SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INTERNATIONAL FIBERCOM, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
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INTERNATIONAL FIBERCOM, INC.
3615 South 28th Street
Phoenix, Arizona 85040
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 10, 1998
The 1998 Annual Meeting of Shareholders of International FiberCom, Inc.
("Company") will be held at Mesa Hilton Pavilion, 1011 West Holmes Avenue, Mesa,
Arizona 85202, on July 10, 1998, at 7:30 a.m., Mountain Standard Time.
MATTERS TO BE VOTED ON:
1. Ratification of the selection of BDO Seidman as the
independent public accountants for the Company's fiscal year
1998;
2. Election of five directors;
3. Approve the amendment of the 1997 Stock Option Plan;
4. Approve the adoption of the Employee Stock Purchase Plan; and
5. Any other matters that may properly come before the meeting or
any adjournment thereof.
The close of business on June 10, 1998 has been fixed as the record
date for the determination of the shareholders of record entitled to notice of,
and to vote at, this meeting or any adjournment thereof. The list of
shareholders entitled to vote at this meeting is available at the offices of
International FiberCom, Inc., 3615 South 28th Street, Phoenix, Arizona 85040,
for examination by any shareholder.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THIS MEETING, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY AND ON BEHALF OF THE
BOARD OF DIRECTORS. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO
REVOKE SUCH PROXY OR TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THIS
MEETING.
By Order of the Board of Directors
/s/ Joseph P. Kealy
Joseph P. Kealy
Chairman of the Board
Phoenix, Arizona
June 16, 1998
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PROXY STATEMENT
TABLE OF CONTENTS
GENERAL INFORMATION ....................................................... 1
Who Can Vote ......................................................... 1
Voting by Proxies .................................................... 1
How You May Revoke Your Proxy Instructions ........................... 1
How Votes are Counted ................................................ 1
Cost of this Proxy Solicitation ...................................... 2
Attending the Annual Meeting ......................................... 2
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL? ........................... 2
WHO SHOULD I CALL IF I HAVE QUESTIONS? .................................... 2
PROPOSALS ................................................................. 3
PROPOSAL NO. 1 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS ...... 3
PROPOSAL NO. 2 - ELECT FIVE DIRECTORS ................................ 3
PROPOSAL NO. 3 - APPROVE AMENDMENT OF THE 1997 STOCK OPTION PLAN ..... 5
PROPOSAL NO. 4 - APPROVAL OF ADOPTION OF THE EMPLOYEE STOCK PURCHASE
PLAN ............................................................ 7
ABOUT THE BOARD AND ITS COMMITTEES ........................................ 8
ABOUT THE EXECUTIVE OFFICERS .............................................. 10
EXECUTIVE COMPENSATION .................................................... 12
OPTION GRANTS IN 1997 ..................................................... 13
OPTION EXERCISES IN 1997 .................................................. 13
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT .............. 13
OWNERSHIP OF OUR COMMON STOCK ............................................. 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ............................ 15
SUMMARY OF THE STOCK OPTION PLANS ......................................... 16
SUMMARY OF THE RESTRICTED STOCK PLANS ..................................... 19
OTHER MATTERS ............................................................. 19
SHAREHOLDER PROPOSALS ..................................................... 19
ANNUAL REPORT ............................................................. 19
EXHIBIT A - AMENDMENT OF 1997 STOCK OPTION PLAN
EXHIBIT B - EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
PROXY STATEMENT
Your vote is very important. For this reason, the Board of Directors is
requesting that you allow your Common Stock to be represented at the Annual
Meeting by the persons who are named on the enclosed Proxy Card. This Proxy
Statement is being sent to you in connection with this request and has been
prepared for the Board by our management. "We," "our," "IFC" and the "Company"
refer to International FiberCom, Inc. The Proxy Statement is first being sent to
our shareholders on or about June 16, 1998.
GENERAL INFORMATION
Who Can Vote
You are entitled to vote your Common Stock if our records showed that you held
your shares as of June 10, 1998. At the close of business on that date,
19,141,012 shares of Common Stock were outstanding and entitled to vote. Each
share of Common Stock has one vote. The enclosed Proxy Card shows the number of
shares which you are entitled to vote. Your individual vote is confidential and
will not be disclosed to third parties.
Voting by Proxies
If your Common Stock is held by a broker, bank or other nominee (i.e. in "street
name"), you will receive instructions from it which you must follow in order to
have your shares voted. If you hold your shares in your own name as a holder of
record, you may instruct the Proxies how to vote your Common Stock by signing,
dating and mailing the Proxy Card in the envelope provided. Of course, you can
always come to the meeting and vote your shares in person. If you give us a
proxy without giving specific voting instructions, your shares will be voted by
the Proxies as recommended by the Board of Directors.
We are not now aware of any other matters to be presented at the Annual Meeting
except for those described in this Proxy Statement. However, if any other
matters not described in the Proxy Statement are properly presented at the
meeting, the Proxies will use their own judgment to determine how to vote your
shares. If the meeting is adjourned, your Common Stock may be voted by the
Proxies on the new meeting date as well, unless you have revoked your proxy
instructions prior to that time.
How You May Revoke Your Proxy Instructions
To revoke your proxy instructions, you must advise the Secretary in writing
before your Common Stock has been voted by the Proxies at the meeting, deliver
later proxy instructions, or attend the meeting and vote your shares in person.
How Votes are Counted
The Annual Meeting will be held if a majority of the outstanding shares of
Common Stock entitled to vote is represented at the meeting. If you have
returned valid proxy instructions or attend the meeting in person, your Common
Stock will be counted for the purpose of determining whether there is a quorum,
even if you wish to abstain from voting on some or all matters introduced at the
meeting.
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Cost of this Proxy Solicitation
We will pay the cost of this proxy solicitation. We will, upon request,
reimburse brokers, banks and other nominees for their expenses in sending proxy
material to their principals and obtaining their proxies. The Company will
solicit proxies by mail, except for any incidental personal solicitation made by
directors, officers and employees of the Company, for which they will not be
paid.
Attending the Annual Meeting
If you are a holder of record and you plan to attend the Annual Meeting, please
indicate this when you vote. If you are a beneficial owner of Common Stock held
by a broker or bank, you will need proof of ownership to be admitted to the
meeting. A recent brokerage statement or letter from a broker or bank showing
your current ownership and ownership of the Company's shares on the record date
are examples of proof of ownership. If you want to vote in person your Common
Stock held in street name, you will have to get a proxy in your name from the
registered holder.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
Proposal 1: Ratification of Independent Public Accountants
The affirmative vote of a majority of the votes cast at the Annual Meeting is
required to ratify the selection of independent auditors. Therefore, if you
"abstain" from voting, it has the same effect as if you voted "against" this
proposal.
Proposal 2: Election of Five Directors
The five nominees for director who receive the most votes will be elected.
Therefore, if you do not vote for a nominee, or you indicate "withhold authority
to vote" for any nominee on your proxy card, your vote will not count for or
against any nominee.
Proposal 3: Approval of Amendment of the 1997 Stock Option Plan
The affirmative vote of a majority of the outstanding shares of Common Stock is
required to approve the increase in shares reserved for issuance and to change
the manner in which shares are counted under the 1997 Stock Option Plan.
Therefore, if you do not vote, or you "abstain" from voting, it has the same
effect as if you voted against the proposal.
Proposal 4: Approval of the Employee Stock Purchase Plan
The affirmative vote of a majority of the outstanding shares of Common Stock is
required to approve the adoption of the Employee Stock Purchase Plan. Therefore,
if you do not vote, or you "abstain" from voting, it has the same effect as if
you voted against the proposal.
WHO SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about the Annual Meeting or voting, please call
Terry W. Beiriger, our Secretary, at (602)941-1900.
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PROPOSALS
PROPOSAL NO. 1 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our Board of Directors, acting upon the recommendation of its Audit
Committee, has selected the firm of BDO Seidman, 1900 Avenue of the Stars, 11th
Floor, Los Angeles, CA, 90067, as independent accountants to examine the
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 1998, and to perform other appropriate accounting services.
A resolution will be presented to the Annual Meeting to ratify this selection.
The Company does not expect that representatives of BDO Seidman will be present
at the Annual Meeting. The affirmative vote of a majority of the number of votes
entitled to be cast by the Common Stock represented at the meeting is needed to
ratify the selection. If the shareholders do not ratify the appointment of BDO
Seidman, the selection of independent accountants will be reconsidered by the
Board of Directors.
For the year ended December 31, 1997, Semple & Cooper, LLP provided
audit services to the Company, including examination of the annual consolidated
financial statements of the Company, review of unaudited quarterly financial
information, assistance and consultation in connection with filing the Company's
Annual Report on Form 10-KSB with the Securities and Exchange Commission and
other filings with the Commission, and consultation in connection with various
audit-related and accounting matters. The Company does not expect that
representatives of Semple & Cooper or BDO Seidman will be present at the annual
meeting.
Semple & Cooper referred the Company to BDO Seidman upon the conclusion
of their audit of the financial statements for the year ended December 31, 1997,
because of the increased size and complexity of the Company's operations. Semple
& Cooper is a member of the BDO Seidman Alliance. Semple & Cooper had been the
Company's independent accountants since 1992. None of the financial statements
prepared by Semple & Cooper contained any adverse or disclaimer of opinion, nor
were they modified as to uncertainty, audit scope, or accounting principles.
The Proxies will vote in favor of ratifying the selection of BDO
Seidman unless instructions to the contrary are indicated on the accompanying
proxy form.
Your directors recommend a vote FOR Proposal No. 1
PROPOSAL NO. 2 - ELECT FIVE DIRECTORS
Number of Directors to be Elected
An entire Board of Directors, consisting of five directors, is to be elected at
the Annual Meeting. Each Director elected will hold office until the next annual
meeting and the election of their successors. If any director resigns or
otherwise is unable to complete his or her term of office, the Board will elect
another director for the remainder of the resigning director's term. The
Company's Articles of Incorporation call for a Board consisting of not fewer
than three nor more than nine members.
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Vote Required - Cumulative Voting
Under Arizona law, when directors are to be elected to office each shareholder
is entitled to cumulate votes. In order to cumulate his or her votes, a
shareholder should multiply the number of votes that the shareholder is entitled
to cast by the number of directors for whom the shareholder is entitled to vote
and then cast the product for a single candidate or distribute the product among
two or more candidates. At the annual meeting there will be five directors
elected to the Board. If you multiply the number of shares you own by five, you
will obtain the number of votes you are entitled to cast. The five individuals
with the most number of votes are elected to office.
