceed $100,000 per year; (iii) an annual performance bonus to be determined by
the CEO, but which may not be more than 25% of his base salary; (iv) an annual
cost of living increase in his base salary; (v) stock options under the Plan for
the purchase of 150,000 shares of the Company's common stock with an exercise
price per share equal to the fair market value of the stock on the date of the
grant, vesting in equal installments over five years.
The Employment Agreement of Mr. Hodge provides that if the Agreement is
terminated due to death, disability or termination of the Company for "Cause,"
the Executive shall receive: 6 months of his annual salary, accrued compensation
and benefits to date plus other allowances. The Agreement provides that if a
termination is due to a "Change in Control," without cause, or by the Executive
for good reason, as defined in the Agreement, the Company will pay base salary
and bonuses to the Executive through the end of the then-applicable term or two
years, whichever is longer, plus certain allowances and benefits. Additionally,
all unvested stock options which have been or are scheduled to be granted
pursuant to the Agreement shall immediately vest.
Messrs. Hodge, Pascuito and Theobald have also received options to purchase the
Company's common Stock under the 1988 Plan and/ or the 1996 Plan.
The Employment Agreements of Messrs. Pascuito and Theobald provide that if the
Agreement is terminated for death or disability, the Executive shall receive:
his annual fixed salary accrued and other benefits and compensation, but no less
than 6 months fixed salary. Additionally, all unvested stock options which have
been or are scheduled to be granted pursuant to the Agreement shall immediately
vest. The Agreements provide that if a termination is due to a "Change in
Control," without cause, or by the Executive for good reason, as defined in the
Agreement, the Company will pay base salary and bonuses to the Executive through
the end of the then-applicable term or two years, whichever is longer, plus
certain allowances and benefits. Additionally, all unvested stock options which
have been or are scheduled to be granted pursuant to the Agreement shall
immediately vest.
Under the Employment Agreements a "Change in Control" includes (i) an
acquisition whereby immediately after such acquisition, a person holds
beneficial ownership of more than 50% of the total combined voting power of the
Company's then outstanding voting securities; (ii) if in any period of three
consecutive years after the date of the Employment Agreements, the
then-incumbent Board ceases to constitute a majority of the Board for reasons
other than voluntary resignation, refusal by one or more Board members to stand
for election, or removal of one or more Board member for good cause; or (iii)
the Board of Directors or the stockholders of the Company approve (A) a merger,
consolidation or reorganization; (B) a complete liquidation or dissolution of
the Company; or (C) the agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
On January 30, 1998, Mr. Per Olof Ezelius entered into an employment agreement
with Network Controls International, Inc. ("NCI") to serve as its President and
Chief Executive Officer for an initial term of three years and three months,
commencing January 30, 1998, and ending April 30, 2001 (the "Original Employment
Agreement"). On May 12, 1998, the Company entered into an extension agreement
(the "Extension Agreement") with Mr. Ezelius which provides that the term of the
covenant not to compete (as referred to in the Original Employment Agreement) is
extended from a period of one-year to two-years commencing from the expiration
of the Original Employment Agreement. Such Extension Agreement further provides
that the Company grant to Mr. Ezelius: (i) 25,000 shares of common stock; (ii)
25,000 options to purchase Company common stock (such exercise price being equal
to the fair market value of such common stock on May 12, 1998); and (iii) a cash
bonus equal to $100,000.
The Original Employment Agreement provides for Mr. Ezelius to receive an annual
base salary composed of a fixed portion totaling $150,000 per year and annual
salary adjustments in the discretion of the Board of Directors or the
compensation committee.
Stock Option Plans
The Company has two option plans: the 1996 Stock Option Plan (the "1996 Plan")
and the 1988 Stock Option Plan (the "1988 Plan"). It is intended that the 1998
Plan will replace the 1996 Plan. The Company has issued options under the 1996
Plan. At its May 12, 1998 meeting, the Board of Directors approved the adoption
of the 1998 Plan, subject to stockholder approval, and approved the issuance of
new options under the 1998 Plan to replace all of the outstanding options under
the 1996 plan, conditioned upon stockholder approval of the 1998 Plan and upon
each option holder agreeing to cancel his or her options under the 1996 Plan
upon issuance of options under the 1998 Plan. At its September 8, 1998, meeting,
the Compensation Committee, which administers the 1998 Plan, granted options
under the 1999 Plan to replace all options granted under the 1996 plan, also
conditioned upon stockholder approval of the 1998 Plan and upon each option
holder agreeing to cancel his or her options under the 1996 Plan upon issuance
of options under the 1998 Plan. The purchase price of stock under such options
is $1.25 per share, which was the market price of the stock on that date. The
options under the 1996 Plan have purchase prices substantially higher than this
price, ranging from $4.25 to $7.31. It is anticipated that all of the option
holders will wish to exchange their 1996 Plan options for 1998 Plan options due
to the lower purchase price under the latter options.
The 1996 Plan provides for the granting of options which are intended to qualify
either as incentive stock options ("Incentive Stock Options") within the meaning
of Section 422 of the Code or as options which are not intended to meet the
requirements of such section ("Nonstatutory Stock Options"). The total number of
shares of Common Stock reserved for issuance under the 1996 Plan is 300,000.
Options to purchase shares may be granted under the 1996 Plan to persons who, in
the case of Incentive Stock Options, are key employees (including officers) of
the Company or any subsidiary of the Company, or, in the case of Nonstatutory
Stock Options, are key employees (including officers) or nonemployee directors
of, or nonemployee consultants to, the Company or any subsidiary of the Company.
The 1996 Plan provides for its administration by the Board of Directors or a
committee chosen by the Board of Directors, which has discretionary authority,
subject to certain restrictions, to determine the number of shares issued
pursuant to Incentive Stock Options and Nonstatutory Stock Options and the
individuals to whom, the times at which and the exercise price for which options
will be granted.
The exercise price of all Incentive Stock Options granted under the 1996 Plan
must be at least equal to the fair market value of such shares on the date of
the grant or, in the case of Incentive Stock Options granted to the holder of
more than 10% of the Company's Common Stock, at least 110% of the fair market
value of such shares on the date of the grant. The maximum exercise period for
which Incentive Stock Options may be granted is ten years from the date of grant
(five years in the case of an individual owning more than 10% of the Company's
Common Stock). The aggregate fair market value (determined at the date of the
option grant) of shares with respect to which Incentive Stock Options are
exercisable for the first time by the holder of the option during any calendar
year shall not exceed $100,000.
The 1996 Plan provides for the issuance of options to purchase Common Stock to
key employees, officers, directors and consultants. As of April 30, 1998, there
were options outstanding to purchase 300,000 shares of Common Stock under the
1996 Plan. All options are exercisable at prices ranging from $4.25 to $7.31 per
share. If the 1998 Plan is approved by the stockholders, the Company will offer
the holders replacement options with an exercise price of $1.25 per share. If
the 1998 Plan is not approved by the stockholders, the Company will either
continue these options as 1996 Plan options or as non-qualified options, and in
either case, will reduce the exercise price to $1.25 per share. These options
expire in various years between 2005-2008. The vesting and expiration dates will
be retained if these options are replaced with 1998 Plan Options. As of April
30, 1998, there were no options available for grant under the 1996 Plan.
The 1988 Plan provides for the issuance of options to purchase Common Stock to
key employees, officers, directors and consultants. As of December 31, 1998,
there were options outstanding to purchase 216,140 shares of Common Stock under
the 1988 Plan. All options are exercisable at prices ranging from $.66 to $4.88
per share and expire in various years between 1997 - 2008. As of January 14,
1999, there were no options available for grant to purchase shares of Common
Stock under the 1988 Plan.
The exercise price of all future option grants will be at least 85% of the fair
market value of the Common Stock on the date of grant.
Certain Relationships and Related Transactions
IFS has issued a purchase order for $259,600 to Euro-Tech International ("ETI")
to obtain ISO 9000 registration. ETI is an Arizona based corporation that
specializes in guiding companies through the ISO 9000 certification process. ISO
9000 is an established international business standard. ISO 9000 requires that
the core processes of a company's business is documented, understood and
followed by company personnel. ISO 9000 is becoming a standard for companies in
the global market. ETI is also a subsidiary of Tech Metrics International, Inc.
of which Mr. David L. Hodge, President and CEO of IFS International, Inc. is a
director.
Frank Pascuito deferred salaries for the five fiscal years ended April 30, 1995
in the aggregate amount of $60,765. Such deferred salaries bore interest at the
rate of 12% per annum until September 30, 1996, which interest aggregated
$31,013 as of such date and was also deferred. As of April 30, 1997, all
deferred salaries and interest have been paid.
Charles Caserta deferred salaries for the five fiscal years ended April 30, 1995
in the aggregate amount of $62,439. Such deferred salaries bore interest at the
rate of 12% per annum until September 30, 1996, which interest aggregated
$34,464 as of such date and was also deferred. As of April 30, 1997, all
deferred salaries and interest have been paid.
On January 30, 1998 the Company acquired all of the outstanding shares of
capital stock of NCI Holdings, Inc. ("Holdings"). Pursuant to the terms of the
Merger Agreement, Per Olof Ezelius ("Ezelius"), the sole beneficial owner of
Holdings' capital stock, received 87,094 shares (the "Base Consideration") of
Preferred Stock valued at approximately $238,000. The number of shares was
subject to adjustment. In August, 1998, the Company waived any right to such
adjustment. The Company is obligated to register all of these shares of
Preferred Stock under the Securities Act of 1933.
The acquisition of Holdings was accounted for as a purchase.
Ezelius may receive additional shares of Preferred Stock (the "Additional
Shares") if the consolidated pre-tax profit of NCI exceeds certain levels during
each of the years ending April 30, 1999, 2000 and 2001 and during the three
years ending April 30, 2001. Any Additional Shares issued to Ezelius up to a
value of $200,000 will be held in escrow to further secure the Indemnification
Obligations. The Merger Agreement required Holdings to satisfy indebtedness to
former stockholders of Holdings and NCI arising pursuant to agreements for the
purchase of shares entered into in 1993 and 1995. Immediately prior to the
merger, the Company advanced $840,000 to Holdings, which was utilized to satisfy
existing indebtedness of Holdings as required by the Merger Agreement. Pursuant
to the terms of the Merger Agreement, Ezelius entered into a separate employment
agreement with NCI to serve as Chief Executive Officer of NCI for a period of 39
months, commencing January 30, 1998, at a base salary of $150,000 per year.
Ezelius also was granted options to purchase 18,000 shares of the Company's
Common Stock at $5.00 per share.
On September 1, 1998, Mr. Charles J. Caserta, co-founder of IFS International,
Inc., resigned from the Company as Director of Business Development and a
Director. At that time, Mr. Caserta and the Company entered into a termination,
severance and release agreement (the "Termination Agreement"). Mr. Caserta will
be performing consulting services for IFS International, Inc. from time to time
for consulting fees and commissions. Under the terms of the Termination
Agreement, the Company purchased from Mr. Caserta 180,723 shares of Common Stock
at a price of $361,446 ($2.00 per share) and paid him $21,214 for surrender of
his stock options to acquire 139,536 shares of Common Stock. The Company has
resold the stock to several individuals at $2.12 per share, a total of $382,660.
Messrs. John Singleton and DuWayne Peterson, directors of the Company, purchase
50,000 shares and 25,000 shares, respectively.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the Company is
not aware of any matters other than those set forth herein and in the Notice of
Meeting of Stockholder that will come before the meeting. Should any other
matters arise requiring the vote of stockholders, it is intended that proxies
will be voted with respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1999
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Exchange Act, must be
received by the Company's offices in Troy, New York by June 20, 1999 for
inclusion in the Company's proxy statement and form of proxy relating to such
meeting.
FORM 10-KSB
A copy of the Company's Form 10-KSB is available at no charge upon written
request to its Investor Relations department at 300 Jordan Road, Troy, NY 12180.
<PAGE>
Appendix 1 to Proxy Statement
1998 IFS INTERNATIONAL, INC. STOCK PLAN
The Board of Directors of IFS INTERNATIONAL, INC. (the "Company"), a
corporation organized under the laws of the State of Delaware, hereby adopts
this 1998 IFS INTERNATIONAL, INC. Stock Plan.
WHEREAS, the growth, development and financial success of the Company
(and any parents and/or any subsidiaries of the Company) is and will remain
dependent, in significant part, upon the judgment, initiative, efforts and/or
services their respective employees, officers, directors, consultants and
advisors;
WHEREAS, the Company desires, in order to attract, compensate and
motivate selected employees, officers, directors, consultants and/or advisors
for the Company (and any parent and/or any subsidiaries of the Company), and to
appropriately compensate them for their efforts, to create a stock plan which
will enable the Company, in its sole discretion and from time-to-time, to offer
to or provide such persons with incentives and/or inducements in the form of
capital stock of the Company, or rights in the form of options to acquire
capital stock of the Company, thereby affording such persons with an opportunity
to share in potential capital appreciation in the capital stock of the Company
and/or potential distributions made in connection therewith;
WHEREAS, the Company further desires that the stock plan be structured
to permit it, in its sole discretion, to offer and issue options to purchase
capital stock which are classified as incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended;
WHEREAS, the Company further desires that the stock plan be structured
to permit it, in its sole discretion, to offer and issue capital stock or
options to acquire capital stock in reliance upon certain exemptions from
registration or qualification afforded under certain federal, state or
territorial securities laws to be selected by the Company as are or may become
applicable, including, by way of example and not limitation: Rule 701
promulgated under the Securities Act of 1933, as amended (for compensatory
benefit plans); Rules 504, 505 and/or 506 of Regulation D promulgated under the
Securities Act of 1933 (for private or limited offerings); and
WHEREAS, so long as the Company's equity securities remain registered
under Sections 12(b) or 12(g) of the Securities and Exchange Act of 1934, the
Company further desires that the stock plan be structured to comply with the
Securities and Exchange Act of 1934.
