<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Internet Communications Corporation
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(Name of Registrant as Specified In Its Charter)
Internet Communications Corporation
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
INTERNET COMMUNICATIONS CORPORATION
7100 E. Belleview Ave., Suite 201
Greenwood Village, Colorado 80111
Telephone - (303) 770-7600
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 27, 1999
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF INTERNET COMMUNICATIONS CORPORATION:
An Annual Meeting of Shareholders of Internet Communications Corporation, a
Colorado corporation (the "Company"), will be held at the Company's offices at
7100 E. Belleview Ave., Suite 201, Greenwood Village, Colorado 80111, on May
27, 1999 at 10:00 a.m., Denver time, to consider and take action for the purpose
of:
1. Electing three directors;
2. Approving the 1999 Employee Stock Purchase Plan; and
3. Such other business as may properly come before the meeting, or any
adjournment or adjournments thereof.
The discussion of the proposals of the Board of Directors set forth above
is intended only as a summary, and is qualified in its entirety by the
information relating to the proposals set forth in the accompanying Proxy
Statement.
Only shareholders of record at the close of business on April 23, 1999,
will be entitled to notice of and to vote at this annual meeting, or any
adjournment or adjournments thereof.
Date: April 30, 1998 By Order of the Board of Directors:
John M. Couzens, President and CEO
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES. THE GIVING OF SUCH PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING.
YOUR VOTE IS IMPORTANT
<PAGE>
INTERNET COMMUNICATIONS CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 27, 1999
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH A SOLICITATION OF
PROXIES (IN THE FORM ENCLOSED) BY THE BOARD OF DIRECTORS OF INTERNET
COMMUNICATIONS CORPORATION (THE "COMPANY", OR "INCC") TO BE USED AT THE ANNUAL
MEETING OF SHAREHOLDERS (THE "ANNUAL MEETING") AT 10:00 A.M. (DENVER TIME), ON
MAY 27, 1999, AT THE COMPANY'S OFFICES AT 7100 E. BELLEVIEW AVE., SUITE 201,
GREENWOOD VILLAGE, COLORADO 80111. THE PROXY AND PROXY STATEMENT IS BEING
MAILED TO SHAREHOLDERS ON OR ABOUT APRIL 30, 1999.
PROXY SOLICITATION
If the enclosed Proxy is executed and returned, it will be voted on the
proposals as indicated by the shareholder. The Proxy may be revoked by the
shareholder at any time prior to its use by notice in writing to the Secretary
of the Company, by executing a later dated proxy and delivering it to the
Company prior to the meeting or by voting in person at the meeting. The cost of
preparing, assembling and mailing the Notice of Meeting, Proxy Statement and
Proxy (the "Proxy Materials"), miscellaneous costs with respect to the Proxy
Materials and solicitation of the Proxies will be paid by the Company. The
Company also may use the services of its directors, officers and employees to
solicit Proxies, personally or by telephone and telegraph, but at no additional
salary or compensation. The Company intends to request banks, brokerage houses
and other custodians, nominees and fiduciaries to forward copies of the Proxy
Materials to those persons for whom they hold such shares and request authority
for the execution of the Proxies. The Company will reimburse them for the
reasonable out-of-pocket expenses incurred by them in so doing.
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VOTING SECURITIES
Shareholders of record at the close of business on April 23, 1999 will be
entitled to vote on all matters. On the record date the Company had 5,617,637
shares of Company Common Stock issued and outstanding and 50,000 shares of
Preferred Stock issued and outstanding (convertible into 2,222,222 shares of
Common Stock). The holders of the Company Common Stock are entitled to one vote
per share. The holders of Preferred Stock vote with the holders of Common Stock
as a single class, with each share of Preferred Stock entitled to the number of
votes that the holder would have if such shares were converted. One third of
the issued and outstanding shares of the Company Common Stock entitled to vote,
represented in person or by proxy, constitutes a quorum at any shareholders'
meeting. Approval of the Stock Purchase Plan will require that the votes cast
favoring the action must exceed the votes cast opposing the action. In the
election of directors (Proposal One), that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast in
favor of their election, are elected to the board of directors. Abstentions and
"broker non-votes" (referring to instances where a broker or other nominee
physically indicates on the proxy that, because it has not received instructions
from beneficial owners, it does not have discretionary authority as to certain
shares of Company Common Stock to vote on the proposal) will have no effect on
either proposal. The proxies named in the enclosed proxy card may, at the
direction of the Board, vote to adjourn or postpone the Annual Meeting to
another time or place for the purpose of soliciting additional proxies necessary
for approval of a proposal or otherwise.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
In December 1998 Reynaldo U. Ortiz resigned from the Board of Directors.
Currently, there are seven directors serving on the Board, six of whom are
currently not employees of the Company.
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
Term
Name Expires Age Positions and Offices Held
- ----------------------- ------- --- -------------------------------------------------------
<S> <C> <C> <C>
John M. Couzens 1999 38 Director, President and Chief Executive Officer
Thomas C. Galley 1999 43 Director
Peter A. Guglielmi 2001 56 Director
William J. Maxwell 2000 56 Director
Craig D. Slater 2000 42 Director
Richard T. Liebhaber 1999 64 Director
Robert L. Smith 2001 55 Director
T. Timothy Kershisnik n/a 41 Chief Financial Officer, Vice President, Treasurer, and
Secretary
Charles R. Eazor n/a 52 General Manager/Vice President
</TABLE>
2
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The following sets forth biographical information as to the business
experience of each Officer and Director of the Company for at least the past
five years.
John M. Couzens - Director, President and Chief Executive Officer. Mr.
Couzens was appointed to the Company's Board of Directors in September 1996 and
was named Vice President, Treasurer and General Manager of Voice Systems in
March 1997. In March 1998, he was appointed Interim President and Chief
Executive Officer and President and Chief Executive Officer in May 1998. He had
been President and Chief Executive Officer of Interwest Communications C.S.
Corporation ("Interwest") from April 1996 until September 1996 and was Vice
President, Chief Financial Officer and Treasurer of Interwest Group Inc.
("Group") (the majority shareholder of the Company) from September 1994 until
March 1996. He has served on the board of directors of Group since May 1996.
Prior to joining Group, Mr. Couzens was Vice President and Division Manager at
The Northern Trust Company. Mr. Couzens has a CPA and MBA from University of
Chicago Graduate School of Business.
Thomas C. Galley - Director. In 1986, Mr. Galley co-founded Internet
Datacomm, Inc., which was subsequently acquired and merged into the Company.
From February 1990 until March 1998, he served as the Company's President and
Chief Executive Officer and remains a member of its Board of Directors.
Peter A. Guglielmi - Director. Mr. Guglielmi was appointed to the
Company's Board of Directors in July 1995. Mr. Guglielmi has served as the
Executive Vice President and Chief Financial Officer of Tellabs, Inc., a major
supplier of advanced networking solutions to the telecommunications industry
worldwide, since 1988. Mr. Guglielmi served as President of Tellabs
International, Inc., with responsibility for all activities outside the United
States, from 1993 to 1997. Mr. Guglielmi also serves as a member of the Board
of Directors of Tellabs, The Cherry Corporation and Uniphase Corp.
Richard T. Liebhaber - Director. Mr. Liebhaber has been a Director of the
Company since May 1997. He has been a Managing Director of Veronis, Suhler &
Associates, Inc., a New York media merchant banking firm, since June 1995. Mr.
Liebhaber currently serves as a member of the Board of Directors for Qwest
Communications International, Inc., Alcatel Network Systems, Inc., Avici
Systems, Inc., Visiting Nurse Service of New York, and Scholz Master Builders.
In addition, he serves as Vice Chairman of the WPAS (Washington Performing Arts
Society). From December 1985 to his retirement in May 1995, Mr. Liebhaber
served as Executive Vice President of MCI Communications Corporation and as a
member of its Management Committee. Mr. Liebhaber was a member of the Board of
Directors of MCI Communications Corporation from July 1992 until his retirement
in May 1995.
William J. Maxwell - Director. Mr. Maxwell was elected to the Company's
Board of Directors in June 1996. Mr. Maxwell is President and Chief Operating
Officer of Advanced Radio Telecom Corp., a telecommunications company delivering
integrated, high-speed communications solutions to businesses. Prior to joining
Advanced Radio, Mr. Maxwell was Executive Vice President of ICG Communications
and President and Chief Executive Officer of ICG Telecom Group, Inc., a leading
competitive local exchange carrier from 1991 to 1997.
Craig D. Slater - Director. Mr. Slater has been a Director of INCC since
September 1996. Mr. Slater has been President of Anschutz Investment Company
since August 1997 and Vice President- Acquisitions and Investments of both
Anschutz Company (the sole shareholder of Group) and The Anschutz Corporation
since August 1995. Mr. Slater served as Corporate Secretary of Anschutz Company
and The Anschutz Corporation from September 1991 to October 1996 and held
various other positions with those companies from 1988 to 1995. He has been a
Director of Forest Oil Corporation since 1995, and a Director of Qwest
Communications International, Inc. since February 1997.