Nominees of the Board
The Board has nominated the following individuals to serve on the Board of
Directors of the Company for the following year:
Joseph P. Kealy
Jerry A. Kleven
John F. Kealy
Richard J. Seminoff
V. Thompson Brown, Jr.
All of these nominees are currently serving on the Board. Each of the nominees
has agreed to be named in this proxy statement and to serve if elected. Each of
the incumbent nominees attended all of the meetings of the Board in the prior
year.
See "Information about the Nominees" on the following page for information
regarding each of the Nominees listed above
We know of no reason why any of the listed nominees would not be able
to serve. However, if any nominee is unavailable for election, the Proxies would
vote your Common Stock to approve the election of any substitute nominee
proposed by the Board. The Board may also choose to reduce the number of
Directors to be elected, as permitted by the Company's Bylaws.
INFORMATION ABOUT THE NOMINEES
Joseph P. Kealy
(Age 48)
Mr. Kealy has been the Chairman of the Company since May 1994 and the President
and a director of the Company since September 1990. He was president of
International Environmental Corporation, a former wholly-owned subsidiary of the
Company, from its inception in 1987 until his resignation in March 1995 in
connection with the sale of IEC. He has been involved in the construction
business for 27 years in both field and management capacities. He spent the 15
years prior to joining the Company as the Arizona manager for a construction
company. He attended college in Hastings, Nebraska and at Northern Arizona
University.
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Jerry A. Kleven
(Age 44)
Mr. Kleven is the President of Kleven Communications, Inc., one of the Company's
principal subsidiaries. He has been involved in the construction industry since
1971 and is a member of various construction organizations in the United States.
He has worked in all phases of Kleven's operations, including systems analysis,
construction methodology and final estimate pricing.
John F. Kealy
(Age 53)
Mr. Kealy has been a Director of the Company since September 1990. He was the
Executive Vice President and Secretary of the Company until March 1995 when he
resigned in connection with his acquisition of IEC from the Company in 1995. He
served as Chairman of the Company from September 1990 to May 1994. He formed IEC
with his brother Joseph P. Kealy in 1987 and served as its chairman from its
inception to May 1994. He has been the President and Chairman of IEC since
January 1995. Mr. Kealy has been in the construction business for 30 years in
both field and management capacities since becoming a construction manager in
1967. He ran construction company offices in Hastings, Nebraska, Farmington, New
Mexico and Phoenix Arizona from 1974 to 1989. He attended Notre Dame University
and graduated from Arizona State University in 1967 with a Bachelor of Science
in Construction Management.
Richard J. Seminoff
(Age 51)
Mr. Seminoff has been a Vice President at Semco Enterprises, Inc., which is in
the metal processing business, since May 1995. From April 1991 to April 1995, he
has served as president of Amos, Lovitt, Touche & Seminoff, an insurance agency
in Phoenix, Arizona. From 1979 to March 1991, he was employed by the Lasher
Cowie Insurance Agency, Inc., one of the largest regional insurance agencies
headquartered in Phoenix, Arizona. He was the president of that agency from 1984
to March 1991. Lasher-Cowie became a part of Hilb, Rogal and Hamilton Company, a
publicly owned company. He resigned as president of Lasher-Cowie in March 1991.
V. Thompson Brown, Jr.
(Age 35)
Mr. Brown joined Concepts In Communications, Incorporated, a principal
subsidiary of the Company, in 1986. He has been the president of the subsidiary
since February 1997. From November 1987 to February 1997 he was the Operations
Manager for Concepts. He is responsible for project administration, materials
management and bid and sales supervision. Mr. Brown graduated from Vanderbilt
University with a Bachelor of Engineering in 1984.
Your directors recommend a vote FOR the election of the five nominees under
Proposal No. 2
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PROPOSAL NO. 3 - APPROVE AMENDMENT OF THE 1997 STOCK OPTION PLAN
Summary of the Amendment
The 1997 Stock Option Plan, attached hereto as Exhibit A, was approved by the
shareholders at the 1997 Annual Meeting. The Board of Directors adopted an
Amendment to the Plan in April 1998 which calls for an increase in the number of
shares reserved for issuance upon exercise of options granted under the Plan and
for two changes in the way the number of shares reserved for issuance are
counted. The Company desires to take these actions because options to purchase
all of the original 1,200,000 shares reserved for issuance under the Stock
Option Plan have been granted.
Addition of Shares
The number of shares reserved for issuance under the Plan is proposed to be
raised from 1,200,000 to 3,200,000 shares.
How Shares Are Currently Counted
Under the Plan as currently written, all grants of options are counted against
the number of shares reserved for issuance. For example, if an employee is
granted 5,000 options, 5,000 shares are taken from the reserved block and are
therefore unavailable for future grants of options whether or not all 5,000
options are actually exercised for Common Stock.
Net Exercise Shares Will No Longer Be Counted
An employee or director who has been granted options under the Plan may, if
permitted by the Board of Directors, exercise those options by having shares
withheld which have a fair market value at the time the option is exercised
equal to the option price (plus applicable withholding tax). See "Summary of the
Stock Option Plans" beginning on Page 15. Under the Plan as originally approved,
the withheld shares used to exercise the option would be counted against the
reserved block of shares under the Plan. Under the Amendment, this would be
changed so that the shares which are withheld to pay the option price of the
remaining shares will be returned to the reserved block of shares available for
grant under the Plan.
Open Market Purchases to Replenish the Reserved Block
Also, under the Amendment, a new clause in the Plan would allow the reserved
block of shares available for grant under the Plan to be replenished through
open market purchases of Common Stock by the Company. For example, if the
Company purchased 50,000 shares of Common Stock on the open market, the Board
could, but does not have to, add these shares to the reserved block available
for grant under the Plan. However, the reserved block of shares may never exceed
3,200,000 without further shareholder approval.
The Amendment will not take effect unless it is approved by a vote of
the majority of the outstanding shares of Common Stock. It is intended that the
Proxies will vote for adoption of the Amendment unless instructions to the
contrary are indicated on the accompanying proxy form.
Your directors recommend a vote FOR amendment of the Plan under Proposal No. 3
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PROPOSAL NO. 4 - APPROVAL OF ADOPTION OF
THE EMPLOYEE STOCK PURCHASE PLAN
Summary of the Employee Stock Purchase Plan
The Board adopted the Employee Stock Purchase Plan, attached hereto as Exhibit
B, in July 1997. The Stock Purchase Plan provides eligible employees with the
opportunity to acquire a stock ownership interest in the Company through
periodic payroll deductions. The purpose of the Stock Purchase Plan is to
provide a method whereby employees will have an opportunity to acquire a
proprietary interest in the Company through the purchase of Common Stock.
Shares Reserved and Eligibility
The Stock Purchase Plan has 2,000,000 shares of Common Stock reserved for
issuance to eligible employees. Employees of the Company and its subsidiaries
are eligible to participate in the Plan following ninety (90) days of continuous
service with the Company.
Oversight
The Compensation Committee of the Board administers the Stock Purchase Plan. It
has the authority to interpret the provisions of the Stock Purchase Plan and to
establish and amend rules for its administration subject to the Plan's
limitations. This Compensation Committee is comprised of non-employee directors
as required by Rule 16b-3 of the Securities and Exchange Act of 1934, as
amended.
Method of Payment and Stock Price
Eligible employees invest in the Stock Purchase Plan through regular payroll
deductions of up to 15% of their gross base salary for each annual or
semi-annual period of participation. However, no employee may purchase greater
than $25,000 worth of the Company's Common Stock in any given calendar year. At
each purchase date, payroll deductions are credited to an account established in
each participating employee's name and shares of the Company's Common Stock are
automatically purchased on behalf of that employee on the last business day of
each purchase period at the lesser of 85% of the market price per share of
Common Stock on (i) the commencement date of the purchase period or (ii) the
purchase period termination date.
Tax Consequences
Participating employees will be subject to taxation on any gain realized from
the sale or other disposition of Common Stock that was acquired under the Stock
Purchase Plan.
Dilution Protection
If any change in outstanding shares of the Company occurs by reason of any stock
split, combination of shares or other similar transaction affecting the
outstanding Common Stock as a class, appropriate adjustments will be made to the
maximum number of shares issuable under the Stock Purchase Plan.
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Amendment and Termination of the Plan
The Board may amend or terminate the Stock Purchase Plan at any time. However,
the Board does not have the power to increase the number of shares available for
issuance, amend the requirements as to the class of employees eligible to
participate, or materially increase the benefits which may accrue to
participants under the Stock Option Plan without shareholder approval. No
termination, modification or amendment of the Stock Purchase Plan can adversely
affect the rights of an employee under the Plan without that employee's consent.
Shares Purchased to Date Under the Stock Purchase Plan
To date, eligible employees have purchased 104,036 shares of the company's
Common Stock under the Stock Purchase Plan. These purchases are subject to the
approval of the Stock Purchase Plan by shareholders at the Annual Meeting.
The Employee Stock Purchase Plan will not take effect unless it is
approved by a vote of the majority of the outstanding shares of Common Stock. It
is intended that the Proxies will be voted for adoption of the Stock Purchase
Plan unless instructions to the contrary are indicated on the accompanying proxy
form.
Your directors recommend a vote FOR adoption of the Plan under Proposal No. 4
ABOUT THE BOARD AND ITS COMMITTEES
The Board
The Company is governed by a Board of Directors and various committees of the
Board which meet throughout the year. The Board of Directors held two meetings
and acted by unanimous written consent 18 times during 1997. Directors discharge
their responsibility throughout the year at Board and committee meetings and
also through considerable telephone contact and other communications with the
Chairman and others regarding matters of concern and interest to the Company.
All directors attended all Board meetings during 1997.
Committees of the Board
The Board has two principal committees, the Compensation Committee and the Audit
Committee. The function of each of these committees is described below along
with the current membership and number of meetings held during 1997.
Compensation Committee
The Compensation Committee has three primary functions. First, it reviews the
performance of the Company's principal executive officers on an annual basis.
The results of this review are then reported to the Board with a recommendation
from the Committee regarding the compensation packages awarded to these
officers. Second, the Compensation Committee reviews the compensation paid to
outside directors for service on the Board and for service on committees of the
Board. Finally, the Committee reviews the level and extent of applicable
benefits provided by the Company with respect to automobiles, travel, insurance,
health and medical coverage, stock options and other stock plans and benefits.
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The Compensation Committee held two meetings, at which both members were
present, and acted by unanimous written consent twice during 1997.
In 1997 the Board elected Edwin L. King and Richard J. Seminoff to the
Compensation Committee. Mr. King resigned from the Board in October 1997 and was
replaced at that time by John F. Kealy, who also assumed Mr. King's duties on
the Compensation Committee. See "Compensation Committee Interlocks and Insider
Participation" in the following section.
