PRELIMINARY COPY
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[Amendment No. _____]
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X Preliminary Proxy Statement
_____ Definitive Proxy Statement
_____ Definitive Additional Materials
_____ Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
International Nursing Services Inc.
________________________________________________________________________
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement)
________________________________________________________________________
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INTERNATIONAL NURSING SERVICES, INC.
360 South Garfield Street, Suite 400
Denver, Colorado 80209
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 4, 1996
NOTICE IF HEREBY GIVEN that the Annual Meeting of
Stockholders of International Nursing Services, Inc., a Colorado
corporation (the "Company"), will be held at the Company's
principal place of business at 360 South Garfield Street, Suite
400, Denver, Colorado, on Monday, November 4, 1996 at 10:00 a.m.,
local time, for the following purposes:
1. To elect a Board of Directors consisting of four
directors to serve until the next Annual Meeting of Stockholders
or until their successors are duly elected and qualified;
2. To approve the amendment of the Company's Articles of
Incorporation to increase the number of authorized shares of
Common Stock to 25,000,000;
3. To approve the adoption of the Company's 1996 Stock
Incentive Plan and an amendment to that Plan increasing the
number of shares reserved for issuance thereunder to 2,000,000;
4. To ratify the appointment of Ehrhardt Keefe Steiner &
Hottman PC. independent public accountants, to audit the
financial statements of the Company for the fiscal year ending
December 31, 1996; and
5. To transact such other business as may properly come
before the Annual Meeting or any adjournments(s) thereof.
The Board of Directors has fixed the close of business on
September 18, 1996 as the record date (the "Record Date") for
determining the stockholders entitled to receive notice of, and
to vote at, the Annual Meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL
MEETING IN PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE
ANNUAL MEETING, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID
ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING
THE ANNUAL MEETING MAY VOTE IN PERSON IF SUCH STOCKHOLDER HAS
PREVIOUSLY RETURNED A PROXY.
By Order of the Board of Directors
John P. Yeros, Chairman of the Board and
Chief Executive Officer
Denver, Colorado, October 1, 1996
INTERNATIONAL NURSING SERVICES, INC.
360 South Garfield Street, Suite 400
Denver, Colorado 80209
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 4, 1996
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of
Directors of International Nursing Services, Inc., a Colorado
corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on Monday, November 4, 1996 at 10:00
a.m., local time, or at any adjournment(s) thereof, for the
purposes set forth herein and in an accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting will be
held at the Company's principal place of business at 360 South
Garfield Street, Suite 400, Denver, Colorado. The Company's
telephone number is (303) 393-1515. These proxy solicitation
materials were mailed on or about October 1, 1996 to all
stockholders listed in the stockholder records of the Company
as of the Record Date (as that term is defined below). The
Company will bear the cost of this solicitation.
Record Date and Share Ownership
Stockholders of record at the close of business on
September 18, 1996 (the "Record Date") are entitled to vote at
the Annual Meeting. At the Record Date, 4,612,856 shares of
the Company's Common Stock, $0.001 par value per share, were
outstanding. Stockholders holding at least a majority of the
outstanding shares of Common Stock represented in person or by
proxy, shall constitute a quorum for the transaction of
business at the Annual Meeting.
Revocability of Proxies
Any Proxy given pursuant to this solicitation may be
revoked by the person or entity giving it at any time before
its use by delivering to the Company a written notice of
revocation or a duly executed Proxy bearing a later date or by
attending the Annual Meeting and voting in person. An
appointment of proxy is revoked upon the death or incapacity
of the stockholder appointing the proxy if the Secretary or
other officer or agent of the Company who is authorized to
tabulate votes receives notice of such death or incapacity
before the proxy exercises his authority under the
appointment.
Voting and Solicitation
Each outstanding share of Common Stock shall be entitled
to one (1) vote on each matter submitted to a vote at the
Annual Meeting. Assuming a quorum is present, a plurality of
votes cast by the shares entitled to vote in the election of
directors will be required to elect each director. The
Company estimates that the proxy materials will be mailed to
shareholders of record on or about October 1, 1996. The
principal executive offices of the Company are located at 360
South Garfield Street, Suite 400, Denver, Colorado 80209. The
Company will bear the cost of solicitation of proxies. In
addition to the use of the mails, proxies may be solicited
personally, by telephone or by facsimile, and the Company may
reimburse brokerage firms and other persons holding shares of
the Company's Common Stock in their names or in the names of
their nominees, for their reasonable expenses in forwarding
proxy solicitation materials to the beneficial owners.
Deadline for Receipt of Shareholder Proposals
Stockholders of the Company who intend to present
proposals at the Company's 1997 Annual Meeting of Stockholders
must deliver such proposals to the Company no later than
January 19, 1997 in order to be included in the Proxy
Statement and form of Proxy relating to the 1997 Annual
Meeting of Stockholders. The Company currently anticipates
that the 1997 Annual Meeting of Stockholders will be held on
June 18, 1997.
Matters to Be Brought Before the Annual Meeting
The matters to be brought before the Annual Meeting
include: (1) the election of a Board of Directors consisting
of four directors; (2) the approval of an amendment to the
Company's Articles of Incorporation to increase the number of
authorized shares of Common Stock to 25,000,000; (3) the
approval of the adoption of the Company's 1996 Stock Incentive
Plan and an amendment to that Plan increasing the number of
shares reserved for issuance thereunder to 2,000,000; (4) the
ratification of the appointment of Ehrhardt, Keefe, Steiner &
Hottman, P.C., independent public accountants, to audit the
financial statements of the Company for the fiscal year ending
December 31, 1996; and (5) the transaction of such other
business as may properly come before the Annual Meeting or any
adjournment(s) thereof.
ELECTION OF DIRECTORS
Nominees
The Company's Board of Directors currently consists of
four directors. It is contemplated that a Board of four
directors will be elected at the Annual Meeting. The Board of
Directors recommends that the stockholders vote "FOR" the
director nominees listed below. Assuming a quorum is present
at the Annual Meeting, a plurality of votes cast by the shares
entitled to vote in the election of directors will be required
to elect each director. Unless otherwise instructed, the
proxy holder will vote the proxies received by him for
management's four nominees, as listed below. In the event any
management nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will
be voted for any nominee who shall be designated by the
current Board of Directors to fill the vacancy. In the event
that additional persons are nominated for election as
directors, the proxy holder intends to vote all proxies
received by him in such a manner as will insure the election
of as many of the nominees listed below as possible. It is
not expected that any nominee will be unable or will decline
to serve as a director. The term of office of each person
elected as a director will continue until the next Annual
Meeting of Stockholders, or until such person's successor has
been elected and qualified. The nominees are as follows:
John P. Yeros
Thomas J. Oberle
Charles Powell
Colleen Dougherty-Gray
All of the nominees are currently serving as directors of
the Company. Certain information regarding each nominee is
set forth hereinbelow.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THOSE
FOUR NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS. A
PLURALITY OF THE VOTES CAST BY THE SHARES ENTITLED TO VOTE AT
THE ANNUAL MEETING WILL BE REQUIRED TO ELECT EACH DIRECTOR.
BOARD MEETINGS
The Board of Directors of the Company held a total of 10
meetings during the fiscal year ended December 31, 1995
(including regularly scheduled and special meetings of the
Board of Directors). All of the then-current members of the
Board of Directors attended (either in person or
telephonically) 100% of all meetings of the Board held during
the fiscal year ended December 31, 1995.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company as of
September 20, 1996 are set forth below:
Name Age Position
____ ___ ________
John P. Yeros 45 Chairman of the Board and
Chief Executive Officer
Colleen Dougherty-Gray 39
Executive Vice President,
Chief Operating Officer and
Robin M. Bradbury 40 Director
Thomas J. Oberle(2) 51 Chief Financial Officer
Charles Powell(1)(2) 41 Director
Director
____________________
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
Each director is serving a term of office that will
continue until the next Annual Meeting of Stockholders and
until the election and qualification of his or her respective
successor. All of the Company's executive officers devote
full-time to the Company's business and affairs.