3
<PAGE>
Robert L. Smith - Director. Mr. Smith was appointed to the Board of
Directors in March 1998 and elected to a three year term in May 1998. Mr. Smith
was previously appointed to the Board and served as a Director from September
1996 through June 1997 until his retirement. Prior to retiring, Mr. Smith was
Vice President of Network Systems for Interwest. Prior to that he was President
of Interwest from 1987 until April 1996.
T. Timothy Kershisnik - Vice President, Chief Financial Officer, Treasurer
and Corporate Secretary. From 1992 through March 1998, Mr. Kershisnik was Vice
President, Controller, Treasurer and Corporate Secretary of Grease Monkey
International, Inc., a public company that franchises quick lube service
stations in the United States and Mexico. From 1980 to 1992, Mr. Kershisnik was
employed by KPMG LLP providing audit services to public and private companies
and partnerships in the oil and gas, airlines and manufacturing industries. The
last position Mr. Kershisnik held was Senior Manager. Mr. Kershisnik is a
Certified Public Accountant and holds a Bachelor of Business Administration from
the University of Notre Dame.
Charles R. Eazor, Vice President/General Manager. Mr. Eazor has over 25
years of direct experience in the voice and data telecommunications industry.
From 1978 to 1983, Mr. Eazor served as Manager of Business development for
SPRINT. In 1983, Mr. Eazor and others purchased the interconnect subsidiaries
of SPRINT and operated them as SPC until it was acquired by AIM Telephones, Inc.
in 1988 where Mr. Eazor served as Senior Vice President with 22 branch offices
in 8 states along the Eastern seaboard. From January 1992 through December 1997
was employed by General Analytics Corporation where he was head of the
telecommunications division, GACTSI, a Government systems integrator, where he
was responsible for implementing GSA's national frame relay network and the
Treasury's national local telecommunications initiative. Mr. Eazor joined INCC
in his current capacity in October 1998. Mr. Eazor received his Master of
Business Administration from the University of Baltimore.
Messrs. Guglielmi, Maxwell, Galley, and Smith are compensated for serving
as members of the Board and receive $2,000 for each board meeting attended in
person; the reimbursement of all travel and other expenses incurred in
connection with such meetings; and the issuance to each outside director on an
annual basis, commencing in 1997 on the anniversary date of the Director's
service of $10,000 of the Corporation's stock based upon the closing per share
price of the Corporation's stock on the business day next preceding the date of
issuance. Messrs. Liebhaber and Slater have agreed not to receive compensation.
Mr. Couzens does not receive additional compensation for being a member of the
Board.
Officers of the Company are currently elected by, and serve at the
discretion of, the Board of Directors.
Directors' Meetings and Standing Committees
Since the Annual Meeting of Shareholders on May 19, 1998, 12 meetings of
the Board of Directors were held. During the last fiscal year, Peter A.
Guglielmi was the only director attending fewer than 75% of the meetings of the
Board of Directors.
The Board has established standing Executive, Audit, and Compensation
committees. There is no nominating or other committee performing similar
functions.
4
<PAGE>
The Executive Committee, during the intervals between meetings of the Board
-----------------------
of Directors, may exercise all of the authority of the Board of Directors in the
management of the Corporation. All minutes of the Executive Committee are
submitted to the next successive meeting of the Board and are recorded in the
minute book of the Corporation. The current members of the Executive Committee
are John M. Couzens, Chairman, William J. Maxwell and Craig D. Slater.
The Audit Committee reviews the scope and results of the audit of the
-------------------
Company by the Company's independent accountants and makes recommendations to
the Board as to the selection of independent accountants. In addition, the
Committee reviews, with the independent accountants, systems of internal control
and accounting policies and procedures, and directs and supervises
investigations into matters within the scope of its duties. The current members
of the Audit Committee are Peter A. Guglielmi, Chairman, William J. Maxwell and
Craig D. Slater.
The Compensation Committee makes recommendations to the Board concerning
--------------------------
matters related to compensation for certain management personnel and certain
executive and management incentive and benefit plans. The current members of
the Compensation Committee are Richard T. Liebhaber, Chairman, Peter A.
Guglielmi, and William J. Maxwell.
Report of the Compensation Committee on Executive Compensation
The goals of the compensation program established by the Compensation
Committee are to align compensation with business objectives and corporate
performance and to enable INCC to attract, retain and reward executive officers
who contribute to the long-term success of the Company and thereby create value
for shareholders. In order to attain these goals, the Committee's compensation
policies link compensation to corporate performance.
The principal components of the Committee's compensation program are annual
cash compensation consisting of base salary and an annual incentive bonus, as
well as long-term incentive compensation using stock options. In determining
the amount and form of executive compensation, the Committee has considered the
competitive market for senior executives, the executive's role in achieving the
business objectives of the Company and the overall performance of INCC.
The Committee believes that its compensation policies, which have been
instrumental in attracting and retaining highly qualified and dedicated
personnel, will be an important factor in the growth and success of the Company.
Section 162(m) of the Code. The Company's Stock Option Plan, which was
adopted by the Company's board of Directors and approved by the Company's
shareholders on September 12, 1996, has been designed to comply with the
requirements for "performance-based compensation" under Internal Revenue Code
Section 162(m). The Committee, however, does not have a policy precluding the
payment of nondeductible compensation.
CEO Compensation. The Company's President and Chief Executive Officer,
John M. Couzens, is paid pursuant to an employment contract dated April 24,
1997. For 1998, the Committee reviewed Mr. Couzens annual base salary of
$117,700 based on criteria previously set forth and by assessing a number of
factors, including his individual effort, performance and contribution toward
achieving the business plan and growth objectives of the Company. Based on this
review, no adjustment was made to Mr. Couzens annual base salary for 1998.
Incentive compensation for Mr. Couzens is tied to performance targets. These
performance targets are set as part of the annual budgeting process for the
Company. No bonus compensation was paid to Mr. Couzens in 1998 since these
factors were not met.
5
<PAGE>
Compensation for Other Executive Officers. Base salaries for other
executive officers have been set at competitive levels giving due regard to the
individuals overall responsibility, experience and performance. Incentive
compensation for other executive officers is recommended to the Board of
Directors by the committee, in consultation with the CEO, based on factors
similar to those used for establishing incentive compensation for the CEO.
Incentive compensation for other executive officers is tied to performance
targets. These performance targets are set as part of the annual budgeting
process for the Company. No bonus compensation was paid in 1998 since these
factors were not met.
Long-term Incentive Compensation. The Committee believes that shareholders'
interests are best served by encouraging key employees of INCC to develop
ownership interests in the Company. The Committee primarily relies upon employee
stock options granted in accordance with the provision of the Stock Option Plan.
During 1998, 535,994 options were granted to employees under the Stock Option
Plan, of which 290,000 were granted to named executive officers, including
120,000 which were exchanged (see Repricing of Stock Options).
Members of the Compensation Committee
Richard T. Liebhaber, Chairman
Peter A. Guglielmi
William J. Maxwell
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee are present or former
officers or employees of the Company or its subsidiaries.
6
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Executive Compensation
The following table sets forth the total remuneration paid during the
Company's fiscal year ended December 31, 1998 and the prior two years to the
Chief Executive Officer, and other executive officers whose total cash and non-
cash compensation exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long-term Compensation Awards
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Other Restricted All
Annual Stock Options/ LTIP Other
Name and Salary Bonus Compen- Award(s) SARs Pay-outs Compen-
Principal Position Year ($) ($) sation($)/3/ ($) (#)/4/ ($) sation ($)/7/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John M. Couzens,
President, CEO 1998 $117,700 -- -- None 70,000 None 2,943
Vice President/General Manager 1997(1) $106,616 -- -- None None None 2,523
Mary Beth Loesch (5)
President Technologies Group 1998 $163,200 -- -- None 100,000 None --
Thomas C. Galley,
Former President, CEO (6) 1998 $160,000 -- -- None None None 1,000
1997(1) $145,833 -- -- None None None --
1996(2) $156,000 -- -- None None None --
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</TABLE>
(1) Period represents 11 months ended December 31, reflecting a change in the
fiscal year end.
(2) Period presented is for the year ended January 31.
(3) Other perquisites and benefits are less than 10% of total salary and bonus.
(4) Number of shares of Company Common Stock subject to options granted during
the year indicated.
(5) Ms. Loesch has announced her resignation from the Company effective May 31,
1999
(6) Effective March 15, 1998, Mr. Galley resigned as president and CEO (see
Employment Agreements).
(7) Amount represents a matching 401-K contribution made by the Company subject
to a vesting schedule.