<PAGE>
ARTICLE I
DEFINITIONS
Set forth below are definitions of capitalized terms which are generally used
throughout the Plan, or references to provisions containing such definitions
(Capitalized terms used only in a specific section of the Plan are defined in
such section):
1.01 "Applicable Laws" means the requirements relating to the
administration of stock plans under: (i) United States corporate laws;
(ii) applicable Securities Laws (including those of any foreign
country or jurisdiction where Awards are, or will be, granted under
the Plan), (iii) the Code; and (iv) any stock exchange or quotation
system on which the Common Stock is listed or quoted.
1.02 "Approved Corporate Transaction" shall mean any time the Board
and/or, to the extent required by law, the stockholders of the
Company, approve either: (i) a merger or consolidation or stock
exchange or divisive reorganization (i.e., spin-off, split-off or
split-up) and/or other reorganization with respect to the Company
and/or its stockholders, or (ii) the sale, transfer, exchange or other
disposition by the Company of fifty percent (50%) or more of its
assets in a single or series of related transactions, is approved,
provided, however, the term Approved Corporate Transaction shall not
include any transaction wherein the stockholders of the Company
immediately before such transaction directly or indirectly own,
immediately following such transaction, a majority of the Total
Combined Voting Power (as such term is defined in section 1.08A below)
of the outstanding Voting Securities (as such term is defined in
section 1.08A below) of the surviving corporation (or other entity)
resulting from such transaction pursuant to clause (i), or the
acquiring corporation (or other entity) pursuant to clause (ii).
1.03 "Award" " shall collectively and severally refer to any Options
or Grant Shares granted or awarded under the Plan.
1.04 "Award Agreement" shall collectively and severally refer to: (i)
in the case of the grant or award of an Option, a Stock Option
Certificate in such form as prescribed by the Plan Administrator from
time-to-time; and (ii) in the case of the grant or award of Grant
Shares, a Stock Grant Agreement in such form as prescribed by the Plan
Administrator from time-to-time; provided, however, the Company may,
in its sole discretion, (1) revise any such form of Award Agreement to
reflect or incorporate such changes as the Company or its legal
counsel may determine is appropriate and consistent with the terms of
the Plan, and/or (2) evidence or confirm the grant of an Award in a
written employment or consulting agreement in lieu of the form of any
of the foregoing Award Agreements.
1.05 "Blue Sky Laws" shall mean the securities laws of any state or
territory of the United States, including any regulations or rules
promulgated thereunder, which may apply to a transaction described in
this Plan by reason of, among other things, the Recipient's residing
in such, state or territory at the time of such transaction.
1.06 "Board" shall mean the Board of Directors of the Company, as such
body may be constituted from time to time.
1.08 "Change In Control" shall mean the occurrence of any "Control
Acquisition" or any "Significant Board Change" (as such terms are
defined below).
A. "Control Acquisition" shall mean any time an "Acquiring
Person" (as defined below) attains, by reason of and immediately
after a transaction or series of related transactions (other than
a Non-Control Transaction), "Beneficial Ownership" of fifty
percent (50%) or more of the "Total Combined Voting Power" of the
Company's then outstanding "Voting Securities" (all as defined
below); unless the Board determines that it is not in the best
interests of the Company for such transaction to be construed as
a Control Acquisition; provided, however that at the time of such
approval of the Board there are then in office not less than two
Continuing Directors (as such term is defined below) and such
action or transaction or series of related actions or
transactions are approved by a majority of the Continuing
Directors then in office.
(1) "Acquiring Person" shall mean any "Person" (as defined
below) with the exception of: (A) any Employee Benefit Plan
(or a trust forming a part thereof) maintained by the
Company, or by any corporation or entity in which the
Company holds fifty percent (50%) or more of the Voting
Securities (each, a "Controlled Subsidiary"); (B) the
Company or any Controlled Subsidiary; or (C) any Person
which acquires the threshold percentage of Voting Securities
through a "Non-Control Transaction" (as defined below).
(2) "Non-Control Transaction" shall mean any transaction in which
the stockholders of the Company immediately before such
transaction directly or indirectly own, immediately following
such transaction, at least a majority of the Total Combined
Voting Power (as defined below) of the outstanding Voting
Securities (as defined below) of the surviving corporation (or
other entity) resulting from such transaction, in substantially
the same proportion as such stockholders' ownership of the
Company's Voting Securities immediately before such transaction.
(3) "Person," "Beneficial Ownership," "Total Combined Voting
Power" and "Voting Securities" shall have the meaning described
to such terms in Sections 13(d) and 14(d) of the Securities
Exchange Act and Rule 13d-3 promulgated thereunder.
(4) "Continuing Director" shall mean: (A) any member of the
Board, while such Person is a member of the Board, who is not an
Acquiring Person or an "Affiliate" or "Associate" (as defined
below) of an Acquiring Person, or a representative of an
Acquiring Person or any such Affiliate or Associate, and was a
member of the Board prior to the date of this Plan, or (B) any
Person who subsequently becomes a member of the Board, while such
Person is a member of the Board, who is not an Acquiring Person
or an Affiliate or Associate of an Acquiring Person or a
representative of an Acquiring Person or any such Affiliate or
Associate, if such Person's nomination for election or election
to the Board is recommended or approved by a majority of the
Continuing Directors. The terms "Affiliate" and "Associates"
shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Exchange
Act.
Notwithstanding the foregoing, a Control Acquisition shall not be deemed to have
occurred solely because any Person acquires Beneficial Ownership of more than
the threshold percentage of the outstanding Voting Securities as a result of an
acquisition of Voting Securities by the Company (each, a "Redemption") which, by
reducing the number of Voting Securities outstanding, increased the percentage
of outstanding Voting Securities Beneficially Owned by such Person; provided,
however, that if (A) a Control Acquisition would occur as a result of a
Redemption but for the operation of this sentence, and (B) after such
Redemption, such Person becomes the Beneficial Owner of any additional Voting
Securities, which increase the percentage of the then outstanding Voting
Securities Beneficially Owned by such Person over the percentage owned as a
result of the Redemption, then a Control Acquisition shall occur.
B. "Significant Board Change" shall mean any time, during any period
of three (3) consecutive years after the date of this Agreement,
wherein the individuals who constituted the Board at the beginning of
such period (the "Incumbent Board") cease to constitute a majority of
the Board, for any reason other than: (1) the voluntary resignation of
one or more Board members; (2) the refusal by one or more Board
members to stand for election to the Board; and/or (3) the removal of
one or more Board members for good cause; provided, however, (A) that
if the nomination or election of any new director of the Company was
approved by a vote of at least a majority of the Incumbent Board, such
new director shall be deemed a member of the Incumbent Board; and (B)
that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Securities Exchange Act), or as a result of a
solicitation of proxies or consents by or on behalf of an Acquiror,
other than a member of the Board (a "Proxy Contest"), or as a result
of any agreement intended to avoid or settle any Election Contest or
Proxy Contest.
1.09 "Code" shall mean the Internal Revenue Code of 1986, as amended
(references herein to sections of the Code are intended to refer to
sections of the Code as enacted at the time of the adoption of the Plan by
the Board and as subsequently amended, or to any substantially similar
successor provisions of the Code resulting from recodification, renumbering
or otherwise).
1.10 "Commission" shall mean the United States Securities and Exchange
Commission.
1.11 "Common Stock" shall mean the Company's common stock, no par value.
1.12 "Company" shall mean IFS INTERNATIONAL, INC., a Delaware corporation
and its successors.
1.13 "Consent of Spouse" shall mean that Consent of Spouse in such form as
prescribed by the Plan Administrator from time-to-time.
1.14 "Consultant" shall mean any Person who, in a capacity other than as an
Employee or Director, provides bona fide services in a consulting or
advisory capacity to the Company and/or to any Parent and/or to any
Subsidiary, whether as an entity or a natural person, and whether as an
independent contractor or an employee of an employer.
1.15 "Director" shall mean any Person who is voted or appointed as a member
of the Board of Directors of the Company and/or of any Parent and/or of any
Subsidiary, whether such Person is so engaged at the time the Plan is
adopted or becomes so engaged subsequent to the adoption of the Plan.
1.16 "Disability" (or the related term "Disabled") shall be defined,
without limitation, as any of the following with respect to a Recipient who
is an Employee or a Director: (i) the receipt of any disability insurance
benefits by the Recipient; (ii) a declaration by a court of competent
jurisdiction that the Recipient is legally incompetent; (iii) the
Recipient's material inability due to medically documented mental or
physical illness or disabilities to fully perform the Recipient's regular
obligations as an Employee or as a Director (as the case may be) under such
office, with reasonable accommodation if then required by applicable
federal, state, territorial and/or provincial laws or regulations, for a
three (3) month continuous period, or for six (6) cumulative months within
any one (1) year continuous period, or the reasonable determination by the
Board that the Recipient will not be able to fully perform the Recipient's
regular obligations as an Employee or as a Director (as the case may be),
under such office, with reasonable accommodation if then required by
applicable federal, state and/or territorial laws or regulations, for a
three (3) month continuous period. If the Board determines that the
Recipient is Disabled under clause (iii) above, and the Recipient disagrees
with the conclusion of the Board, then the Company shall engage a qualified
independent physician reasonably acceptable to the Recipient to examine the
Recipient at the Company's sole expense. The determination of such
physician shall be provided in writing to the parties and shall be final
and binding upon the parties for all purposes of this Agreement. The
Recipient hereby consents to examination in the manner set forth above, and
waives any physician-patient privilege arising from any such examination as
it relates to the determination of the purported disability. If the parties
cannot agree upon such physician, a physician shall be appointed by the
American Arbitration Association, located in Troy, New York, according to
the rules and practices of the American Arbitration Association from
time-to-time in force.
1.17 "Eligible Person" shall mean any Person who, at the applicable time of
the grant or award of an Award under the Plan, is an Employee, a Director,
and/or a Consultant. Notwithstanding the foregoing, no Award hereunder may
be granted to any Person, even if otherwise an Eligible Person, with
respect to: (i) any circumstances which would not be considered to be
either a bonus or reward for services provided, or compensation for
services rendered; or (ii) in the case of any Consultant, services rendered
wholly or partially in connection with the offer and sale of securities in
a capital-raising transaction.
1.18 "Employee" shall mean any employee of the Company or of any Parent
and/or of any Subsidiary, whether such Person is so employed at the time
the Plan is adopted or becomes so employed subsequent to the adoption of
the Plan.
1.19 "Executive Officer" shall mean the Company's president, principal
financial officer, principal accounting officer (or, if there is no such
accounting officer, the controller), any vice-president of the Company in
charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions
for the Company. Officers of any Parent or Subsidiary of the Company shall
be deemed Executive Officers of the Company if they perform such
policy-making functions for the Company.
1.20 "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended, including any regulations or rules promulgated by the Commission
thereunder (references herein to sections of the Exchange Act are intended
to refer to sections of the Exchange Act as enacted at the time of the
adoption of the Plan by the Board and as subsequently amended, or to any
substantially similar successor provisions of the Exchange Act resulting
from recodification, renumbering or otherwise).
1.21 "Fair Market Value" of a share of Common Stock as of a given valuation
date shall be determined as follows:
A. If the Common Stock is traded on a stock exchange, the Fair Market
Value will be equal to the closing price of Common Stock on the
principal exchange on which the Common Stock is then trading as
reported by such exchange (or as reported by any composite index which
includes such principal exchange) for the trading day previous to the
date of valuation, or if the Common Stock is not traded on such date,
on the next preceding trading day during which a trade occurred;
B. If the Common Stock is traded over-the-counter on the NASDAQ
National Market on the date in question, the Fair Market Value will be
equal to the last transaction-price of the Common Stock as reported by
NASDAQ for the trading day previous to the date of valuation, or if
the Common Stock is not traded on such date, on the next preceding
trading day during which a trade occurred;
C. If the Common Stock is traded over-the-counter on the NASDAQ
SmallCap Market, the Fair Market Value will equal the mean between the
last reported closing representative bid and asked price for the
Common Stock as reported by NASDAQ for the trading day previous to the
date of valuation, or if the Common Stock is not traded on such date,
on the next preceding trading day during which a trade occurred; or
D. If the Common Stock is not publicly traded on an exchange and is
not traded over-the-counter on NASDAQ, the Fair Market Value shall be
determined by the Board acting in good faith on such basis as it deems
appropriate, including quotations by market makers if the Common Stock
is traded over-the-counter on the NASD Electronic Bulletin Board or
Pink Sheets on the date in question should the Plan Administrator deem
such quotations to be appropriate given the volume and circumstances
of trades.