John P. Yeros. Mr. Yeros, the founder of the Company,
served as President and a director of the Company from the
Company's incorporation in April 1988 through September 1993.
Mr. Yeros has since served as Chairman of the Board and Chief
Executive Officer of the Company.
Colleen Dougherty-Gray. Ms. Dougherty-Gray has served as
Executive Vice President and Chief Operating Officer of the
Company since November 1994 and as a director since August
1995. From 1993 to November 1994, Ms. Dougherty-Gray was Area
Vice President of In Home Health, Inc., a home health care
agency. Also in 1993, Ms. Dougherty-Gray was the Northeast
Regional Manager of The Hug Center of New England, a preferred
provider for Children's Hospital of Boston. From 1990 through
1992, Ms. Dougherty-Gray was a senior consultant with Ernst &
Young, New York, New York, an international accounting and
consulting firm.
Robin M. Bradbury. Mr. Bradbury has served as Chief
Financial Officer of the Company since February 1996. From
1991 to September 1995, Mr. Bradbury served as the Chief
Financial Officer of InfoNow Corporation, a publicly-traded
internet provider of multi-media solutions in Denver,
Colorado. From 1987 to 1991, Mr. Bradbury owned and operated
an interim chief financial/controller service that served
private and public companies. During this period, Mr.
Bradbury also served as the Chief Financial Officer of Top
Source, Inc., a publicly-traded automotive accessory
distributor in Palm Beach, Florida. From 1980 to 1987, Mr.
Bradbury was an audit manager with Deloitte Haskins & Sells
(now Deloitte Touche) in Denver and Colorado Springs,
Colorado.
Thomas J. Oberle. Mr. Oberle has been a director of the
Company since its incorporation. Since January 1993, Mr.
Oberle has been the director of the Colorado Dental
Association. From January 1991 to January 1993, he served as
an independent insurance agent in Denver, Colorado. From
October 1989 to December 1991, Mr. Oberle was a Vice President
of Equicor, a health maintenance organization in Denver,
Colorado. From May 1987 to October 1989, he served as
President of RMS, Inc., a corporation involved in organizing
various companies associated with the Children's Hospital in
Denver, Colorado. Mr. Oberle devotes only such time as is
necessary to the business of the Company.
Charles Powell. Mr. Powell has served as a director of
the Company since September 1994. Mr. Powell co-founded KAPRE
Software, Inc., Boulder, Colorado, in March 1992. Since March
1996 Mr. Powell has served as a director and the Vice
President of Operations for Antalys Corporation, a privately-
held software Company. Mr. Powell has served as Vice
President of Finance and Vice President of International
Operations of KAPRE Software from March 1992 to February 1996.
From February 1992 through March 1993, Mr. Powell also served
as Chief Executive Officer of Generation 5 Technology, Inc.,
Denver, Colorado, a publicly-held software development
company. Mr. Powell devoted approximately half of his time to
each of KAPRE Software, Inc. and General 5 Technology, Inc.
from March 1992 through March 1993. From November 1988 to
February 1992, Mr. Powell served as the Vice President of
International Operations for J.D. Edwards, Inc., Englewood,
Colorado, a software applications developer for the mainframe
computer market. From April 1988 to June 1989, Mr. Powell was
President of Sheridan Securities, Inc., Denver, Colorado. Mr.
Powell currently serves on the Board of Directors of Milestone
Capital, Inc. and Siscom, Inc., both publicly-held companies
located in Denver, Colorado, and the Rockies Fund, Inc.,
headquartered in Colorado Springs, Colorado. Mr. Powell
devotes only such time as is necessary to the Company's
business.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The Company believes that shareholders should be provided
information about director and executive officer compensation
consistent with the rules of the Securities and Exchange
Commission. As a result, this Proxy Statement contains the
following sections of information regarding executive
compensation: Summary Compensation Table, Options Grants
Table and Fiscal Year-End Option and Warrants--Option/Warrant
Value Table.
Summary Compensation Table. The following table sets
forth the annual and long-term compensation for services in
all capacities to the Company for the three years ended
December 31, 1995 for John P. Yeros, the Chief Executive
Officer of the Company, Colleen Dougherty-Gray, the Chief
Operating Officer of the Company, Judith Shargel, the former
Executive Vice President and Gerald R. Hendricks, the former
President and Chief Financial Officer of the Company
(collectively, the "Named Officers"). No officer of the
Company other than Mr. Yeros, Ms. Dougherty-Gray, Ms. Shargel
and Mr. Hendricks received annual salary and bonus exceeding
$100,000 in 1995.
Long-Term
Compensation
Annual Compensation(1) Awards
Name and Restricted Options/
Principal Fiscal Stock Warrants
Position Year Salary Bonus (Shares) (Shares)
John P. 1995 $130,000 $10,000 -0- 300,000(2)
Yeros, 1994 $109,000(3) -0- -0- 403,813
Chief 1993 $90,615 -0- -0- 65,000(4)
Executive
Officer and
Chairman of
the Board
Colleen 1995 $96,000 $5,000 -0- 100,000(2)
Doughterty- 1994 $9,230 -0- -0- 15,000
Gray, 1993 N/A N/A N/A N/A
Chief
Operating
Officer and
Director
Judith 1995 $110,000 $2,000 -0- -0-
Shargel, 1994 $32,000 -0- -0- 12,500
former 1993 N/A N/A N/A N/A
Executive
Vice
President
Gerald R. 1995 $108,500 -0- -0- -0-
Hendricks, 1994 $109,000(3) -0- -0- 403,814
former 1993 $-0- -0- $77,500(5) 32,500
President,
Former
Chief
Financial
Officer and
Former
Director
____________________________________________
(1) With respect to each of the Named Officers, the aggregate
amount of perquisites and other personal benefits,
securities or property received was less than either
$50,000 or 10% of the salary and bonus reported.
(2) The options to purchase a total of 400,000 shares of
Common Stock granted to Mr. Yeros and Ms. Dougherty-Gray
were granted with an exercise price of $0.63 per share,
which represented the fair market value of the Common
Stock at the time of issuance.
(3) Notwithstanding the terms of their respective employment
agreements, Messrs. Yeros and Hendricks agreed to reduce
their annual salary for fiscal 1994 to $109,000 rather
than $120,000.
(4) A total of 32,500 of these options were canceled in 1993.
(5) Mr. Hendricks was issued 77,500 shares of Common Stock in
September 1993 in lieu of receiving cash compensation.
Those shares were valued for financial reporting purposes
at $0.50 per share, the estimated fair market value on
the date of issuance. Mr. Hendricks transferred by gift
a total of 25,000 shares of Common Stock to a charity in
1994. The value of the remaining shares at December 31,
1995 was $307,650.
Options Grants Table. The following table sets forth
information on grants of stock options pursuant to the
Company's 1996 Stock Incentive Plan (the "1996 Plan") to the
Named Officers:
Percent of Total
Options/ Options/Warrants Exercise
Warrants Granted to or Base
Granted Employees in 1995 Price Expiration
Name (Shares) (1) ($/Share) Date
John P. 300,000 75% $0.63 November
Yeros (2) 2005
Colleen 100,000 25% $0.63 November
Dougherty (2) 2005
-Gray
Judith -0- 0% -- --
Shargel
Gerald R. -0- 0% -- --
Hendricks
____________________________________________
(1) The Company issued options to acquire a total of 400,000
shares of its Common Stock to employees during 1995.
(2) These options were granted pursuant to the 1996 Plan and
are exercisable immediately.
Fiscal Year-End Options and Warrants--Option/Warrant Value
Table. The following table sets forth information on year-end
values of stock options and warrants granted to the Named
Officers as of December 31, 1995:
Number of Securities
Underlying Unexercised Value of Unexercised
Options/Warrants at In-the-Money Options
Fiscal Year-End at Fiscal Year-End
_______________ __________________
Name Exercisable Unexercisable Exercisable Unexercisable(1)
____ ___________ _____________ ___________ _______________
John P. Yeros 148,687 587,626 $21,450 $482,907
Colleen 15,000 100,000 $ 2,500 $134,000
Dougherty-Gray
Judith Shargel 12,500 -0- $ 3,750 $ -0-
Gerald R. -0- -0- $ -0- $ -0-
Hendricks
____________________________________________
(1) The dollar values are calculated by determining the
difference between $2.00 per share, the fair market
value of the Common Stock at August 15, 1996, and the
exercise price of the respective options.
