UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NETWORK SYSTEMS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0460247
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
200 North Elm Street, Greensboro, North Carolina 27401
(Address of Principal Executive Offices, Including Zip Code)
NETWORK SYSTEMS INTERNATIONAL, INC. AND SUBSIDIARIES
LONG-TERM STOCK INCENTIVE PLAN
NETWORK SYSTEMS INTERNATIONAL, INC.
STOCK OPTION AGREEMENT
(Full title of Plans)
Robbie M. Efird
Chairman of the Board and Chief Executive Officer
Network Systems International, Inc.
200 North Elm Street
Greensboro, North Carolina 27401
(336) 271-8400
(Name, address, including zip code and, telephone number,
including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount of
to be to be Offering Aggregate Registration
Registered Registered Price Per Share Offering Price Fee (1)
Common
Stock, 1,000,000 $1 and $4.00 $2,500,000 $737.50
$.00l shares
par value
(1) Pursuant to Rule 457(h)(1) under the Securities Act of
1933, as amended (the "Securities Act"), based on the option
price for shares available for issuance upon exercise of
options granted pursuant to the Network Systems
International, Inc. and Subsidiaries Long-Term Stock
Incentive Plan and the Network Systems International, Inc.
Stock Option Agreement.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents constituting the prospectus (the
"Prospectus") of Network Systems International, Inc. (the
"Registrant") with respect to this Registration Statement in
accordance with Rule 428 promulgated pursuant to the
Securities Act are kept on file at the offices of the
Registrant. The Registrant will provide without charge to
employees, on the written or oral request of any such
person, a copy of any or all of the documents constituting
the Prospectus. Written requests for such copies should be
directed to the Secretary, Network Systems International,
Inc., 200 North Elm Street, Greensboro, North Carolina
27401. Telephone requests may be directed to (336) 271-8400.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the
Securities and Exchange Commission (the "Commission") are
incorporated herein by reference and made a part hereof:
(a)(i) The Registrant's Annual Report on Form 10-KSB
for the year ended September 30, 1999, as filed
with the Commission on January 13, 2000.
(b)(i) The Registrant's Quarterly Report on Form 10-
QSB for the quarter ended December 31, 1999,
as filed with the Commission on February 14, 2000.
(ii) The Registrant's Current Report on Form
8-K as filed with the Commission on January 13,
2000.
All documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934, as amended, (the
"Exchange Act"), after the date of this Registration
Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered
have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and the
Prospectus and to be a part hereof from the date of
filing of such documents.
Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or
superceded for purposes of this Registration Statement
and the Prospectus to the extent that a statement
incorporated by reference herein or any other
subsequently filed documents modifies or supercedes
such earlier statement. Any such statement so modified
or superceded shall not be deemed, except as so
modified or superceded, to constitute a part of this
Registration Statement or the Prospectus.
The Registrant will provide without charge to each
person to whom the Prospectus is delivered, on the
written or oral request of any such person, a copy of
any or all of the documents incorporated herein and in
the Prospectus by reference (other than exhibits to
such documents which are not specifically incorporated
by reference in such documents). Written requests for
such copies should be directed to Secretary, Network
Systems International, Inc., 200 North Elm Street,
Greensboro, North Carolina 27401. Telephone requests
may be directed to (336) 271-8400.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
There are no contracts between the Registrant and its
directors and officers, nor any resolutions adopted by the
Registrant, relating to indemnification. However, in
accordance with the provisions of the General Corporation
law of Nevada (the "Act"), the Registrant's Articles of
Incorporation provide indemnification for the directors and
officers to the fullest extent permitted by law. The
Articles of Incorporation further provide that a director or
officer of the Registrant will not be personally liable to
the Registrant or its shareholders for monetary damages for
breach of fiduciary duty as a director or officer, except
for liability for any negligence or misconduct of the
directors or officers in the performance of his duty.
The Registrant's Bylaws provide for the advancement to
indemnified directors or officers of litigation expenses
arising out of his status as such and insure against certain
liabilities without regard to whether they may be
indemnified under Nevada law. Pursuant to the Registrant's
Bylaws, the Registrant maintains directors' and officers'
liability insurance coverage which insures the Registrant
and the elected officers and directors of the Registrant
against damages, judgments, settlements and costs incurred
by reason of certain acts committed by such persons in their
capacities as officers and directors.
The indemnification laws of the State of Nevada generally
allow indemnification, in matters not involving the right of
the corporation, to a director or officer of the corporation
if such person acted in good faith, in a manner such person
reasonably believed to be in or not opposed to the best
interests of the corporation and in the case of a criminal
matter, had no reasonable cause to believe the conduct of
such person was unlawful. Nevada law, with respect to
matters involving the right of a corporation, allows
indemnification of a director or officer of the corporation,
if such person acted in good faith, in a manner such person
believed to be in the best interests of the corporation;
provided that there shall be no indemnification for matters
in which such person shall have been adjudged to be liable
to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that a court of
competent jurisdiction determines that indemnification is
proper.