Stock Option Grants in Fiscal Year ended December 31, 1998
The following stock option grants were made to the named executive officers
for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term
-------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Officer Granted Fiscal Year (per share) Date 5% 10%
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<S> <C> <C> <C> <C> <C> <C>
John M. Couzens 70,000 13.1 2.375 10/22/08 104,554 264,960
John M. Couzens 20,000 (1) 3.7 4.25 03/14/08 53,456 135,468
Mary Beth Loesch 100,000 18.7 2.375 10/22/08 149,362 378,514
Mary Beth Loesch 100,000 (2) 18.7 4.688 01/08/08 294,826 747,146
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</TABLE>
(1) This option was cancelled on October 23, 1998, see Repricing of Stock
Options.
(2) This option was cancelled on October 23, 1998, see Repricing of Stock
Options.
Aggregate Options Exercised During 1998 and Option Values at December 31, 1998
The following table sets forth certain information regarding options to
purchase shares of Company Common Stock exercised during the Company's fiscal
year ended December 31, 1998 and the number and value of exercisable and
unexercisable options to purchase shares of Company Common Stock held as of the
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end of the Company's fiscal year by the Chief Executive Officer and other
officers of the Company named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
12/31/98 12/31/98
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable (1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John M. Couzens None -- 0/70,000 $0/$113,750
Mary Beth Loesch None -- 0/100,000 $0/$162,500
Thomas C. Galley 75,000 $152,325 0/0 0/0
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</TABLE>
(1) Value of exercisable/unexercisable in-the-money options is equal to the
difference between the fair market value per share of Company Common Stock
of $4.00 at December 31, 1998, and the option exercise price per share
multiplied by the number of shares subject to options.
Repricing of Stock Options
The following table sets forth the option repricing information for the named
executive officers.
<TABLE>
<CAPTION>
Length of
Number of Market price Exercise original
securities of stock at price at option term
underlying time of time of New exercise remaining at
options/SARs repricing or repricing price ($) date of
Name Date repriced or amendment or repricing or
amended (#) ($) amendment amendment
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John M. Couzens 10/23/98 50,000 $2.375 $6.25 $2.375 8 years
John M. Couzens 10/23/98 20,000 2.375 4.25 2.375 9.5 years
Mary Beth Loesch 10/23/98 100,000 2.375 4.688 2.375 9.25 years
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Report on Repricing of Stock Options
During October 1998, there was a substantial decrease in the market price
of the Company's Common Stock due, in part, to the failed merger. As a result,
on October 23, 1998, the Board of Directors provided the Company's officers and
employees with an opportunity to exchange their options in their entirety for an
equal number of non-qualified incentive options at the current market level. In
doing so, the option holder agreed to a new exercise price and a new vesting
schedule whereby 33% would vest at the first year anniversary of the grant and
33% each year thereafter. The exchange was done in an effort to retain the
Company's quality employees and officers who had lost a significant portion of
their financial interest in the Company because their stock options were "out of
the money." The Company completed the Company's stock exchange for officers and
employees of the Company pursuant to which stock options for 328,139 shares of
Common Stock, originally issued with exercise prices ranging from $3.75 to $8.25
per share, were issued with an exercise price of $2.375 per share, which
exercise price represented the last sale price of the Company's shares on
October 22, 1999. Employees with stock options representing 164,162 shares did
not accept the offer.
Stock options are intended to provide incentives to the Company's officers
and employees. The
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Board of Directors believes that such equity incentives are
a significant factor in the Company's ability to attract, retain, and motivate
officers and employees who are critical to the Company's long-term success. The
Board of Directors believes that such exchange is in the best interest of the
Company and its shareholders.
Stock Performance Graph
The graph below compares monthly change in cumulative total return of the
Company's Common Stock with the cumulative total return of the Nasdaq Stock
Market and the Nasdaq Telecommunications Stocks from December 31, 1993 through
December 31, 1998 assuming an investment of $100 in the Company's Common Stock
and each index.
COMPARISON OF CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH APPEARS HERE]
Date INCC Nasdaq Stock Market Nasdaq Telecommunications Stock
Dec-93 100 100 100
Mar-94 75.758 95.797 86.306
Jun-94 51.515 91.318 82.687
Sep-94 71.212 98.881 90.182
Dec-94 50 97.752 83.458
Mar-95 54.545 106.578 87.116
Jun-95 50 121.913 95.49
Sep-95 63.636 136.6 107.607
Dec-95 51.515 138.265 109.257
Mar-96 46.97 144.713 114.896
Jun-96 77.237 156.526 118.53
Sep-96 78.788 162.068 111.57
Dec-96 69.697 170.032 111.717
Mar-97 51.515 160.78 103.579
Jun-97 84.848 190.25 130.021
Sep-97 101.515 222.383 150.6
Dec-97 55.303 208.277 163.369
Mar-98 56.061 243.737 207.943
Jun-98 72.727 250.384 219.922
Sep-98 60.606 226.181 194.651
Dec-98 48.485 293.484 268.868
Employment Agreements
The Company has Employee Agreements with the following Executive Officers:
John M. Couzens - Mr. Couzens has an employment agreement with the Company under
- ---------------
which Mr. Couzens receives a base salary of $117,700 for 1998. Under the
agreement, either party may terminate employment with a sixty (60) day notice in
writing. In such case, Mr. Couzens is entitled to compensation for such sixty
(60) days provided he continue to perform his services during such period.
Mary Beth Loesch - Ms. Loesch has an employment agreement with the Company under
- ----------------
which Ms. Loesch receives a base salary of $175,000 per year. In the case of
termination for reasons other than those stipulated in the Agreement, Ms. Loesch
will receive 100% of her base salary payable over an 18 month period payable
during the normal course of payroll distributions, or as one lump sum, at the
discretion of the
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Company. Under the agreement, Ms. Loesch is subject to a non-compete clause for
a period of 18 months. Ms. Loesch has announced her resignation from the Company
effective May 31, 1999.
Thomas C. Galley - On March 15, 1998, Mr. Galley entered into a Severance
- ----------------
Agreement and Mutual Legal Release whereby the Company agrees to pay a total of
two years severance from the date of termination from employment at a rate of
$160,000 per year. The portion of unvested incentive stock options that would
have vested on March 18 but for the termination of employment, became vested.
Under the agreement, Mr. Galley agrees to refrain from soliciting or recruiting
any of the Company's employees to work either for Mr. Galley or for a firm which
Mr. Galley is associated for a period of 24 months. The agreement also
stipulates that Mr. Galley may not disclose trade secrets or confidential
information. All prior agreements have been terminated and each party is
released from all legal claims and demands including but not limited to the Non-
Compete Agreement dated December 23, 1991, the Executive Employment Agreement
dated October 10, 1997, and the Buy-Sell Agreement dated May 1, 1994. On
October 23, 1998, Mr. Galley entered into an Amendment to Severance Agreement
and Mutual Legal Release whereby Mr. Galley received an accelerated payment of
$160,000 in exchange for a reduction of $168,800 of the balance of the
outstanding severance owed him by the Severance Agreement and Mutual Legal
Release dated March 15, 1998.
There are confidentiality agreements with all employees of the Company.
Such agreements generally provide that in the event of the employee's
termination, the employee will not solicit, directly or indirectly, any customer
of the Company or any subsidiary of the Company for a period of three years, or
release Company trade secrets and proprietary information. The Company may
elect to terminate the employee without cause.
Under the 1996 Incentive Stock Plan, as amended, if the Company's assets or
50% of the outstanding Company Common Stock is sold, the outstanding options and
purchase rights become fully vested and immediately exercisable.
RELATED PARTY TRANSACTIONS
On December 30, 1998, the Company executed a stock purchase agreement with
Interwest Group, Inc., a wholly owned subsidiary of Anschutz Company. Under the
terms of the agreement, the Company issued Series A 7-1/8% convertible preferred
stock, convertible at $2.25 per share, in exchange for $5.0 million. On
December 30, 1998, $2.5 million was funded to the Company, of which $650,000 was
restricted for payment on the Company's credit facility. Of the balance of the
proceeds, $300,000 was used to pay down the note from the related party, and
$1,550,000 was used for working capital. The remaining $2.5 million was funded
to escrow subject to shareholder approval as required by NASDAQ corporate
governance rules. On February 23, 1999, the Company received shareholder
approval and the escrow was released. The Company used $850,000 to pay down the
Company's credit facility, $1,300,000 to pay the balance of the note from the
related party, and $350,000 for working capital purposes. As a result of this
equity investment, the Company reduced its debt by $3.1 million.
In March 1998, the Company received $1.6 million from a related party in
exchange for a convertible promissory note ("Note"), due March 1999. The Note
bears interest at 10% and interest payments are due quarterly. The Note
includes a conversion clause which allows conversion if the Note is not paid
when due and carries a conversion price of $4.25 per common share. At December
31, 1998, $1,300,000 was outstanding on this note. This note was paid in full
upon release of the escrowed funds as mentioned above.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1999
with respect to each director and executive officer, each person who is known to
the Company to be the beneficial owner of more than five percent of the Company
common stock, and all directors and executive officers as a group. The Shares
listed below represent ownership, whether direct or beneficial, of the Company's
common stock.