No employee-director of the Company receives any
additional compensation for services as a director. Non-
employee directors receive no salary for their services as
such, although they do receive a fee of $250 per Board or
committee meeting attended. The Board of Directors has also
authorized payment of reasonable travel or other out-of-pocket
expenses incurred by non-employee directors for attending
Board or committee meetings.
The Company has no retirement, pension or profit-sharing
program for the benefit of its directors, executive officers
or other employees, but the Board of Directors may recommend
one or more such programs for adoption in the future.
Employment Agreements. Mr. Yeros entered into an
Employment Agreement with the Company effective October 15,
1993. Ms. Dougherty-Gray initially entered into an Employment
Agreement with the Company effective November 21, 1994. Ms.
Dougherty-Gray signed an additional Employment Agreement
effective March 1, 1996 for another two-year term. Mr.
Bradbury entered into an Employment Agreement with the Company
effective February 13, 1996. Ms. Shargel entered into an
Employment Agreement with the Company effective as of
September 19, 1994. Mr. Yeros' Employment Agreement provides
for a three-year term, while two-year terms are provided for
Ms. Dougherty-Gray, Ms. Shargel and Mr. Bradbury, with the
right on the part of the Company to extend each of those
Employment Agreements on written notice to the employee given
not less than 90 days prior to the expiration of the initial
term. In August 1996, the Company chose not to renew Ms.
Shargel's Employment Agreement. Each of those Employment
Agreements provides for termination by the employee with or
without cause or by the Company with cause. Those Employment
Agreements are subject to termination by the Company without
cause after the initial one-year term, subject to the right of
the employee to receive 12 months' compensation. These
Employment Agreements call for Messrs. Yeros and Bradbury and
Ms. Shargel and Ms. Dougherty-Gray to receive minimum annual
salaries of $120,000, $110,000, $110,000 and $108,000,
respectively. These Employment Agreements also contain bonus
and stock option provisions that empower the Board of
Directors to grant bonuses and stock options based upon the
employee's performance.
On June 22, 1995, the Company and Gerald R. Hendricks
mutually agreed to terminate Mr. Hendricks' Employment
Agreement. The Company agreed to pay Mr. Hendricks $7,500 per
month in severance through December 15, 1995. The Company
also canceled certain options and warrants granted to Mr.
Hendricks consisting of rights to purchase a total of 287,625
shares of Common Stock at $1.75 per share.
Each of Messrs. Yeros' and Bradbury's and Ms.
Dougherty-Gray's employment agreements contain provisions
providing that, upon the occurrence of a "Triggering Event"
(defined to include a non-negotiated change in ownership of
between 50% and 80% of the outstanding shares of the Company's
Common Stock or a non-negotiated merger of the Company with
and into another corporation) during the period that such
persons are acting as officers or directors for the Company,
the employee will receive a lump sum payment equal to between
one and 2.9 times the previous year's base pay in the event of
termination other than for cause. Each Employment Agreement
also contains a non-compete provision that extends for a
period of one year after termination or resignation of the
employee, as well as certain confidentiality provisions.
1996 Stock Incentive Plan
The 1996 Stock Incentive Plan (the "1996 Plan") was
adopted by the Company's Board of Directors effective November
24, 1995. The purpose of the 1996 Plan is to provide a
vehicle under which a variety of equity-based awards may be
granted to employees, non-affiliated individuals (as defined
in the 1996 Plan) and non-employee directors of the Company in
order to promote the Company's development and success. The
1996 Plan permits the award of non-qualified stock options,
incentive stock options, stock awards and purchases, as
approved by the Compensation Committee of the Board of
Directors. A maximum of 500,000 shares of Common Stock were
initialy reserved for grant under the 1996 Plan. As of August
15, 1996, a total of 1,288,874 options were outstanding under
the 1996 Plan at exercise prices between $0.63 and $1.88.
Warrant Issuances
In November 1994, the Board of Directors issued warrants
to Messrs. Yeros and Hendricks entitling each of them to
acquire 287,626 shares of Common Stock. The warrants have an
exercise price of $1.75, the fair market value at the date of
grant. The warrants vested immediately and are exercisable
when the Company's consolidated revenues, on a pro forma
basis, equal or exceed $20,000,000, or at the end of seven
years, whichever comes first. These warrants expire at the
end of seven years if not exercised. The Compensation
Committee of the Board of Directors approved the granting of
these warrants. In connection with the termination of Mr.
Hendricks' employment, his warrants were canceled.
Conflicts of Interest
The Company has adopted a policy that any transactions
with directors or officers or any entities in which they are
also officers or directors or in which they have a financial
interest, will only be on terms that would be reached in an
arms-length transaction, consistent with industry standards
and approved by a majority of the disinterested directors of
the Company's Board of Directors. This policy, which is set
forth in the minutes of the Board of Directors, provides that
no such transaction by the Company shall be either void or
voidable solely because of such relationship or interest of
such directors or officers or solely because such directors
are present at the meeting of the Board of Directors of the
Company or a committee thereof that approves such transaction
or solely because their votes are counted for such purpose.
In addition, interested directors may be counted in
determining the presence of a quorum at a meeting of the Board
of Directors of the Company or a committee thereof that
approves such a transaction.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information
regarding beneficial ownership of Common Stock as of August
15, 1996 by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director and each of the Named Officers and
(iii) all executive officers and directors as a group. Shares
not outstanding but deemed beneficially owned by virtue of the
right of any individual to acquire shares within 60 days are
treated as outstanding only when determining the amount and
percentage of Common Stock owned by such individual. Each
person has sole voting and investment power with respect to
the shares shown, except as noted.
August 15, 1996
_______________
Name Number of Shares Percent of Class
____ ________________ ________________
John P. Yeros(1) 587,687(2) 11.6%
Colleen Dougherty-Gray(1) 215,000(3) 4.5%
Robin M. Bradbury(1) 150,000(3) 3.2%
Thomas J. Oberle(1) 113,250(3) 2.4%
Charles Powell(1) 110,000(3) 2.3%
Millenco L.P. 640,000 12.2%
111 Broadway
New York, New York 10069
Huberfeld Bodner Family 320,000 6.5%
Foundation
152 West 57th Street,
54th Floor
New York, New York 10019
Laura Huberfeld 768,000 14.3%
250 Longwood Crossing
Lawrence, New York 11559
Newark Sales Corp. 800,000 14.8%
43 Elizabeth Avenue
Nassau Bahamas
Naomi Bodner 768,000 14.3%
16 Grosser Lane
Monsey, New York 10952
Nais Corp. 640,000 12.2%
94 Washington Avenue
Lawrence, New York 11559
Ezer Mzion, Inc. 320,000 6.5%
152 West 57th Street,
54th Floor
New York, New York 10019
Jules Nordlizht 320,000 6.5%
255 West Beach Street
Long Beach, New York
11561
David Klugman 548,000 10.62%
152 West 57th Street,
54th Floor
New York, New York 10019
STAT Health Care Services 325,000 6.9%
3071 Perry Avenue
Bronx, New York 10467
All directors, director 1,175,937(4) 20.8%
nominees and officers as
a group (five persons)
____________________________________________
(1) The address for each named officer and director is 360
South Garfield Street, Suite 400, Denver, Colorado 80209.
Gerald R. Hendricks is not named because he is no longer
an executive officer of the Company.
(2) Consists of 448,687 shares subject to currently
exercisable options or options exercisable within 60
days.
(3) Represents shares subject to currently exercisable
options or options exercisable within 60 days.
(4) Includes 1,036,937 shares subject to currently
exercisable options or options exercisable within 60
days.