The foregoing is only a general summary of certain aspects
of Nevada law dealing with indemnification of directors and
officers and does not purport to be complete. It is
qualified in its entirety by reference to the relevant
statutes which contain detailed specific provisions
regarding the circumstances under which and the person for
whose benefit indemnification shall or may be made and
accordingly are incorporated by reference as Exhibit 99.1 of
this Registration Statement.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Exhibit No. Description
4.1 Network Systems International, Inc. and
Subsidiaries Long Term Incentive Plan
4.2 Network Systems International, Inc.
Stock Option Agreement
5.1 Opinion of Smith Helms Mulliss & Moore,
L.L.P. as to the legality of the
securities being registered.
23.1 Consent of Smith Helms Mulliss & Moore,
L.L.P. (included in its opinion filed as
Exhibit 5.1)
23.2 Consent of KPMG LLP.
99.1 Provisions of Nevada law relating to
indemnification.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
Registration Statement;
(iii)To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement; provided, however, that
paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a
post-effective amendment by those paragraphs is
contained in periodic reports filed with or
furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered
therein, and the offering of such securities at
that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being
registered that remain unsold at the termination
of the offering.
(c)Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or
controlling person in connection with the securities
being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the
Securities Act and will be governed by the final
adjudication of such issue.
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable
grounds to believe that it meets all the requirements for
filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Greensboro, State
of North Carolina on April 4, 2000.
Network Systems International, Inc.
/s/ Robbie M. Efird
Robbie M. Efird,
Chairman of the Board And Chief Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on this 4th day of
April 2000.
Signature Capacities
/s/ Robbie M. Efird Chairman of the Board and
Robbie M. Efird Chief Executive Officer; Director
(Principal Executive Officer)
/s/ Christopher N. Baker President and Chief Operating Officer;
Christopher N. Baker Director
/s/ Michael T. Spohn Chief Financial Officer; (Principal
Michael T. Spohn Financial and Accounting Officer)
/s/ Joseph M. Brower Director
Joseph M. Brower
/s/ Carlton Joseph Mertens Director
Carlton Joseph Mertens
/s/ Olin H. Broadway, Jr. Director
Olin H. Broadway, Jr.
Index to Exhibits to Registration Statement on Form S-8
Exhibit No. Description
4.1 Network Systems International, Inc. and Subsidiaries
Long Term Incentive Plan
4.2 Network Systems International, Inc. Stock Option Agreement
5.1 Opinion of Smith Helms Mulliss & Moore, L.L.P. as to the
legality of the Securities being registered.
23.1 Consent of Smith Helms Mulliss & Moore,
L.L.P. (included in its opinion filed as
Exhibit 5.1)
23.2 Consent of KPMG LLP.
99.1 Provisions of Nevada law relating to indemnification.
Network Systems International, Inc. and Subsidiaries
Long-Term Stock Incentive Plan
ARTICLE I GENERAL
1.01. Purpose.
The purposes of this Long-Term Stock Incentive Plan (the
"Plan") are to: (1) closely associate the interests of the
key associates (management and certain other employees) of
Network Systems International, Inc., a Nevada corporation,
and its adopting Subsidiaries (the "Company") with the
stockholders by reinforcing the relationship between
participants' rewards and stockholder gains; (2) provide key
associates with an equity ownership in the Company
commensurate with Company performance, as reflected in
increased stockholder value; (3) maintain competitive
compensation levels; and (4) provide an incentive to key
associates for continuous employment with the Company.
1.02. Administration.
(a) The Plan shall be administered by a Committee (the
"Committee"), appointed by the Board of Directors of Network
Systems International, Inc. (the "Board"), which shall
consist of at least three members, all of whom shall be
members of the Board.
(b) The Committee shall have the authority, in its sole
discretion and from time to time to:
(i) designate the key associates or classes of key
associates eligible to participate in the Plan;
(ii) grant awards provided in the Plan in such form and
amount as the Committee shall determine;
(iii)impose such limitations, restrictions and
conditions upon any such award as the Committee shall
deem appropriate; and
(iv) interpret the Plan, adopt, amend and rescind rules
and regulations relating to the Plan, and make all other
determinations and take all other action necessary or
advisable for the implementation and administration of
the Plan.
(c) Decisions and determinations of the Committee on all
matters relating to the Plan shall be in its sole discretion
and shall be conclusive so long as such decisions shall
conform to applicable federal and state law. No member of
the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any
award thereunder.