<TABLE>
<CAPTION>
Amount of Beneficial
Ownership Percent of Class
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John M. Couzens (1) 36,797 *
7100 E. Belleview Ave., Suite 201
Greenwood Village, CO 80111
Thomas C. Galley (2) 480,978 8.6%
7100 E. Belleview Ave., Suite 201
Greenwood Village, CO 80111
Peter A. Guglielmi (3) 13,194 *
4951 Indiana Avenue
Lisle, IL 60532
Richard Liebhaber (4) 5,195,790 65.7%
555 17th St., Suite 2400
Denver, CO 80202
William J. Maxwell (5) 8,772 *
500 108th Avenue, NE, Suite 2600
Bellevue, WA 98004
Craig D. Slater (6) 5,197,741 65.8%
555 17th St., Suite 2400
Denver, CO 80202
Robert L. Smith (7) 26,900 *
7100 E. Belleview, Suite 201
Greenwood Village, CO 80111
T. Timothy Kershisnik (8) -- *
7100 E. Belleview Ave., Suite 201
Greenwood Village, CO 80111
Mary Beth Loesch (9) 1,000 *
7100 E. Belleview Ave., Suite 201
Greenwood Village, CO 80111
Charles R. Eazor (10) -- *
7100 E. Belleview Ave., Suite 201
Greenwood Village, CO 80111
Interwest Group, Inc. ("Group") (11) 5,195,790 65.7%
555 17th St., Suite 2400
Denver, CO 80202
All Directors and Executive Officers 5,765,382 72.8%
as a Group (12)
</TABLE>
_______________________________
(*) Less than one percent.
11
<PAGE>
(1) Share ownership includes 36,797 shares and options to purchase 120,000
shares of which none are presently exercisable.
(2) Share ownership includes 255,220 shares of Company Common Stock owned
beneficially and of record, 43,500 shares owned beneficially by virtue of
his wife's ownership of said shares, 182,258 shares owned beneficially and
of record in joint tenancy with his wife.
(3) Share ownership includes 1,194 shares and options to purchase 12,000 shares
of which 12,000 are presently exercisable.
(4) Mr. Liebhaber is director of a subsidiary of Anschutz Company. Anschutz is
the sole shareholder of Group. Mr. Liebhaber disclaims beneficial ownership
of all shares held by Group.
(5) Share ownership includes 2,105 shares and options to purchase 10,000 shares
of which 6,667 are presently exercisable.
(6) Mr. Slater is a director of Group. However, Mr. Slater disclaims
beneficial ownership of all shares except 1,951 shares which he owns
beneficially and of record.
(7) Share ownership includes 26,900 shares owned.
(8) Share ownership includes options to purchase 50,000 shares of which none
are presently exercisable.
(9) Share ownership includes 1,000 shares of Company Common Stock owned by
virtue of her husband and options to purchase 100,000 shares of which none
are presently exercisable. Ms. Loesch has announced her resignation from
the Company effective May 31, 1999.
(10) Share ownership includes options to purchase 50,000 shares of which none
are presently exercisable.
(11) Share ownership includes 2,910,410 shares of Company Common Stock owned
beneficially and of record, warrants to purchase 63,158 shares, and 50,000
Series A Convertible Preferred shares, convertible into 2,222,222 common
shares at $2.25 per common share. Philip F. Anschutz, the sole shareholder
of Anschutz Company, the corporate parent of Group, 555 17th Street, Suite
2400, Denver, Colorado 80202, will exercise sole voting and dispositive
control over these shares.
(12) Represents 11 persons as of March 31, 1999. Share ownership includes
5,197,741 shares reported in the table with respect to Mr. Slater. Mr.
Slater disclaims beneficial ownership of all but 1,951 of these shares.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
if any, to file with the Securities and Exchange Commission ("SEC") initial
reports of ownership and reports of changes in ownership of equity securities of
the Company. Such persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, all of the Company's Officers and Directors have
complied with all applicable Section 16(a) filing requirements for the period
ending December 31, 1998, except John M. Couzens, President and Chief Executive
Officer, Robert L. Smith, Director, Mary Beth Loesch, President Technologies
Group and T. Timothy Kershisnik, Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary, each filed a late Form 4; and Charles R.
Eazor, Vice President/General Manager, filed a late Form 3. This statement is
based solely on a review of the copies of such reports furnished to the Company
by its Officers and Directors.
ELECTION OF THREE DIRECTORS
The Company's Board of Directors has recommended the election of the three
nominees listed below, each to serve a three year term. John M. Couzens, who
was elected to the Board in 1996, is nominated for reelection; Thomas C. Galley,
who was elected to the Board in 1986, is nominated for reelection; and Richard
T. Liebhaber, who was elected to the Board in 1996, is nominated for reelection.
The persons named as "proxies" in the enclosed form of Proxy intend to vote
for the three nominees for election as Directors unless otherwise instructed in
such Proxy. If at the time of the Annual Meeting any of the nominees named
below should be unable to serve, which event is not expected to occur, the
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<PAGE>
discretionary authority provided in the Proxy will be exercised to vote for such
substitute nominee and nominees, if any, as shall be designated by the Board of
Directors. In the election of directors, that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast in
favor of their election, are elected to the Board of Directors.
A PROPOSAL TO APPROVE THE 1999 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
- -------
The Board of Directors intends to adopt the Internet Communications
Corporation 1999 Employee Stock Purchase Plan (the "Purchase Plan"), subject to
approval by the shareholders of the Company. The purpose of the Purchase Plan is
to provide an incentive to employees of the Company and certain of its
subsidiaries to acquire or increase an ownership interest in the Company through
the purchase of shares of Common Stock. In order to receive favorable income tax
treatment under section 423 of the Internal Revenue Code of 1986, as amended
(the "Code"), stockholder approval of the Purchase Plan is required. A majority
of the vote represented at the Annual Meeting by shares of Common Stock entitled
to vote is required to approve the Purchase Plan.
SUMMARY OF PURCHASE PLAN
- ------------------------
The following general description of certain features of the Purchase Plan
is qualified in its entirety by reference to the Purchase Plan, which is
attached as Annex A.
Shares Available Under the Purchase Plan; Adjustments. Subject to
adjustment as provided in the Purchase Plan, the number of shares of Common
Stock that may be purchased by participating employees under the Purchase Plan
will not in the aggregate exceed 250,000 shares, which may be originally issued
or reacquired shares, including shares bought in the market or otherwise for
purposes of the Purchase Plan. Such number of shares is subject to adjustment in
the event of a change in the Common Stock by reason of a stock dividend or by
reason of a subdivision, stock split, reverse stock split, recapitalization,
reorganization, combination, reclassification of shares or other similar change.
Upon any such event, the maximum number of shares that may be subject to any
option, and the number and purchase price of shares subject to options
outstanding under the Purchase Plan, will also be adjusted accordingly.
Eligibility. Options under the Purchase Plan will be granted on July 1,
1999, and, thereafter through June 30, 2009, on the first day of each successive
October, January, April and July (each such date being referred to herein as a
"Date of Grant"). Each employee of the Company or any present or future parent
or subsidiary corporation of the Company that has been designated as a
"Participating Company" from time to time by the Plan administrative committee
as of a Date of Grant is eligible to participate in the Purchase Plan as of such
Date of Grant if such employee is regularly scheduled to work more than 20 hours
per week and more than five calendar months in any calendar year.
However, an eligible employee may not participate if such employee would
own (directly or indirectly) 5% or more of the total combined voting power of
all classes of stock of the Company or a subsidiary, taking into account options
to purchase stock and stock that may be purchased under the Purchase Plan. At
the present time, no employee of the Company or a Participating Company would be
prevented from participating by reason of this limitation. In addition,
nonemployee directors, leased employees and independent contractors are not
eligible to participate in the Purchase Plan. To the extent permitted by Section
423 of the Code and the regulations thereunder, an individual who is
reclassified as a
13
<PAGE>
common-law employee as a result of a final court decree or the settlement of an
administrative or judicial proceeding will become eligible to participate after
two years of employment (including any service recharacterized as common law
employment).
Approximately 140 employees would have been eligible to participate in the
Purchase Plan as of April 1, 1999.