CERTAIN BUSINESS RELATIONSHIPS
In connection with the Company's purchase of a travel
nurse business from Staff Builders in 1992, the Company issued
a promissory note in the amount of $275,000 to Staff Builders
that was guaranteed by Mr. Yeros, the Company's then-
President. The Company also issued a warrant to Staff
Builders to purchase 37,500 shares of the Company's Common
Stock at an exercise price of $6.00 per share, which warrant
is exercisable for a three-year period. The promissory note
bears interest at the rate of 8% per annum and was initially
due on September 30, 1993. In November 1993, Staff Builders
and the Company entered into a modification agreement that
provided that the term of the promissory note would be
extended to September 30, 1995. The Company is currently in
default under this promissory note for non-payment. The
Company agreed to increase the number of shares of Common
Stock purchasable upon exercise of Staff Builders' warrant
from 37,500 shares to 50,000 shares, and to reduce the
exercise price from $6.00 per share to $4.00 per share.
Additionally, the modification agreement provided that 50% of
the principal balance of the promissory note would be repaid
upon completion of the Company's 1994 public offering and that
the remaining balance would be repaid in the event the Company
completes an additional public or private financing during the
remaining term of the promissory note. From the proceeds of
the Company's 1994 public offering, $137,500 was paid to Staff
Builders in accordance with the terms of the modification
agreement. Mr. Yeros received an indirect personal benefit as
a result of the partial release of his personal guarantee.
From June through August 1994, the Company received a
$500,000 bridge financing from a number of investors,
including partners of the Beta Financial Group, a California
general partnership. Messrs. Yeros and Hendricks pledged as
collateral the shares of the Company's Common Stock owned by
them and any securities held by them that are convertible or
exercisable into shares of Common Stock to secure the
Company's obligations under that bridge financing. The
Company's obligation under that bridge financing was repaid
from the proceeds of the Company's 1994 public offering.
Messrs. Yeros and Hendricks each received an indirect personal
benefit as a result of the release of their collateral pledge
of shares. Mr. Yeros has also personally guaranteed the lease
payments on the Company's executive offices. Neither Messrs.
Yeros or Hendricks received any compensation from the Company
for providing the collateral securing the bridge financing,
and Mr. Yeros received no compensation for providing the lease
guarantee.
The Company paid legal fees to the law firm of Berliner
Zisser Walter & Gallegos, P.C., in the amount of $5,000 for
fiscal 1995. Robert W. Walter, one of the Company's former
directors, is a shareholder in such law firm.
The Board of Directors believes that the terms of the
transactions described above were at least as favorable as
could have been obtained from unaffiliated third parties. The
Company has adopted policies that any loans to officers,
directors and 5% or more shareholders (collectively,
"Affiliates") are subject to approval by a majority of the
disinterested directors and that future transactions with
Affiliates will be on terms no less favorable than could be
obtained from unaffiliated parties and approved by a majority
of the disinterested directors.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and executive
officers, and persons who own more than 10% of a registered
class of the Company's equity securities, to file with the
Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Company's
Common Stock and other equity securities. Officers, directors
and greater than 10% shareholders are requested by Securities
and Exchange Commission regulations to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports
furnished to the Company and written representations that no
other reports were required, the Company believes that there
was compliance for the fiscal year ended December 31, 1995,
and thus far for fiscal 1996, with all Section 16(a) filing
requirements applicable to the Company's officers, directors
and greater than 10% shareholders, except that during fiscal
1995, John P. Yeros did not file on a timely basis a Form 4
concerning the grant of certain options, Colleen Dougherty-
Gray did not file on a timely basis a Form 4 concerning the
grant of certain options, Charles Powell did not file on a
timely basis a Form 4 concerning the grant of certain options
and, during fiscal 1996, Robin M. Bradbury did not file on a
timely basis a Form 3 concerning his becoming an officer of
the Company or a Form 4 concerning the grant of certain
options.
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
The Board of Directors has determined that it is in the
Company's best interest to amend the Company's Articles of
Incorporation to increase the number of authorized shares of
Common Stock, as more fully described below. The text of the
proposed Articles of Amendment to Articles of Incorporation is
attached hereto as Exhibit "A". The Company currently is
authorized to issue a total of 15,000,000 shares of its Common
Stock, $0.001 par value per share. However, the Company's
Board of Directors believes that it is in the Company's best
interest to amend its Articles of Incorporation to authorize
the issuance of a total of 25,000,000 shares of Common Stock.
As of August 15, 1996 there were 4,612,856 shares of Common
Stock issued and outstanding. The 25,000,000 shares of Common
Stock will result in the existence of approximately 20,387,144
authorized but unissued shares of Common Stock. The Board of
Directors believes that these shares will be sufficient for
issuance from time to time as may be required for various
purposes, including the issuance of shares of Common Stock in
connection with proposed financing transactions and the
issuance or reservation of shares of Common Stock for employee
stock options.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ARTICLES OF
AMENDMENT TO ARTICLES OF INCORPORATION. THE ADOPTION OF THE
PROPOSED ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
REQUIRES THAT HOLDERS OF A MAJORITY OF THE SHARES ENTITLED TO
VOTE AT THE ANNUAL MEETING MUST VOTE IN FAVOR OF THE AMENDMENT
OF THE COMPANY'S ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
APPROVAL AND AMENDMENT OF 1996 STOCK INCENTIVE PLAN
The Company's Board of Directors approved and adopted the
1996 Plan on November 24, 1995 and initially proposed the
reservation of a total of 500,000 shares of the Company's
Common Stock for issuance thereunder. By resolution dated
effective as of August 16, 1996, the Board of Directors of the
Company approved an amendment to the 1996 Plan increasing the
shares of Common Stock received for issuance thereunder from
500,000 to 2,000,000 (the "Amended 1996 Plan"). The Board of
Directors further directed that the Amended 1995 Plan be
submitted to the shareholders of the Company for their
approval. The stockholders who are entitled to vote at the
Annual Meeting are asked to approve the adoption of the
Amended 1996 Plan and the Board of Directors recommends a vote
"For" the adoption and amendment of the Amended 1996 Plan.
Approval of the adoption of the Amended 1996 Plan will permit
the granting of options and the issuance of shares of the
Company's Common Stock as a means of providing equity
incentives to key employees and other personnel, giving such
employees and personnel a proprietary interest in the Company
and its growth, success and progress. A copy of the Amended
1996 Plan is attached hereto as Exhibit "B".
The Amended 1996 Plan provides for the grant of options
and the award or sale of stock to officers, directors,
employees and consultants of the Company. As of the date
hereof, a total of 1,288,874 options have been granted
pursuant to the Amended 1996 Plan. No awards or sales of
stock have been made under the Amended 1996 Plan. Both
"incentive stock options", as defined under Section 422A(b) of
the Internal Revenue Code of 1986, as amended (the "Code"),
and "non-qualified options" may be granted pursuant to the
Amended 1996 Plan. The Amended 1996 Plan will be administered
by the Board of Directors or by a committee designated by the
Board. The terms of options granted or stock awards or sales
effected under the Amended 1996 Plan will be determined by the
Board of Directors or its committee. No options may be
exercised for a term of more than 10 years from the date of
grant. Options intended as incentive stock options may be
issued only to employees and must meet certain conditions
imposed by the Code, including the requirement that the option
exercise price be no less than the fair market value of the
option shares on the date of grant. The Amended 1996 Plan has
a term of 10 years from original adoption. The consideration
to be received by the Company under the Amended 1996 Plan may
include cash, promissory notes and shares of the Company's
securities.