Audit Committee
The Audit Committee has several functions. First, it receives reports with
respect to loss contingencies that may require public disclosure or financial
statement notation. Second, it performs an annual review and examination of
those matters that relate to a financial and performance audit of the Company's
employee plans. Third, it recommends to the Board the selection, retention and
termination of the Company's independent accountants. Fourth, it reviews the
professional services, proposed fees and independence of the nominated
accountants. And finally, it provides for the periodic review and examination of
management performance in selected aspects of corporate responsibility.
The Audit Committee held two meetings during fiscal 1997, at which both members
were present.
In 1997 the Board elected Edwin L. King and Richard J. Seminoff to the Audit
Committee. Mr. King resigned from the Board in October 1997 and was replaced at
that time by John F. Kealy.
Compensation Committee Interlocks and Insider Participation
Messrs. King and Seminoff served as members of the Compensation Committee during
the last fiscal year. Mr. King resigned from the Board of Directors in October
1997. Prior to that time each of Messrs. King and Seminoff had served in that
capacity since they were appointed in August 1994. No action has been taken by
the Compensation Committee since Mr. King's resignation from the Board. John F.
Kealy took the place of Mr. King on the Compensation Committee and the Audit
Committee in October 1997. Each member of the Compensation Committee has been,
and will be, a non-employee director for purposes of administering the Plan
under Rule 16b-3.
Director Compensation
Directors currently receive no cash compensation for their services in that
capacity. Reasonable out-of-pocket expenses may be reimbursed to directors in
connection with attendance at meetings. In January 1997, the Company granted
30,000 options each to Edwin L. King, Richard J. Seminoff and John F. Kealy
under the 1997 Stock Option Plan to purchase shares of Common Stock at a price
of $.9375 per share. In April 1997, the Company granted 20,000 options to each
of the same individuals under the 1997 Stock Option Plan to purchase shares of
Common Stock at a price of $1.47 per share. All of these options are exercisable
until May 1, 2002.
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Limitation of Liability of Directors
Arizona Corporate Law
Arizona Law permits the inclusion of a provision in the articles of
incorporation of a corporation limiting or eliminating the potential monetary
liability of directors to a corporation or its shareholders by reason of their
conduct as directors. These sections do not permit any limitation on, or the
elimination of, liability of a director for disloyalty to his corporation or its
shareholders, failing to act in good faith, engaging in intentional misconduct
or a knowing violation of the law, obtaining an improper personal benefit or
paying a dividend or approving a stock repurchase that was illegal under Arizona
law. Accordingly, the provisions limiting or eliminating the potential monetary
liability of directors permitted by the Arizona law apply only to the "duty of
care" of directors, that is, to unintentional errors in their deliberations or
judgments and not to any form of "bad faith" conduct.
Limitation of Liability for Company Directors
The Articles of Incorporation of the Company eliminate the personal monetary
liability of directors to the extent allowed under Arizona law. A shareholder is
able to prosecute an action against a director for monetary damages only if he
can show a breach of the duty of loyalty, a failure to act in good faith,
intentional misconduct, a knowing violation of law, an improper personal benefit
or an illegal dividend or stock repurchase, and not "negligence" or "gross
negligence" in satisfying the director's duty of care. This provision in the
Articles of Incorporation applies only to claims against a director arising out
of his role as a director and not in any other capacity or to his
responsibilities under any other law, such as the federal securities laws.
ABOUT THE EXECUTIVE OFFICERS
Joseph P. Kealy, Jerry A. Kleven, Terry W. Beiriger and Douglas N.
Kimball are the principal executive officers of the Company. For information
regarding Messrs. Kealy and Kleven please refer to "Information About the
Nominees" beginning on Page 4. All executive officers are appointed by and serve
at the discretion of the Board for continuous terms.
Terry W. Beiriger
(Age 46)
Mr. Beiriger is the Principal Financial Officer, Controller, Treasurer and
Secretary of the Company. Mr. Beiriger has served as the Principal Financial
Officer and Controller of the Company since September 1990, as Treasurer since
July 1996, and as Secretary since March 1995. In 1979 he became the controller
of Kealy Construction Company, which was owned by Joseph P. Kealy and John F.
Kealy. From 1974 to 1979, he was employed as a U.S. Internal Revenue Service
agent specializing in the audits of medium-sized corporations. Mr. Beiriger
graduated from Hastings College in Nebraska in 1974 with a Bachelor of Science
in Business Administration.
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Douglas N. Kimball
(Age 43)
Mr. Kimball joined the Company in late 1997 and became its Chief Operating
Officer in early 1998. From 1995 until joining the Company he held various
executive officer positions, and most recently as Vice President, Operations, at
American Environmental Network, Inc., an environmental testing firm. Prior to
that he was a self-employed consultant in the Metro-NY area. From 1987-1989 he
served as the Treasurer, Vice President Finance and Chief Financial Officer of
Mayor's Jewelers, Inc. in Coral Gables, Florida. Mr. Kimball has also served as
the Executive Vice President and as a director of American Trade and Finance
Corp., a Boston based venture firm; as Vice President, Finance, Secretary and
Treasurer of Enseco Incorporated, a public environmental company; and as an
audit manager for the Boston Office of Touche Ross & Co. Mr. Kimball graduated
with a liberal arts degree from Dartmouth College in 1976 and earned a masters
of science in accounting from Northeastern University in 1978.
11
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the
Company to the chief executive officer and the most highly compensated executive
officers and key employees whose total remuneration exceeded $100,000 for
services rendered in all capacities to the Company during the last three
completed fiscal years.
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
---------------------
Annual Securities
Name and Principal Compensation/ Underlying All Other
Positions Year Salary & Bonus Options (#)(4) Compensation (3)
- ------------------------------ --------- -------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
Joseph P. Kealy 1997 $146,680 740,000 $9,600
President and Chairman of
the Board 1996 117,092 165,000 9,600
1995 96,936 9,600
Terry W. Beiriger 1997 76,997 170,000 9,600
Principal Financial
Officer, Secretary and 1996 75,154 65,000 9,600
Treasurer
1995 71,922 9,600
Jerry A. Kleven 1997 146,060 120,000 10,000
Executive Vice President
and Director 1996 150,000 70,000 10,000
1995 150,000 10,000
V. Thompson Brown, Jr. 1997 190,879 (2) 70,000 9,600
Director
1996 78,843
1995 75,158
</TABLE>
- ----------------------
(1) In August 1994 the Company entered in to a five-year employment
agreements with Joseph P. Kealy, Jerry A. Kleven and Terry W. Beiriger
providing for an annual base salary of $150,000 for Messrs. Kealy and
Kleven and, as subsequently amended, $104,000 for Mr. Beiriger,
effective in 1998.
(2) Of the total compensation payed to Mr. Brown during 1997, $70,000 is
attributable to forgiveness of a loan made by Concepts to Mr. Brown
prior to the Company's acquisition of Concepts.
(3) The amounts set forth in this column are the automobile allowances
received by the persons in the table under the respective employment
agreements.
(4) The exercise price of all stock options granted were at least equal to
the fair market values of the Company's Common Stock on the date of
grant.
12
<PAGE>
OPTION GRANTS IN 1997
The following executive officers were granted stock options under and
outside of the Option Plans by the Company in Fiscal 1997 in recognition of
their past contributions to the Company. In each case, the option price was in
excess of the fair market value of the Common Stock on the date of grant.
<TABLE>
<CAPTION>
Percentage of Total
No. of Shares Shares for which
Underlying Options Granted to Exercise
Name Options Granted Employees (1) Price Expiration Date
- ----------------------- --------------------- ------------------------ ------------ ---------------------
<S> <C> <C> <C> <C>
Joseph P. Kealy 400,000 (2) 66.4 $3.00 August 14, 2004
300,000 (3) .9375 May 1, 2002
40,000 (3) 1.47 July 20, 2002
Jerry A. Kleven 100,000 (3) 10.8 .9375 May 1, 2002
20,000 (3) 1.47 July 20, 2002
Terry W. Beiriger 50,000 (2) 15.2 3.00 August 14, 2004
100,000 (3) .9375 May 1, 2002
20,000 (3) 1.47 July 20, 2002
</TABLE>
- ----------------------
(1) Percentages represent total percentages for fiscal 1997 including all
grants under and outside of the Option Plans listed for each person.
(2) Options became exercisable on December 1, 1997.
(3) Options became exercisable on July 21, 1997.
OPTION EXERCISES IN 1997
There were no exercises of outstanding stock options in Fiscal 1997.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Such officers, directors and
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms that they file. During the last year Messrs.
Beiriger, Brown, Kleven and John Kealy each failed to file one report on Form 4
in a timely fashion, each of which should have contained disclosure regarding
one transaction. All of such transactions have subsequently been reported on
Form 5.
OWNERSHIP OF OUR COMMON STOCK
The following table sets forth information, as of May 29, 1998 with
respect to the number of shares of Common Stock of the Company beneficially
owned by individual directors, by all directors and officers of the Company as a
group, and by persons known by the Company to own more than 5% of the Company's
Common Stock. The Company has no other class of voting stock outstanding.
13
<PAGE>
<TABLE>
<CAPTION>
Name of Beneficial Number Percent of
Owner and Address of Shares (1) Common Stock Owned
- ------------------------------------------------- ------------------------- ----------------------------------
<S> <C> <C>
Joseph P. Kealy 1,267,088 (2) 6.21
3615 S. 28th Street
Phoenix, Arizona 85040
John F. Kealy 276,711 (3) 1.45
520 South 52nd Street
Tempe, Arizona 85281
Jerry A. Kleven 251,874 (4) 1.30
3615 S. 28th Street
Phoenix, Arizona 85040
Terry W. Beiriger 251,206 (5) 1.30
3615 S. 28th Street
Phoenix, Arizona 85040
Richard J. Seminoff 105,000 (6) *
5050 North 40th Street
Suite 220
Phoenix, Arizona 85018
V. Thompson Brown, Jr. 84,222 (7) *
5714 Charlotte Avenue
Nashville, Tennessee 37209
Wallace E. Sapp 2,346,661 (8) 12.30
Edna M. Sapp
1940 Highway 71 So.
Marianna, Florida 32446
Liviakis Financial Communications, Inc. 1,650,000 (9) 8.65
2420 "K" Street
Suite 220
Sacramento, California 95816
All directors and 2,236,101 10.71
officers as a group
(six persons)
</TABLE>
- ----------------------
* Less than 1%
(1) The shareholder listed has sole voting and investment power with
respect to the shares listed.
(2) Includes options to purchase 1,035,000 shares of Common Stock which are
presently exercisable. Does not include options to purchase 20,000
shares of Common Stock granted under the 1997 Stock Option Plan, which
grants do not become effective until approval of the Amendment to the
Plan at the Annual Meeting.
14
<PAGE>
(3) Includes options to purchase 85,000 shares of Common Stock which are
presently exercisable. John Kealy disclaims beneficial ownership of an
additional 1,500 shares owned by his immediate family.