Participation. An eligible employee may elect to participate in the
Purchase Plan for any calendar quarter during the period from July 1, 1999 to
June 30, 2009, by designating a specified whole dollar amount or a whole
percentage of such employee's eligible compensation to be deducted for each pay
period and paid into the Purchase Plan for such employee's account. The
designated percentage or whole dollar amount may not be less than 1% nor more
than 15%. An eligible employee may participate in the Purchase Plan only by
means of payroll deduction. No employee will be granted an option under the
Purchase Plan that permits such employee's rights to purchase Common Stock to
accrue at a rate that exceeds $25,000 of fair market value of such stock
(determined at the time such option is granted) for the calendar year in which
such option is outstanding. Unless an employee's payroll deductions are
withdrawn (as described below), the aggregate payroll deductions credited to the
employee's account will be used to purchase shares of Common Stock at the end of
the three-month period beginning on a Date of Grant (the "Option Period");
provided, however, that the maximum number of shares of Common Stock that may be
purchased by a participant under any quarterly option may not exceed 5,000
(subject to adjustment in the event of a change in the Common Stock). The per
share purchase price of the Common Stock will be 85% of the lesser of the fair
market value of the Common Stock on the Date of Grant or on the last day of the
Option Period (the "Date of Exercise"). For all purposes under the Purchase
Plan, the fair market value of a share of Common Stock on a particular date
shall be equal to the last sale price on the applicable date for shares of
Common Stock made and reported through the Small Cap Market of the National
Association of Securities Dealers, Inc., or such national stock exchange on
which the Common Stock may then be listed and which constitutes the principal
market for the Common Stock, or, if no sales of the Common Stock shall have been
reported with respect to that date, on the next preceding date with respect to
which sales have been reported. Payroll deductions will be included in the
general funds of the Company, free of any trust or other arrangement and may be
used for any corporate purpose. No interest will be paid or credited to any
participant.
Changes In And Withdrawal of Payroll Deductions. A participant may not
change the rate of his or her payroll deductions during an Option Period.
However, a participant may withdraw in whole from the Purchase Plan, but not in
part, at any time prior to the Date of Exercise relating to a particular Option
Period by timely delivering to the Company a notice of withdrawal in the manner
specified by the Company. The Company promptly will refund to the participant
the amount of the participant's payroll deductions under the Purchase Plan that
have not been otherwise returned or used upon exercise of options, and
thereafter the participant's payroll deduction authorization and interest in
unexercised options under the Purchase Plan will terminate.
Delivery Of Shares; Restrictions On Transfer. As soon as practicable after
each Date of Exercise, the Company will deliver to a custodian one or more
certificates representing (or shall otherwise cause to be credited to the
account of such custodian) the total number of whole shares of Common Stock
respecting options exercised on such Date of Exercise in the aggregate (for both
whole and fractional shares) of all of the participating employees under the
Purchase Plan. Any remaining amount representing a fractional share will not be
certificated (or otherwise so credited) and such remaining amount will be paid
in cash to the custodian. Such custodian will keep accurate records of the
beneficial interests of each participant in such shares by means of participant
accounts under the Purchase Plan, and will provide each participant with
quarterly or such other periodic statements with respect thereto as the
administrative
14
<PAGE>
committee under the Purchase Plan may specify. A participant may not generally
transfer or otherwise dispose of the shares for a period of six months from the
Date of Exercise (or for such other period as may be specified from time to time
by the administrative committee under the Purchase Plan). During this period,
the custodian will retain custody of the shares.
Termination Of Employment; Leaves Of Absence. Except as described below,
if the employment of a participant terminates for any reason, then the
participant's participation in the Purchase Plan ceases and the Company will
refund the amount of such participant's payroll deductions under the Purchase
Plan that have not yet been otherwise returned or used upon exercise of options.
If the employment of a participant terminates after such participant has
attained age 65 or due to death or disability, the participant, or the
participant's personal representative, as applicable, may elect either to (i)
withdraw all of the accumulated unused payroll deductions credited to the
participant's account or (ii) exercise the participant's option for the purchase
of Common Stock at the end of the Option Period. If no such election is timely
received by the Company, the participant or personal representative will
automatically be deemed to have elected the second alternative.
During a paid leave of absence approved by the Company and meeting Internal
Revenue Service regulations, a participant's elected payroll deductions will
continue. A participant may not contribute to the Purchase Plan during an unpaid
leave of absence. If a participant takes an unpaid leave of absence that is
approved by the Company and meets Internal Revenue Service regulations, then
such participant's payroll deductions for such Option Period that were made
prior to such leave may remain in the Purchase Plan and be used to purchase
Common Stock on the Date of Exercise relating to such Option Period. If a
participant takes a leave of absence not described above, then the participant
will be considered to have withdrawn from the Purchase Plan.
Restriction Upon Assignment Of Option. An option granted under the
Purchase Plan may not be transferred other than by will or the laws of descent
and distribution. Subject to certain limited exceptions, each option is
exercisable, during the employee's lifetime, only by the employee to whom
granted.
Administration, Amendments And Termination. The Purchase Plan is to be
administered by a committee appointed from time to time by the Board. If the
Board does not appoint a committee, the Board will serve as the committee. In
connection with its administration of the Purchase Plan, the committee is
authorized to interpret the Purchase Plan.
The Purchase Plan may be amended from time to time by the Board; provided,
however, that no change in any option theretofore granted may be made that would
impair the rights of a participant without the consent of such participant. The
Board may in its discretion terminate the Purchase Plan at any time with respect
to any Common Stock for which options have not theretofore been granted.
The benefits and amounts to be received by any participant under the
Purchase Plan are not currently determinable.
15
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
- ---------------------------------------------
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN OF THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF CERTAIN TRANSACTIONS UNDER THE PURCHASE PLAN BASED ON FEDERAL
INCOME TAX LAWS CURRENTLY IN EFFECT. THIS SUMMARY APPLIES TO THE PURCHASE PLAN
AS NORMALLY OPERATED AND IS NOT INTENDED TO PROVIDE OR SUPPLEMENT TAX ADVICE TO
ELIGIBLE EMPLOYEES. THE SUMMARY CONTAINS GENERAL STATEMENTS BASED ON CURRENT
U.S. FEDERAL INCOME TAX STATUTES, REGULATIONS AND CURRENTLY AVAILABLE
INTERPRETATIONS THEREOF. THIS SUMMARY IS NOT INTENDED TO BE EXHAUSTIVE AND DOES
NOT DESCRIBE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OR THE EFFECT, IF ANY, OF
GIFT, ESTATE AND INHERITANCE TAXES. THE PURCHASE PLAN IS NOT QUALIFIED UNDER
SECTION 401(a) OF THE CODE.
Tax Consequences To Participants. A participant's payroll deductions to
purchase Common Stock are made on an after-tax basis. There is no tax liability
to the participant when shares of Common Stock are purchased pursuant to the
Purchase Plan. However, the participant may incur tax liability upon disposition
(including by way of gift) of the shares acquired under the Purchase Plan. The
participant's U.S. federal income tax liability will depend on whether the
disposition is a qualifying disposition or a disqualifying disposition as
described below.
If a qualifying disposition of the shares is made by the participant (i.e.,
a disposition that occurs more than two years after the first day of the Option
Period in which the shares were purchased), or in the event of death (whenever
occurring) while owning the shares, the participant will recognize in the year
of disposition (or, if earlier, the year of the participant's death) ordinary
income in an amount equal to the lesser of (i) the excess of the fair market
value of the shares at the time of disposition (or death) over the amount paid
for the shares under the option or (ii) 15% of the fair market value of the
shares at the Date of Grant (the beginning of the Option Period). Upon the sale
of the shares, any amount realized in excess of the ordinary income recognized
by the participant will be taxed to the participant as a long-term capital gain.
If the shares are sold at less than the purchase price under the option, then
there will be no ordinary income. Instead, the participant will have a capital
loss equal to the difference between the sales price and the purchase price paid
under the option.
If a disqualifying disposition of the shares is made (i.e., a disposition
(other than by reason of death) within two years after the first day of the
Option Period in which the shares were purchased), the participant generally
will recognize ordinary income in the year of disposition in an amount equal to
any excess of the fair market value of the shares at the Date of Exercise over
the purchase price paid for the shares under the option (even if no gain is
realized on the sale or if a gratuitous transfer is made). Any further gain (or
loss) realized by the participant generally will be taxed as short-term or long-
term capital gain (or loss) depending on the holding period.
Tax Consequences To the Company Or Participating Company. The Company, or
the Participating Company for which a participant performs services, will be
entitled to a deduction only if the participant makes a disqualifying
disposition of any shares purchased under the Purchase Plan. In such case, the
Company or such Participating Company can deduct as a compensation expense the
amount that is ordinary income to the participant provided that, among other
things, (i) the amount meets the test of reasonableness, is an ordinary and
necessary business expense and is not an "excess parachute payment" within the
meaning of Section 280G of the Code, (ii) any applicable reporting obligations
are satisfied and (iii) the one million dollar limitation of Section 162(m) of
the Code is not exceeded.
16
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1999 EMPLOYEE
STOCK PURCHASE PLAN, AS DESCRIBED ABOVE AND AS SET FORTH IN ANNEX A, WHICH IS
DESIGNATED AS PROPOSAL TWO ON THE ENCLOSED PROXY.
COMPANY'S RELATIONSHIP WITH
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
It is expected that a representative of KPMG LLP, Denver, Colorado, the
Company's independent certified public accountants for the current year will be
present at the Annual Meeting to respond to appropriate questions and to make a
statement if he so desires.
FINANCIAL INFORMATION
A copy of the Company's Annual Report for the fiscal year ended December
31, 1998, including audited financial statements, is enclosed herewith.