With respect to any participant in the Amended 1996 Plan
who owns stock representing more than 10% of the voting rights
of the Company's outstanding capital stock, the exercise price
of any option granted under the Amended 1996 Plan must be at
least equal to 110% of the fair market value of the Company's
Common Stock on the date of grant. Otherwise, the exercise
price for options intended to be incentive stock options will
be the fair market value on the date of grant. The exercise
price of any non-qualified stock option will be determined by
the Board of Directors or its committee, in its absolute
discretion, after taking into consideration factors deemed to
be relevant. Recipients of incentive stock options are not
taxed on the grant or exercise of such options, except for the
impact of such options on the calculation of the option
holder's alternative minimum tax. Rather, holders of
incentive stock options are taxed upon the sale of stock
purchased upon the exercise of such options and, provided
applicable holding periods are satisfied, the gain recognized
upon the sale of stock purchased upon exercise of such options
is taxed at capital gains rates to the seller. There will be
no material tax effects for the Company resulting from the
granting or exercise of incentive stock options under the
Amended 1996 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE ADOPTION OF THE AMENDED 1996 PLAN. THE APPROVAL OF THE
AMENDED 1996 PLAN REQUIRES THAT HOLDERS OF A MAJORITY OF THE
SHARES ENTITLED TO VOTE AT THE ANNUAL MEETING MUST VOTE IN
FAVOR OF THE APPROVAL OF THE ADOPTION OF THE AMENDED 1996
PLAN.
RATIFICATION OF APPOINTMENT OF
EHRHARDT KEEFE STEINER & HOTTMAN PC
The Board of Directors has appointed Ehrhardt Keefe
Steiner & Hottman PC, independent public accountants, to audit
the Company's financial statements for the fiscal year ending
December 31, 1996 and recommends that the Company's
stockholders ratify such appointment. Representatives of
Ehrhardt Keefe Steiner & Hottman PC are expected to be present
at the Annual Meeting, and will have the opportunity to make a
statement if they desire, and are expected to be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF EHRHARDT KEEFE STEINER & HOTTMAN PC TO AUDIT
THE COMPANY'S FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1996. SUCH APPOINTMENT SHALL BE RATIFIED IF A
MAJORITY OF THE SHARES REPRESENTED AT THE ANNUAL MEETING VOTE
IN FAVOR OF THE APPOINTMENT.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders concerning the
operation of the Company for fiscal year 1995, including
financial statements, is enclosed herewith.
OTHER MATTERS
Management knows of no other matters to be submitted to
the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is intended that the person named in
the enclosed form of Proxy will vote such Proxy in accordance
with his judgment.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
A copy of the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1995, as filed with the
Securities and Exchange Commission, is enclosed herewith as
part of the Company's Annual Report to Shareholders and
additional copies thereof may be obtained by stockholders,
without charge, by written request to Robin M. Bradbury, Chief
Financial Officer, International Nursing Services, Inc., 360
South Garfield Street, Suite 400, Denver, Colorado 80209.
By Order of the Board of Directors
John P. Yeros, Chairman of the Board
and Chief Executive Officer
DATED: October 1, 1996
EXHIBIT "A"
TEXT OF PROPOSED ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
EXHIBIT "B"
AMENDED 1996 STOCK INCENTIVE PLAN
PROXY INTERNATIONAL NURSING SERVICES, INC. PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John P. Yeros with full power
of substitution, as attorney and proxy of the undersigned to
vote as set forth below and otherwise represent all of the
shares of Common Stock registered in the name of the
undersigned at the Annual Meeting of Stockholders of
International Nursing Services, Inc., a Colorado corporation
(the "Company"), to be held at the Company's principal place
of business at 360 South Garfield Street, Suite 400, Denver,
Colorado 80209 on Monday, November 4, 1996 at 10:00 a.m.,
local time, and any adjournment(s) thereof, with the same
effect as if the undersigned were present and voting the
shares on all matters set forth in the Notice of Annual
Meeting of Stockholders and the Proxy Statement, copies of
which have been previously sent to and received by the
undersigned:
1. The election of the following nominees as directors of the
Company, each to serve until the next Annual Meeting of
Stockholders or until a successor shall be duly elected
and qualified:
___ FOR all nominees listed below (except as marked to the
contrary)
___ WITHHOLD AUTHORITY to vote for all the nominees listed
below
John P. Yeros Thomas J. Oberle Charles Powell
Colleen Dougherty-Gray
2. To approve the amendment of the Company's Articles of
Incorporation to increase the number of authorized shares
of Common Stock to 25,000,000:
___ FOR ___ AGAINST ___ ABSTAIN
(Continued on reverse side)
3. To approve the adoption of the Company's 1996 Stock
Incentive Plan and an amendment to that Plan increasing
the number of shares reserved for issuance thereunder to
2,000,000:
___ FOR ___ AGAINST ___ ABSTAIN
4. To ratify the appointment of Ehrhardt Keefe Steiner &
Hottman PC, certified public accountants, to audit the
Company's financial statements:
___ FOR ___ AGAINST ___ ABSTAIN
5. In his discretion, upon such other matters as may properly
come before the Annual Meeting or any adjournment(s)
thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFIC
INDICATIONS ABOVE. IN THE ABSENCE OF SUCH INDICATION, THIS
PROXY WILL BE VOTED UPON EACH OF THE NOMINEES TO THE COMPANY'S
BOARD OF DIRECTORS, TO AMEND THE COMPANY'S ARTICLES OF
INCORPORATION, FOR THE ADOPTION OF THE COMPANY'S 1996 STOCK
INCENTIVE PLAN AND THE AMENDMENT TO THAT PLAN INCREASING THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER, FOR THE
RATIFICATION OF EHRHARDT KEEFE STEINER & HOTTMAN PC, AS THE
COMPANY'S INDEPENDENT AUDITOR, AND, IN THE DISCRETION OF THE
PROXYHOLDER, ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT(S) THEREOF.
I/We plan to attend the Annual Meeting ___ Yes ___ No
Dated: ________________________, 1996
_____________________________________
Signature
_____________________________________
Signature if held jointly
Note: Please sign your name exactly as it appears on your
stock certificate(s). A corporation is requested to sign its
name by its President or other authorized officer, with the
office held also being designated. If shares are held
jointly, each stockholder should sign. Executors, trustees
and other fiduciaries should so indicate when signing. Please
sign, date and return this Proxy promptly.
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INTERNATIONAL NURSING SERVICES, INC.
Pursuant to the provisions of the Colorado Business
Corporation Act, as amended (the "Act"), International Nursing
Services, Inc., a corporation organized under the laws of the
State of Colorado, by its Chief Executive Officer and Secretary,
does hereby certify as follows:
1. The name of the Corporation is International Nursing
Services, Inc.
2. The Board of Directors of said Corporation has
consented to, authorized by unanimous written consent and passed
resolutions declaring that the amendment to the Articles of
Incorporation contained herein is advisable and decided to
present such amendment to the shareholders of the Corporation at
the Annual Meeting of shareholders.
3. Upon notice given to each shareholder of record
entitled to vote on such amendment to the Articles of
Incorporation in accordance with the requirements of the Act, the
Annual Meeting of the shareholders of the Corporation was held on
November 4, 1996, at which meeting holders representing at least
a majority of the voting power were present in person or
represented by proxy, and the number of votes cast for the
amendment by each voting group entitled to vote separately on the
amendment was sufficient for approval by the voting group.
4. The amendment approved was as follows:
Section 1 of Article IV of the Corporation's Articles of
Incorporation is amended in its entirety to read as follows:
ARTICLE IV
CAPITAL STOCK
Section 1. Classes and Shares Authorized. The total number
of shares of Common Stock that the Corporation shall have
authority to issue is Twenty-Five Million (25,000,000) shares of
Common Stock, $0.001 par value per share. The total number of
shares of Preferred Stock that the Corporation shall have
authority to issue is Two Million Five Hundred Thousand
(2,500,000) shares of Preferred Stock, $1.00 par value per share.
IN WITNESS WHEREOF, International Nursing Services, Inc. has
caused these Articles of Amendment to Articles of Incorporation
to be signed by its Chief Executive Officer, effective as of the
date of filing of these Articles of Amendment to Articles of
Incorporation with the Secretary of State of the State of
Colorado.
INTERNATIONAL NURSING SERVICES, INC.
By: ________________________________
John P. Yeros
Its: Chief Executive Officer
INTERNATIONAL NURSING SERVICES, INC.