1.03. Eligibility for Participation.
Participants in the Plan shall be selected by the
Committee from the executive officers, management, and other
employees (collectively "associates") of the Company who
have the capability of making a substantial contribution to
the success of the Company. In making this selection and in
determining the form and amount of awards, the Committee
shall consider any factors deemed relevant, including the
individual's functions, responsibilities, value of services
to the Company and past and potential contributions to the
Company's profitability and sound growth. The Committee's
determinations need not be uniform and may be made by the
Committee selectively among the persons who receive, or are
eligible to receive, Options under the Plan, whether or not
such persons are similarly situated.
1.04. Types of Awards Under Plan.
Awards under the Plan may be in the form of any one or
more of the following:
(i) Stock Options, as described in Article II; and
(ii) Incentive Stock Options, as described in Article III.
1.05. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan
shall be authorized Common Stock of Network Systems
International, Inc. a Nevada corporation, par value $.001
per share ("Common Stock"). The maximum number of shares of
Common Stock which may be issued under the Plan shall be
five hundred thousand.
(b) For purposes of calculating the maximum number of
shares of Common Stock which may be issued under the Plan:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be
counted when cash is used as full payment for shares
issued upon exercise of a Stock Option or Incentive Stock
Option; and only the net shares issued (including the
shares, if any, withheld for tax withholding
requirements) shall be counted when shares of Common
Stock are used as full or partial payment for shares
issued upon exercise of a Stock Option or Incentive Stock
Option.
(c) Shares tendered by a participant as payment for
shares issued upon exercise of a Stock Option or Incentive
Stock Option shall be available for issuance under the Plan.
Any shares of Common Stock subject to a Stock Option or
Incentive Stock Option which for any reason is terminated
unexercised or expires shall again be available for issuance
under the Plan.
1.06. Effective Date and Term of Plan.
The Plan shall become effective on the date approved by
the Board and shall remain in effect for a period of ten
years from such date.
ARTICLE II STOCK OPTIONS
2.01. Award of Stock Options.
The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions
as the Committee may grant to any person eligible to
participate in the Plan one or more options to purchase for
cash or shares the number of shares of Common Stock ("Stock
Options") allotted by the Committee. The date a Stock Option
is granted shall mean the date selected by the Committee as
of which the Committee allots a specific number of shares to
a participant pursuant to the Plan.
2.02. Stock Option Agreements.
The grant of a Stock Option shall be evidenced by a
written Stock Option Agreement ("Stock Option Agreement"),
executed by the Company and the holder of a Stock Option
(the "Optionee"), stating the number of shares of Common
Stock subject to the Stock Option evidenced thereby, and in
such form as the Committee may from time to time determine.
2.03. Stock Option Price.
The option price per share of Common Stock deliverable
upon the exercise of a Stock Option shall be, at least, 100%
of the fair market value of a share of Common Stock on the
date the Stock Option is granted.
2.04. Term and Exercise.
Each Stock Option shall be fully exercisable as set forth
in the Stock Option Agreement, but in any event not sooner
than one year from the date of its grant, and unless a
shorter period is provided by the Committee or by another
Section of this Plan, may be exercised during a period of
ten years from the date of grant thereof (the "option
term"). No Stock Option shall be exercisable after the
expiration of its option term.
2.05. Manner of Payment.
Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted
thereunder, and shall provide that, upon such exercise in
respect of any shares of Common Stock subject thereto, the
Optionee shall pay to the Company, in full, the option price
for such shares with cash or with previously owned Common
Stock at the discretion of the Company.
2.06. Death of Optionee.
(a) Upon the death of the Optionee, any rights to the
extent exercisable on the date of death may be exercised by
the Optionee's estate, or by a person who acquires the right
to exercise such Stock Option by bequest or inheritance or
by reason of the death of the Optionee, provided that such
exercise occurs within both the remaining effective term of
the Stock Option and twelve months after the Optionee's
death.
(b) The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may
have terminated prior to death, but only to the extent of
any rights exercisable on the date of death.
2.07 Retirement or Disability.
Upon termination of the Optionee's employment by reason
of retirement or permanent disability (as each is determined
by the Committee), the Optionee may, within 12 months from
the date of termination, exercise any Stock Options to the
extent such options are exercisable during such 12-month
period.
2.08. Termination for Other Reasons.
Except as provided in Sections 2.06 and 2.07, or except
as otherwise determined by the Committee, all Stock Options
shall terminate sixty (60) days after the termination of the
Optionee's employment for any other reason.
ARTICLE III INCENTIVE STOCK OPTIONS
3.01. Award of Incentive Stock Options.
The Committee may, from time to time and subject to the
provisions of the Plan and such other terms and conditions
as the Committee may prescribe, grant to any employee of the
Company who is eligible to participate in the Plan one or
more "incentive stock options" (intended to qualify as such
under the provisions of section 422 of the Internal Revenue
Code of 1986, as amended ("Incentive Stock Options") to
purchase for cash or shares the number of shares of Common
Stock allotted by the Committee. The date an Incentive Stock
Option is granted shall mean the date selected by the
Committee as of which the Committee allots a specific number
of shares to a participant pursuant to the Plan.