(4) Includes options to purchase 195,000 shares of Common Stock which are
presently exercisable. Does not include options to purchase 20,000
shares of Common Stock granted under the 1997 Stock Option Plan, which
grants do not become effective until approval of the Amendment to the
Plan at the Annual Meeting.
(5) Includes options to purchase 240,000 shares of Common Stock which are
presently exercisable. Terry Beiriger disclaims beneficial ownership of
an additional 9,450 shares owned by his immediate family. Does not
include options to purchase 20,000 shares of Common Stock granted under
the 1997 Stock Option Plan, which grants do not become effective until
approval of the Amendment to the Plan at the Annual Meeting.
(6) Includes options to purchase 105,000 shares of Common Stock which are
presently exercisable.
(7) Includes options to purchase 75,000 shares of Common Stock. which are
presently exercisable. Does not include options to purchase 20,000
shares of Common Stock granted under the 1997 Stock Option Plan, which
grants do not become effective until approval of the Amendment to the
Plan at the Annual Meeting.
(8) Includes options to purchase 215,000 shares of Common Stock which are
presently exercisable. Wallace E. Sapp and Edna M. Sapp hold such
shares jointly with right of survivorship. Wallace E. Sapp and Edna M.
Sapp were the sole shareholders of the former Southern Communications
Products, Inc., a Florida corporation. The Company purchased all or
substantially all of the assets of such company in December 1997.
Wallace E. Sapp remains an employee of the Company's subsidiary, SCP.
(9) Represents options to purchase 1,650,000 shares of Common Stock granted
to Liviakis which are presently exercisable. Excludes options to
purchase 550,000 shares of Common Stock granted to Robert Prag over
which Liviakis disclaims beneficial ownership. Liviakis performs
financial consulting services for the Company pursuant to a consulting
agreement effective as of November 5, 1996. Such consulting agreement
was extended in December 1997 through June 30, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Commencing in 1989 the Company advanced funds to Wings Limited Partnership
("Wings"), the partners of which included Joseph P. Kealy, John F. Kealy and
Joseph W. Zerbib, a former principal shareholder of the Company. In 1993, these
persons and their spouses assumed the Wing's obligation by executing a
promissory note in the principal amount of $396,732, plus accrued interest. Such
individuals secured the note by pledging 267,000 shares of their Common Stock to
the Company. In June 1996, Mr. Zerbib paid $108,035 representing his pro-rata
share of the principal and accrued interest on the note. Upon such payment the
Company released him and his spouse from their obligations under the note and
107,000 shares of Common Stock that they had pledged to secure the note. The
total principal and accrued interest due as of December 31, 1997 was $166,108,
and the maturity date of the note has been extended to December 31, 1998.
15
<PAGE>
At December 31, 1994 Jerry A. Kleven, Brad J. Kleven and Ronald Abeyta
owed the Company $81,656, $108,400 and $68,634, respectively, as a result of
advances made by the Company to such individuals in fiscal 1994. The advances
were represented by secured promissory notes bearing interest at 7% per annum,
which notes were due and payable in full on or before December 31, 1995. Also,
at December 31, 1994 International FiberCon, Inc., a California corporation
("FiberCon"), in which Jerry A. Kleven, Brad J. Kleven and Ronald Abeyta owned a
majority interest, owed the Company $210,000 as the result of advances made by
the Company to FiberCon. These individuals personally guaranteed FiberCon's
payment of the promissory note. FiberCon failed to make the required payments on
the note and the Company requested payment from the guarantors under their
respective guarantees of the note. In 1995 Jerry A. Kleven paid the sum of
$100,000 toward his note and his pro rata portion of the guarantee of the
FiberCon note. The remaining balance due of $63,497 was consolidated into a new
note on December 31, 1995. The Company did not receive a payment from either
Brad Kleven or Ronald Abeyta, who resigned as officers of the Company in 1996,
on their respective notes or guarantees under the FiberCon note and therefore
filed suit against each of such individuals in 1996 demanding full payment of
the principal and accrued interest on the notes. On January 15, 1998, the
Company entered into a settlement agreement and mutual release with Brad Kleven
and Ronald Abeyta whereby all claims and counterclaims were dismissed by all
parties. As a part of such agreement these individuals agreed to five-year
non-compete arrangements with the Company. As such, the receivables balance was
converted to covenants not to compete and amortized over a five-year period.
SUMMARY OF THE STOCK OPTION PLANS
Summary of the 1994 and 1997 Stock Option Plans
The Board adopted the 1997 Stock Option Plan in January 1997 and the 1994 Stock
Option Plan in May 1994. There were originally 1,200,000 shares of Common Stock
for issuance upon exercise of options granted under the 1997 Plan and 441,707
shares under the 1994 Plan. For the purposes of this summary, unless otherwise
stated, "Plans" will refer to both the 1994 and 1997 Stock Option Plans.
The 1994 Plan authorized the Company to grant to key employees of the Company
(i) incentive stock options to purchase shares of Common Stock and (ii)
non-qualified stock options to purchase shares of Common Stock. The 1997 Plan
allowed the issuance of both types of stock options to key employees and
directors.
Objectives
The objectives of the Plans are to provide incentives to key employees, and also
to directors in the case of the 1997 Plan, to achieve financial results aimed at
increasing shareholder value and attracting talented individuals to the Company.
Persons eligible to be granted incentive stock options under the Plans will be
those employees of the Company whose performance, in the judgment of the
Compensation Committee, can have significant effect on the success of the
Company.
16
<PAGE>
Oversight
The Compensation Committee of the Board administers the Plans by making initial
determinations and recommendations to the Board regarding the persons to whom
options should be granted and the amount, terms, conditions and restrictions of
the awards. It also has the authority to interpret the provisions of the Plan
and to establish and amend rules for its administration subject to the Plan's
limitations. This Compensation Committee is comprised of non-employee directors
as required by Rule 16b-3 of the Securities and Exchange Act of 1934, as
amended.
Types of Grants
Although the Plans do not specify what portion of the awards may be in the form
of incentive stock options or non-statutory options, historically a
substantially greater number of non-statutory stock options have been awarded
under the Plans. The Company anticipates that, if the Plans are amended as
proposed, a greater number of incentive, rather than non- statutory, options
will be granted in the future. Incentive stock options awarded to employees of
the Company are qualified stock options under the Internal Revenue Code.
Statutory Conditions on Stock Options
- exercise price
Incentive stock options granted under the Plans must have an exercise price at
least equal to 100% of the fair market value of the Common Stock as of the date
of grant. Incentive stock options granted to any person who owns, immediately
after the grant, stock possessing more than 10% of the combined voting power of
all classes of the Company's stock, or of any parent or subsidiary corporation,
must have an exercise price at least equal to 110% of the fair market value of
the Common Stock on the date of grant. Non-statutory stock options may have
exercise prices as determined by the Compensation Committee or the Board.
- dollar limit
The aggregate fair market value, determined as of the time an incentive stock
option is granted, of the Common Stock with respect to which incentive stock
options are exercisable by an employee for the first time during any calendar
year, cannot exceed $100,000. However, there is no aggregate dollar limitation
on the amount of non-statutory stock options which may be exercisable for the
first time during any calendar year.
- expiration
Any option granted under the Plans will expire at the time fixed by the
Committee, which cannot be more than ten years after the date it is granted date
or, in the case of any person who owns more than 10% of the combined voting
power of all classes of the Company's stock or of any subsidiary corporation,
not more than five years after the date of grant.
- exerciseability
The Compensation Committee may also specify when all or part of an option
becomes exercisable, but in the absence of such specification, the option will
ordinarily be exercisable in whole or part at any time during its term. However,
the Compensation Committee may accelerate the exerciseability of any option at
its discretion.
17
<PAGE>
- assignability
Options granted under the Plans are not assignable. Incentive Stock Options may
be exercised only while the optionee is employed by the Company or within twelve
months after termination by reason of death, within twelve months after the date
of disability, or within three months after termination for any other reason.
Payment Upon Exercise of Options
Payment of the exercise price for any option may be in cash, by withheld shares
which, upon exercise, have a fair market value at the time the option is
exercised equal to the option price (plus applicable withholding tax) or in the
form of shares of the Company's Common Stock.
Tax Consequences of Options
An employee or director will not recognize income on the awarding of incentive
stock options and nonstatutory options under the Stock Option Plan.
An optionee will recognize ordinary income as the result of the exercise of a
nonstatutory stock option in the amount of the excess of the fair market value
of the stock on the day of exercise over the option exercise price. An employee
will not recognize income on the exercise of an incentive stock option, unless
the option exercise price is paid with stock acquired on the exercise of an
incentive stock option and the following holding period for such stock has not
been satisfied. The employee will recognize long-term capital gain or loss on a
sale of the shares acquired on exercise, provided the shares acquired are not
sold or otherwise disposed of before the earlier of: (i) two years from the date
of award of the option or (ii) one year from the date of exercise. If the shares
are not held for the required period of time, the employee will recognize
ordinary income to the extent the fair market value of the stock at the time the
option is exercised exceeds the option price, but limited to the gain recognized
on sale. The balance of any such gain will be a short-term capital gain.
Exercise of an option with previously owned stock is not a taxable disposition
of such stock.
An employee generally must include in alternative minimum taxable income the
amount by which the price he paid for an incentive stock option is exceeded by
the option's fair market value at the time his rights to the stock are freely
transferrable or are not subject to a substantial risk of forfeiture.
The Company and its subsidiaries will be entitled to deductions for federal
income tax purposes as a result of the exercise of a nonstatutory option and the
disqualifying sale or disposition of incentive stock options in the year and the
amount that the employee recognizes ordinary income as a result of such
disqualifying disposition.
18
<PAGE>
SUMMARY OF THE RESTRICTED STOCK PLANS
Summary of the 1994 and 1997 Restricted Stock Plans
The Company adopted the 1997 Restricted Stock Plan in July 1997 and the 1994
Restricted Stock Plan in May 1994. For the purposes of this summary, unless
otherwise stated, "Plans" will refer to both the 1994 and 1997 Restricted Stock
Plans. Under the Plans, shares of Common Stock of the Company are reserved, in
such amounts as determined by the Board, for issuance as part of the total
shares reserved under the Stock Option Plans described above. The Plans
authorize the grant of shares of Common Stock to key employees, consultants,
researchers and to members of the Board. The Compensation Committee of the Board
administers the Plans by making initial determinations and recommendations to
the Board regarding the persons to whom shares of Common Stock should be granted
and the terms of the awards. It also has the authority to interpret the
provisions of the Plan and to establish and amend rules for its administration
subject to the Plan's limitations. As of the date hereof, no shares have been
granted under the Plans.