OTHER MATTERS
Management does not know of any other matters to be brought before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the appointees named in the enclosed form of proxy to vote in
accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
Any shareholder proposing to have any appropriate matter brought before the
2000 Annual Meeting of Shareholders must submit such proposal in accordance with
the proxy rules of the Commission. Such proposals should be sent to the
Secretary of the Company not later than January 19, 2000 to be considered for
inclusion in the 2000 Proxy Statement.
By Order of the Board of Directors:
INTERNET COMMUNICATIONS CORPORATION
Date: April 30, 1999 John M. Couzens
President and CEO
17
<PAGE>
ANNEX A
INTERNET COMMUNICATIONS CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
Effective July 1, 1999
1. PURPOSE.
The INTERNET COMMUNICATIONS CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN
(the "Plan") is intended to provide an incentive for employees of INTERNET
COMMUNICATIONS CORPORATION (the "Company") and certain of its subsidiaries to
acquire or increase a proprietary interest in the Company through the purchase
of shares of the Company's common stock. The Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall be construed in
a manner consistent with the requirements of that section of the Code.
2. DEFINITIONS.
Where the following words and phrases are used in the Plan, they shall have
the respective meanings set forth below, unless the context clearly indicates to
the contrary:
(a) "Board" means the Board of Directors of the Company or a duly
authorized committee thereof.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the committee appointed by the Board to administer
the Plan, or if the Board does not appoint a committee, the full Board shall act
as the Committee.
(d) "Company" means Internet Communications Corporation, a Colorado
corporation.
(e) "Date of Exercise" means the last day of each Option Period.
(f) "Date of Grant" means July 1, 1999, and, thereafter, the first day of
each successive October, January, April, and July.
(g) "Eligible Compensation" means regular straight-time earnings or base
salary, determined before giving effect to any salary reduction agreement
pursuant to (i) a qualified cash or deferred arrangement (within the meaning of
Section 401(k) of the Code) or (ii) a cafeteria plan (within the meaning of
Section 125 of the Code). Eligible Compensation shall not include overtime,
bonuses, commissions, severance pay, incentive pay, shift premium differentials,
pay in lieu of vacation, reimbursements, or any other special or incentive
payments excluded by the Committee in its discretion (applied in a uniform
basis). If an Employee's sole compensation from the Company is commissions, then
the Employee's commissions will be the Employee's Eligible Compensation for
purposes of the Plan.
(h) "Eligible Employee" means, with respect to each Date of Grant, each
Employee of the Company or a Participating Company. Notwithstanding the
foregoing and to the extent permitted by Section 423 of the Code and any rules
or regulations promulgated thereunder, an Employee whose customary employment
with the Company or a Participating Company is for twenty (20) hours or less per
week or for not more than five (5) months in any calendar year shall not be
eligible to participate in the Plan.
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<PAGE>
(i) "Employee" means an individual who performs services for the Company or
a Participating Company whose remuneration for services rendered to the Company
or a Participating Company is subject to the withholding of federal income tax
under Section 3401 of the Code. In addition, the term "Employee" as used herein
shall (i) have the meaning applicable under Treasury Regulation Section 1.421-
7(h), (ii) shall not include a member of the Board of Directors of the Company
or of a Participating Company who is not also an employee of the Company or of a
Participating Company, (iii) shall not include leased employees within the
meaning of Section 414(n) of the Code; and (iv) shall not include any individual
(A) who provides services to the Company, any Participating Company or any
division thereof under an agreement, contract, or any other arrangement pursuant
to which the individual is initially classified as an independent contractor or
(B) whose remuneration for services has not been treated initially as subject to
the withholding of federal income tax pursuant to Section 3401 of the Code,
unless the individual is subsequently reclassified as a common law employee as a
result of a final decree of a court of competent jurisdiction or the settlement
of an administrative or judicial proceeding. To the extent permitted by Section
423 of the Code and any rules or regulations promulgated thereunder, an
individual who is reclassified as a common law employee as a result of a final
decree of a court of competent jurisdiction or the settlement of an
administrative or judicial proceeding shall become eligible to participate, if
otherwise eligible under this Section 2 hereof, after two years of employment
(including any period of service recharacterized as common law employment).
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) "Option Period" means the three month period beginning on each Date of
Grant.
(l) "Option Price" shall have the meaning assigned to such term in
paragraph 8(b).
(m) "Participant" shall mean an Eligible Employee who has elected to
participate in the Plan.
(n) "Participating Company" means any present or future parent or
subsidiary corporation of the Company that participates in the Plan pursuant to
paragraph 4.
(o) "Plan" means this Internet Communications Corporation 1999 Employee
Stock Purchase Plan, as amended from time to time.
(p) "Restriction Period" means the period of time during which shares of
Stock acquired by a participant in the Plan may not be sold, assigned, pledged,
exchanged, hypothecated or otherwise transferred, encumbered or disposed of by
such participant as provided in paragraph 8(d).
(q) "Stock" means the shares of the Company's no par value common stock.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee shall interpret the Plan and all options granted
under the Plan, make such rules as it deems necessary for the proper
administration of the Plan, and make all other determinations necessary or
advisable for the administration of the Plan. In addition, the Committee shall
correct any defect or supply any omission or reconcile any inconsistency in the
Plan, or in any option granted under the Plan, in the manner and to the extent
that the Committee deems desirable to carry the Plan or any option into effect.
The Committee shall, in its sole discretion, make such decisions or
determinations and take such actions, and all such decisions, determinations and
actions taken or made by the Committee pursuant to this and the other paragraphs
of the Plan shall be conclusive on all parties. The Committee shall not be
liable for any decision, determination or action taken in good faith in
connection with the administration of the Plan. The Committee shall have the
authority to delegate routine day-to-day administration of the Plan to such
officers and employees of the
A-2
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Company as the Committee deems appropriate.
4. PARTICIPATING COMPANIES.
The Committee may designate any present or future parent or subsidiary
corporation of the Company that is eligible by law to participate in the Plan as
a Participating Company by written instrument delivered to the designated
Participating Company. Such written instrument shall specify the effective date
of such designation and shall become, as to such designated Participating
Company and persons in its employment, a part of the Plan. The terms of the Plan
may be modified as applied to the Participating Company only to the extent
permitted under Section 423 of the Code. Transfer of employment among the
Company and Participating Companies (and among any other parent or subsidiary
corporation of the Company) shall not be considered a termination of employment
hereunder. Any Participating Company may, by appropriate action of its Board of
Directors, terminate its participation in the Plan. Moreover, the Committee
may, in its discretion, terminate a Participating Company's Plan participation
at any time.
5. ELIGIBILITY.
Subject to the provisions hereof, all Eligible Employees as of a Date of
Grant shall be eligible to participate in the Plan with respect to options
granted under the Plan as of such date.
6. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of paragraph 13, the aggregate number of shares
which may be sold pursuant to options granted under the Plan shall not exceed
250,000 shares of the authorized Stock, which shares may be unissued shares or
reacquired shares, including shares bought in the market or otherwise for
purposes of the Plan. Should any option granted under the Plan expire or
terminate prior to its exercise in full, the shares theretofore subject to such
option may again be subject to an option granted under the Plan. Any shares that
are not subject to outstanding options upon the termination of the Plan shall
cease to be subject to the Plan.
7. GRANT OF OPTIONS.
(a) In General.
Commencing on July 1, 1999, and continuing while the Plan remains in force,
the Company shall, on each Date of Grant, grant an option under the Plan to
purchase shares of Stock to each Eligible Employee as of such Date of Grant who
elects to participate in the Plan; provided, however, that no option shall be
granted to an Eligible Employee if such individual, immediately after the option
is granted, owns stock possessing five percent or more of the total combined
voting power or value of all classes of stock of the Company or of its parent or
subsidiary corporations (within the meaning of Sections 423(b)(3) and 424(d) of
the Code). Except as provided in paragraph 13, the term of each option shall be
for three months, which shall begin on a Date of Grant and end on the last day
of such three-month period. Subject to subparagraph 7(d), the number of shares
of Stock subject to an option for a Participant shall be equal to the quotient
of (i) the aggregate payroll deductions withheld on behalf of such Participant
during the Option Period in accordance with subparagraph 7(b), divided by (ii)
the Option Price of the Stock applicable to the Option Period, including
fractions; provided, however, that the maximum number of shares of Stock that
may be subject to any option for a Participant may not exceed 5,000 (subject to
adjustment as provided in paragraph 13).
(b) Election To Participate; Payroll Deduction Authorization.
An Eligible Employee may participate in the Plan only by means of payroll
deduction. Except as provided in subparagraph 7(f), each Eligible Employee who
elects to participate in the Plan shall deliver to
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the Company, within the time period prescribed by the Committee, a written
payroll deduction authorization in a form prepared by the Company whereby he
gives notice of his election to participate in the Plan as of the next following
Date of Grant, and whereby he designates a specified whole dollar amount or a
whole percentage of his Eligible Compensation to be deducted from his
compensation for each pay period and paid into the Plan for his account. The
designated percentage may not be less than 1% nor exceed 15%.