The Fair Market Value as determined above shall be subject to such discount as
the Plan Administrator may, in its sole discretion and without obligation to do
so, determine to be appropriate to reflect any such impairments to the value of
the associated Option Shares and/or Grant Shares to which the valuation relates
such as, by way of example and not limitation, (1) the fact that such Option
Shares and/or Grant Shares constitute unregistered securities (whether or not
considered "restricted stock" within the meaning of Rule 144 of the Securities
Act), and/or (2) such Option Shares and/or Grant Shares are subject to
conditions, risk of forfeiture, or repurchase rights or rights of first refusal
which impair their value including, without limitation, those forfeiture
conditions more particularly described in Article VII; provided, however, in the
event of the grant or award of an Incentive Option, no discount shall be given
with respect to any impairments in value attributable to any restriction which,
by its terms, will never lapse within the meaning of Section 422(c)(7) of the
Code.
1.22 "Forfeitable Grant Shares" shall mean Grant Shares that are subject to
restrictions set forth in Article VII.
1.23 "Grant Shares" shall mean Plan Shares granted or awarded in accordance
with Article VI.
1.24 "Incentive Option" shall mean an Option which qualifies under Section
422 of the Code, and is specifically granted as an Incentive Option under
the Plan in accordance with the applicable provisions of Article V.
1.25 [Reserved]
1.26 "Non-Qualified Option" shall mean any Option granted under the Plan
other than an Incentive Option; provided, however, the term Non-Qualified
Option shall include any Incentive Option which, for any reason, fails to
qualify as an incentive stock option under Section 422 of the Code and the
rules and regulations thereunder.
1.27 "Option" shall mean an option to purchase Plan Shares granted or
awarded pursuant to Article V. Unless specific reference is made thereto,
the term "Options" shall be construed as referring to both Non-Qualified
Options (including Replacement Options) and Incentive Options.
1.28 "Option Price" is defined in section 5.02 of the Plan.
1.29 "Option Shares" shall mean any Plan Shares which an Option entitles
the holder thereof to purchase.
1.30 "Parent" shall mean any "parent" of the Company, as such term is
defined by, or interpreted under, Rule 701 promulgated under the Securities
Act, including any such parent which is a corporation, partnership, limited
partnership or limited liability company to the extent permitted under Rule
701.
1.31 "Person" shall be defined, in its broadest sense, as any individual,
entity or fiduciary such as, by way of example and not limitation,
individual or natural persons, corporations, partnerships (limited or
general), joint-ventures, associations, limited liability
companies/partnerships or fiduciary arrangements (such as trusts and
custodial arrangements).
1.32 "Plan" shall mean this 1998 IFS INTERNATIONAL, INC. Stock Plan.
1.33 "Plan Administrator" shall refer to the Person or Persons who are
administering the Plan as described in Article III, namely, the Board, the
Plan Committee, or any Director-Officers designated by the Board or the
Plan Committee.
1.34 "Plan Committee" shall mean that Committee comprised of members of the
Board that may be appointed by the Board to administer and interpret the
Plan as more particularly described in Article III of the Plan.
1.35 "Plan Shares" shall refer to shares of Common Stock issuable in
connection with Awards in accordance with section 4.01, including, Option
Shares and Grant Shares.
1.36 "Recipient" shall mean any Eligible Person who, at a particular time,
receives the grant of an Award.
1.37 "Recipient's Representative's Letter" shall mean that letter from an
independent investment advisor of a Recipient in such form as prescribed by
the Plan Administrator from time-to-time.
1.38 "Replacement Option" shall mean a Non-Qualified Option specifically
granted as a Replacement Option under the Plan in accordance with the
applicable provisions of section 5.08.
1.39 "Reporting Company" shall mean a corporation which registers its
equity securities pursuant to Sections 12(b) or 12(g) of the Exchange Act;
provided, however, any foreign corporation which registers its equity
securities as a "foreign private issuer" shall not be deemed a Reporting
Company for purposes of this Plan unless and until such time as it is
required or elects to register its equity securities as a foreign issuer
other than a foreign private issuer.
1.40 [Reserved]
1.41 "Securities Act" shall mean the Securities Act of 1933, as amended,
including all regulations or rules promulgated by the Commission thereunder
(references herein to sections of the Securities Act are intended to refer
to sections of the Securities Act as enacted at the time of the adoption of
the Plan by the Board and as subsequently amended, or to any substantially
similar successor provisions of the Securities Act resulting from
recodification, renumbering or otherwise).
1.42 "Securities Laws" shall collectively refer to the Securities Act, the
Exchange Act and the Blue Sky Laws.
1.43 "Subsidiary" shall mean any "majority-owned subsidiary" of the
Company, as such term is defined by, or interpreted under, Rule 701
promulgated under the Securities Act, including any such subsidiary which
is a corporation, partnership, limited partnership or limited liability
company to the extent permitted under Rule 701. The term Subsidiary shall
specifically exclude any majority-owned subsidiaries (other than the
Company, if applicable) of any Parent.
1.44 [Reserved]
1.45 "Ten Percent Stockholder" shall mean a Person who owns, either
directly or indirectly, at the time such Person is granted an Award, stock
of the Company possessing more than ten percent (10%) of the total combined
voting power or value of all classes of stock of the Company or of any
Parent and/or any Subsidiary.
1.46 "Termination By Company For Cause" shall mean the following:
A. Employee-Recipient. In the case of a Recipient who is an Employee,
the Plan Administrator determines that:
(1) Any representation or warranty of the Recipient in connection
with the grant of the Award (or the subsequent exercise of an
Option, if the Award is an Option) is not materially true,
accurate and complete;
(2) The Recipient has breached or wrongfully failed and/or
refused to fulfill and/or perform any of the Recipient's
obligations, promises or covenants under the underlying Award
Agreement;
(3) The Recipient has breached or wrongfully failed and/or
refused to fulfill and/or perform any of the Recipient's
representations, warranties, obligations, promises or covenants
in any agreement (other than the Award Agreement) entered into
between the Company and the Recipient, without cure, if any, as
provided in such agreement;
(4) The Recipient has failed and/or refused to obey any lawful
and proper order or directive of the Board, and/or the Recipient
has intentionally interfered with the compliance by other
employees of the Company with any such orders or directives;
(5) The Recipient has breached the Recipient's fiduciary duties
to the Company;
(6) The Recipient has caused the Company to be convicted of a
crime, or intentionally caused the Company to incur criminal
penalties in material amounts;
(7) The Recipient has committed: (A) any act of fraud,
misrepresentation, theft, embezzlement or misappropriation,
and/or any other dishonest act against the Company and/or any of
its affiliates, subsidiaries, joint ventures; or (B) any other
offense involving moral turpitude, which offense is followed by
conviction or by final action of any court of law; or (C) a
felony;
(8) The Recipient has used alcohol or drugs to an extent that
such use: (A) interfered with or was likely to interfere with the
Recipient's ability to perform the Recipient's duties to the
Company; and/or (B) such use endangers or was likely to endanger
the life, health, safety, or property of the Recipient, the
Company, and/or any other person;
(9) The Recipient has demonstrated or committed such acts racism,
sexism or other discrimination as would tend to bring the Company
into public scandal or ridicule, or would otherwise result in
material and substantial harm to the Company's business,
reputation, operations, affairs or financial position; and/or
(10) The Recipient engaged in other conduct constituting cause
for termination.
B. Director-Recipient. With respect to a Recipient who is a
Director, the Plan Administrator determines that:
(1) The Board has removed the Recipient as a member of the
Board for "cause" as such term is defined or interpreted by
the Articles or Certificate of Incorporation and/or the
Bylaws of the Company, and/or the laws of the State of the
Company's organization, or for breach of the Recipient's
statutory or common law duties as a Director;
(2) The Recipient has refused or is unable to be nominated
for a position on the Board, including where due to the
Recipient's failure to request cumulative voting for such
election (if applicable) and the Recipient's failure to vote
all of the Recipient's shares of Common Stock for the
Recipient's election to the Board; and/or
(3) Any event described above in section 1.46A has occurred
with respect to the Recipient.
C. Consultant-Recipient. In the case of any Recipient who is
a Consultant, the Plan Administrator determines that any
event described above in section 1.46A has occurred with
respect to the Recipient.
Any nominees or designees of the Recipient to the Board shall, if a member of
the Plan Administrator, abstain from voting with respect to any decision by the
Plan Administrator relating to any of the foregoing events as they pertain to
any Award in which the Recipient has a direct or indirect interest.
In the event the Recipient is both Disabled and the provisions of subsection
1.46A(6) are applicable with respect to the Recipient, the Company shall
nevertheless have the right to deem such event as a Termination By Company For
Cause.
1.47 "Termination By Recipient For Good Reason" shall mean the
following:
A. Employee-Recipient. With respect to any Recipient who is
an Employee:
(1) The Company's representations or warranties in the Award
Agreement are not materially true, accurate and complete;
(2) The Company has intentionally and continually breached
or wrongfully failed and/or refused to fulfill and/or
perform any of the Company's obligations, promises or
covenants under the underlying Award Agreement;
(3) The Company has intentionally and continually breached
or wrongfully failed and/or refused to fulfill and/or
perform any of the Company's representations, warranties,
obligations, promises or covenants in any agreement (other
than the Award Agreement) entered into between the Company
and the Recipient, without cure, if any, as provided in such
agreement; and/or
(4) The Company intentionally requires the Recipient to
commit or participate in any felony or other serious crime.
B. Director-Recipient. With respect to any Recipient who is
a Director:
(1) The Company removes or fails to reappoint or re-elect
the Recipient as a Director (unless such action is
attributable to an event considered to constitute
Termination By Company For Cause); and/or
(2) The occurrence of any of the events described above in
subsection 1.47A(1) through subsection 1.47A(4) with respect
to the Director.
C. Consultant-Recipient. With respect to any Recipient who
is a Consultant, the occurrence of any of the events
described above in subsection 1.47A(1) through subsection
1.47A(4) with respect to the Consultant.
In the event any of the events described above in this section 1.46 occurs with
respect to the Company, and such event is reasonably susceptible of being cured,
then the Company shall be entitled to a grace period of thirty (30) days
following receipt of written notice of such event (or such longer period of time
as is reasonable should such event be of a character which cannot be cured
within a period of thirty (30) days), to cure such event to the reasonable
satisfaction of the Recipient, provided that the Company promptly commences to
cure such event and uses reasonable diligence thereafter in curing such event No
act, nor failure to act, on the Company's part shall be considered "intentional"
unless the Company has acted, or failed to act, with a lack of good faith and
with a lack of reasonable belief.
1.48 "Termination Of Recipient" is defined, as the case may be, as
follows:
A. Employee-Recipient. With respect to a Recipient who is an
Employee, the time when the employee-employer relationship
between the Recipient and the Company (or any Parent or
Subsidiary) is terminated for any reason whatsoever, whether
voluntary or involuntary (including death or Disability), or
with or without good cause, including, but not by way of
limitation, termination by resignation, discharge,
retirement, or leave of absence, but excluding terminations
where: (1) the Recipient remains employed by the Company (if
such termination relates to the Recipient's employment with
any Parent and/or any Subsidiary) and/or by any Parent
and/or any Subsidiary (if such termination relates to the
Recipient's employment with the Company); (2) there is
simultaneous employment of the Recipient by the Company
and/or any Parent and/or any Subsidiary; and/or (3) there is
a simultaneous establishment of a consulting relationship
between the Company and the Recipient."
B. Director-Recipient. With respect to a Recipient who is a
Director, the time when the Recipient's status as a Director
ceases for any reason whatsoever, whether voluntary or
involuntary (including death or Disability), or with or
without good cause, but excluding cases where the Recipient
remains a Director of the Company (if such termination
relates to the Recipient's status as a Director of any
Parent and/or any Subsidiary) and/or by any Parent and/or
any Subsidiary (if such termination relates to the
Recipient's status as a Director of the Company).
C. Consultant-Recipient. With respect to a Recipient who is
a Consultant, the time when the Recipient's engagement as a
Consultant to the Company and/or any Parent and/or any
Subsidiary ceases for any reason whatsoever, whether
voluntary or involuntary (including death or Disability), or
with or without good cause, but excluding cases where there
is a simultaneous commencement of employment of the
Recipient by the Company and/or any Parent and/or any
Subsidiary.
1.49 "Transfer" shall mean any transfer or alienation of an Award
which would directly or indirectly change the legal or beneficial
ownership thereof, whether voluntary or by operation of law,
regardless of payment or provision of consideration, including, by way
of example and not limitation: (i) the sale, assignment, bequest or
gift of the Award; (ii) any transaction that creates or grants an
option, warrant, or right to obtain an interest in the Award; (iii)
any transaction that creates a form of joint ownership in the Award
between the Recipient and one or more other Persons; (iv) any Transfer
of the Award to a creditor of the Recipient, including the
hypothecation, encumbrance or pledge of the Award or any interest
therein, or the attachment or imposition of a lien by a creditor of
the Recipient on the Award or any interest therein which is not
released within thirty (30) days after the imposition thereof; (v) any
distribution by a Recipient which is an entity to its stockholders,
partners, co-venturers or members, as the case may be; or (vi) any
distribution by a Recipient which is a fiduciary such as a trustee or
custodian to its settlors or beneficiaries.
1.50 "Withholding Taxes" means any federal, state and/or local
employment taxes which the Company shall have the obligation to
withhold from a Recipient in connection with the grant of any Award
and/or exercise of any Option, as the case may be.