AMENDED 1996 STOCK INCENTIVE PLAN
1. Purpose. This Amended 1996 Stock Incentive Plan (the
"Plan") is intended to provide incentives: (a) to the officers
and other employees of International Nursing Services, Inc. , a
Colorado corporation (the "Company"), and any present or future
50% or more owned subsidiaries of the Company (individually a
"Related Corporation" and collectively "Related Corporations") by
providing them with opportunities to purchase stock in the
Company pursuant to options granted hereunder that qualify as
"incentive stock options" under Section 422A(b) of the Internal
Revenue Code of 1986, as amended and the regulations thereunder
(the "Code") (individually an "ISO" and collectively "ISOs");
(b) to directors, officers, employees and consultants of the
Company and Related Corporations by providing them with
opportunities to purchase stock in the Company pursuant to
options granted hereunder that do not qualify as ISOs
(individually a "Non-Qualified Option" and collectively "Non-
Qualified Options"); (c) to directors, officers, employees and
consultants of the Company and Related Corporations by providing
them with awards of stock in the Company ("Awards"); and (d) to
directors, officers, employees and consultants of the Company and
Related Corporations by providing them with opportunities to make
direct purchases of stock in the Company ("Purchases"). Both
ISOs and Non-Qualified Options are referred to hereinafter
individually as an "Option" and collectively as "Options".
Options, Awards and authorizations to make Purchases are referred
to hereinafter collectively as "Stock Rights". As used herein,
the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation", respectively, as those terms are
defined in Section 425 of the Code.
2. Administration of Plan.
(a) Board or Committee Administration. This Plan
shall be administered solely by the Company's Board of Directors
(the "Board") or by a Compensation Committee (the "Committee")
consisting of not less than two (2) members of the Board,
provided the members of the Board or such Committee members have
not within one year prior to such Committee service received, or
during such service receive, a grant or award of Stock Rights
under this Plan or any other plan of the Company. Hereinafter,
all references in this Plan to the "Committee" shall mean the
Board if no Committee has been appointed. Subject to
ratification of the grant or authorization of each Stock Right by
the Board, and subject to the terms of this Plan, the Committee
shall have the authority to (i) determine the employees of the
Company and Related Corporations (from among the class of
employees eligible under Section 3 below to receive ISOs) to whom
ISOs may be granted, and to determine (from among the class of
individuals and entities eligible under Section 3 below to
receive Non-Qualified Options and Awards and to make Purchases)
to whom Non-Qualified Options, Awards and authorizations to make
Purchases may be granted; (ii) determine the time or times at
which Options or Awards may be granted or Purchases made;
(iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price
specified in Section 6 below, and the purchase price of shares
subject to each Purchase; (iv) determine whether each Option
granted shall be an ISO or a Non-Qualified Option; (v) determine
(subject to Section 7 below) the time or times when each Option
shall become exercisable and the duration of the exercise period;
(vi) determine whether restrictions such as repurchase options
are to be imposed on shares subject to Options, Awards and
Purchases and the nature of such restrictions, if any; and
(vii) interpret this Plan and prescribe and rescind rules and
regulations relating to this Plan. If the Committee determines
to issue a Non-Qualified Option, the Committee shall take
whatever actions it deems necessary under Section 422A of the
Code and the regulations promulgated thereunder, to ensure that
such Option is not treated as an ISO. The interpretation and
construction by the Committee of any provisions of this Plan or
of any Stock Right granted under this Plan shall be final unless
otherwise determined by the Board. The Committee may from time-
to-time adopt such rules and regulations for carrying out this
Plan as it may deem appropriate. No member of the Board or of
the Committee shall be liable for any action or determination
made in good faith with respect to this Plan or any Stock Right
granted under this Plan.
(b) Committee Actions. The Committee may select one
of its members as its chairman, and shall hold meetings at such
times and places as it may determine. Except as otherwise
provided by the Company's Bylaws, acts by a majority of the
Committee, or acts reduced to or approved in writing by unanimous
consent of the members of the Committee, shall be the valid acts
of the Committee. From time-to-time the Board may increase the
size of the Committee and appoint additional members thereof, may
remove members (with or without cause) and may appoint new
members in substitution therefor, fill vacancies (however
caused), or remove all members of the Committee and thereafter
directly administer this Plan.
(c) Grant of Stock Rights to Board Members. Stock
Rights may be granted to members of the Board, but any such grant
shall be made and approved in accordance with Section 2(d) below,
if applicable. All grants of Stock Rights to members of the
Board shall in all other respects be made in accordance with the
provisions of this Plan applicable to other eligible persons.
Members of the Board who are either (i) eligible for Stock Rights
pursuant to this Plan or (ii) have been granted Stock Rights, may
vote on any matters affecting the administration of this Plan or
the grant of any Stock Rights pursuant to this Plan, except that
no such member shall act upon the granting to himself or herself
of Stock Rights, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board
during which action is taken with respect to the granting to him
or her of Stock Rights.
(d) Compliance with Federal and State Securities Laws
and State Corporate Law. Various restrictions apply to officers
and directors and others who may be deemed insiders under federal
and state securities laws and state corporate law. These laws
impose certain restrictions on insiders. Any Stock Right granted
to any director is subject to those restrictions. Holders of
Stock Rights should consult with their legal and tax advisors
regarding the securities law, tax law, corporate law and other
effects of transactions under this Plan. These restrictions
relate to holding periods, alternative minimum tax calculations
and other matters and should be clearly understood by the holders
of Stock Rights. The granting of Stock Rights is subject to any
applicable restrictions under state corporate law, including
without limitation, restrictions applicable to conflicting
interest transactions involving directors.
(e) Purpose and Intent of Plan. The purpose of this
Plan is to advance the interest of the Company and its Related
Corporations by stimulating the efforts of employees on behalf of
the Company and Related Corporations, and heightening the desire
of employees to continue employment with the Company and Related
Corporations, assisting the Company and Related Corporations in
competing effectively with other enterprises for the services of
new employees necessary for the continued improvement of
operations, and to attract and retain the best available
personnel for service as directors to the Company and Related
Corporations and for services as consultants to the Company and
Related Corporations. This Plan is intended to be an "employee
benefit plan" under Rule 16b-3 promulgated under Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "1934 Act").
This Plan is also intended to be a "compensatory benefit plan"
under Rule 701 promulgated under the Securities Act of 1933, as
amended. Transactions under this Plan are intended to comply
with Rule 16b-3 and Rule 701. To the extent any provisions of
this Plan or any action by the Committee or the Board fails to
comply with such Rules and to the extent any provisions of this
Plan or any action by the Committee or the Board fails to comply
with the requirements of the Code (for options intended to be
ISOs hereunder), each such provision(s) and action(s) shall be
deemed to be null and void, to the extent permitted by applicable
law and as deemed advisable by the Committee or the Board.
(f) Shareholder Approval. Grants of incentive stock
options hereunder shall be subject to shareholder approval of
this Plan within twelve (12) months following the date this Plan
is approved and adopted by the Board.
3. Eligible Employees and Others. ISOs may be granted to
any employee of the Company or any Related Corporation. Any
officer or director of the Company who is not also an employee of
the Company may not be granted ISOs under this Plan. Non-
Qualified Options, Awards and authorizations to make Purchases
may be granted to any employee, officer or director (whether or
not such person is also an employee of the Company) or to any
consultant to the Company or to any Related Corporation. The
Committee may take into consideration a recipient's individual
circumstances in determining whether to grant an ISO, a Non-
Qualified Option, an Award or an authorization to make a
Purchase. The granting of a Stock Right to any individual or
entity shall neither entitle that individual or entity to, nor
disqualify that individual or entity from, participation in any
other grant of Stock Rights.
4. Stock. The stock subject to Options, Awards and
Purchases shall be authorized but unissued shares of Common Stock
of the Company, $.001 par value per share (the "Common Stock"),
or shares of Common Stock reacquired by the Company in any
manner. Subject to the foregoing, the aggregate maximum number
of shares of Common Stock that may be issued pursuant to this
Plan is 2,000,000, subject to adjustment as provided below in
this Section 4 and in Section 13. Any such shares may be issued
as ISOs, Non-Qualified Options or Awards or to individuals or
entities making Purchases, so long as the number of shares so
issued does not exceed such number, as adjusted. If any Option
granted under this Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any
reason to be exercisable in whole or in part, or if the Company
shall reacquire any unvested shares issued pursuant to Awards or
Purchases, the unpurchased shares subject to such Options and any
unvested shares so reacquired by the Company shall again be
available for grants of Stock Rights under this Plan.