OTHER MATTERS
The Company's Board is not presently aware of any matters to be
presented at the meeting other than those described above. However, if other
matters properly come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote said proxy on such matters in accordance
with their judgment.
SHAREHOLDER PROPOSALS
Any shareholder desiring to have a proposal included in the Company's
proxy statement for its 1999 Annual Meeting must deliver such proposal (which
must comply with the requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934) to the Company's principal executive offices not later
than February 27, 1999.
ANNUAL REPORT
The Company's Annual Report on Form 10-KSB with certified financial
statements required to be filed for the fiscal year ended December 31, 1997,
accompanies this Notice and Proxy Statement and was mailed to all shareholders
of record on or about June 16, 1998. Any exhibit to the annual report on Form
10-KSB will be furnished to any requesting person who sets forth a good faith
representation that he or she was a beneficial owner of the Company's Common
Stock on June 10, 1998. The fee for furnishing a copy of any exhibit will be 25
cents per page plus $3.00 for postage and handling.
19
<PAGE>
EXHIBIT A
INTERNATIONAL FIBERCOM, INC.
FIRST AMENDED AND RESTATED
1997 STOCK OPTION PLAN
The following definitions shall be applicable throughout the Plan:
(a) "Board" means the Board of Directors of the Company.
(b) "Articles of Incorporation" means the Company's Articles of
Incorporation, as amended or restated from time to time.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. Reference in the Plan to any Section of the Code shall be deemed
to include any amendments or successor provisions to such Section and any rules
or regulations under such Section.
(d) "Committee" means the committee appointed by the Board to
administer the Plan as referred to in Article V.
(e) "Commission" means the Securities and Exchange Commission or any
successor agency.
(f) "Company" means International FiberCom, Inc., an Arizona
corporation.
(g) "Date of Grant" means the date on which the granting of an Option
is authorized by the Board or such later date as may be specified by the Board
in such authorization as referred to in Article V.
(h) "Eligible Employee" means any person regularly employed by the
Company or a Subsidiary on a full-time salaried basis who satisfies all of the
requirements of Article IX.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.
(j) "Fair Market Value" is defined in Article IV.
(k) "Holder" means an employee of the Company or a Subsidiary who has
been granted an Option.
(l) "Incentive Stock Option" means any Option intended to be and
designated as an "incentive stock option" within the meaning of ss.422 of the
Code.
(m) "Non-Employee Director" means a member of the Board who qualifies
as a "Non- Employee Director" as defined in Rule 16b-3, as promulgated by the
Commission under the Exchange Act or any successor definition adopted by the
Commission.
<PAGE>
(n) "Non-Incentive Options" means an Option which is not an Incentive
Stock Option
(o) "Normal Termination" means termination at retirement pursuant to
the Company or Subsidiary retirement plan then in effect.
(p) "Option" means an award granted under Article IX of the Plan and
includes both Non- Incentive Options and Incentive Stock Options.
(q) "Plan" means this 1997 Stock Option Plan.
(r) "Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations promulgated thereunder.
(s) "Share" means a share of Stock.
(t) "Stock" means common stock of the Company as described in the
Articles of Incorporation.
(u) "Subsidiary" means "subsidiary corporation" as defined in ss.424(f)
of the Code.
(v) "Termination" means separation from employment with the Company or
any of its Subsidiaries for any reason except due to death.
(w) "Treasury" means the Department of the Treasury of the United
States of America.
ARTICLE I.
Designation and Purpose of the Plan
-----------------------------------
The Plan shall be known as the "International FiberCom, Inc. 1997 Stock
Option Plan." The purpose of the Plan is to provide additional incentives to
Employees and Non-Employee Directors of the Company to achieve financial results
aimed at increasing shareholder value and to attract and retain the best
available personnel for positions of responsibility within the Company through
the grant of options to purchase shares of the Company's Common Stock. The Plan
was approved by the Shareholders on July 21, 1997 and was amended by the Board,
subject to the approval by the shareholders of the Company, on April 2, 1998.
Subject to the determination of the Board or a Committee appointed by the Board,
Options granted under this Plan may be Incentive Stock Options or Non-Incentive
Options.
- 2 -
<PAGE>
ARTICLE II.
Shares Available for Purchase
-----------------------------
A maximum of 3,200,000 authorized but unissued shares of the Company's
common stock may be issued upon the exercise of Options granted pursuant to the
Plan. Shares reserved for issuance shall be deemed to have been used in the
exercise of Options whether actually delivered or whether the Fair Market Value
equivalent of such Shares is paid in cash. If an Eligible Employee pays the
exercise price of any given Option by having shares withheld which, upon
exercise, would have a Fair Market Value at the time the Option is exercised
equal to the Option price, then the withheld shares will not be deducted from
those shares reserved for issuance under the Plan. Also, if the Company, at any
time during the effective period of this plan, repurchases Shares on the open
market, then the Board may, but is not required to, add such Shares to the pool
of Shares reserved for issuance under this Plan. However, the number of shares
authorized for issuance under the Plan may never exceed 3,200,000 at any given
time.
In the event that any Option granted under the Plan expires or
terminates for any reason whatsoever without having been exercised in full, the
Shares subject to, but not delivered under such Option shall become available
for other Options which may be granted under the Plan; or shall be available for
any other lawful corporate purpose.
ARTICLE III.
Limit on Value of Option Shares
-------------------------------
In the case of an Incentive Stock Option, the aggregate Fair Market
Value (determined as of the time such Option is granted) of the Shares with
respect to which the Incentive Stock Option is exercisable for the first time by
an individual during any calendar year (under all plans of the Company) shall
not exceed $100,000.
ARTICLE IV.
Determination of Fair Market Value
----------------------------------
As used herein the term "Fair Market Value" shall mean, with respect to
the date a given Option is granted or exercised, the value determined by the
Board or any Committee appointed in accordance with Article VI hereof in good
faith using a generally accepted valuation method and, in the case of an
incentive stock option, determined in accordance with applicable Treasury
regulations; provided, however, that where there is a public market for the
common stock of the Company, the Fair Market Value per share shall be the mean
of the final bid and asked prices of the Stock on the date of grant, as reported
in The Wall Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation System) or, in
the event the stock is listed on a stock exchange, the fair market value per
share shall be the closing price on such exchange on the date of grant of the
option, as reported in The Wall Street Journal.
- 3 -
<PAGE>
ARTICLE V.
Stock Options and Option Agreements
-----------------------------------
(a) Stock Options under the Plan may be of two types: Incentive Stock
Options and Non- Incentive Options. Any Stock Option granted under the Plan will
be in such form as the Board may from time to time approve. The Board will have
the authority to grant any optionee Incentive Stock Options, Non-Incentive
Options or both types of Options. The Date of Grant of an Option will be the
date the Board by resolution selects an individual to be a participant in any
grant of an Option, determines the number of Shares to be subject to such Option
to be granted to such individual and specifies the terms and provisions of the
Option. Incentive Stock Options may only be granted to Eligible Employees. To
the extent that any Option is not designated as an Incentive Stock Option or
even if so designated does not qualify as an Incentive Stock Option, it will be
deemed to be a Non- Incentive Option. The Board may grant Non-Incentive Options
to Non-Employee Directors under the Plan. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive Stock Options will be
interpreted, amended or altered nor shall any discretion or authority granted
under the Plan be exercised so as to disqualify the Plan under ss.422 of the
Code or, without the consent of the optionee, to disqualify any Incentive Stock
Option under such ss.422.
(b) Each Option granted under the Plan shall be evidenced by an option
agreement ("Option Agreement"), which shall indicate on its face whether it is
an agreement for an Incentive Stock Option or a Non-Incentive Option, or both
and shall be signed by an officer of the Company on behalf of the Company and by
the employee who was granted the Option and which shall contain such provisions
as may be approved by the Board or any Committee appointed by the Board
according to Article VI. The provisions shall be subject to the following terms
and conditions:
(i) Any Option or portion thereof that is exercisable shall be
exercisable as to such number of Shares and at such times as set forth
in the Stock Option Agreement, except as limited by the terms of the
Plan heretofore;
(ii) Every Share purchased through the exercise of an Option
shall be paid for in full at the time of the exercise. Each Option
shall cease to be exercisable, as to any Share, when the Holder
purchases the Share, or when the Option lapses;
(iii) Options shall not be transferable by the Holder except
by will, the laws of descent and distribution or pursuant to a
qualified domestic relations order and shall be exercisable during the
Holder's lifetime only by the Holder; and
(iv) An unexpired Option shall become immediately exercisable
(1) automatically on the Holder's Normal Termination, (2) at the
discretion of the Board, in whole or in part, on the date the Holder
becomes eligible to receive early retirement benefits, as defined under
the retirement plan of the Company then in effect, (3) upon any change
in control of the Company, and (4) under such other circumstances as
the Board may direct.
- 4 -
<PAGE>
(c) The Option Agreements shall constitute binding contracts between
the Company and the employee. Every employee, upon acceptance and execution of
such option agreement, shall be bound by the terms and conditions of this Plan
and of the Option Agreement.
(d) The terms and conditions of the Option Agreement shall be in
accordance with this Plan, but may include additional provisions and
restrictions, provided that the same are not inconsistent with the Plan.
ARTICLE VI.
Compensation and Stock Option Committee
---------------------------------------
The Plan shall be administered by the Board or a Committee appointed by
the Board in accordance with Rule 16b-3 of the Exchange Act ("Rule 16b-3"). Any
Committee which has been delegated the duty of administering the Plan by the
Board shall be composed of two or more persons each of whom (i) is a
Non-Employee Director and (ii) is an "outside director" as defined in
ss.162(m)(4) of the Code. To the extent reasonable and practicable, the Plan
shall be consistent with the provisions of Rule 16b-3 to the degree necessary to
ensure that transactions authorized pursuant to the Plan are exempt from the
operation of Section 16(b) of the Exchange Act. If such a Committee is
appointed, the Committee shall have the same power and authority to construe,
interpret and administer the Plan and from time to time adopt such rules and
regulations for carrying out this Plan as it may deem proper and in the best
interests of the Company as does the Board. Any reference herein to the Board
shall, where appropriate, encompass a Committee appointed to administer the Plan
in accordance with this Article VI.
The Board shall, from time to time, in its discretion, determine which
of the Eligible Employees are to be granted Options and the form, amount and
timing of such Options and, unless otherwise provided herein, the terms and
provisions thereof and the form of payment of an Option, if applicable, and such
other matters specifically delegated to It under this Plan. Subject to the
express provisions of the Plan, the Board shall have authority to interpret the
Plan and Options granted hereunder, to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations necessary
or advisable in administering the Plan, all of which determinations shall be
final and binding upon all persons. A quorum of the Board shall consist of a
majority of its members and the Board may act by vote of a majority of its
members at a meeting at which a quorum is present, or without a meeting by a
written consent to the action taken signed by all members of the Board. No
member of the Board shall be liable for any action, interpretation or
construction made in good faith with respect to the Plan or any Option granted
hereunder.