ARTICLE II
TERM OF PLAN
2.01 Effective Date for Plan; Termination Date for Plan. The Plan
shall be effective as of such time and date as the Plan is adopted by
the Board, and the Plan shall terminate on the first business day
prior to the ten (10) year anniversary of the date the Plan became
effective. No Awards shall be granted or awarded under the Plan before
the date the Plan becomes effective or after the date the Plan
terminates; provided, however: (i) all Awards granted pursuant to the
Plan prior to the effective date of the Plan shall not be affected by
the termination of the Plan; and (ii) all other provisions of the Plan
shall remain in effect until the terms of all outstanding Awards have
been satisfied or terminated in accordance with the Plan and the terms
of such Awards.
2.02 Failure of Stockholders to Approve Plan. In the event the Plan is
not approved by the holders of a majority of the shares of Common
Stock of the Company within twelve (12) months before or after the
date the Plan becomes effective, then: (i) any Incentive Options
granted under the Plan shall be reclassified as Non-Qualified Options
retroactive to the date of grant; and (ii) any Awards (including
Incentive Options discussed immediately above) made pursuant to any
state securities law exemption which is available only with respect to
Incentive Options shall be rescinded (including any Incentive Options
granted pursuant to such exemption, notwithstanding clause (i) above)
unless a suitable alternative state securities law exemption is
available.
ARTICLE III
PLAN ADMINISTRATION
3.01 General. The Plan shall be administered exclusively by the Board
and/or, to the extent authorized pursuant to this Article III, the
Plan Committee or Director-Officers (collectively, the "Plan
Administrator").
3.02 Delegation to Plan Committee. Subject to the authority granted to
the Board under the Articles of Incorporation and the Bylaws of the
Company, the Board may, in its sole discretion and at any time,
establish a committee comprised of two (2) or more members of the
Board (the "Plan Committee") to administer the Plan either in its
entirety or to administer such functions concerning the Plan as
delegated to such Committee by the Board. Members of the Plan
Committee may resign at any time by delivering written notice to the
Board. Vacancies in the Plan Committee shall be filled by the Board.
The Plan Committee shall act by a majority of its members in office.
The Plan Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the
Plan Committee.
3.03 Compliance with Section 16 of the Exchange Act. Anything in this
Article III to the contrary notwithstanding, in the event and
commencing at such time as this Company becomes a Reporting Company,
or is otherwise required to register its equity securities under
Sections 12(b) or 12(g) of the Exchange Act, any matter concerning a
grant or award of an Award under the Plan to any Director, Executive
Officer or Ten Percent Stockholder shall, to the extent desirable to
qualify such Awards as exempt under Rule 16b-3(b)(3) promulgated under
the Exchange Act, be made only by: (i) the Board; (ii) the Plan
Committee, provided it is comprised solely of "Non-Employee Directors"
within the meaning of Rule 16b-3(b)(3); or (iii) a special committee
of the Board, or subcommittee of the Plan Committee, comprised solely
of two (2) or more members of the Board who are non-Employee
Directors.
3.04 Compliance with Section 162(m) of the Code. Anything in this
Article III to the contrary notwithstanding, in the event and
commencing at such time as any grant of an Award shall be subject to
the deduction limitations prescribed by Section 162(m) of the Code,
and the Plan Administrator determines it to be desirable to qualify
Awards granted hereunder as "performance-based compensation" within
the meaning of Section 162(m) of the Code, the Plan Administrator
shall (for purposes of making such grant) consist of a special
committee of the Board comprised solely of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
3.05 Delegation to Director-Officers. Subject to the authority granted
to the Board under the Articles of Incorporation and the Bylaws of the
Company, the Board may, in its sole discretion and at any time, and
subject to the authority granted to it by the Board, the Plan
Committee may, in its sole discretion and at any time, delegate all or
any portion of their authority described below under section 3.06
through section 3.06 to one or more Directors who are also
Director-Officers, provided that the Board or the Plan Committee (as
the case may be) ratifies such actions by such designated
Director-Officers. Notwithstanding the foregoing, in the event the
Company is then a Reporting Company, no authority shall be delegated
to the aforesaid Director-Officers with respect to any matter
concerning a grant or award of an Award under the Plan to any
Director, Executive Officer or Ten Percent Stockholder.
3.06 Authority to Make Awards and to Determine Terms and Conditions of
Awards. Subject to any limitations prescribed by the Articles of
Incorporation and Bylaws of the Company, and further subject to the
express terms, conditions, limitations and other provisions of the
Plan, the Plan Administrator shall have the full and final authority,
in its sole discretion at any time and from time-to-time, to do any of
the following: (i) designate and/or identify the Persons or classes of
Persons who are considered Eligible Persons; (ii) grant Awards to such
selected Eligible Persons or classes of Eligible Persons in such form
and amount as the Plan Administrator shall determine; (iii) determine
the number of Plan Shares to be covered by each Award; (iv) approve
forms of Award Agreements for use under the Plan; (v) impose such
terms, limitations, restrictions and conditions upon any Award as the
Plan Administrator shall deem appropriate and necessary including,
without limitation: (1) the date of grant of the Award; (2) the time
or times when Options may be exercised (which may be based on
performance criteria); (3) any vesting and/or forfeiture conditions
placed upon any Awards; and (4) and repurchase conditions placed upon
grants or awards of Grant Shares; (vi) require as a condition of the
grant of an Award that the Recipient surrender for cancellation some
or all of any unexercised Options which have previously been granted
to the Recipient under the Plan or otherwise (an Award, the grant of
which is conditioned upon such surrender; may have a price or value
lower (or higher) than the surrendered Option; may cover the same (or
a lesser or greater) number of shares of Common Stock as such
surrendered Option; may contain such other terms as the Plan
Administrator deems appropriate and necessary; and shall be
exercisable in or granted in accordance with its terms, without regard
to the number of shares, price, exercise period or any other term or
condition of such surrendered Option); (vii) approve the reduction in
the exercise price of any Option to the then-current Fair Market Value
if the Fair Market Value of the Common Stock covered by such Option
shall have declined since the date such Option was granted; (viii)
determine the type and value of consideration which the Company will
accept from Recipients in payment for the exercise of Options and/or
the award of Grant Shares; (ix) adopt, amend and rescind rules and
regulations relating to the Plan, including rules and regulations
relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws, and make all other
determinations and take all other action necessary or advisable for
the implementation and administration of the Plan; (x) modify or amend
each Award (subject to ), including the discretionary authority to
extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan; and (xi) agree to withhold
Plan Shares in satisfaction of any applicable Withholding Taxes. In
determining the recipient, form and amount of Awards, the Plan
Administrator shall consider any factors it may deem relevant such as,
by way of example and not limitation or obligation, the Recipient's
functions, responsibilities, value of services to the Company, and
past and potential contributions to the Company's profitability and
sound growth.
3.07 Authority to Interpret Plan; Binding Effect of All
Determinations. The Plan Administrator shall, in its sole and absolute
discretion, interpret and determine the effect of all matters and
questions relating to the Plan including, without limitation, all
questions relating to whether a Termination Of Recipient has occurred
such as, by way of example and not limitation, those relating to the
effect of a leave of absence, a change in status from an employee to
an independent contractor, and/or any other change in the
employer-employee relationship. All interpretations and determinations
of the Plan Administrator under the Plan (including, without
limitation, determinations pertaining to the eligibility of Persons to
receive Awards, the form, amount and timing of Awards, the methods of
payment for Awards, the restrictions and conditions placed upon
Awards, and the other terms and provisions of Awards and the
certificates or agreements evidencing same) need not be uniform and
may be made by the Plan Administrator selectively among Persons who
receive, or are eligible to receive, Awards under the Plan, whether or
not such Persons are similarly situated. All actions taken and all
interpretations and determinations made under the Plan in good faith
by the Plan Administrator shall be final and binding upon the
Recipient, the Company, and all other interested Persons. No member of
the Plan Administrator shall be personally liable for any action taken
or decision made in good faith relating to the Plan, and all Persons
constituting the Plan Administrator shall be fully protected and
indemnified to the fullest extent permitted under applicable law by
the Company in respect to any such action, determination, or
interpretation.
3.08 Compensation; Advisors. Members of the Plan Administrator shall
receive such compensation for their services hereunder as may be
determined by the Board. All expenses and liabilities incurred by
members of the Plan Administrator in connection with the
administration of the Plan shall be borne by the Company. The Plan
Administrator may, at the cost of the Company, employ attorneys,
consultants, advisors, accountants, appraisers, brokers or other
Persons to provide advice, opinions or valuations, and the Plan
Administrator shall be entitled to rely upon any such advice, opinions
or valuations.
ARTICLE IV
SHARES OF COMMON STOCK ISSUABLE UNDER PLAN
4.01 Maximum Number of Shares Authorized Under Plan. Plan Shares which
may be issued or granted under the Plan shall be authorized and
unissued or treasury shares of Common Stock. The aggregate maximum
number of Plan Shares which may be issued, whether upon exercise of
Options or as a grant of Grant Sharesshall not exceed One Million Four
Hundred Thousand (1,400,000) shares of Common Stock; provided,
however, that such number shall be increased by the following (unless
and to the extent that such action would cause an Incentive Option to
fail to qualify as an Incentive Option under Section 422 of the Code):
A. Any shares of Common Stock tendered by a Recipient as payment
for Option Shares (in connection with the exercise of the
associated Option) or Grant Shares;
B. Any shares of Common Stock underlying any options, warrants or
other rights to purchase or acquire Common Stock which options,
warrants or rights are surrendered by a Recipient as payment for
Option Shares (in connection with the exercise of the associated
Option) or Grant Shares;
C. Any shares of Common Stock subject to an Option which, for any
reason, is terminated unexercised or expires; and
D. Any Forfeitable Grant Shares which, for any reason, are
forfeited by the holder thereof or repurchased by the Company.
4.02 Calculation of Number of Shares Available for Awards. For
purposes of calculating the maximum number of Plan Shares which may be
issued under the Plan, the following rules shall apply:
A. When Options are exercised, and when cash is used as full
payment for Option Shares issuable upon exercise of such Options,
all Option Shares issued in connection with such exercise
(including Option Shares, if any, withheld in satisfaction of any
applicable Withholding Taxes) shall be counted;
B. When Options are exercised, and when shares of Common Stock
are used as full or partial payment for Option Shares issuable
upon exercise of such Options, the net Option Shares issued in
connection with such exercise (including Option Shares, if any,
withheld in satisfaction of any Applicable Withholding Tax
Requirements) shall be counted;
C. When Grant Shares are granted, and when shares of Common Stock
are used as full or partial payment therefore, the net Grant
Shares issued (including Grant Shares, if any, withheld in
satisfaction of any applicable Withholding Taxes) shall be
counted;
D. [Reserved]
E. If the exercise price of an Option is reduced, the transaction
will be treated as a cancellation of the Option and the grant of
a new Option.
4.03 Date of Awards. The date an Award is granted shall mean the date
selected by the Plan Administrator as of which the Plan Administrator
allots a specific number of Plan Shares to a Recipient with respect to
such Award pursuant to the Plan.
ARTICLE V
OPTIONS (TO PURCHASE OPTION SHARES)
5.01 Grant. The Plan Administrator may from time to time, and subject
to the provisions of the Plan and such other terms and conditions as the Plan
Administrator may prescribe, grant to any Eligible Person one or more options
("Options") to purchase the number of Plan Shares allotted by the Plan
Administrator ("Option Shares"), which Options shall be designated as
Non-Qualified Options or Incentive Options; provided, however, no Incentive
Option shall be granted to any Person who is not an "employee" (within the
meaning of Sections 422(a)(2) and 3401(c) of the Code) of the Company and/or of
any Parent and/or of any Subsidiary.
All Options shall be Non-Qualified Options unless expressly
stated by the Plan Administrator to be an Incentive Option, even if the terms
and conditions of the Option comply with the terms and conditions of Section 422
of the Code. No Incentive Option may be granted in tandem with any other Option.
The grant of an Option shall be evidenced by a written Stock Option Certificate,
executed by the Recipient and an authorized officer of the Company, stating: (i)
whether the Option is an Incentive Option, if applicable; (ii) the number of
Option Shares subject to the Option; (iii) the Option Price (as such term is
defined below) for the Option; and (iv) all other material terms and conditions
of such Option.
5.02 Option Price. The purchase price per Option Share deliverable upon
the exercise of an Option (the "Option Price") shall be such price as may be
determined by the Plan Administrator; provided, however: (i) if the Option is an
Incentive Option, the Option Price per Option Share may not be less than the
Fair Market Value of a share of Common Stock as of the date of the grant, unless
the Recipient of the Option is a Ten Percent Stockholder at the time of grant,
in which case the Option Price per Option Share may not be less than one hundred
ten percent (110%) of the Fair Market Value of a share of Common Stock on the
date the Option is granted; (ii) the Option Price per Option Share shall not be
less than that allowed under the Applicable Laws; and (iii) under no
circumstances shall the Option Price per Option Share be less than the then
current par value per share of Common Stock.