Notwithstanding the foregoing, Incentive Stock Options shall
not be granted to any owner of 10% or more of the total
combined voting power of the Company and its subsidiaries.
3.02. Incentive Stock Option Agreements.
The grant of an Incentive Stock Option shall be evidenced
by a written Incentive Stock Option Agreement, executed by
the Company and the grantee of an Incentive Stock Option
(the "Optionee"), stating the number of shares of Common
Stock subject to the Incentive Stock Option evidenced
thereby, and in such form as the Committee may from time to
time determine.
3.03. Incentive Stock Option Price.
The option price per share of Common Stock deliverable
upon the exercise of an Incentive Stock Option shall be at
least 100% of the fair market value of a share of Common
Stock on the date the Incentive Stock Option is granted.
3.04. Term and Exercise.
Each Incentive Stock Option shall be fully exercisable as
set forth in the Long Term Incentive Stock Option Agreement,
but in any event not sooner than one year from the date of
grant and in compliance with current IRS guidelines.
Options may be exercised during a period of ten years from
the date of grant (the "option term"). No Incentive Stock
Option shall be exercisable after the expiration of its
option term.
3.05. Maximum Amount of Incentive Stock Option Grant.
No Optionee may be granted an Incentive Stock Option in
any calendar year if the aggregate fair market value
(determined as of the date the Option is granted) of the
Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by such Optionee during
any calendar year, under this and all other incentive stock
option plans (as defined in Section 422 of the Internal
Revenue Code) of the Company, would exceed One Hundred
Thousand Dollars ($100,000).
3.06. Death of Optionee.
(a) Upon the death of the Optionee, any Incentive Stock
Option exercisable on the date of death may be exercised by
the Optionee's estate or by a person who acquires the right
to exercise such Incentive Stock Option by bequest or
inheritance or by reason of the death of the Optionee,
provided that such exercise occurs within both the remaining
option term of the Incentive Stock Option and one year after
the Optionee's death.
(b) The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may
have terminated prior to death, but only to the extent of
any Incentive Stock Options exercisable on the date of
death.
3.07. Retirement or Disability.
Upon the termination of the Optionee's employment by
reason of permanent disability or retirement at age 65 (or
at such other times as each shall be determined by the
Committee), the Optionee may exercise Incentive Stock
Options to the extent such Incentive Stock Options were
exercisable at the date of such termination of employment.
In addition, these options can only be exercised up to the
end of the time periods set forth in Section 422 of the
Internal Revenue Code of 1986, which states that exercise of
an Incentive Stock Option will not be available to an
Optionee who exercises any Incentive Stock Options more than
(i) 12 months after the date of termination of employment
due to permanent disability or (ii) three months after the
date of termination of employment due to retirement.
3.08. Termination for Other Reasons.
Except as provided in Sections 3.06 and 3.07 or except as
otherwise determined by the Committee, all Incentive Stock
Options shall terminate sixty (60) days after the
termination of the Optionee's employment with the Company.
3.09. Applicability of Stock Options Section.
Section 2.05, Manner of Payment applicable to Stock
Options, shall apply equally to Incentive Stock Options.
Said Section is incorporated by reference in this Article
III as though fully set forth herein.
ARTICLE IV MISCELLANEOUS
4.01. General Restriction.
Each award under the Plan shall be subject to the
requirement that, if at any time the Committee shall
determine that (i) the listing, registration or
qualification of the shares of Common Stock subject or
related thereto upon any securities exchange or under any
state or Federal law, or (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the
Optionee of an award with respect to the disposition of
shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such
award or the issue or purchase of shares of Common Stock
thereunder, such award may not be consummated in whole or in
part unless such listing, registration, qualification,
consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the
Committee.
4.02. Non-Assignability.
No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by
the laws of descent and distribution, nor shall any award
under the Plan be subject to attachment, execution or other
similar process. During the life of the recipient, such
award shall be exercisable only by such person or by such
person's guardian or legal representative.
4.03. Withholding Taxes.
Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company,
if required to withhold taxes upon issuance or transfer of
shares, will have the right to require the Optionee to remit
to the Company an amount sufficient to satisfy any Federal,
state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.
Alternatively, the Company may issue or transfer such shares
of Common Stock net of the number of shares sufficient to
satisfy the withholding tax requirements. For withholding
tax purposes, the shares of Common Stock shall be valued on
the date the withholding obligation is incurred.