ARTICLE VII.
Option Price
------------
The Option price at which Shares may be purchased under an Option
granted pursuant to this Plan shall be set by the Board, but shall in no
instance be less than the Fair Market Value of such
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Shares on the Date of Grant in the case of Incentive Stock Options. Such Fair
Market Value shall be determined by the criteria set forth in Article IV hereof.
The Option price will be subject to adjustments in accordance with provisions of
Article X herein.
In the event that an employee granted an Incentive Stock Option
hereunder owns, directly or indirectly, immediately after such grant, more than
10% of the total combined voting power of all classes of the issued and
outstanding stock of the company, the option price shall be at least 110% of the
Fair Market Value of the stock subject to the Option and such Option by its
terms shall not be exercisable after the expiration of five (5) years from the
date such Option is granted.
ARTICLE VIII.
Exercise of Option
------------------
(a) Subject to the provisions of Articles VII and IX the period during
which each Option may be exercised shall be fixed by the Board at the time such
Option is granted, subject to the following rules:
(i) such Option is granted within ten (10) years from the date
the Plan is adopted, or the date such Plan is approved by the
stockholders, whichever is earlier;
(ii) such Option by its terms is not exercisable after the
expiration of ten (10) years (in the case if Incentive Stock Options,
not to exceed five years for Eligible Employees owning 10% or more of
the combined voting power of all classes of stock of the Company) from
the Date of Grant as shall be set forth in the Stock Option Agreement
relating to such grant; and,
(iii) such Option by its terms states that a person's rights
and interests under the Plan, including amounts payable, may not be
assigned, pledged, or transferred except, in the event of an employee's
death, to a designated beneficiary as provided in the Plan, or in the
absence of such designation, by will or the laws of descent and
distribution and pursuant to a qualified domestic relations order.
(b) An Option shall lapse under the following circumstances:
(i) Ten (10) years after it is granted, three months after
Normal Termination, twelve months after the date of Termination if due
to permanent disability, three months after any other Termination or
any earlier time set by the grant.
(ii) If the Holder dies within the Option period, the Option
shall lapse unless it is exercised within the Option period and in no
event later than twelve months after the date of his death by the
Holder's legal representative or representatives or by the person or
persons entitled to do so under the Holder's last will and testament
or, if the Holder shall fail to make testamentary disposition of such
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Option or shall die intestate, by the person or persons entitled to
receive said Option under the applicable laws of descent and
distribution.
(iii) Notwithstanding the foregoing, in no event shall the
period of exercise be less than thirty days after Normal Termination or
the death of the Holder; provided, however, that in no event shall an
Incentive Stock Option be exercised more than ten years after the Date
of Grant.
(c) No Shares shall be delivered pursuant to any exercise of an Option
until the requirements of such laws and regulations, as may be deemed by the
Board to be applicable, are satisfied and until payment in full of the option
price specified in the applicable Stock Option Agreement is received by the
Company. No employee shall be deemed to be an owner of any Shares subject to any
Option unless and until the certificate or certificates for them have been
issued, as reflected on the stock record and transfer books of the Company.
ARTICLE IX.
Eligibility
-----------
All employees of the Company, including officers and directors who are
salaried employees, shall be Eligible Employees eligible to participate under
this Plan. The fact that an employee has been granted an Option under this Plan
shall not in any way affect or qualify the right of the employee to terminate
his employment at any time. Nothing contained in this Plan shall be construed to
limit the right of the Company to grant Options otherwise than under the Plan
for any proper and lawful corporate purpose, including but not limited to
Options granted to employees. Employees to whom Options may be granted under the
Plan will be those selected by the Committee from time to time who, in the sole
discretion of the Committee, have contributed in the past or who may be expected
to contribute materially in the future to the successful performance of the
Company.
ARTICLE X.
Capital Adjustments Affecting Stock
-----------------------------------
(a) If the outstanding Stock of the Company shall at any time be
changed or exchanged by declaration of a stock dividend, split-up, combination
of Shares, recapitalization, merger, consolidation, or other corporate
reorganization in which the Company is the surviving corporation, the number and
kind of Shares subject to the Plan or subject to any Options theretofore
granted, and the Option prices, shall be appropriately and equitably adjusted so
as to maintain the proportionate number of Shares without changing the aggregate
Option price and the Board may make any other adjustments as the Board deems
appropriate for purposes of the Plan. The determination of the Board as to the
terms of any adjustment shall be conclusive except to the extent governed by
Treasury regulations applicable to Incentive Stock Options.
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(b) In the event of a liquidation or dissolution of the Company, sale
of all or substantially all of its assets, or a merger, consolidation or other
corporate reorganization in which the Company is not the surviving corporation,
or any merger or other reorganization in which the Company is the surviving
corporation but the holders of its Stock receive securities of another
corporation, or in the event a person makes a tender offer to the stockholders
of the Company, the Board may, but need not, accelerate the time at which
unexercised Options may be exercised. Nothing herein contained shall prevent the
substitution of a new Option by the surviving or acquiring corporation.
ARTICLE XI.
Amendments, Suspension or Termination
-------------------------------------
(a) The Board shall have the right, at any time, to amend, suspend or
terminate the Plan, and if suspended, reinstate the Plan in whole or in part in
any respect which it may deem to be in the best interests of the Company,
provided, however, no amendments shall be made in the Plan which:
(i) Increase the total number of Shares for which Options may
be granted under this Plan for all employees or for any one of them
except as provided in Article X;
(ii) Change the minimum purchase price for the optioned
Shares, except as provided in Article X;
(iii) Affect outstanding Options or any unexercised rights
thereunder, except as provided in Article VIII;
(iv) Extend the option period provided in Article VIII or make
an Option exercisable earlier than as specified in Article VIII; or
(v) Extend the termination date of the Plan.
(b) The Board shall also have the right, with the express written
consent of an individual participant, to cancel, reduce or otherwise alter such
participant's outstanding Options under the Plan.
(c) Any such amendment, termination, suspension, cancellation,
reduction or alteration shall be further approved by the shareholders of the
Company if such approval is required to preserve or comply with any exemption,
whether under Rule 16b-3 or otherwise, from Section 16(b) of the Exchange Act or
to preserve the status of Incentive Stock Options within the meaning of ss.422
of the Code.
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ARTICLE XII.
Effective Date, Term and Approval
---------------------------------
The effective date for this Amended Plan shall be upon approval by the
stockholders. Options may be granted as provided herein for a period of ten
years after such date unless an earlier termination date after which no Options
may be granted under the Plan is fixed by action of the Board, but any Option
granted prior thereto may be exercised in accordance with its terms. The grant
of any Options under the Plan is effective only upon approval of the Plan by the
stockholders. The Plan and all Options granted pursuant to it are subject to all
laws, approvals, requirements, and regulations of any governmental authority or
securities exchange which may be applicable thereto and, notwithstanding any
provisions of the Plan or option agreement, the Holder of an Option shall not be
entitled to exercise his Option nor shall the Company be obligated to issue any
Shares to the Holder if such exercise or issuance shall constitute a violation
by the Holder or the Company of any provisions of any such laws, approvals,
requirements, or regulations. The Plan shall continue in effect until all
matters relating to the payment of Options granted under the Plan and
administration of the Plan have been settled.
ARTICLE XIII.
General
-------
(a) Government and Other Regulations. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, and the requirements of any stock exchange upon which the
Shares may then be listed and shall be further subject to the approval of
counsel for the Company with respect to such compliance. Inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
(b) Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
(c) Tax Withholding. The employee or other person receiving Stock upon
exercise of an Option may be required to pay to the Company or to a Subsidiary,
as appropriate, the amount of any such taxes which the Company or Subsidiary is
required to withhold with respect to such Stock. In connection with such
obligation to withhold tax, the Company may defer making delivery of such Stock
unless and until indemnified on such withholding liability to its satisfaction.
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<PAGE>
(d) Claim to Options and Employment Rights. No employee or other person
shall have any claim or right to be granted an Option under the Plan. Neither
this Plan nor any action taken hereunder shall be construed as giving any
employee any right to be retained in the employ of the Company or a Subsidiary.
(e) Beneficiaries. Any issuance of shares upon exercise of Options
issued under this Plan to be made to a deceased participant shall be paid to the
beneficiary designated by the participant and filed with the Board. If no such
beneficiary has been designated or survives the participant, issuance shall be
made to the participant's legal representative. A beneficiary designation may be
aged or revoked by a participant at any time provided the change or revocation
is filed with the Board. The designation by a married participant of one or more
persons other than the participant's spouse must be consented to by the spouse.
(f) Indemnification. Each person who is or shall have been a member of
the Board shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action or failure to act under the Plan and against and from any and all
amounts paid by him in satisfaction of judgment in such action, suit, or
proceeding against him. He shall give the Company an opportunity, at its own
expense, to handle and defend the same before he undertakes to handle and defend
it on his own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Bylaws or Articles of Incorporation, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
(g) Reliance on Reports. Each member of the Board shall be fully
justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company and its Subsidiaries and upon any
other information furnished in connection with the Plan by any person or persons
other than himself. In no event shall any person who is or shall have been a
member of the Board be liable for any determination made or other action taken,
including the furnishing of information, or failure to act, if in good faith.
(h) Relationship to Other Benefits. No grant of any Options under the
Plan shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary.
(i) Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
(j) Pronouns. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
(k) Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
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<PAGE>
(l) Fractional Shares. No fractional Shares shall be issued and the
Board shall determine whether cash shall be given in lieu of fractional Shares
or whether such fractional Shares shall be eliminated by rounding up or rounding
down unless otherwise provided in the Plan.
(m) Construction of Plan. The place of administration of the Plan shall
be in the State of Arizona, and the validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined in accordance with the laws of
the State of Arizona.
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<PAGE>
EXHIBIT B
INTERNATIONAL FIBERCOM, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
1.1 Purpose. The International FiberCom, Inc. Employee Stock Purchase
Plan is intended to provide a method whereby employees of International
FiberCom, Inc. and its subsidiary corporations (hereinafter referred to, unless
the context otherwise requires, as the "Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the Common Stock of the Company. It is the intention of the Company to have the
Plan qualify as an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
ARTICLE II - DEFINITIONS
2.1 Base Pay. "Base Pay" shall mean regular straight-time earnings
excluding payments for overtime, shift premium, bonuses and other special
payments, commissions and other marketing incentive payments.
2.2 Committee. "Committee" shall mean the individuals described in
Article XI.