5.03 Option Term; Expiration. The term of each Option shall commence at
the grant date for such Option as determined by the Plan Administrator, and
shall expire (unless an earlier expiration date is expressly provided in the
underlying Stock Option Certificate or another section of the Plan including,
without limitation, section 5.05), on the first business day prior to the ten
(10) year anniversary of the date of grant thereof; provided, however,
notwithstanding the foregoing, any Incentive Options granted to a Ten Percent
Stockholder shall terminate on the first business day prior to the five (5) year
anniversary of the date of grant thereof. Except as limited by the requirements
of Section 422(b)(3) of the Code in the case of Incentive Options, the Plan
Administrator may extend the term of any outstanding Option should the Plan
Administrator, in its sole and absolute discretion, determine it advisable or
necessary to do so including, without limitation, in connection with any
Termination of Recipient.
5.04 Exercise Date. Unless a later exercise date is expressly provided
in the underlying Stock Option Certificate or another section of the Plan, each
Option shall become exercisable on the later of: (i) the date of its grant as
determined by the Plan Administrator; or (ii) the date of delivery to the
Recipient, and execution by the Company and the Recipient, of the underlying
Stock Option Certificate evidencing the grant of the Option. No Option shall be
exercisable after the expiration of its applicable term as set forth in section
5.03. Subject to the foregoing, each Option shall be exercisable in whole or in
part during its applicable term unless expressly provided otherwise in the
underlying Stock Option Certificate.
5.05 Vesting Conditions. Subject to the limitations in Article X relating
to Termination Of Recipient, the Plan Administrator may subject any Options
granted to such vesting conditions as the Plan Administrator, in its sole
discretion, determines are appropriate and necessary, such as, by way of example
and not obligation: (1) the attainment of goals by the Recipient; (2) in the
case of a Recipient who is an Employee, the continued provision of employment
services by such Recipient to the Company and/or to any Parent or Subsidiary;
(3) in the case of a Recipient who is a Director, the continued service by such
Recipient as a Director to the Company and/or to any Parent or Subsidiary; or
(4) in the case of a Recipient who is a Consultant, the continued provision of
consulting services by such Recipient to the Company and/or to any Parent or
Subsidiary. If no vesting is expressly provided in the underlying Stock Option
Certificate, the Option Shares shall be deemed fully vested upon date of grant.
Where vesting conditions are based upon continued performance of services to the
Company, the special rules of Article X relating to Termination Of Recipient
shall apply. No vesting conditions may be imposed which are not permitted, or
exceed those permitted, under the exemption from registration or qualification
to be relied upon under applicable Securities Laws, as selected by the Company
in its sole discretion. If no vesting is expressly provided in the underlying
Stock Option Certificate, the Option Shares shall be deemed fully vested upon
date of grant. The Plan Administrator may waive the acceleration of any vesting
and/or expiration provision of any outstanding Option should the Plan
Administrator, in its sole and absolute discretion, determine it advisable or
necessary to do so including, without limitation, in connection with any
Termination Of Recipient.
5.06 Manner of Exercise. An exercisable Option, or any exercisable
portion thereof, may be exercised solely by delivery of all of the following to
the Secretary of the Company at its principal executive offices prior to the
time when such Option (or such portion) becomes unexercisable under this Article
V: (i) a Notice of Exercise of Stock Option in the form attached to the
underlying Stock Option Certificate, duly signed by the Recipient or other
Person then entitled to exercise the Option or portion thereof, stating the
number of Option Shares to be purchased by exercise of the associated Option;
(ii) subject to Article VIII relating to non-cash form of consideration, payment
in full for the Option Shares to be purchased by exercise of the underlying
Option, together with payment in satisfaction of any applicable Withholding
Taxes (collectively, the "Gross Option Exercise Price"), in immediately
available funds, in U.S. dollars; provided, however, the Plan Administrator may,
in its sole discretion, permit a delay in payment of the Gross Option Exercise
Price for a period of up to thirty (30) days; (iii) a Consent of Spouse from the
spouse of the Recipient, if any, duly signed by such spouse; (iv) in the event
that the Option or portion thereof shall be exercised by any Person other than
the Recipient, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof; and (v) Such documents, representations
and undertakings as provided in the Stock Option Certificate and/or which the
Plan Administrator, in its absolute discretion, deems necessary or advisable
pursuant to section 13.01.
5.07 Net Conversion of Option. Notwithstanding section 5.06, if and to
the extent expressly permitted in the underlying Stock Option Certificate, or if
and to the extent otherwise consented to by the Plan Administrator in writing,
the Recipient may convert an Option, in whole or in part, into such net number
of Option Shares as shall be determined by dividing (x) the difference between
(I) the aggregate Fair Market Value of the total number Option Shares to be
exercised as of the conversion date, together with payment in satisfaction of
any applicable Withholding Taxes, and (II) the aggregate Exercise Price of such
total number of Option Shares, by (y) the Fair Market Value of one Option Share
as of the date of conversion. The Recipient shall, in the event of such
permitted conversion, tender to the Company all of the items described in
section 5.06 with respect to the underlying Option (other than section 5.06 to
the extent payment therefore is not required by operation of this section 5.07).
5.08 Grant of Replacement Options. In the event: (i) the Gross Option
Exercise Price is paid in the form of shares of Common Stock owned by the
Recipient pursuant to section of ; and (ii) the exercising Recipient is then an
Eligible Person, then the Plan Administrator in its sole discretion may, or the
Plan Administrator (if and to the extent expressly required by the underlying
Stock Option Certificate) shall, grant to the exercising Recipient options (the
"Replacement Options") entitling the exercising Recipient to purchase such
number of Plan Shares as shall equal the number of shares of Common Stock
delivered to the Company in payment of the Gross Option Exercise Price with
respect to the underlying Stock Option Certificate. The Replacement Option: (1)
shall be immediately exercisable upon its grant (without any vesting
conditions); (2) shall have an Option Price for each Option Share which equals
the Fair Market Value of the Common Stock so paid as determined for purposes of
payment pursuant to section of ; (3) shall have an Option Term co-terminus with
that of the underlying Option; and (4) shall contain such other terms and
conditions as contained in the underlying Stock Option Certificate. Shares of
Common Stock received by the Recipient in connection with the grant of the
Replacement Option may not be used as consideration in connection with the
exercise of the Replacement Option, unless such shares of Common Stock have been
held by the Recipient for a period of at least one (1) year, and such form of
payment is otherwise permitted pursuant to the terms of Article VIII. Each
Replacement Option shall be a Non-Qualified Option, even if the underlying
Option was an Incentive Option or the terms and conditions of the Replacement
Option would comply with the terms and conditions of Section 422 of the Code.
The grant of a Replacement Option shall be evidenced by a written Stock Option
Certificate, executed by the Recipient and an authorized officer of the Company,
stating: (A) the number of Option Shares subject to the Option; (B) the Option
Price (determined in the manner prescribed above in this section) for the
Option; and (C) all other material terms and conditions of such Option.
5.09 Conditions to Issuance of Option Shares. The Company shall not be
required to issue or deliver any certificate or certificates representing the
Option Shares purchased upon exercise of any Option or any portion thereof prior
to fulfillment of all of the following conditions: (i) the delivery of the
documents described in section 5.06; (ii) the receipt by the Company of full
payment for such Option Shares, together with payment in satisfaction of any
applicable Withholding Taxes; (iii) subject to Article XIII, the satisfaction of
any requirements or conditions of the Applicable Laws; and (iv) the lapse of
such reasonable period of time following the exercise of the Option as the Plan
Administrator may establish from time-to-time for administrative convenience.
5.10 Notice of Disposition of Option Shares Acquired by Exercise of
Incentive Options. The Plan Administrator may require any Recipient who is an
Employee who acquires any Option Shares pursuant to the exercise of an Incentive
Option to give the Company prompt notice of any "disposition" (within the
meaning of Section 422(a)(1) of the Code) of such Option Shares within (i) two
(2) years from the date of grant of the underlying Incentive Option, or (ii) one
(1) year after the issuance of such Option Shares to such Employee. The Plan
Administrator may direct that the certificates evidencing such Option Shares
refer to such requirement to give prompt notice.
ARTICLE VI
GRANT SHARES
6.01 Grant. The Plan Administrator may from time to time, and subject
to the provision of the Plan and such other terms and conditions as the Plan
Administrator may prescribe, grant to any Eligible Person one or more Plan
Shares allotted by the Plan Administrator ("Grant Shares"). The grant of Grant
Shares or grant of the right to receive Grant Shares shall be evidenced by a
written Stock Grant Agreement, executed by the Recipient and an authorized
officer of the Company on or before the time of the grant of such Grant Shares,
setting forth: (i) the number of Grant Shares granted; (ii) the consideration
(if any) for such Grant Shares; and (iii) all other material terms and
conditions of such grant.
6.02 Consideration (Purchase Price). The Plan Administrator, in its
sole discretion, may grant or award Grant Shares in any of the following
instances:
A. As Bonus/Reward. As a "bonus" or "reward" for services
previously rendered and otherwise fully compensated, in which case the recipient
of the Grant Shares shall not be required to pay any consideration to the
Company for such Grant Shares, and the value of each Grant Shares shall be the
Fair Market Value of a share of Common Stock on the date of grant.
B. As Compensation. As "compensation" for the previous
performance or future performance of services or attainment of goals, in which
case the recipient of the Grant Shares shall not be required to pay any
consideration to the Company for such Grant Shares (other than the performance
of the Recipient's services), and the value of each Grant Share received
(together with the value of such services or attainment of goals attained by the
Recipient), shall be the Fair Market Value of a share of Common Stock on the
date of grant.
C. As Purchase Price Consideration. In "consideration" for the
payment of a purchase price to the Company for each of such Grant Shares (the
"Stock Grant Purchase Price") in an amount established by the Plan
Administrator, provided, however:
(1) The Stock Grant Purchase Price shall not be less
than that allowed under the exemption from registration under the
applicable Blue Sky Laws of the state or territory in which the
Recipient then resides as selected by the Company in its sole
discretion;
(2) If the Common Stock is traded on a stock exchange
or over-the-counter on NASDAQ, the purchase price shall not be less
than the minimum price per share permitted by such stock exchange or
NASDAQ; and
(3) Under no circumstances shall the Stock Grant
Purchase Price per Grant Share be less than the then current par value
per share of Common Stock.
6.03 Term; Expiration. The term in which a Recipient may purchase any
Grant Shares awarded for which the Recipient is required to pay consideration
shall commence at the grant date of the underlying Stock Grant Agreement as
determined by the Plan Administrator, and shall expire on the date specified in
the underlying Stock Grant. Except as limited by applicable state securities law
exemption requirements, the Plan Administrator may extend the term of any
outstanding Stock Grant Agreement should the Plan Administrator, in its sole and
absolute discretion, determine it advisable or necessary to do so including,
without limitation, in connection with any Termination Of Recipient.
6.04 Deliveries; Manner of Payment. The Grant Shares may be purchased
solely by delivery of all of the following to the Secretary of the Company at
the principal executive offices at the Company prior to the time the Grant
Shares become purchasable under this Article VI: (i) the Stock Grant Agreement
for the Grant Shares, duly signed by the Recipient; (ii) a Consent of Spouse
from the spouse of the Recipient, if any, duly signed by such spouse; (iii)
subject to Article VIII relating to non-cash form of consideration, payment in
full of the Stock Grant Purchase Price (where payment thereof is required),
together with payment in satisfaction of any applicable Withholding Taxes
(collectively, the "Gross Stock Grant Purchase Price"), in immediately available
funds, in U.S. dollars; provided, however, the Plan Administrator may, in its
sole discretion, permit a delay in payment of the Gross Stock Grant Purchase
Price for a period of up to thirty (30) days; (iv) such documents,
representations and undertakings as provided in the Stock Grant Agreement and/or
which the Plan Administrator, in its absolute discretion, deems necessary or
advisable pursuant to section 13.01.
6.05 Conditions to Issuance of Grant Shares. The Company shall not be
required to issue or deliver any certificate or certificates representing the
Grant Shares prior to fulfillment of all of the following conditions: (i) the
delivery of the documents described in section 6.04; (ii) the receipt by the
Company of full payment (if applicable) for such Grant Shares, together with
payment in satisfaction of any applicable Withholding Taxes; (iii) subject to
Article XIII, the satisfaction of any requirements or conditions of the
Applicable Laws; and (iv) the lapse of such reasonable period of time following
the award of the Grant Shares as the Plan Administrator may establish from
time-to-time for administrative convenience.
ARTICLE VII
FORFEITURE CONDITIONS PLACED UPON GRANT SHARES
7.01 Vesting Conditions; Forfeiture of Unvested Grant Shares. Subject to
the limitations in Article X relating to Termination Of Recipient, the Plan
Administrator may subject or condition Grant Shares granted or awarded
(hereinafter referred to as "Forfeitable Grant Shares") to such vesting
conditions based upon continued provision of services or attainment of goals
subsequent to such grant of Forfeitable Grant Shares as the Plan Administrator,
in its sole discretion, may deem appropriate and necessary, such as, by way of
example and not obligation: (i) the attainment of goals by the Recipient; (ii)
in the case of a Recipient who is an Employee, the continued provision of
employment services by such Recipient to the Company and/or to any Parent or
Subsidiary; (iii) in the case of a Recipient who is a Director, the continued
service by such Recipient as a Director to the Company and/or to any Parent or
Subsidiary; or (iv) in the case of a Recipient who is a Consultant, the
continued provision of consulting services by such Recipient to the Company
and/or to any Parent or Subsidiary, subject to the provisions set forth below.