4.04. Right to Terminate Employment.
Nothing in the Plan or in any agreement entered into
pursuant to the Plan shall confer upon any Optionee or
stockholder any right to continue in the employment of the
Company or affect any right which the Company may have to
terminate the employment of any Optionee or stockholder.
4.05. Rights as a Stockholder.
An Optionee shall have no rights as a stockholder with
respect to shares of Common Stock subject to an option
granted to the Optionee unless and until certificates for
shares of Common Stock are issued to the Optionee pursuant
to such option.
4.06. Definitions.
In this Plan the following definitions shall apply:
(a) "Subsidiary" means any corporation of which, at the
time more than 50% of the shares entitled to vote generally
in an election of directors are owned directly or indirectly
by Network Systems International, Inc., a Nevada
corporation, or any Subsidiary thereof.
(b) "Fair market value" as of any date and in respect of
any share of Common Stock means the closing bid price on
such date or on the next business day, if such date is not a
business day, of a share of Common Stock reflected in the
consolidated trading tables of The Wall Street Journal
(presently the NASDAQ) or any other publication selected by
the Committee, provided that, if shares of Common Stock
shall not have been traded on the NASDAQ market for more
than 10 days immediately preceding such date or if deemed
appropriate by the Committee for any other reason, the fair
market value of shares of Common Stock shall be as
determined by the Committee in such other manner as it may
deem appropriate.
(d) "Option" means Stock Option or Incentive Stock
Option.
(e) "Option price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Stock Option
or Incentive Stock Option.
4.07 Leaves of Absence.
The Committee shall be entitled to make such rules,
regulations and determinations, consistent with any
applicable laws, as it deems appropriate under the Plan in
respect of any leave of absence taken by the recipient of
any award. Without limiting the generality of the foregoing,
the Committee shall be entitled to determine (i) whether or
not any such leave of absence shall constitute a termination
of employment within the meaning of the Plan and (ii) the
impact, if any, of any such leave of absence on awards under
the Plan theretofore made to any recipient who takes such
leave of absence.
4.08. Newly Eligible Employees.
The Committee shall be entitled to make such
determinations and awards as it deems appropriate in respect
of any employee who becomes eligible to participate in the
Plan or any portion thereof after the commencement of an
award or incentive period.
4.09. Adjustments of and Changes in Stock of Network.
In any event of any change in the outstanding Common
Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up,
combination, exchange of shares or the like, the Committee
may appropriately adjust the number of shares of Common
Stock which may be issued under the Plan, the number of
shares of Common Stock 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 Committee. In the event
of a "Change in Control" of the Company any Option
previously granted under the Plan to an Optionee shall be
immediately exercisable in full on such date, without regard
to any times of exercise established under Section 2.04 or
3.04 hereof and any Sections outlined in the Stock Option
Agreement or Long Term Incentive Stock Option Agreement, as
the case may be. The term "Change in Control" shall mean
the occurrence, at any time during the specified term of an
Option granted under the Plan, of any of the following
events:
(a) The Company is merged or consolidated or reorganized
into or with or shares of stock of the Company are exchanged
for stock or securities of, another corporation or other
legal person and as a result of such, merger, consolidation,
reorganization or exchange less than 51% of the outstanding
voting securities or other capital interests of the
surviving, resulting or acquiring corporation or other legal
person are owned in the aggregate by the stockholders of the
Company immediately prior to such merger, consolidation,
reorganization or exchange;
(b) The Company sells all or substantially all of its
business and/or assets to any other corporation or other
legal person, less than 51% of the outstanding voting
securities or other capital interests of which are owned in
the aggregate by the stockholders of the Company, directly
or indirectly, immediately prior to or after such sale;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form or report), as promulgated
pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), disclosing that any person
or group (as the terms "person" and "group" are used in
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act and
the rules and regulations promulgated thereunder) has become
the beneficial owner (as the term "beneficial owner" is
defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 20% or more of the
issued and outstanding shares of voting securities of the
Company; or
(d) During any period of two consecutive years, individuals
who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute
at least a majority thereof unless the election, or
nomination for election by the Company's stockholders of
each new director of the Company was approved by a vote of
at least two-thirds of such directors of the Company then
still in office who were directors of the Company at the
beginning of any such period.
4.10. Amendment of the Plan.
(a) The Committee may, without further action by the
stockholders of the Company and without receiving further
consideration from the participants or paying further
consideration to participants, amend this Plan or condition
or modify awards under this Plan in response to changes in
securities or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply
with stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except
that without stockholder approval the Committee may not (i)
increase the maximum number of shares of Common Stock which
may be issued under the Plan (other than increases pursuant
to Section 4.09), (ii) extend the period during which any
award may be granted or exercised, (iii) extend the term of
the Plan, or (iv) change the associates/employees or group
of associates/employees eligible to receive Incentive Stock
Options. The termination or any modification or amendment of
the Plan, except as provided in subsection (a), shall not,
without the consent of a participant, affect his or her
rights under an award previously granted to him or her.