2.3 Employee. "Employee" means any person who is customarily employed
on a full-time or part-time basis by the Company and is regularly scheduled to
work more than 20 hours per week.
2.4 Subsidiary Corporation. "Subsidiary Corporation" shall mean any
present or future corporation which (i) would be a "Subsidiary Corporation" of
Company, as that term is defined in Section 424(f) of the Code, and (ii) is
designated as a participant in the Plan by the Committee.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 Initial Eligibility. Any Employee who shall have completed ninety
(90) days' employment and shall be employed by the Company on the date his
participation in the Plan is to become effective shall be eligible to
participate in offerings under the Plan which commence on or after such ninety
day period has concluded.
3.2 Leave of Absence. For purposes of participation in the Plan, a
person on leave of absence shall be deemed to be an Employee for the first 90
days of such
<PAGE>
leave of absence and such Employee's employment shall be deemed to
have terminated at the close of business on the 90th day of such leave of
absence unless such Employee shall have returned to regular full-time or
part-time employment (as the case may be) prior to the close of business on such
90th day. Termination by the Company of any Employee's leave of absence, other
than termination of such leave of absence on return to full-time or part-time
employment, shall terminate an Employee's employment for all purposes of the
Plan and shall terminate such Employee's participation in the Plan and right to
exercise any option.
3.3 Restrictions on Participation. Notwithstanding any provisions of
the Plan to the contrary, no Employee shall be granted an option to participate
in the Plan:
(a) if, immediately after the grant, such Employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5%
or more of the total combined voting power or value of all classes of
stock of the Company (for purposes of this paragraph, the rules of
Section 424(d) of the Code shall apply in determining stock ownership
of any Employee); or
(b) which permits his rights to purchase stock under all
Employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the stock (determined at the
time such option is granted) for the calendar year in which such option
is granted.
3.4 Commencement of Participation. An eligible Employee may become a
participant by completing an authorization for a payroll deduction on the form
provided by the Company and filing it with the office of the Treasurer of the
Company on or before the date set therefor by the Committee, which date shall be
prior to the Offering Commencement Date for the Offering (as such terms are
defined below). Payroll deductions for a Participant shall commence on the
applicable Offering Commencement Date when his authorization for a payroll
deduction becomes effective and shall end on the Offering Termination Date of
the Offering to which such authorization is applicable unless sooner terminated
by the participant as provided in Article VIII.
ARTICLE IV - OFFERINGS
4.1 Annual Offerings. The Plan will be implemented by annual offerings
of the Company's Common Stock (the "Offerings") beginning on the 1st day of
January in each year, each Offering terminating on December 31 of the same year;
provided, however, that each annual Offering may, in the discretion of the
Committee exercised prior to the commencement thereof, be divided into two
six-month Offerings commencing, respectively, on January 1 and July 1 of such
year and terminating on June 30 of such year and December 31 of such year,
respectively; and provided further, however, there shall be a short Offering
period beginning August 1, 1997 and ending December 31, 1997 ("Short Offering
Period").
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<PAGE>
ARTICLE V - PAYROLL DEDUCTIONS
5.1 Amount of Deduction. At the time a participant files his
authorization for payroll deduction, he shall elect to have deductions made from
his pay on each payday during the time he is a participant in an Offering at the
rate of from 1% to 15%, in whole percent increments, of his Base Pay in effect
at the Offering Commencement Date of such Offering; provided, however, for the
Short Offering Period, a participant may elect to have deductions made from his
pay on each pay day during the time he is a participant in the Offering at the
rate of from 1% to 18% of his Base Pay at the Offering Commencement Date of
August 1, 1997. In the case of a part-time hourly Employee, such Employee's Base
Pay during an Offering shall be determined by multiplying such Employee's hourly
rate of pay in effect on the Offering Commencement Date by the number of
regularly scheduled hours of work for such Employee during such Offering.
5.2 Participant's Account. All payroll deductions made for a
participant shall be credited to his account under the Plan. A participant may
not make any separate cash payment into such account except when on leave of
absence as provided in Section 5.4 of the Plan or as lump sum payment as
provided in Section 5.5.
5.3 Changes in Payroll Deductions. A participant may discontinue his
participation in the Plan as provided in Article VIII, but no other change can
be made during an Offering and, specifically, a participant may not alter the
amount of his payroll deductions or lump sum payment pursuant to Section 5.5 for
that Offering.
5.4 Leave of Absence. If a participant goes on a leave of absence, such
participant shall have the right to elect: (a) to withdraw the balance in his or
her account pursuant to Section 7.2 of the Plan, (b) to discontinue
contributions to the Plan but remain a participant in the Plan, or (c) to remain
a participant in the Plan during such leave of absence, authorizing deductions
to be made from payments by the Company to the participant during such leave of
absence and undertaking to make cash payments to the Plan at the end of each
payroll period to the extent that amounts payable by the Company to such
participant are insufficient to meet such participant's authorized Plan
deductions.
5.5 Lump Sum Payment Option. Notwithstanding the foregoing provisions
of this Article V, a participant may elect prior to the Offering Commencement
Date of any Offering period to pay a fixed sum for shares to be paid as a lump
sum payment to be made prior to Offering Termination Date; provided, however, in
no event, shall such amount exceed the amount that could be deferred for payment
if the maximum rate for payroll deductions were elected by the participant.
ARTICLE VI - GRANTING OF OPTION
6.1 Number of Option Shares. On the Commencement Date of each Offering,
a participating Employee shall be deemed to have been granted an option to
purchase a maximum number of shares of the stock of the Company equal to an
amount determined as follows: an
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amount equal to (a) that percentage of the Employee's Base Pay which he has
elected to have withheld (but not in any case in excess of 15%, except for the
Short Offering Period, in which case not in excess of 18%), multiplied by (b)
the Employee's Base Pay during the period of the Offering (c) divided by 85% of
the lower of the closing price of the stock of the Company on the applicable
Offering Commencement Date or the Offering Termination Date, as provided in
Section 6.2; provided, however, in the case of a lump sum payment pursuant to
Section 5.5, such maximum number of shares shall equal to (a) the total lump sum
payment, divided by (b) above. The market value of the Company's stock shall be
determined as provided in paragraphs (a) and (b) of Section 6.2 of the Plan
below. An Employee's Base Pay during the period of an Offering shall be
determined by multiplying, in the case of a one-year Offering, his nominal
weekly rate of pay (as in effect on the last day prior to the Commencement Date
of the particular Offering) by 52 or the hourly rate by 2,080 or, in the case of
a six-month Offering, by 26 or 1040, or as similarly adjusted for the Short
Offering Period commencing July 21, 1997, as the case may be, provided that, in
the case of a part-time hourly Employee, the Employee's Base Pay during the
period of an Offering shall be determined by multiplying such Employee's hourly
rate by the number of regularly scheduled hours of work for such Employee during
such Offering.
6.2 Option Price. The option price of stock purchased with payroll
deductions made during such annual Offering for a participant therein shall be
the lower of:
(a) 85% of the closing price of the stock on the Offering
Commencement Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System, the NASDAQ SmallCap
Market or any national securities exchange; or
(b) 85% of the closing price of the stock on the Offering
Termination Date or the nearest prior business day on which trading
occurred on the NASDAQ National Market System, the NASDAQ SmallCap
Market or any national securities exchange. If the Common Stock of the
Company is not admitted to trading on any of the aforesaid dates for
which closing prices of the stock are to be determined, then reference
shall be made to the fair market value of the stock on that date, as
determined on such basis as shall be established or specified for the
purpose by the Committee.
ARTICLE VII - EXERCISE OF OPTION
7.1 Automatic Exercise. Unless a participant gives written notice to
the Company as hereinafter provided, his option for the purpose of stock with
payroll deductions made during any Offering will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering, for the purchase of the number of full shares of stock which the
accumulated payroll deductions in his account at that time will purchase at the
applicable option price (but not in excess of the number of shares for which
options have been granted to the Employee pursuant to Section 6.1 of the Plan),
and any excess in his account at that time will be returned to him.
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<PAGE>
7.2 Withdrawal of Account. By written notice to the Treasurer of the
Company, at any time prior to the Offering Termination Date applicable to any
Offering, a participant may elect to withdraw all the accumulated payroll
deductions in his account at such time.
7.3 Fractional Shares. Fractional shares will not be issued under the
Plan. Any accumulated payroll deduction which would have been used to purchase
fractional shares will be returned to the participant's account promptly
following the termination of an Offering, without interest.
7.4 Transferability of Option. During a participant's lifetime, options
held by such Participant shall be exercisable only by that participant.
7.5 Delivery of Stock. As promptly as practicable after the Offering
Termination Date of each Offering, the Company will deliver to each participant,
as appropriate, the stock purchased upon exercise of his option.
ARTICLE VIII - WITHDRAWAL
8.1 In General. As indicated in Section 7.2 of the Plan, a participant
may withdraw payroll deductions or lump sum payments credited to his account
under the Plan at any time by giving written notice to the Treasurer of the
Company. All of the participant's payroll deductions and any lump sum payments
credited to his account will be paid to him promptly after receipt of his notice
withdrawal, and no further payroll deductions will be made from his pay during
such Offering. The Company may, at its option, treat an attempt to borrow by an
Employee on the security of his accumulated payroll deductions or lump sum
payments as an election to withdraw such deductions.
8.2 Effect on Subsequent Participation. A participant's withdrawal from
any Offering will not have any effect on his eligibility to participate in any
succeeding Offering or in any similar plan which may hereafter be adopted by the
Company.
8.3 Termination Of Employment. Upon termination of the participant's
employment for any reason, including retirement (but excluding death while in
the employ of the Company or continuation of a leave of absence for a period
beyond 90 days), the payroll deductions or lump sum payments credited to his
account will be returned to him, or, in the case of his death subsequent to the
termination of his employment, to the person or persons entitled thereto under
Section 12.1 of the Plan.
8.4 Termination of Employment Due to Death. Upon termination of the
participant's employment because of his death, his beneficiary (as defined in
Section 12.1 of the Plan) shall have the right to elect, by written notice given
to the Treasurer of the Company prior to the earlier of the Offering Termination
Date or the expiration of a period of sixty (60) days commencing with the date
of the death of the participant, either:
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(a) to withdraw all of the payroll deductions or lump sum
payments credited to the participant's account under the Plan, or
(b) to exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares of
stock which the accumulated payroll deductions or lump sum payments in
the participant's account at the date of the participant's death will
purchase at the applicable option price, and any excess in such account
will be returned to said beneficiary, without interest.
In the event that no such written notice of election shall be duly
received by the office of the Treasurer of the Company, the beneficiary shall
automatically be deemed to have elected, pursuant to paragraph (b), to exercise
the participant's option.