(c) Changes In Payroll Authorization.
The payroll deduction authorization referred to in subparagraph 7(b) may
not be changed during the Option Period. However, a Participant may withdraw
from the Plan as provided in paragraph 9.
(d) $25,000 Limitation.
No Eligible Employee shall be granted an option under the Plan which
permits his rights to purchase Stock under the Plan and under all other employee
stock purchase plans of the Company and its parent and subsidiary corporations
to accrue at a rate which exceeds $25,000 of fair market value of Stock
(determined at the time such option is granted) for each calendar year in which
such option is outstanding at any time (within the meaning of Section 423(b)(8)
of the Code). Any payroll deductions in excess of the amount specified in the
foregoing sentence shall be returned to the Participant as soon as
administratively feasible after the next following Date of Exercise.
(e) Leaves Of Absence.
During a paid leave of absence approved by the Company and meeting the
requirements of Treasury Regulation Section 1.421-7(h)(2), a Participant's
elected payroll deductions shall continue. A Participant may not contribute to
the Plan during an unpaid leave of absence. If a Participant takes an unpaid
leave of absence that is approved by the Company and meets the requirements of
Treasury Regulation Section1.421-7(h)(2), then such Participant's payroll
deductions for such Option Period that were made prior to such leave may remain
in the Plan and be used to purchase Stock under the Plan on the Date of Exercise
relating to such Option Period. If a Participant takes a leave of absence that
is not described in the first or third sentence of this subparagraph 7(e), then
he shall be considered to have terminated his employment and withdrawn from the
Plan pursuant to the provisions of paragraph 9 hereof. Further, notwithstanding
the preceding provisions of this subparagraph 7(e), if a Participant takes a
leave of absence that is described in the first or third sentence of this
subparagraph 7(e) and such leave of absence exceeds 90 days, then he shall be
considered to have withdrawn from the Plan pursuant to the provisions of
paragraph 9 hereof and terminated his employment for purposes of the Plan on the
91st day of such leave of absence.
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(f) Continuing Election.
Subject to the limitation set forth in subparagraph 7(d), a Participant (i)
who has elected to participate in the Plan pursuant to subparagraph 7(b) as of a
Date of Grant and (ii) who takes no action to change or revoke such election as
of the next following Date of Grant and/or as of any subsequent Date of Grant
prior to any such respective Date of Grant shall be deemed to have made the same
election, including the same attendant payroll deduction authorization, for such
next following and/or subsequent Date(s) of Grant as was in effect immediately
prior to such respective Date of Grant. Payroll deductions that are limited by
subparagraph 7(d) shall recommence at the rate provided in such Participant's
payroll deduction authorization at the beginning of the first Option Period that
is scheduled to end in the following calendar year, unless the Participant
changes the amount of his payroll deduction authorization pursuant to paragraph
7, withdraws from the Plan as provided in paragraph 9, or is terminated from
participation in the Plan as provided in paragraph 10.
8. EXERCISE OF OPTIONS.
(a) General Statement.
Subject to the limitation set forth in subparagraph 7(d), each Participant
in the Plan automatically and without any act on his part shall be deemed to
have exercised his option on each Date of Exercise to the extent of his unused
payroll deductions under the Plan and to the extent the issuance of Stock to
such Participant upon such exercise is lawful.
(b) "Option Price" Defined.
The term "Option Price" shall mean the per share price of Stock to be paid
by each Participant on each exercise of his option, which price shall be equal
to 85% of the fair market value of the Stock on the Date of Exercise or on the
Date of Grant, whichever amount is less. For all purposes under the Plan, the
fair market value of a share of Stock on a particular date shall be equal to the
last sale price on the applicable date for shares of Stock made and reported
through the Small Cap Market of the National Association of Securities Dealers,
Inc., or such national stock exchange on which the Stock may then be listed and
which constitutes the principal market for the Stock, or, if no sales of the
Stock shall have been reported with respect to that date, on the next preceding
date with respect to which sales are reported.
(c) Delivery Of Share Certificates.
As soon as practicable after each Date of Exercise, the Company shall
deliver to a custodian selected by the Committee one or more certificates
representing (or shall otherwise cause to be credited to the account of such
custodian) the total number of whole shares of Stock representing options
exercised on such Date of Exercise in the aggregate (for both whole and
fractional shares) of all of the Participants hereunder. Any remaining amount
representing a fractional share shall not be certificated (or otherwise so
credited) and such remaining amount shall be paid in cash to the custodian. Such
custodian shall keep accurate records of the beneficial interests of each
Participant in such shares by means of participant accounts under the Plan, and
shall provide each participating employee with quarterly or such other periodic
statements with respect thereto as may be directed by the Committee. If the
Company is required to obtain from any U.S. commission or agency authority to
issue any such shares, the Company shall seek to obtain such authority.
Inability of the Company to obtain from any commission or agency (whether U.S.
or foreign) authority which counsel for the Company deems necessary for the
lawful issuance of any such shares shall relieve the Company from liability to
any Participant in the Plan except to return to him the amount of his payroll
deductions under the Plan which would have otherwise been used upon exercise of
the relevant option.
(d) Restrictions On Transfer.
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The Committee may from time to time specify with respect to a particular grant
of options the Restriction Period that shall apply to the shares of Stock
acquired pursuant to such options. Unless otherwise specified by the Committee,
the Restriction Period applicable to shares of Stock acquired under the Plan
shall be a period of six months after the Date of Exercise of the options
pursuant to which such shares were acquired. Except as hereinafter provided,
during the Restriction Period applicable to shares of Stock acquired under the
Plan, such shares may not be sold, assigned, pledged, exchanged, hypothecated or
otherwise transferred, encumbered or disposed of by the Participant who has
purchased such shares; provided, however, that such restriction shall not apply
to the transfer, exchange or conversion of such shares of Stock pursuant to a
merger, consolidation or other plan of reorganization of the Company, but the
stock, securities or other property (other than cash) received upon any such
transfer, exchange or conversion shall also become subject to the same transfer
restrictions applicable to the original shares of Stock, and shall be held by
the custodian, pursuant to the provisions hereof. Upon the expiration of such
Restriction Period, the transfer restrictions set forth in this subparagraph
8(d) shall cease to apply and the optionee may, pursuant to procedures
established by the Committee and the custodian, direct the sale or distribution
of some or all of the whole shares of Stock in his Company stock account that
are not then subject to transfer restrictions and, in the event of a sale,
request payment of the net proceeds from such sale. At the time of distribution
of such shares, any fractional share in such Company stock account shall be
converted to cash based on the fair market value of the Stock on the date of
distribution and such cash shall be paid to the Participant. The Committee may
cause the Stock issued in connection with the exercise of options under the Plan
to bear such legends or other appropriate restrictions, and the Committee may
take such other actions, as it deems appropriate in order to reflect the
transfer restrictions set forth in this subparagraph 8(d) and to assure
compliance with applicable laws.
9. WITHDRAWAL FROM THE PLAN.
(a) General Statement.
Any Participant may withdraw in whole from the Plan at any time prior to
the Date of Exercise relating to a particular Option Period. Partial withdrawals
shall not be permitted. A Participant who wishes to withdraw from the Plan must
timely deliver to the Company a notice of withdrawal in a form prepared by the
Company. The Company, promptly following the time when the notice of withdrawal
is delivered, shall refund to the Participant the amount of his payroll
deductions under the Plan which have not yet been otherwise returned to him or
used upon exercise of options; and thereupon, automatically and without any
further act on his part, his payroll deduction authorization and his interest in
unexercised options under the Plan shall terminate.
(b) Eligibility Following Withdrawal.
A participant who withdraws from the Plan shall be eligible to participate
again in the Plan upon expiration of the Option Period during which he withdrew
(provided that he is otherwise eligible to participate in the Plan at such
time).
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10. TERMINATION OF EMPLOYMENT.
(a) General Statement.
Except as provided in subparagraph 10(b), if the employment of a
participant terminates for any reason whatsoever, then his participation in the
Plan automatically and without any act on his part shall terminate as of the
date of the termination of his employment. The Company shall promptly refund to
him the amount of his payroll deductions under the Plan which have not yet been
otherwise returned to him or used upon exercise of options, and thereupon his
interest in unexercised options under the Plan shall terminate.
(b) Termination By Retirement, Death Or Disability.
If the employment of a Participant terminates after such Participant has
attained age 65 or due to such Participant's death or permanent and total
disability (within the meaning of Section 22(e)(3) of the Code), then such
Participant, or such Participant's personal representative, as applicable, shall
have the right to elect either to:
(1) withdraw all of such Participant's accumulated unused payroll
deductions under the Plan; or
(2) exercise such Participant's option for the purchase of Stock on the
last day of the Option Period during which termination of employment occurs for
the purchase of the number of shares of Stock, including fractions, which the
accumulated payroll deductions at the date of such Participant's termination of
employment will purchase at the applicable Option Price (subject to subparagraph
7(d)).