4.11. Effective Date of the Plan.
Effectiveness of the Plan is subject to approval by the
stockholders of the Company within twelve (12) months from
the date the Plan is adopted by the Board. Notwithstanding
any other provision hereof, options may be granted under the
Plan prior to obtaining stockholder approval, however no
Option granted hereunder may be exercised prior to approval
of the Plan by the stockholders of the Company and, in the
event the stockholders do not approve the Plan within one
year from the adoption of the Plan by the Board, all Options
granted hereunder shall be void ab initio.
NETWORK SYSTEMS INTERNATIONAL, INC.
STOCK OPTION AGREEMENT
1. Grant of Option. Network Systems International,
Inc., a Nevada corporation (the "Company"), hereby grants to
CHRISTOPHER N. BAKER
(the "Option Holder")
an option ("Option") to purchase from the Company a total
of 500,000 shares of Common Stock, $0.001 par value, of the
Company (the "Common Stock") at $1.00 per share, in the
amounts, during the periods and upon the terms and
conditions set forth in this Agreement. This Option is not
intended to constitute an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986,
as amended. Capitalized terms not otherwise defined herein
shall have the meaning ascribed to such terms in that
certain Executive Employment Agreement of even date herewith
between the Company and Option Holder (the "Employment
Agreement").
2. Time of Exercise. Except only as specifically pro
vided elsewhere in this Agreement, this Option is
exercisable in the following cumulative installments:
(A) Up to 25% of the total number of optioned shares
at any time on or after April 15, 2000.
(B) Up to an additional 25% of the total number of
optioned shares at any time on or after April 15,
2001.
(C) Up to an additional 25% of the total number of
optioned shares at any time on or after April 15,
2002.
(D) Up to an additional 25% of the total number of
optioned shares at any time on or after April 15,
2003.
If an installment covers a fractional share, such
installment will be rounded off to the next highest share,
except the final installment, which will be for the balance
of the total optioned shares. Notwithstanding the preceding
provisions of this Section 2, the number of option shares
exercisable under this Option shall not exceed the number of
shares exercisable on the earlier of the following:
(a) 5 p.m. EST on the date one year following the
date of the Option Holder's death or Disability
(as defined herein and as described in Section 6).
(b) 5 p.m. on the date six months following the
date the Option Holder's employment with the
Company terminates.
(c) The date and time this Option terminates
pursuant to Section 5.
3. Vesting Upon Certain Events. Notwithstanding the
provisions of Section 2, this Option shall become fully
exercisable immediately upon the occurrence of a Change of
Control or if Option Holder is terminated by the Company
without Cause or by Executive for Good Reason (as such terms
are defined herein).
4. Exercise of Option. The exercise of this Option
shall entitle the Option Holder to purchase shares of Common
Stock of the Company. If requested by the Option Holder and
approved by the Company, the Option Holder may exercise this
Option or any portion hereof by tendering shares of Common
Stock, in lieu of cash payment for the option shares being
purchased, with the number of shares tendered to be
determined based on the closing price per share of the
Common Stock on the date of exercise, as quoted on any
national securities exchange or The Nasdaq Stock Market, or
if no sale of the Common Stock shall have been reported on
such date of exercise, on the next preceding day or the last
day prior to the date of exercise when a sale was reported.
The Company shall register the option shares subject to the
Option on a Form S-8 or other applicable registration
statement promptly after the date of this Agreement, and in
any event by October 1, 1999.
5. Term. Upon the first to occur of the following,
this Option will terminate immediately and the Option Holder
will forfeit any right to exercise any portion of this
Option:
(a) 5 p.m. EST on April 15, 2009.
(b) 5 p.m. on the date one month following the
termination of the Option Holder's employment with
the Company for Cause.
6. Who May Exercise. During the lifetime of the
Option Holder, this Option may be exercised only by the
Option Holder. If the Option Holder dies or becomes
Disabled prior to the termination date specified in Section
5 hereof without having exercised this Option as to all of
the shares covered hereby, the Option may be exercised to
the extent the Option Holder could have exercised the Option
on or after the date of his death or Disability in
accordance with Section 2 by (i) the Option Holder's estate
or a person who acquired the right to exercise the Option by
bequest or inheritance or by reason of the death of the
Option Holder in the event of the Option Holder's death, or
(ii) the Option Holder or his personal representative in the
event of the Option Holder's Disability, subject to the
other terms of this Agreement and applicable laws, rules and
regulations.