8.5 Leave of Absence. A participant on leave of absence shall, subject
to the election made by such participant pursuant to Section 5.4 of the Plan,
continue to be a participant in the Plan so long as such participant is on
continuous leave of absence. A Participant who has been on leave of absence for
more than 90 days and who therefore is not an Employee for the purpose of the
Plan shall not be entitled to participate in any Offering commencing after the
90th day of such leave of absence. Notwithstanding any other provisions of the
Plan, unless a participant on leave of absence returns to regular full-time or
part-time employment with the Company at the earlier of: (a) the termination of
such leave of absence or (b) three months from the 90th day of such leave of
absence, such participant's participation in the Plan shall terminate on
whichever of such dates first occurs.
ARTICLE IX - INTEREST
9.1 Payment of Interest. No interest will be paid or allowed on any
money paid into the Plan or credited to the account of any participant Employee;
provided, however, that interest shall be paid on any and all money which is
distributed to an Employee or his beneficiary pursuant to the provisions of
Sections 7.2, 8.1, 8.3, 8.4 and 10.1 of the Plan. Such distributions shall bear
simple interest during the period from the date of withholding or lump sum
payments to the date of return at the regular passbook savings account rates per
annum in effect at Bank One, Arizona, during the applicable Offering period or,
if such rates are not published or otherwise available for such purpose, at the
regular passbook savings account rates per annum in effect during such period at
another major commercial bank in Phoenix, Arizona selected by the Committee.
Where the amount returned represents an excess amount in an Employee's account
after such account has been applied to the purchase of stock, the Employee's
account shall be deemed to have been applied first toward purchase of stock
under the Plan, so that interest shall be paid on the last withholdings during
the period which results in the excess amount.
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ARTICLE X - STOCK
10.1 Maximum Shares. The maximum number of shares which shall be issued
under the Plan, subject to adjustment upon changes in capitalization of the
Company as provided in Section 12.4 of the Plan shall be 2,000,000 shares to be
made available for such Offerings as the Company elects. If the total number of
shares for which options are exercised on any Offering Termination Date in
accordance with Article VI exceeds the maximum number of shares for the
applicable Offering, the Company shall make a pro rata allocation of the shares
available for delivery and distribution in an nearly a uniform manner as shall
be practicable and as it shall determine to be equitable, and the balance of
payroll deductions or lump sum payments credited to the account of each
participant under the Plan shall be returned to him as promptly as possible.
10.2 Participant's Interest in Option Stock. The participant will have
no interest in stock covered by his option until such option has been exercised.
10.3 Registration of Stock. Stock to be delivered to a participant
under the Plan will be registered in the name of the participant, or, if the
participant so directs by written notice to the Treasurer of the Company prior
to the Offering Termination Date applicable thereto, in the names of the
participant and one such other person as may be designated by the participant,
as joint tenants with rights of survivorship or as tenants by the entireties, to
the extent permitted by applicable law.
10.4 Restrictions on Exercise. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall have
been duly listed, upon official notice of issuance, upon a stock exchange, and
that either:
(a) a Registration Statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is
his intention to purchase the shares for investment and not for resale
or distribution.
ARTICLE XI - ADMINISTRATION
11.1 Appointment of Committee. The Plan shall be administered by a
Committee appointed by the Board to administer the Plan at any time or from time
to time. If the Company has a class of equity securities registered under
Section 12 of the Exchange Act, the Plan shall be administered by a Committee
appointed by the Board in accordance with Rule 16b-3 of the Exchange Act ("Rule
16b-3"). Any Committee which has been delegated the duty of administering the
Plan by the Board shall be composed of two or more persons each of whom (i) is a
non-Employee Director and (ii) is an "outside director" as that term is used in
ss.162(m)(4) of the Code. To the extent reasonable and practicable, the Plan
shall be consistent with the
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<PAGE>
provisions of Rule 16b-3 to the degree necessary to ensure that transactions
authorized pursuant to the Plan are exempt from the operation of Section 16(b)
of the Exchange Act. No member of the Committee shall be eligible to purchase
stock under the Plan.
11.2 Authority of Committee. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to interpret
and construe any and all provisions of the Plan, to adopt rules and regulations
for administering the Plan, and to make all other determinations deemed
necessary or advisable for administering the Plan. The Committee's determination
on the foregoing matters shall be conclusive.
11.3 Rules Governing the Administration of the Committee. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee in accordance with the terms of Section 11.1.
The Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable and may hold
telephonic meetings. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. The
Committee may correct any defect or omission or reconcile any inconsistency in
the Plan, in the manner and to the extent it shall deem desirable. Any decision
or determination reduced to writing and signed by a majority of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
ARTICLE XII - MISCELLANEOUS
12.1 Designation of Beneficiary. A participant may file a written
designation of a beneficiary who is to receive any stock and/or cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the Treasurer of the Company. Upon the death of a participant
and upon receipt by the Company of proof of identity and existence at the
participant's death of a beneficiary validly designated by him under the Plan,
the Company shall deliver such stock and/or cash to such beneficiary. In the
event of the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such stock and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such stock and/or cash to the spouse or to any
one or more dependents of the participant as the Company may designate. No
beneficiary shall, prior to the death of the participant by whom he had been
designated, acquire any interest in the stock or cash credited to the
participant under the Plan.
12.2 Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge
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<PAGE>
or other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 7.2 of the
Plan.
12.3 Use of Funds. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose and
the Company shall not be obligated to segregate such payroll deductions.
12.4 Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the outstanding
shares of Common Stock of the Company have increased, decreased, changed into,
or been exchanged for a different number or kind of shares or securities of the
Company through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the number and/or kind
of shares which are subject to purchase under outstanding options and on the
option exercise price or prices applicable to such outstanding options. In
addition, in any such event, the number and/or kind of shares which may be
offered in the offerings described in Article IV hereof shall also be
proportionately adjusted. No adjustments shall be made for stock dividends. For
the purposes of this Paragraph, any distribution of shares to shareholders in an
amount aggregating 20% or more of the outstanding shares shall be deemed a stock
split and any distributions of shares aggregating less than 20% of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.4 shall thereafter be
applicable, as nearly as reasonably may be determined, in relation to the said
cash, securities and/or property as to which such holder of such option might
thereafter be entitled to receive.
12.5 Amendment and Termination. The Board of Directors shall have
complete power and authority to terminate or amend the Plan; provided, however,
that the Board of Directors shall not, without the approval of the stockholders
of the Corporation (a) increase the maximum number of shares which may be issued
under any Offering (except pursuant to Section 12.4 of the Plan); (b) amend the
requirements as to the class of Employees eligible to purchase stock under the
Plan or permit the members of the Committee to purchase stock under the Plan; or
(c) materially increase the benefits which may accrue to participants under the
Plan. No termination, modification, or amendment of the Plan may, without the
consent of an Employee then having an
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<PAGE>
option under the Plan to purchase stock, adversely affect the rights of such
Employee under such option.
12.6 Effective Date. The Plan shall become effective as of July 21,
1997, subject to approval by the holders of the majority of the Common Stock
present and represented at a special or annual meeting of the shareholders held
on or before July 20, 1998. If the Plan is not so approved, the Plan shall not
become effective.
12.7 No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any Employee or class of employees to
purchase any shares under the Plan, or create in any Employee or class of
employees any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an Employee's employment at any time.
12.8 Effect of Plan. The provisions of the Plan shall, in accordance
with its terms, be binding upon, and inure to the benefit of, all successors of
each Employee participating in the Plan, including, without limitation, such
Employee's estate and the executors, administrators or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
12.9 Governing Law. The law of the State of Arizona will govern all
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
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<PAGE>
PROXY PROXY
- ----- -----
INTERNATIONAL FIBERCOM, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S
BOARD OF DIRECTORS FOR THE 1998 ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD JULY 10, 1998
The undersigned hereby appoints Joseph P. Kealy, Terry W. Beiriger,
Jerry A. Kleven and V. Thompson Brown, Jr. and each of them, with full power of
substitution, as proxies, to represent the undersigned at the 1998 Annual
Meeting of Shareholders of International FiberCom, Inc. ("Company") to be held
at the Mesa Hilton Pavilion, 1011 West Holmes Avenue, Mesa, Arizona 85202 on
July 10, 1998 at 7:30 a.m., Mountain Standard Time, and at any adjournment
thereof, and to vote all shares of the Company's Common Stock standing in the
name of the undersigned on the matters set forth below and upon any other
matters that may properly come before the meeting or any adjournment thereof as
follows:
ITEM NO. 1 RATIFICATION OF INDEPENDENT ACCOUNTANTS
---------------------------------------
___ VOTE FOR RATIFICATION of BDO SEIDMAN as the
independent public accountants for the Company's
fiscal year 1998
___ VOTE AGAINST RATIFICATION
___ ABSTAIN
ITEM NO. 2 ELECTION OF FIVE DIRECTORS
--------------------------
Joseph P. Kealy
Jerry A. Kleven
V. Thompson Brown, Jr.
John F. Kealy
Richard J. Seminoff
___ VOTE FOR all nominees listed above
___ VOTE FOR all nominees listed above, except
___________________________
___ CUMULATIVE VOTES for one or more nominees as follows:
Joseph P. Kealy ____________________________________;
Jerry A. Kleven ____________________________________;
V. Thompson Brown, Jr. _____________________________;
John F. Kealy __________________________________; and
Richard J. Seminoff ________________________________.
___ WITHHOLD AUTHORITY to vote for all nominees listed
above
<PAGE>
ITEM NO. 3 APPROVAL OF THE AMENDMENT TO THE 1997 STOCK OPTION
-----------------------------------------------------
PLAN
----
___ VOTE FOR approval of the Amendment to the 1997 Stock
Option Plan
___ VOTE AGAINST approval of the Amendment to the 1997
Stock Option Plan
___ ABSTAIN
ITEM NO. 4 APPROVE THE ADOPTION OF THE EMPLOYEE STOCK PURCHASE
-----------------------------------------------------
PLAN
----
___ VOTE FOR adoption of the Employee Stock Purchase Plan
___ VOTE AGAINST adoption of the employee Stock Purchase
Plan
___ ABSTAIN
The shares represented by this Proxy will be voted at the meeting in
accordance with the specifications appearing above. THE SHARES WILL BE VOTED
"FOR" ANY PROPOSAL FOR WHICH NO CONTRARY SPECIFICATION IS MADE.
Dated:_____________, 1998 Signed _________________________________
_________________________________
(Print Name)
Dated:_____________, 1998 Signed _________________________________
(Co-owner, if any)
_________________________________
(Print Name)
Please sign exactly as the name
appears on the stock certificate.
When signing as attorney,
executor, administrator, trustee,
guardian, etc., give full title
as such. If stock is held
jointly, each joint owner should
sign.
PLEASE DATE, SIGN AND RETURN PROMPTLY
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