5. Granting of Stock Rights. Stock Rights may be granted
under this Plan at any time until ten (10) years after the date
of the approval and adoption of this Plan by the Board. The date
of grant of a Stock Right under this Plan will be the date
specified by the Committee at the time it grants the Stock Right;
provided, however, that such date shall not be prior to the date
on which the Committee acts to approve the grant. The Committee
shall have the right, with the consent of the optionee, to
convert an ISO granted under this Plan into a Non-Qualified
Option pursuant to Section 16 below.
6. Minimum Option Price; ISO Limitations.
(a) Price for Non-Qualified Options. The exercise
price per share specified in the agreement relating to each Non-
Qualified Option granted under this Plan shall in no event be
less than the lesser of (i) the book value per share of the
Common Stock as of the end of the fiscal year of the Company
immediately preceding the date of such grant or (ii) fifty
percent (50%) of the fair market value per share of the Common
Stock on the date of such grant. Subject to the foregoing
sentence, the exercise price for Non-Qualified Options granted
hereunder shall be determined by the Committee or the Board in
its sole discretion, taking into account factors it deems
relevant.
(b) Price for ISOs. The exercise price per share
specified in the agreement relating to each ISO granted under
this Plan shall not be less than the fair market value per share
of the Common Stock on the date of such grant. In the case of
an ISO to be granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any Related Corporation,
the price per share specified in the agreement relating to such
ISO shall not be less than one hundred ten percent (110%) of the
fair market value per share of the Common Stock on the date of
grant.
(c) $100,000 Annual Limitation on ISOs. Each eligible
employee may be granted ISOs only to the extent that (in the
aggregate under this Plan and all incentive stock option plans of
the Company and any Related Corporation), such ISOs do not become
exercisable for the first time by such employee during any
calendar year in a manner that would entitle the employee to
purchase more than $100,000 in fair market value (determined at
the time the ISOs were granted) of the Common Stock in that
calendar year. Any options granted to an employee in excess of
that amount will be granted as Non-Qualified Options.
(d) Awards and Purchases. Awards and Purchases under
this Plan shall be made at prices equal to the fair market value
of the Common Stock on the date of such Award or Purchase. Fair
market value shall be determined by the Committee or the Board in
its sole discretion in accordance with Section 6(e) below.
Shares of Common Stock may be issued in Award and Purchase
transactions for any lawful consideration determined by the
Committee or the Board in its sole discretion.
(e) Determination of Fair Market Value. If, at the
time an Option is granted under this Plan, the Company's Common
Stock is publicly-traded, "fair market value" shall be determined
as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such
Option is granted and shall mean (i) the average (on that date)
of the high and low prices of the Common Stock on the principal
national securities exchange on which the Common Stock is traded,
if the Common Stock is then-traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of
the Common Stock on the NASDAQ National Market, if the Common
Stock is not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last
quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported
on the NASDAQ National Market. However, if the Common Stock is
not publicly-traded at the time an Option is granted under this
Plan, "fair market value" shall be deemed to be the fair value of
the Common Stock as determined by the Committee or the Board in
its sole discretion, after taking into consideration all factors
that it deems appropriate, including, without limitation, recent
sale and offer prices of the Common Stock in private transactions
negotiated at arm's length.
7. Option Duration. Subject to earlier termination as
provided in Sections 9 and 10 below, each Option shall expire on
the date specified by the Committee or the Board, but not more
than (i) ten (10) years and one (1) day from the date of grant in
the case of Non-Qualified Options, (ii) ten (10) years from the
date of grant in the case of ISOs generally and (iii) five (5)
years from the date of grant in the case of ISOs granted to an
employee owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the
Company or of any Related Corporation. Subject to earlier
termination as provided in Sections 9 and 10 below, the term of
each ISO shall be the term set forth in the original instrument
granting such ISO, except with respect to any part of such ISO
that is converted into a Non-Qualified Option pursuant to Section
16 below.
8. Exercise of Options. Subject to the provisions of
Sections 9 through 12 below, each Option granted under this Plan
shall be exercisable as follows:
(a) Vesting. The Option shall either be fully
exercisable on the date of grant or shall become exercisable
thereafter in such installments as the Committee or Board may
specify.
(b) Full Vesting of Installments. Once an installment
becomes exercisable it shall remain exercisable until expiration
or termination of the Option, unless otherwise specified by the
Committee or the Board.
(c) Partial Exercise. Each Option or installment may
be exercised at any time or from time-to-time, in whole or in
part, for up to the total number of shares with respect to which
it is then exercisable.
(d) Acceleration of Vesting. The Committee or the
Board shall have the right to accelerate the date of exercise of
any installment of any Option; provided, however, that the
Committee or the Board shall not, without the consent of the
optionee, accelerate the exercise date of any installment of any
Option granted to any employee as an ISO (and not previously
converted into a Non-Qualified Option pursuant to Section 16
below) if such acceleration would violate the annual vesting
limitation contained in the Code, as described in Section 6(c)
above.
9. Termination of Employment. If an ISO optionee ceases
to be employed by the Company or any Related Corporation other
than by reason of death or disability as defined in Section 10
below, no further installments of such optionee's ISOs shall
become exercisable, and such optionee's vested ISOs shall
terminate after the passage of ninety (90) days from the date of
termination of such optionee's employment, but in no event later
than on their specified expiration date(s), except to the extent
that such ISOs (or the unexercised installments thereof) have
been converted into Non-Qualified Options pursuant to Section 16
below. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as
those attributable to illness, military obligations or
governmental service), provided that the period of such leave
does not exceed ninety (90) days or, if longer, any period during
which such optionee's right to reemployment is guaranteed by
statute. A bona fide leave of absence with the written approval
of the Committee or the Board shall not be considered an
interruption of employment under this Plan, provided that such
written approval contractually obligates the Company or any
Related Corporation to continue the employment of the optionee
after the approved period of absence. ISOs granted under this
Plan shall not be affected by any change of employment within or
among the Company and any Related Corporations, so long as the
optionee continues to be an employee of the Company or any
Related Corporation. Nothing in this Plan shall be deemed to
give any grantee of any Stock Right the right to be retained in
employment or other service by the Company or any Related
Corporation for any period of time.
10. Death; Disability.
(a) Death. If an ISO optionee ceases to be employed
by the Company or any Related Corporation by reason of such
optionee's death, any ISO of such optionee may be exercised, to
the extent of the number of shares with respect to which the
optionee could have exercised on the date of the optionee's
death, by the optionee's estate, personal representative or
beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the earlier of the
specified expiration date of the ISO or one year from the date of
the optionee's death.
(b) Disability. If an ISO optionee ceases to be
employed by the Company or any Related Corporation by reason of
disability, such optionee (or such optionee's custodian) shall
have the right to exercise any ISO held by such optionee on the
date of termination of employment, to the extent of the number of
shares with respect to which the optionee could have exercised on
that date, at any time prior to the earlier of the specified
expiration date of the ISO or one year from the date of the
termination of the optionee's employment. For purposes of this
Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code or any
successor statute.
11. Assignability. No Option or Derivative Security (as
that term is defined in Rule 16b-3 under the 1934 Act) shall be
assignable or transferable by the optionee except as permitted
under Rule 16b-3 under the 1934 Act or by will or by the laws of
descent and distribution, and during the lifetime of the optionee
each Option shall be exercisable only by the optionee. No ISO
shall be transferable except as permitted by the Code.
12. Terms and Conditions of Options. Options shall be
evidenced by instruments (which need not be identical) in such
form as the Committee or the Board may from time-to-time approve.