7. Restrictions on Exercise. This Option:
(a) may be exercised only with respect to full
shares and no fractional share of stock shall be
issued;
(b) may not be exercised in whole or in part and
no certificates representing shares subject to
such Option shall be delivered, if any requisite
approval or consent of any government authority of
any kind having jurisdiction over the exercise of
options shall not have been secured; and
(c) must be exercised prior to the date specified
in Section 5(a).
8. Manner of Exercise. Subject to such administrative
regulations as the Company may from time to time adopt, the
Option Holder or, if applicable, Option Holder's
representative or beneficiary shall, in order to exercise
this Option:
(a) give written notice to the Company of the
exercise price and the number of shares which he
will purchase and furnish an undertaking to make
payment of such exercise price in United States
dollars before issuance of such shares; or
(b) give written notice to the Company of the exercise
price and the number of shares for which he is re
questing approval from the Company to tender other
shares of Common Stock in exchange for Option
shares.
Any notice shall include an undertaking to furnish or
execute such documents as the Company in its reasonable
discretion shall deem necessary (i) to evidence such
exercise, in whole or in part, of the Option evidenced by
this Agreement, (ii) to determine whether registration is
then required under the Securities Act of 1933, or any other
law, as then in effect, and (iii) to comply with or satisfy
the requirements of the Securities Act of 1933, or any other
law, as then in effect.
In addition, if an exercise under paragraph (b) above
is requested, the notice shall include an undertaking to
tender to the Company (i) promptly after receipt of denial
by the Company of the paragraph (b) request, full payment in
United States dollars of the Option exercise price for the
shares being purchased hereunder or (ii) promptly after
receipt of approval by the Company of exercise of this
Option or portion thereof by payment of Common Stock, full
payment in Common Stock in exchange for the shares being
purchased hereunder. In addition, the Option Holder shall
tender payment of the amount that may be requested pursuant
to Section 14 by the Company for the purpose of satisfying
its liability to withhold federal, state or local income or
other taxes incurred by reason of the exercise of this
Option.
9. Non-Assignability. This Option is not assignable
or transferable by the Option Holder except by will or by
the laws of descent and distribution.
10. Rights of Shareholder. The Option Holder will
have no rights as a shareholder with respect to any shares
covered by this Option until the issuance of a certificate
or certificates to the Option Holder for the shares. Except
as otherwise provided in Section 11 hereof, no adjustment
shall be made for dividends or other rights for which the
record date is prior to the issuance of such certificate or
certificates.
11. Capital Adjustments; Antidilution. In the event
that, by reason of any merger, consolidation, combination,
liquidation, reorganization, recapitalization, stock
dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like
change in capital structure of the Company (collectively, a
"Reorganization"), the Common Stock is substituted,
combined, or changed into any cash, property, or other
securities, or the shares of Common Stock are changed into a
greater or lesser number of shares of Common Stock, the
number and/or kind of shares and/or interests subject to
this Option and the per share price or value thereof shall
be appropriately and equitably adjusted by the Company to
give appropriate effect to such Reorganization. Any
fractional shares or interests resulting from such
adjustment shall be eliminated.
In the event the Company is not the surviving entity of
a Reorganization and, following such Reorganization, the
Option Holder holds Options which have not been exercised,
canceled, or terminated in connection herewith, the Company
shall cause such Options to be assumed (or canceled and
replacement Options issued) by the surviving entity in the
Reorganization.
12. Law Governing. This Agreement is intended to be
performed in the State of North Carolina and shall be
construed and enforced in accordance with and governed by
the laws of such State.
13. Date of Grant. The date of grant of this Option
is April 15, 1999.
14. Withholding. It shall be a condition to the
obligation of the Company to issue or transfer shares of
stock upon exercise of this Option that the Option Holder
pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying its
liability to withhold federal, state or local income or
other taxes incurred by reason of the exercise of this
Option. If the amount requested is not paid, the Company
may refuse to issue or transfer shares of stock upon
exercise of this Option.
15. Dispute Resolution.
(a) Arbitration . The exclusive remedy or method
of resolving all disputes or questions arising out of
or relating to this Agreement shall be arbitration held
in Greensboro, North Carolina. Any arbitration may be
requested or initiated by the Company or Option Holder
(each a "Party") by written notice to the other Party
specifying the subject of the requested arbitration and
appointing the notifying Party's arbitrator
("Arbitration Notice").
(b) Arbitrators . Arbitration shall be before
three arbitrators, one to be appointed by the Company,
a second to be appointed by Option Holder, and a third
to be appointed by the two arbitrators chosen by the
Company and Option Holder. All such arbitrators shall
be selected from a list of potential arbitrators
provided by the American Arbitration Association. The
third arbitrator shall act as chairman. If either
Party fails to appoint an arbitrator by written notice
to the other Party within ten days after the
Arbitration Notice is given or the two arbitrators
appointed by the Parties fail to appoint a third
arbitrator within ten days after the date of the
appointment of the second arbitrator, then the American
Arbitration Association in Greensboro, North Carolina,
upon application of a Party shall appoint an arbitrator
to fill that position.