The Participant or, if applicable, such personal representative, must make such
election by giving written notice to the Committee at such time and in such
manner as the Committee prescribes. In the event that no such written notice of
election is timely received by the Committee, the Participant or personal
representative will automatically be deemed to have elected as set forth in
clause (2) above.
11. RESTRICTION UPON ASSIGNMENT OF OPTION.
An option granted under the Plan shall not be transferable otherwise than
by will or the laws of descent and distribution. Each option shall be
exercisable, during his lifetime, only by the employee to whom granted. The
Company shall not recognize and shall be under no duty to recognize any
assignment or purported assignment by an employee of his option or of any rights
under his option or under the Plan.
12. NO RIGHTS OF SHAREHOLDER UNTIL EXERCISE OF OPTION.
With respect to shares of Stock subject to an option, an optionee shall not
be deemed to be a shareholder, and he shall not have any of the rights or
privileges of a shareholder, until such option has been exercised. With respect
to an individual's Stock held by the custodian pursuant to subparagraph 8(d),
the custodian shall, as soon as practicable, pay the individual any cash
dividends attributable thereto or credit such dividends to such individual's
account (as directed by the Committee in its discretion applied in a uniform
manner) and shall, in accordance with procedures adopted by the custodian,
facilitate the individual's voting rights attributable thereto.
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13. CHANGES IN STOCK; ADJUSTMENTS.
Whenever any change is made in the Stock, by reason of a stock dividend or
by reason of subdivision, stock split, reverse stock split, recapitalization,
reorganization, combination, reclassification of shares or other similar change,
appropriate action will be taken by the Committee to adjust accordingly the
number of shares subject to the Plan, the maximum number of shares that may be
subject to any option, and the number and Option Price of shares subject to
options outstanding under the Plan.
If the Company shall not be the surviving corporation in any merger or
consolidation (or survives only as a subsidiary of another entity), or if the
Company is to be dissolved or liquidated, then, unless a surviving corporation
assumes or substitutes new options (within the meaning of Section 424(a) of the
Code) for all options then outstanding, (i) the Date of Exercise for all options
then outstanding shall be accelerated to a date fixed by the Committee prior to
the effective date of such merger or consolidation or such dissolution or
liquidation and (ii) upon such effective date any unexercised options shall
expire and the Company promptly shall refund to each Participant the amount of
such Participant's payroll deductions under the Plan which have not yet been
otherwise returned to him or used upon exercise of options.
14. USE OF FUNDS; NO INTEREST PAID.
All funds received or held by the Company under the Plan shall be included
in the general funds of the Company free of any trust or other restriction, and
may be used for any corporate purpose. No interest shall be paid to any
participant.
15. TERM OF THE PLAN.
The Plan shall be effective upon the date of its adoption by the Board,
provided the Plan is approved by the shareholders of the Company within 12
months. Notwithstanding any provision in the Plan, no option granted under the
Plan shall be exercisable prior to such shareholder approval, and, if the
shareholders of the Company do not approve the Plan by the Date of Exercise of
the first option granted hereunder, then the Plan shall automatically terminate,
no options may be exercised hereunder, and the Company promptly shall refund to
each Participant the amount of such Participant's payroll deductions under the
Plan; and thereupon, automatically and without any further act on his part, his
payroll deduction authorization and his interest in unexercised options under
the Plan shall terminate. Except with respect to options then outstanding, if
not sooner terminated under the provisions of paragraph 16, the Plan shall
terminate upon and no further payroll deductions shall be made and no further
options shall be granted after June 30, 2009.
16. AMENDMENT OR TERMINATION OF THE PLAN.
The Board in its discretion may terminate the Plan at any time with respect
to any Stock for which options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided, however, that no change in any option theretofore granted may be
made that would impair the rights of the optionee without the consent of such
optionee.
17. SECURITIES LAWS.
The Company shall not be obligated to issue any Stock pursuant to any
option granted under the Plan at any time when the offer, issuance or sale of
shares covered by such option has not been registered under the Securities Act
of 1933, as amended, or does not comply with such other state, federal or
foreign laws, rules or regulations, or the requirements of any stock exchange
upon which the Stock may then be listed, as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the requirements of such laws, rules, regulations or requirements
available for the offer, issuance and sale of such shares. Further, all Stock
acquired pursuant to the Plan shall be subject to the
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Company's policies concerning compliance with securities laws and regulations,
as such policies may be amended from time to time. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with any applicable provisions of
Rule 16b-3. As to such persons, the Plan shall be deemed to contain, and such
options shall contain, and the shares issued upon exercise thereof shall be
subject to, such additional conditions and restrictions as may be required from
time to time by Rule 16b-3 to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
18. NO RESTRICTION ON CORPORATE ACTION.
Nothing contained in the Plan shall be construed to prevent the Company or
any subsidiary from taking any corporate action that is deemed by the Company or
such subsidiary to be appropriate or in its best interest, whether or not such
action would have an adverse effect on the Plan or any option granted under the
Plan. No employee, beneficiary or other person shall have any claim against the
Company or any subsidiary as a result of any such action.
19. MISCELLANEOUS PROVISIONS.
(a) Parent And Subsidiary Corporations.
For all purposes of the Plan, a corporation shall be considered to be a
parent or subsidiary corporation of the Company only if such corporation is a
parent or subsidiary corporation of the Company within the meaning of Sections
424(e) and (f) of the Code.
(b) Number And Gender.
Wherever appropriate herein, words used in the singular shall be considered
to include the plural and words used in the plural shall be considered to
include the singular. The masculine gender, where appearing in the Plan, shall
be deemed to include the feminine gender.
(c) Headings.
The headings and subheadings in the Plan are included solely for
convenience, and if there is any conflict between such headings or subheadings
and the text of the Plan, the text shall control.
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(d) Not A Contract Of Employment.
The adoption and maintenance of the Plan shall not be deemed to be a
contract between the Company or any Participating Company and any person or to
be consideration for the employment of any person. Participation in the Plan at
any given time shall not be deemed to create the right to participate in the
Plan, or any other arrangement permitting an employee of the Company or any
Participating Company to purchase Stock at a discount, in the future. The rights
and obligations under any participant's terms of employment with the Company or
any Participating Company shall not be affected by participation in the Plan.
Nothing herein contained shall be deemed to give any person the right to be
retained in the employ of the Company or any Participating Company or to
restrict the right of the Company or any Participating Company to discharge any
person at any time, nor shall the Plan be deemed to give the Company or any
Participating Company the right to require any person to remain in the employ of
the Company or such Participating Company or to restrict any person's right to
terminate his employment at any time. The Plan shall not afford any participant
any additional right to compensation as a result of the termination of such
participant's employment for any reason whatsoever.
(e) Compliance With Applicable Laws.
The Company's obligation to offer, issue, sell or deliver Stock under the
Plan is at all times subject to all approvals of and compliance with any
governmental authorities (whether domestic or foreign) required in connection
with the authorization, offer, issuance, sale or delivery of Stock as well as
all federal, state, local and foreign laws. Without limiting the scope of the
preceding sentence, and notwithstanding any other provision in the Plan, the
Company shall not be obligated to grant options or to offer, issue, sell or
deliver Stock under the Plan to any employee who is a citizen or resident of a
jurisdiction the laws of which, for reasons of its public policy, prohibit the
Company from taking any such action with respect to such employee.
(f) Severability.
If any provision of the Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining provisions
hereof; instead, each provision shall be fully severable and the Plan shall be
construed and enforced as if said illegal or invalid provision had never been
included herein.
(g) Governing Law.
All provisions of the Plan shall be construed in accordance with the laws
of Colorado except to the extent preempted by federal law.
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INTERNET COMMUNICATIONS CORPORATION
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John M. Couzens, with the power to appoint
his substitute, and hereby authorizes him to represent and to vote as
designated below, all the shares of common stock of Internet Communications
Corporation held of record by the undersigned on April 23, 1999 at the Annual
Meeting of Shareholders to be held on May 27, 1999, or any adjournment
thereof.
1. A proposal to elect three (3) Directors.
[_] FOR the following nominees (except as marked to the contrary)
John M. Couzens Thomas C. Galley Richard T. Liebhaber
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
cross out that nominee's name above.)
2. A proposal to approve the 1999 Employee Stock Purchase Plan
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the named proxies may vote on such other business as
may properly come before the Annual Meeting or any adjournments or
postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 and 2.
<PAGE>
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. THE PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders, Proxy Statement and Annual Report furnished therewith.
Dated: _________________________, 1999
________________________________, 1999
Signature(s) of Shareholder(s)
Signature(s) should agree with names appearing hereon. Executors,
administrators, trustees, guardians, and attorneys should indicate when
signing. Attorneys should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERNET
COMMUNICATIONS CORPORATION. PLEASE SIGN AND RETURN THIS PROXY IN THE
ENCLOSED, PRE-ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