Such instruments shall conform to the terms and conditions set
forth in Sections 6 through 11 above and may contain such other
provisions as the Committee or the Board deems advisable, which
are not inconsistent with this Plan, including, without
limitation, restrictions applicable to shares of the Company's
Common Stock issuable upon exercise of Options. In granting Non-
Qualified Options, the Committee or the Board may specify that
Non-Qualified Options shall be subject to the restrictions set
forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee or the Board may
determine. The Committee or the Board may from time-to-time
confer authority and responsibility on one or more of its members
and/or one or more officers of the Company to execute and deliver
such instruments. The proper officers of the Company are
authorized and directed to take any and all action necessary or
advisable from time-to-time to carry out the terms of such
instruments.
13. Adjustments. Upon the occurrence of any of the
following events, an optionee's rights with respect to Options
granted to the optionee hereunder shall be adjusted as
hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company
regarding such Option:
(a) Stock Dividends and Stock Splits. If the shares
of the Company's Common Stock shall be subdivided or combined
into a greater or smaller number of shares or if the Company
shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock
deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to
reflect such subdivision, combination or stock dividend.
(b) Merger; Consolidation; Sale of Assets. In the
event of a consolidation, a merger in which the Company is not
the surviving entity, or the sale of all or substantially all of
the Company's assets, the Committee or the Board may in its sole
discretion accelerate the exercisability of any or all
outstanding Options so that such Options would be exercisable in
full prior to the consummation of such consolidation, merger or
asset sale at such times and on such conditions as the Committee
or the Board shall determine, unless the successor entity, if
any, assumes the outstanding Options or substitutes substantially
equivalent options therefor.
(c) Recapitalization or Reorganization. In the event
of a recapitalization or reorganization of the Company (other
than a transaction described in Section 13(b) above) pursuant to
which securities of the Company or of another entity are issued
with respect to the outstanding shares of Common Stock, an
optionee, upon exercising an Option, shall be entitled to receive
for the purchase price paid upon such exercise the securities the
optionee would have received if the optionee had exercised the
Option prior to such recapitalization or reorganization.
(d) Modification of ISOs. Notwithstanding the
foregoing, any adjustments made pursuant to Sections 13(a),
(b) or (c) above with respect to ISOs shall be made only after
the Committee or the Board, after consulting with counsel for the
Company, determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in Section
425 of the Code) or would cause any adverse tax consequences for
the holders of such ISOs. If the Committee or the Board
determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from
making such adjustments.
(e) Issuances of Securities. Except as expressly
provided herein, no issuance by the Company of shares of stock of
any class, or of securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends
paid in cash or in property other than securities of the Company.
(f) Fractional Shares. No fractional shares shall be
issued under this Plan and each optionee shall receive from the
Company cash in lieu of such fractional shares.
(g) Adjustments. Upon the happening of any of the
events described in Section 13(a), (b) or (c) above, the class
and aggregate number of shares set forth in Section 4 above that
are subject to Stock Rights that previously have been or
subsequently may be granted under this Plan shall also be
appropriately adjusted to reflect the events described in such
Sections. The Committee or Board shall determine the specific
adjustments to be made under this Section 13 and, subject to
Section 2 above, its determination shall be conclusive.
If any person or entity owning restricted Common Stock obtained
by exercise of a Stock Right hereunder receives shares or
securities or cash in connection with a corporate transaction
described in Sections 13(a), (b) or (c) above as a result of
owning such restricted Common Stock, such shares or securities or
cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which
such shares or securities or cash were issued, unless otherwise
determined by the Committee or Board.
14. Means of Exercising Stock Rights. A Stock Right (or
any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address.
Such notice shall identify the Stock Right being exercised and
specify the number of shares as to which such Stock Right is
being exercised, accompanied by full payment of the purchase
price therefor in United States dollars in cash or by check. The
holder of a Stock Right shall not have the rights of a
shareholder with respect to the shares covered by his, her or its
Stock Right until the date of issuance of a stock certificate for
such shares. Except as expressly provided in Section 13 above
with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for
which the record date is before the date such stock certificate
is issued.
15. Term and Amendment of Plan. This Plan was approved and
adopted by the Board on November 24, 1995, subject (with respect
to the validation of ISOs granted under this Plan) to approval of
this Plan by the stockholders of the Company. If the approval of
this Plan by the Company's stockholders is not obtained by
November 24, 1996, any grants of ISOs under this Plan made prior
to that date will be rescinded. This Plan shall expire on
November 24, 1996, 2005 (except as to Options outstanding on that
date). Subject to the provisions of Section 5 above, Stock
Rights may be granted under this Plan prior to the date of
stockholder approval of this Plan. The Board may terminate or
amend this Plan in any respect at any time; provided, however,
that the Board may not amend this Plan in any of the following
respects without the approval of the Company's stockholders
obtained within twelve (12) months before or after the Board
adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under this Plan
may not be increased (except by adjustment pursuant to Section 13
above); (b) the provisions of Section 3 above regarding
eligibility for grants of ISOs may not be modified; (c) the
provisions of Section 6(b) above regarding the exercise price at
which shares may be offered pursuant to ISOs may not be modified
(except by adjustment pursuant to Section 13 above); and (d) the
expiration date of this Plan may not be extended. Except as
otherwise provided in this Section 15, in no event may action of
the Board or the stockholders alter or impair the rights of a
grantee, without such grantee's consent, under any Stock Right
previously granted to such grantee. The Committee or the Board
may amend the terms of any Stock Right granted if such amendment
is agreed to by the recipient of such Stock Right.
16. Conversion of ISOs Into Non-Qualified Options;
Termination of ISOs. The Committee or the Board, at the written
request of any optionee, may in its discretion take such actions
as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-Qualified
Options at any time prior to the expiration of such ISOs,
regardless of whether the optionee is an employee of the Company
or a Related Corporation at the time of such conversion. Such
actions may include, but shall not be limited to, extending the
exercise period or reducing the exercise price of the appropriate
installments of such Options. At the time of such conversion,
the Committee or the Board (with the consent of the optionee) may
impose such conditions on the exercise of the resulting Non-
Qualified Options as the Committee or the Board in its discretion
may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in this Plan shall be
deemed to give any optionee the right to have such optionee's
ISOs converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Committee or the Board takes
appropriate action. The Committee or the Board, with the consent
of the optionee, may also terminate any portion of any ISO that
has not been exercised at the time of such termination.
17. Application of Funds. The proceeds received by the
Company from the sale of shares pursuant to Options granted and
Purchases authorized under this Plan shall be used for general
corporate purposes.
18. Governmental Regulation. The Company's obligation to
sell and deliver shares of Common Stock under this Plan is
subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such
shares.
19. Withholding of Additional Income Taxes. Upon the
exercise of a Non-Qualified Option, the grant of an Award, the
making of a Purchase of Common Stock for less than its fair
market value, the making of a Disqualifying Disposition (as that
term is defined in Section 20 below) or the vesting of restricted
Common Stock acquired upon the exercise of a Stock Right
hereunder, the Company, in accordance with Section 3402(a) of the
Code, may require the optionee, Award recipient or purchaser to
pay additional withholding taxes in respect of the amount that is
considered compensation includable in such individual's gross
income. The Committee or the Board in its discretion may
condition (i) the exercise of an Option, (ii) the grant of an
Award, (iii) the making of a Purchase of Common Stock for less
than its fair market value or (iv) the vesting of restricted
Common Stock acquired by exercising a Stock Right, on the
grantee's payment of such additional withholding taxes.
20. Notice to Company of Disqualifying Disposition. Each
employee who receives an ISO must agree to notify the Company in
writing immediately after the employee makes a Disqualifying
Disposition of any shares of the Company's Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition
is any disposition (including any sale) of such Common Stock
before the later of (a) two (2) years after the date the employee
was granted the ISO and (b) one (1) year after the date the
employee acquired the Common Stock by exercising the ISO. If the
employee dies before such shares of Common Stock are sold, these
holding period requirements do not apply and no Disqualifying
Disposition can occur thereafter.
21. Governing Law; Construction. The validity and
construction of this Plan and the instruments evidencing Stock
Rights shall be governed by the laws of the State of Colorado, or
the laws of any jurisdiction in which the Company or its
successors in interest may be organized. In construing this
Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, and vice versa,
unless the context otherwise requires.