(c) Award and Costs . The arbitration proceeding
shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration
Association. A determination or award made or approved
by at least two of the arbitrators shall be the valid
and binding action of the arbitrators. The costs of
arbitration shall be borne by the Company and/or Option
Holder as determined by the arbitrators. The
arbitration determination or award shall be final and
conclusive on the Parties, and judgment upon such award
may be entered and enforced in any court of competent
jurisdiction.
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer and
the Option Holder, to evidence his consent and approval of
all the terms hereof, has duly executed this Agreement, as
of the date specified in Section 13 hereof.
NETWORK SYSTEMS INTERNATIONAL, INC.
By: /s/ Robbie M. Efird
Robbie M. Efird,
Chief Executive Officer
/s/ Christopher N. Baker
CHRISTOPHER N. BAKER, Option Holder
SMITH HELMS MULLISS & MOORE, L.L.P.
Attorneys at Law
Post Office Box 21927
Greensboro, North Carolina 27420
(Tel) 336-378-5200
(Fax) 336-378-5400
April 4, 2000
Network Systems International, Inc.
200 North Elm Street
Greensboro, North Carolina 27401
Re: Registration Statement on Form S-8
1,000,000 Shares of Common Stock
Network Systems International, Inc. and Subsidiaries Long-
Term Stock Incentive Plan
Network Systems International, Inc. Stock Option Agreement
Ladies and Gentlemen:
In connection with the possible offering and sale from time
to time of up to 1,000,000 shares of the common stock (the
"Shares") of Network Systems International, Inc. (the
"Corporation"), upon the terms and conditions set forth in the
Registration Statement on Form S-8 (the "Registration
Statement"), filed on April 4, 2000, by the Corporation with the
Securities and Exchange Commission under the Securities Act of
1933, as amended, and the prospectus constituting a part thereof
(the "Prospectus"), we are of the opinion that when (a) the
Registration Statement shall become effective, and (b) the
Shares have been sold upon the terms and conditions set forth in
the Registration Statement and the Prospectus, the Shares will
be validly authorized and legally issued, fully paid and
nonassessable.
We hereby consent (1) to be named in the Registration
Statement and in the Prospectus as attorneys who will pass upon
the legality of the Shares and (2) to the filing of a copy of
this opinion as Exhibit 5.1 of the Registration Statement.
Very truly yours,
/s/ SMITH HELMS MULLISS & MOORE, L.L.P.
INDEPENDENT AUDITORS' CONSENT
The Board of Directors Network Systems International, Inc.:
We consent to the incorporation by reference in the
Registration Statement on Form S-8 of Network Systems
International, Inc. of our report dated January 7, 2000,
relating to the consolidated balance sheet of Network
Systems International, Inc. and subsidiary as of September
30, 1999, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for the year
then ended, which report appears in the September 30, 1999,
annual report on Form 10-KSB of Network Systems
International, Inc.
/s/ KPMG LLP
KPMG LLP
Greensboro, North Carolina
April 4, 2000
Nevada Revised Statutes 78.7502 Discretionary and mandatory
indemnification of officers, directors, employees and agents:
General provisions.
1. A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by
or in the right of the corporation, by reason of the fact that
he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, does not, of itself,
create a presumption that the person did not act in good faith
and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and that, with
respect to any criminal action or proceeding, he had reasonable
cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred
by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the corporation. Indemnification may not be made
for any claim, issue or matter as to which such a person has
been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
subsections 1 and 2, or in defense of any claim, issue or matter
therein, the corporation shall indemnify him against expenses,
including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
(Added to NRS by 1997, 694)
Nevada Revised Statutes 78.751 Authorization required for
discretionary indemnification; advancement of expenses;
limitation on indemnification and advancement of expenses.
1. Any discretionary indemnification under NRS 78.7502 unless
ordered by a court or advanced pursuant to subsection 2, may
be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the
director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the action, suit
or proceeding;
(c) If a majority vote of a quorum consisting of directors who
were not parties to the action, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to
the action, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
1. The articles of incorporation, the bylaws or an agreement
made by the corporation may provide that the expenses of
officers and directors incurred in defending a civil or criminal
action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or
on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the corporation.
The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or
otherwise by law.
2. The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either
an action in his official capacity or an action in another
capacity while holding his office, except that indemnification,
unless ordered by a court pursuant to NRS 78.7502 or for the
advancement of expenses made pursuant to subsection 2, may not
be made to or on behalf of any director or officer if a final
adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law
and was material to the cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
(Added to NRS by 1969, 118; A 1987, 83; 1993, 976; 1997, 706)