Where vesting conditions are based upon continued performance of services to the
Company, the special rules of Article X relating to Termination Of Recipient
shall apply. In the event the Recipient does not satisfy any vesting conditions,
the Company may require the Recipient, subject to the repurchase payment terms
of section 7.02, to forfeit such unvested Forfeitable Grant Shares to the
Company. All vesting conditions imposed on the grant of Forfeitable Grant
Shares, including repurchase payment terms complying with section 7.02, shall be
set forth in a written Stock Grant Agreement, executed by the Company and the
Recipient on or before the time of the grant of such Forfeitable Grant Shares,
stating the number of said Forfeitable Grant Shares subject to such conditions,
and further specifying the vesting conditions. If no vesting conditions are
expressly provided in the underlying Stock Grant Agreement, the Grant Shares
shall not be deemed to be Forfeitable Grant Shares, and will not be subject to
forfeiture. The Plan Administrator may waive the acceleration of any vesting
conditions placed upon any Forfeitable Grant Shares should the Plan
Administrator, in its sole and absolute discretion, determine it advisable or
necessary to do so including, without limitation, in connection with any
Termination Of Recipient.
7.02 Repurchase of Forfeitable Grant Shares Which Are Forfeited.
A. Repurchase Rights and Price. In the event the Company does
not waive its right to require the Recipient to forfeit any or all of such
unvested Forfeitable Grant Shares, the Company shall be required to pay the
Recipient, for each unvested Forfeitable Grant Share which the Company requires
the Recipient to forfeit, the amount per Forfeitable Grant Share set forth in
the Stock Grant Agreement, provided, however the repurchase price per
Forfeitable Grant Share in any event may not be less that the "original cost"
(as such term is defined below) of such Forfeitable Grant Shares to be forfeited
or, if elected by the Plan Administrator in its sole discretion and without any
obligation to do so in the underlying Stock Grant Agreement, the "book value"
(as such term is defined below) of such Forfeitable Grant Shares to be
forfeited, if higher than the original cost.
The "original cost" per Forfeitable Grant Share means the aggregate amount
originally paid to the Company by the Recipient (or his, her or its predecessor)
to purchase or acquire all of the Grant Shares to be forfeited, divided by the
total number of such shares. The amount of consideration paid by any Recipient
(or his, her or its predecessor) who originally received the Grant Shares as
compensation for services or a bonus, or otherwise without payment of
consideration in cash or property, shall be zero
The "book value" per Forfeitable Grant Share means the difference between
the Company's total assets and total liabilities as of the close of business on
the last day of the calendar month preceding the date of forfeiture, divided by
the total number of shares of Common Stock then outstanding. The book value per
Forfeitable Grant Share shall be determined by the independent certified public
accountant regularly engaged by the Company. The determination shall be
conclusive and binding and made in accordance with generally accepted accounting
principles applied on a basis consistent with those previously applied by the
Company.
B. Form of Payment. The repurchase payments to be made by the Company to a
Recipient for forfeited Forfeitable Grant Shares shall be in the form of cash or
cancellation of purchase money indebtedness with respect to the initial purchase
of said Forfeitable Grant Shares by the Recipient, if any, and must be paid no
later than ninety (90) days after the date of termination.
7.03 Restrictive Legend. Until such time as all conditions placed upon
Forfeitable Grant Shares lapse, the Plan Administrator may place a restrictive
legend on the share certificate representing such Forfeitable Grant Shares which
evidences said restrictions in such form, and subject to such stop instructions,
as the Plan Administrator shall deem appropriate and necessary, including the
following legend with respect to vesting conditions based upon continued
provision of services by the Recipient:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
FORFEITURE IN THE EVENT CERTAIN VESTING CONDITIONS BASED UPON THE
CONTINUED PROVISION OF SERVICES TO THE COMPANY BY THE HOLDER HEREOF ARE
NOT SATISFIED. THIS RISK OF FORFEITURE AND UNDERLYING VESTING
CONDITIONS ARE SET FORTH IN FULL IN THAT CERTAIN STOCK GRANT AGREEMENT
BETWEEN THE HOLDER OF THIS CERTIFICATE AND THE COMPANY DATED THE DAY OF
, , AND THAT CERTAIN 1998 IFS INTERNATIONAL, INC. STOCK PLAN DATED MAY
12, 1998, A COPY OF WHICH MAY BE INSPECTED BY AUTHORIZED PERSONS AT THE
PRINCIPAL OFFICE OF THE COMPANY AND ALL THE PROVISIONS OF WHICH ARE
INCORPORATED BY REFERENCE IN THIS CERTIFICATE.
The conditions shall similarly apply to any new, additional or
different securities the Recipient may become entitled to receive with respect
to such Forfeitable Grant Shares by virtue of a stock split or stock dividend or
any other change in the corporate or capital structure of the Company.
The Plan Administrator shall also have the right, should it
elect to do so, to require the Recipient to deposit the share certificate for
the Forfeitable Grant Shares with the Company or its agent, endorsed in blank or
accompanied by a duly executed irrevocable stock power or other instrument of
transfer, until such time as the conditions lapse. The Company shall remove the
legend with respect to any Forfeitable Grant Shares which become vested, and
remit to the Recipient a share certificate evidencing such vested Grant Shares.
ARTICLE VIII ,
NON-CASH PURCHASE CONSIDERATION
Notwithstanding section 5.06 or section 6.04, if and to the extent
expressly permitted in the underlying Stock Option Certificate or Stock Grant
Agreement (as the case may be), or if and to the extent otherwise consented to
by the Plan Administrator in writing, payment of the Gross Option Exercise Price
or the Gross Stock Grant Purchase Price (as the case may be) may be made by one
or more of the following non-cash forms of payment in lieu of cash
consideration:
(1) Shares of Common Stock owned by the Recipient
duly endorsed for transfer to the Company, with a Fair Market Value on
the date of delivery equal (i) in the case of the exercise of an
Option, to the aggregate Gross Option Exercise Price of the Option
Shares with respect to which the Option or portion thereof is thereby
exercised, or (ii) in the case of the purchase of Grant Shares, to the
Gross Stock Grant Purchase Price;
(2) The surrender or relinquishment of options (other
than with respect to the underlying Option), warrants or other rights
to acquire Common Stock held by the Recipient, with a Fair Market Value
on the date of delivery (or date of grant if permitted by the Plan
Administrator) equal (i) in the case of the exercise of an Option, to
the aggregate Gross Option Exercise Price of the Option Shares with
respect to which the Option or portion thereof is thereby exercised, or
(ii) in the case of the purchase of Grant Shares, to the Gross Stock
Grant Purchase Price;
(3) A reduction in the amount of any Company
liability to the Recipient, including any liability attributable to the
Recipient's participation in any Company-sponsored deferred
compensation program or arrangement;
(4) A full recourse promissory note bearing interest
at a rate as shall then preclude the imputation of interest under the
Code, and payable upon such terms as may be prescribed by the Plan
Administrator. The Plan Administrator shall prescribe the form of such
note and the security to be given for such note. Notwithstanding the
foregoing, no Option may be exercised by delivery of a promissory note
or by a loan from the Company if such loan or other extension of credit
is prohibited by law at the time of exercise of this Option or does not
comply with the provisions of Regulation G promulgated by the Federal
Reserve Board with respect to "margin stock" if the Company and the
Recipient are then subject to such Regulation;
(5) Any combination of the foregoing methods of
payment; and/or
(6) Such other good and valuable consideration and
method of payment for the issuance of Plan Shares to the extent
permitted by Applicable Laws.
ARTICLE IX
[RESERVED]
ARTICLE X
SPECIAL RULES FOR VESTING OR FORFEITURE
CONDITIONS BASED ON CONTINUED PERFORMANCE OF SERVICES
10.01 Lapse of Unvested Options and Forfeitable Grant Shares. Where vesting
conditions are imposed upon Options, or forfeiture conditions are imposed upon
Forfeitable Grant Shares, and such conditions are based upon continued
performance of services to the Company, then, in the event of Termination Of
Recipient: (i) in the case of unvested Options, the prospective right to
purchase unvested Option Shares shall immediately lapse upon such termination if
not exercised prior thereto; and (ii) in the case of unvested Forfeitable Grant
Shares, all such unvested Forfeitable Grant Shares shall be immediately
forfeited upon such termination unless such forfeiture is expressly waived in
writing by the Company; provided, however, in each of the foregoing cases, the
Plan Administrator may, but without any obligation to do so, provide in the
underlying Award Agreement that such unvested Options or Forfeitable Grant
Shares shall immediately vest upon the occurrence of one or more of the
following events as selected by the Plan Administration in its sole and absolute
discretion: (1) in the event of Termination of Recipient where such termination
is made by the Recipient and constitutes Termination By Recipient For Good
Reason; (2) in the event of Termination of Recipient where such termination is
made by the Company but does not constitute Termination By Company For Cause;
and/or (3) in the event of Termination of Recipient due to his or her death or
Disability.
10.02 Immediate Vesting of Unvested Options and Forfeitable Grant Shares
Upon Specified Events. The Plan Administrator may, but without any obligation to
do so, provide in the underlying Award Agreement that unvested Options or
Forfeitable Grant Shares shall immediately vest upon the occurrence of one or
more of the following events as selected by the Plan Administration in its sole
and absolute discretion: (i) in the event of a Change In Control; and/or (ii) in
the event of an Approved Corporate Transaction.
10.03 Acceleration of Expiration Date - Vested Options. Where vesting
conditions are imposed upon Options, and such conditions are based upon
continued performance of services to the Company, then, in the event of
Termination Of Recipient, unless otherwise expressly waived or extended by the
underlying Award Agreement, the following rules shall apply:
(1) The expiration date for vested Options shall be
accelerated to thirty (30) days after the effective date of Termination
Of Recipient; provided, however, the Plan Administrator may, but
without any obligation to do so, provide in the underlying Award
Agreement that the expiration date for vested Options shall not be
accelerated in any event, or be accelerated to a date later than said
thirty (30) days after the effective date of Termination Of Recipient,
in any of the following events as selected by the Plan Administration
in its sole and absolute discretion: (i) in the event of Termination of
Recipient where such termination is made by the Recipient and
constitutes Termination By Recipient For Good Reason; (ii) in the event
of Termination of Recipient where such termination is made by the
Company but does not constitute Termination By Company For Cause;
and/or (iii) in the event of Termination of Recipient due to his or her
death or Disability.
(2) The expiration date for unvested Options (insofar
as they do not become immediately vested pursuant to section 10.02))
shall be upon Termination Of Recipient if earlier than the expiration
date specified in section 5.03.
ARTICLE XI
ASSIGNABILITY OF CERTAIN AWARDS
11.01 Exercise of Options. Options (whether vested or unvested) may be
exercised only by the original Recipient thereof or, to the extent a Transfer is
permitted pursuant to section 11.02 and/or section 11.03 below, by a permitted
transferee of such Options.
11.02 Transfer of Options and Unvested Forfeitable Grant Shares. Except
as provided in section 11.03 below, neither Options (whether vested or
unvested), nor unvested Forfeitable Grant Shares, may be Transferred by a
Recipient, including upon the Death of a Recipient and/or pursuant to a
Qualified Domestic Relations Order as defined by Section 414(p) of the Code,
unless (A) such Transfer is expressly permitted in the underlying Award
Agreement, or (B) the Plan Administrator, in its sole and absolute discretion,
otherwise consents to such Transfer in writing; provided, however, anything in
the preceding sentence to the contrary notwithstanding, the following Options
may not in any circumstances be Transferred:
A. Incentive Options, except to the extent such Transfer (if
otherwise permitted under the terms of the Stock Option Certificate or by the
Plan Administrator) will not violate Section 422(b)(5) of the Code (i.e., any
Transfer {including Transfers pursuant to Qualified Domestic Relations Orders}
other than Transfers to a deceased Recipient's successors pursuant to will or
the laws of descent or distribution by reason of the death of the Recipient );
B. Options registered under the Securities Act with the
Commission on Form S-8; and/or
C. Options granted pursuant to any other exemption from
registration or qualification to be relied upon by the Company under applicable
Securities Laws which prohibits such assignment.
11.03 Death of Recipient. Upon the death of the Recipient (if the Recipient
is a natural Person, vested Options and unvested Forfeitable Grant Shares may,
if such Transfer is expressly permitted in the underlying Award Agreement, or if
the Plan Administrator, in its sole and absolute discretion, otherwise consents
to such Transfer in writing, be Transferred to such Persons who are the deceased
Recipient's successors pursuant to will or the laws of descent or distribution
by reason of the death of the Recipient (the "Recipient's Successors") and, in
the case of vested Options, may thereafter be exercised by the Recipient's
Successors. Options and unvested Forfeitable Grant Shares so Transferred shall
not be further Transferred by the Recipient's Successors except to the extent
the original Recipient of such Options and unvested Forfeitable Grant Shares
would have been permitted to Transfer such Options pursuant to section 11.02.
11.04 Effect of Prohibited Transfer or Exercise. Any Transfer or
exercise of any Option or unvested Forfeitable Grant Share so Transferred in
violation of this Article XI shall be null and void ab initio and of no further
force and effect.
11.05 Application to Vested Grant Shares. Under no circumstances shall
the prohibition against Transfer contained in this Article XI be construed to
apply to vested Grant Shares.
ARTICLE XII
NO STOCKHOLDER RIGHTS FOR HOLDERS OF OPTIONS
The Recipient of any Option (whether vested or unvested) shall not be,
nor have any of the rights or privileges of, a stockholder of the Company with
respect to the Option Shares underlying the Option, including, by way of example
and not limitation, the right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders, or to receive dividends, distributions,
subscription rights or otherwise, unless and until all conditions for exercise
of the Option shall be satisfied, and the Option duly exercised and underlying
Option Shares duly issued and delivered, at which time the Recipient shall
become a stockholder of the Company with respect to such issued Option Shares
and, in such capacity, shall thereafter be fully entitled to receive dividends
(if any are declared and paid), to vote, and to exercise all other rights of a
stockholder with respect to such issued Option Shares.
ARTICLE XIII
COMPLIANCE WITH APPLICABLE SECURITIES LAWS
13.01 Registration or Exemption from Registration. Unless expressly
stipulated in the underlying Award Agreement, in no event shall the Company be
required at any time to register any securities issued under or derivative from
the Plan, including any Option, Option Shares, or Grant Shares awarded or
granted hereunder (the "Plan Securities"), under the Securities Act (including,
without limitation, as part of any primary or secondary offering, or pursuant to
Form S-8) or to register or qualify the Plan Securities under any applicable
Securities Laws. In the event the Company does not register or qualify the Plan
Securities, the Plan Securities shall be issued in reliance upon such exemptions
from registration or qualification under the applicable Securities Laws that the
Company and its legal counsel, in their sole discretion, shall determine to be
appropriate and necessary with respect to any particular offer or sale of
securities under the Plan including, without limitation:
A. In the case of applicable federal Securities Laws, any of
the following if available: (1) Section 3(a)(11) of the Securities Act for
intrastate offerings and Rule 147 promulgated thereto; (2) Section 3(b) of the
Securities Act for limited offerings and Rule 701 promulgated thereto and/or
Rules 504 and/or 505 of Regulation D promulgated thereto, and/or (3) Section
4(2) of the Securities Act for private offerings and Rule 506 of Regulation D
promulgated thereto; and
B. In the case of applicable Blue Sky Laws, the requirements
of any applicable exemptions from registration or qualification afforded by such
Blue Sky Laws.
13.02 Failure or Inability to Obtain Regulatory Consents or Approvals.
In the event the Company is unable to obtain, without undue burden or expense,
such consents or approvals that may be required from any applicable regulatory
authority (or may be deemed reasonably necessary or advisable by legal counsel
for the Company) with respect to the applicable exemptions from registration or
qualification under the applicable Securities Laws which the Company is
reasonably relying upon, the Company shall have no obligation under this
Agreement to issue or sell the Plan Securities until such time as such consents
or approvals may be reasonably obtained without undue burden or expense, and the
Company shall be relieved of all liability therefor; provided, however, the
Company shall, if requested by the Recipient, rescind the Recipient's investment
decisions and return all funds or payments made by the Recipient to the Company
should the Company fail to obtain such consents or approvals within a reasonable
time after the Recipient tenders such funds or property to the Company.
13.03 Provision of Other Documents, Including Recipient's
Representative's Letter. If requested by the Company, the Recipient shall
provide such further representations or documents as the Company or its legal
counsel, in their reasonable discretion, deem necessary or advisable in order to
effect compliance with the conditions of any and all of the aforesaid exemptions
from registration or qualification under the applicable Securities Laws which
the Company is relying upon, or with all applicable rules and regulations of any
applicable securities exchanges or Nasdaq. If required by the Company, the
Recipient shall provide a Recipient's Representative's Letter from a purchaser
representative with credentials reasonably acceptable to the Company to the
effect that such purchaser representative has reviewed the Recipient's proposed
investment in the Plan Securities and has determined that an investment in the
Plan Securities: (i) is appropriate in light of the Recipient's financial
circumstances, (ii) that the purchaser representative and, if applicable, the
Recipient, have such knowledge and experience in financial and business matters
that such persons are capable of evaluating the merits and risks of an
investment in the Plan Securities, and (iii) that the purchaser representative
and, if applicable, the Recipient, have such business or financial experience to
be reasonably assumed to have the capacity to protect the Recipient's interests
in connection with the purchase of the Plan Securities.
13.04 Legend on Plan Shares. In the event the Company delivers
unregistered Plan Shares, the Company reserves the right to place the following
legend or such other legend as it deems necessary on the share certificate or
certificates to comply with the applicable Securities Laws being relied upon by
the Company.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN (1)
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION AFFORDED BY SUCH ACT
INCLUDING, WITHOUT LIMITATION, RULE 701 TO SECTION 3(b) OF THE
SECURITIES ACT OF 1933, OR (2) REGISTERED OR QUALIFIED, AS THE CASE MAY
BE, UNDER THE SECURITIES LAWS OF ANY STATE OR TERRITORY OF THE UNITED
STATES OR PROVINCE OF CANADA WHICH MAY BE APPLICABLE, IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION OR QUALIFICATION, AS THE CASE MAY BE,
AFFORDED BY SUCH STATE OR TERRITORIAL SECURITIES LAWS. THESE SECURITIES
HAVE BEEN ACQUIRED FOR THE HOLDER'S OWN ACCOUNT FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW FOR RESALE OR DISTRIBUTION. THESE SECURITIES MAY
NOT BE SOLD OR TRANSFERRED UNLESS (A) THEY HAVE BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 AS WELL AS UNDER THE
SECURITIES LAWS OF ANY STATE OR TERRITORY OF THE UNITED STATES AS MAY
THEN BE APPLICABLE, OR (B) THE TRANSFER AGENT (OR THE COMPANY IF THEN
ACTING AS ITS TRANSFER AGENT) IS PRESENTED WITH EITHER A WRITTEN
OPINION SATISFACTORY TO COUNSEL FOR THE COMPANY OR A NO-ACTION OR
INTERPRETIVE LETTER FROM THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION AND ANY APPLICABLE STATE OR TERRITORIAL SECURITIES
REGULATORY AGENCY TO THE EFFECT THAT SUCH REGISTRATION OR
QUALIFICATION, AS THE CASE MAY BE, IS NOT REQUIRED UNDER THE
CIRCUMSTANCES OF SUCH SALE OR TRANSFER.
ARTICLE XIV
REPORTS TO RECIPIENTS OF AWARDS
14.01 Financial Statements. The Company shall provide each Recipient with the
Company's financial statements at least annually. 14.02 Incentive Stock Option
Reports. The Company shall provide, with respect to each holder of an Incentive
Option who has exercised such Incentive Option, on or before January 31st of the
year following the year of exercise of such Incentive Option, a statement
containing the following information: (i) the Company's name, address, and
taxpayer identification number; (ii) the name, address, and taxpayer
identification number of the Person to whom Option Shares were issued by the
Company upon exercise of the Incentive Option; (iii) the date the Incentive
Option was granted; (iv) the date the Option Shares underlying the Incentive
Option were issued pursuant to the exercise of the Incentive Option; (v) the
Fair Market Value of the Option Shares on date of exercise; (vi) the number of
Option Shares issued upon exercise of the Incentive Option; (vii) a statement
that the Incentive Option was an incentive stock option; and (viii) the total
cost of the Option Shares.
ARTICLE XV
ADJUSTMENTS
15.01 Common Stock Recapitalization or Reclassification; Combination or
Reverse Stock Split; Forward Stock Split. If (i) outstanding shares of Common
Stock are subdivided into a greater number of shares by reason of
recapitalization or reclassification, (ii) a dividend in Common Stock shall be
paid or distributed in respect of the Common Stock, then the number of Plan
Shares, if any, available for issuance under the Plan, and the Option Price of
any outstanding Options in effect immediately prior to such subdivision or at
the record date of such dividend shall, simultaneously with the effectiveness of
such subdivision or immediately after the record date of such dividend, be
proportionately increased and reduced, respectively. If outstanding shares of
Common Stock are combined into a lesser number of shares by reason of
combination or reverse stock split, then the number of Plan Shares, if any,
available for issuance under the Plan, and the Option Price of any outstanding
Option in effect immediately prior to such combination shall, simultaneously
with the effectiveness of such combination, be proportionately reduced and
increased, respectively.
15.02 Consolidation or Merger; Exchange of Securities; Divisive
Reorganization; Other Reorganization or Reclassification. In case of (i) the
consolidation, merger, combination or exchange of shares of capital stock with
another entity, (ii) the divisive reorganization of the Company (i.e., split-up,
spin-off or split-off), or (iii) any capital reorganization or any
reclassification of Common Stock (other than a recapitalization or
reclassification described above in section 15.01), the Recipient shall
thereafter be entitled upon exercise of the Option to purchase the kind and
number of shares of capital stock or other securities or property of the Company
(or its successor{s}) receivable upon such event by a Recipient of the number of
Option Shares which such Option entitles the Recipient to purchase from the
Company immediately prior to such event. In every such case, the Company may
appropriately adjust the number of Option Shares which may be issued under the
Plan, the number of Option Shares subject to Options theretofore granted under
the Plan, the Option Price of Options theretofore granted under the Plan, and
any and all other matters deemed appropriate by the Plan Administrator.
15.03 Adjustments Determined in Sole Discretion of Board. All
adjustments to be made pursuant to the foregoing subsections shall be made in
such manner as the Plan Administrator shall deem equitable and appropriate, the
determination of the Plan Administrator shall be final, binding and conclusive.
15.04 No Other Rights to Recipient. Except as expressly provided in
this Article XV: (i) the Recipient shall have no rights by reason of any
subdivision or consolidation of shares of capital stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class, and (ii) the dissolution, liquidation, merger,
consolidation or divisive reorganization or sale of assets or stock to another
corporation (including any Approved Corporate Transactions), or any issue by the
Company of shares of capital stock of any class, or warrants or options or
rights to purchase securities (including securities convertible into shares of
capital stock of any class), shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of, or the Option Price for,
the Option Shares. The grant of an Award pursuant to the Plan shall not in any
way affect or impede the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or to sell or
transfer all or any part of its business or assets.
ARTICLE XVI
APPROVED CORPORATE TRANSACTIONS -- AFFECT ON OPTIONS
Notwithstanding Article XV above, in the event of the occurrence of any
Approved Corporate Transaction, or in the event of any change in applicable
laws, regulations or accounting principles, the Plan Administrator in its
discretion is hereby authorized to take any one or more of the following actions
whenever the Plan Administrator determines that such action is appropriate in
order to facilitate such Approved Corporate Transactions or to give effect to
changes in laws, regulations or principles:
16.01 Purchase or Replacement of Option. In its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, the Plan
Administrator may provide, either by the terms of the underlying Award Agreement
or by action taken prior to the occurrence of such transaction or event and
either automatically or upon the Recipient's request, for any one or combination
of the following: (1) the purchase of any such Option for an amount of cash
equal to the amount that could have been attained upon the exercise of such
Option, or realization of the Recipient's rights had such Option been currently
exercisable or payable or fully vested; and/or (ii) the replacement of such
Option with other rights or property (which may or may not be securities)
selected by the Plan Administrator in its sole discretion.
16.02 Acceleration of Vesting and Exercise. In its sole and absolute
discretion, and on such terms and conditions as it deems appropriate, the Plan
Administrator may provide, either by the terms of the underlying Award Agreement
or by action taken prior to the occurrence of such transaction or event, that
such Option may not be exercised after the occurrence of such event; provided,
however, the Recipient must be given the opportunity, for a specified period of
time prior to the consummation of such transaction, to exercise the Option as to
all Option Shares (i.e., both fully vested and unvested) covered thereby.
16.03 Assumption or Substitution. In its sole and absolute discretion,
and on such terms and conditions as it deems appropriate, the Plan Administrator
may provide, either by the terms of the underlying Award Agreement or by action
taken prior to the occurrence of such transaction or event, that such Option be
assumed by the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options covering the capital
stock of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
prices.
ARTICLE XVII
CERTAIN TRANSACTIONS WITHOUT CHANGE IN
BENEFICIAL OWNERSHIP -- AFFECT ON OPTIONS
Notwithstanding Article XV above, in the event of a transaction whose
principal purpose is to change the State in which the Company is incorporated,
or to form a holding company, or to effect a similar reorganization as to form
of entity without change of beneficial ownership, including, without limitation,
through: (i) a merger or consolidation or stock exchange or divisive
reorganization (i.e., spin-off, split-off or split-up) or other reorganization
with respect to the Company and/or its stockholders, or (ii) the sale, transfer,
exchange or other disposition by the Company of its assets in a single or series
of related transactions, then the Plan Administrator may provide, in its sole
and absolute discretion, and on such terms and conditions as it deems
appropriate, either by the terms of the underlying Award Agreement or by action
taken prior to the occurrence of such transaction or event, that such Option
shall be assumed by the successor or survivor corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar options covering the
capital stock of the successor or survivor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices.
ARTICLE XVIII
AMENDMENT AND DISCONTINUATION OF PLAN; MODIFICATION OF AWARDS
18.01 Amendment, Modification or Termination of Plan. The Board may
amend or modify the Plan or suspend or discontinue the Plan at any time or from
time-to-time; provided, however, (i) no such action may adversely alter or
impair any Award previously granted under the Plan without the consent of each
Recipient affected thereby, and (ii) no action of the Board will cause Incentive
Options granted under the Plan not to comply with Section 422 of the Code unless
the Board specifically declares such action to be made for that purpose.
18.02 Modification of Terms of Outstanding Options. Subject to the
terms and conditions and within the limitations of the Plan, the Plan
Administrator may modify the terms and conditions of any outstanding Options
granted under the Plan, including extending the expiration date of such Options
or renewing such Options or repricing such options or modifying any vesting
conditions (but only, in the case of Incentive Options, to the extent permitted
under Section 422 of the Code), or accept the surrender of outstanding Options
(to the extent not theretofore exercised) and authorize the granting of new
Options in substitution therefor (to the extent not theretofore exercised);
provided, however, no modification of any outstanding Option may, without the
consent of the Recipient affected thereby, adversely alter or impair such
Recipients rights under such Option.
18.03 Modification of Vesting Conditions Placed on Forfeitable Grant
Shares. Subject to the terms and conditions and within the limitations of the
Plan, including vesting conditions, the Plan Administrator may modify the terms
and conditions placed upon the grant of any Forfeitable Grant Shares; provided,
however, no modification of any conditions placed upon Forfeitable Grant Shares
may, without the consent of the Recipient thereof, adversely alter or impair
such Recipient's rights with respect to such Forfeitable Grant Shares.
18.04 Compliance with Laws. The Plan Administrator may, at any time or
from time-to-time, without receiving further consideration from, or paying any
consideration to, any Person who may become entitled to receive or who has
received the grant of an Award hereunder, modify or amend Awards granted under
the Plan as required to: (i) comport with changes in securities, tax or other
laws or rules, regulations or regulatory interpretations thereof applicable to
the Plan or Awards thereunder or to comply with the rules or requirements of any
stock exchange or Nasdaq and/or (ii) ensure that the Plan is and remains exempt
from the application of any participation, vesting, benefit accrual, funding,
fiduciary, reporting, disclosure, administration or enforcement requirement of
either the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the corresponding provisions of the Internal Revenue Code of 1986,
as amended (Subchapter D of Title A, Chapter 1 of the Code {encompassing
Sections 400 to 420 of the Code}).
ARTICLE XIX
MISCELLANEOUS
19.01 Performance on Business Day. In the event the date on which a
party to the Plan is required to take any action under the terms of the Plan is
not a business day, the action shall, unless otherwise provided herein, be
deemed to be required to be taken on the next succeeding business day.
19.02 Employment Status. In no event shall the granting of an Award be
construed to: (i) grant a continued right of employment to a Recipient if such
Person is employed by the Company and/or by the Parent and/or any Subsidiary, or
(ii) affect, restrict or interfere with in any way any right the Company and/or
Parent and/or any Subsidiary may have to terminate or otherwise discharge the
employment and/or engagement of such Person, at any time, with or without cause,
except to the extent that such Person and the Company and/or Parent and/or any
Subsidiary may have otherwise expressly agreed in writing. Unless otherwise
expressly agreed in writing, the application and/or construction of the terms
Termination By Company For Cause, Termination By Recipient For Good Reason and
Termination Of Recipient are solely intended for, and shall be limited to, the
operation of the vesting and expiration provisions of Awards granted under this
Plan, and governing Award Agreements, and not for any other purpose.
19.03 Non-Liability For Debts; Restrictions Against Transfer. No
Options or unvested Forfeitable Grant Shares granted hereunder, or any part
thereof, (i) shall be liable for the debts, contracts, or engagements of a
Recipient, or such Recipient's successors in interest as permitted under this
Plan, or (ii) shall be subject to disposition by transfer, alienation, or any
other means whether such disposition be voluntary or involuntary or by operation
of law, by judgment, levy, attachment, garnishment, or any other legal or
equitable proceeding (including bankruptcy), and any attempted disposition
thereof shall be null and void ab initio and of no further force and effect.
19.04 Relationship Of Plan To Other Options And Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Parent or Subsidiary. Nothing in this Plan
shall be construed to limit the right of the Company to: (i) establish any other
forms of incentives or compensation for Employees and/or Directors of the
Company and/or of any Parent and/or any Subsidiary and/or to any Consultants to
the Company and/or to any Parent and/or any Subsidiary; or (ii) to grant options
to purchase shares of Common Stock or to award shares of Common Stock or grant
any other securities or rights otherwise under this Plan in connection with any
proper corporate purpose including but not by way of limitation, in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise, of
the business, stock or assets of any corporation, partnership, firm or
association.
19.05 Severability. If any term or provision of this Plan or the
application thereof to any person or circumstance shall, to any extent, be
determined to be invalid, illegal or unenforceable under present or future laws,
then, and in that event: (i) the performance of the offending term or provision
(but only to the extent its application is invalid, illegal or unenforceable)
shall be excused as if it had never been incorporated into this Plan, and, in
lieu of such excused provision, there shall be added a provision as similar in
terms and amount to such excused provision as may be possible and be legal,
valid and enforceable; and (ii) the remaining part of this Plan (including the
application of the offending term or provision to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable) shall not
be affected thereby, and shall continue in full force and effect to the fullest
extent provided by law.
19.06 Headings; References; Incorporation; Gender; Statutory
References. The headings used in this Plan are for convenience and reference
purposes only, and shall not be used in construing or interpreting the scope or
intent of this Plan or any provision hereof. References to this Plan shall
include all amendments or renewals thereof. All cross-references in this Plan,
unless specifically directed to another agreement or document, shall be
construed only to refer to provisions within this Plan, and shall not be
construed to be referenced to the overall transaction or to any other agreement
or document. Any Exhibit referenced in Plan shall be construed to be
incorporated in this Plan by such reference. As used in this Plan, each gender
shall be deemed to include the other gender, including neutral genders
appropriate for entities, if applicable, and the singular shall be deemed to
include the plural, and vice versa, as the context requires. Any reference to
statutes or laws will include all amendments, modifications, or replacements of
the specific sections and provisions concerned.
19.07 Applicable Law. This Plan and the rights and remedies of each
party arising out of or relating to this Plan (including, without limitation,
equitable remedies) shall (with the exception of the Securities Laws) be solely
governed by, interpreted under, and construed and enforced in accordance with
the laws (without regard to the conflicts of law principles) of the State of New
York, as if this Plan were made, and as if its obligations are to be performed,
wholly within the State of New York.
<PAGE>
- --------------------------------------------------------------------------------
1998 IFS INTERNATIONAL, INC. STOCK PLAN
Adopted May 12, 1998
- --------------------------------------------------------------------------------
IFS INTERNATIONAL, INC.
Rensselaer Technology Park
300 Jordan Road
Troy, New York 12180
<PAGE>
Appendix 2 to Proxy Statement
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION, NUMBER, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS,
AND OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES A PREFERRED STOCK
OF
IFS HOLDINGS, INC.
[FORMERLY IFS INTERNATIONAL, INC.]
IFS HOLDINGS, INC., formerly IFS INTERNATIONAL, INC., a corporation
organized and existing under the laws of the State of Delaware, hereby certifies
as follows:
THAT the name of the corporation (hereinafter called the "Corporation"
or the "Company" is IFS HOLDINGS, INC., formerly IFS INTERNATIONAL, INC.,
THAT the certificate of incorporation of the Corporation authorizes the
issuance of 25,000,000 shares of Preferred Stock, par value $0.001 per share,
and expressly vests in the Board of Directors of the Corporation the authority
provided therein to issue any or all of said shares in one or more series and by
resolution or resolutions to establish the designation, number, full or limited
voting powers, or the denial of voting powers, preferences and relative,
participating, optional, and other special rights and qualification,
limitations, restrictions, and other distinguishing characteristics of each
series to be issued.
THAT on February 20, 1997, the Corporation filed with the Secretary of
State of the State of Delaware a Certificate of Designation, Number, Powers,
Preferences and Relative, Participating, Optional, and Other Special Rights and
the Qualifications, Limitations, Restrictions, and Other Distinguishing
Characteristics of Series A Preferred Stock (hereinafter called the "Certificate
of Designation").
THAT the Board of Directors of the Corporation, acting pursuant to the
authority expressly vested in it as aforesaid, has adopted resolutions amending
the Certificate of Designation as follows:
RESOLVED, that Section C.4. of the Certificate of Designation is
hereby amended and restated in its entirety to read as follows:
" 4. Conversion Number. Each share of Series A Preferred Stock shall
be convertible into such number of shares of Common Stock as shall
equal the Conversion Number at the time of conversion. The Conversion
Number shall equal 1.1 shares, subject to adjustment as set forth in
Section C.8 of this Designation."
RESOLVED, that Section C.5. of the Certificate of Designation is
hereby amended and restated in its entirety to read as follows:
" 5. Mandatory Conversion. Each share of Series A Preferred Stock
automatically shall be converted into Common Stock on the earlier of
(a) the opening of business on February 1, 1999, or (b) the opening of
business on the first business day following the date of consummation
of a merger or acquisition of the Corporation (the "Business
Combination") in which the outstanding capital stock to the Corporation
is exchanged for cash, property or securities (the "Consummation") of
another entity if the Consideration received in the Business
Combination for each share of Common Stock is $5.00 or greater per
share on a fully-diluted basis. If part or all of the Consideration is
other than cash, the amount of the Consideration other than cash shall
be deemed to be the value as determined in good faith by the Board of
Directors. The date of such automatic conversion shall be deemed to be
the Notice Date with respect to such conversion."
THAT thereafter, the foregoing amendments were ratified and approved at
the next annual meeting of stockholders, held on January 21, 1999, by the
affirmative vote of more than two-thirds of the outstanding shares of each class
of voting stock of the corporation, including the Series A Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by David L. Hodge, its President, and attested to by Carmen A. Pascuito,
its Secretary, this ___ day of _________, 1999.
IFS International, Inc. Attest:
By: By:
David L. Hodge, President Carmen A. Pascuito, Secretary
<PAGE>
Appendix 3 to Proxy Statement
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IFS INTERNATIONAL, INC.
IFS INTERNATIONAL, INC., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
THAT at a meeting of the Board of Directors of IFS International, Inc. (the
"Corporation") duly held on August 18, 1998, resolutions were duly adopted
approving amendment of the Certificate of Incorporation of the Corporation,
declaring such amendments to be advisable, and directing that such amendment
proposals be considered by the stockholders of the Corporation at the next
annual meeting of stockholders. The resolutions for the proposed amendments are
as follows:
RESOLVED, that Article FIRST of the Certificate of
Incorporation is hereby amended and restated in its entirety to read as
follows:
" FIRST: The name of the corporation (hereinafter called the
"corporation") is IFS HOLDINGS, INC."
THAT thereafter, the foregoing amendment was approved at the next annual
meeting of stockholders, held on March 16, 1999, by the affirmative vote of more
than two-thirds of the outstanding shares of each class of voting stock of the
corporation.
THAT the foregoing amendments to the corporation's Certificate of
Incorporation have been duly approved in accordance with section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
signed by David L. Hodge, its President, and attested to by Carmen A. Pascuito,
its Secretary, this ___ day of March, 1999.
IFS International, Inc. Attest:
By:_________________________ By:___________________________
David L. Hodge, President Carmen A. Pascuito, Secretary
<PAGE>
IFS International, Inc.
Rensselaer Technology Park
300 Jordan Road
Troy, New York 12180
PROXY
The undersigned hereby appoints __________________ and ______________________,
and each of them, with power of substitution, to represent and vote on behalf of
the undersigned all of the shares of IFS International, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
on Thursday, December 10, 1998, at the offices of the Company located at 300
Jordan Road, Troy, New York, and at any adjournment thereof, hereby revoking all
proxies heretofore given with respect to such stock, upon the proposals more
fully described in the notice of and proxy statement for the meeting, receipt of
which are hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS LISTED BELOW AND
ELECTION OF THE PERSONS NAMED BELOW AS DIRECTORS.
1. PROPOSAL FOR APPROVAL OF 1998 IFS INTERNATIONAL, INC. STOCK PLAN
_ FOR _ AGAINST _ ABSTAIN
2. PROPOSAL FOR APPROVAL OF AN AMENDMENT OF THE CERTIFICATE OF DETERMINATION
CONCERNING SERIES A PREFERRED STOCK.
_ FOR _ AGAINST _ ABSTAIN
3. PROPOSAL FOR APPROVAL OF CHANGE OF CORPORATE NAME TO IFS HOLDINGS, INC.
_ FOR _ AGAINST _ ABSTAIN
4. PROPOSAL FOR APPROVAL OF THE SELECTION OF URBACH KAHN & WERLIN PC AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING APRIL 30, 1999.
_ FOR _ AGAINST _ ABSTAIN
5. ELECTION OF DIRECTORS
_ FOR all nominees listed below _ WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
Frank A. Pascuito, David L. Hodge, Simon J. Theobald, Arnold Wells,
John P. Singleton, DuWayne J. Peterson, Per Olof Ezelius, C. Rex Welton
INSTRUCTION:
To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below.)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL OF THE ABOVE-DESCRIBED PROPOSALS AND FOR ELECTION OF THE NAMED
DIRECTOR NOMINEES. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Please sign exactly a name appears below. When shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership or
limited liability company, please sign in the partnership or limited liability
company name by authorized person.
Printed Name of Shareholder
<PAGE>
Date
Signature
Signature if held jointly
<PAGE>
Please sign and return this proxy in the enclosed, postage-paid envelope whether
or not you attend the meeting. You may attend the meeting and void this proxy
simply by voting your shares. I G will G will not attend the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY.
