SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
INFODATA SYSTEMS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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INFODATA SYSTEMS INC.
Corporate Headquarters
12150 Monument Drive
Fairfax, Virginia 22033
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NOTICE OF THE 2001 ANNUAL MEETING OF SHAREHOLDERS
August 15, 2001
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The Annual Meeting of the Shareholders of Infodata Systems Inc. (the "Company")
will be held at the Company's Corporate Headquarters on Wednesday, August 15,
2001, at 9:00 a.m. for the following purposes:
1. To elect seven directors to serve until their respective successors are
elected and qualified;
2. To approve an amendment to the Company's 1995 Stock Option Plan that would
reserve 250,000 additional shares of the Company's common stock, par value
$.03 per share (the "Common Stock"), for issuance thereunder;
3. To approve an amendment to the Company's 1995 Stock Option Plan that would
annually reserve additional shares of the Company's Common Stock equal to
2% of the total authorized common shares, for issuance thereunder;
4. To approve an amendment to the Company's 1997 Employee Stock Purchase Plan
that would reserve 200,000 additional shares of the Company's Common Stock
for issuance thereunder; and
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Shareholders of record as of the close of business on June 8, 2001, are entitled
to notice of and to vote at the meeting. You are requested to sign, date, and
return the accompanying proxy card in the enclosed, self-addressed envelope. You
may withdraw your Proxy at the meeting if you are present and desire to vote
your shares in person.
By order of the Board of Directors
Curtis D. Carlson, Secretary
Dated: Fairfax, Virginia
July 30, 2001
YOUR VOTE IS IMPORTANT, PLEASE RETURN YOUR SIGNED PROXY PROMPTLY.
INFODATA SYSTEMS INC.
PROXY STATEMENT
General Information
The enclosed Proxy is solicited by the Company's Board of Directors. It
may be revoked in writing at any time by written notice delivered to the
Secretary of the Company before it is voted or it may be withdrawn at the
meeting and voted in person. If not revoked or withdrawn, the shares represented
by the Proxy will be voted in the manner directed therein. If a choice is not
specified, the Proxy will be voted FOR the election of the Board of Directors'
nominees, FOR each of the two proposed amendments to the Company's 1995 Stock
Option Plan, and FOR the proposed amendment to the Company's 1997 Employee Stock
Purchase Plan.
A majority of the vote of shareholders present in person or by proxy is
required for the election of the nominees to the Board of Directors and to
approve the proposed amendments to the 1995 Stock Option Plan and the 1997
Employee Stock Purchase Plan. On June 8, 2001, the record date for eligibility
to vote, the Company had 4,742,701 outstanding shares of Common Stock, par value
$.03 per share. Each share of Common Stock outstanding is entitled to one vote.
No other class of securities is issued or outstanding.
A majority of the votes entitled to be cast on matters to be considered
at the meeting constitutes a quorum. If a share is represented for any purpose
at the meeting, it is deemed to be present for quorum purposes for the remainder
of the meeting or adjournments thereof. Abstentions and broker non-votes (where
a nominee holding shares for a beneficial owner has not received voting
instructions from the beneficial owner with respect to a particular matter and
such nominee does not possess or choose to exercise discretionary authority with
respect thereto) are counted only for purposes of determining whether a quorum
is present.
Votes cast by proxy or in person at the annual meeting will be
tabulated by the Inspectors of Election appointed by the Company for the
meeting. The number of shares represented at the meeting in person or by proxy
will determine whether or not a quorum is present. The Inspectors of Election
will treat abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote by the Inspectors of Election with
respect to that matter.
Board Committees
The Board of Directors is responsible for the overall affairs of the
Company and held five meetings either in person or by telephone during the year
ended December 31, 2000. To assist it in carrying out this responsibility, the
Board has delegated certain authority to several committees.
The Executive Committee members are Richard T. Bueschel, Alan S.
Fisher, Christine Hughes, Robert M. Leopold and Steven M. Samowich. The
Executive Committee may exercise any of the powers and perform any of the duties
of the Board of Directors, subject to the provisions of the law and certain
limits imposed by the Board of Directors. During the year ended December 31,
2000, either in-person or telephonic meetings of the Executive Committee were
held on the average of three times per month.
The Audit Committee members, Messrs. Leopold, Laurence C. Glazer and
Millard H. Pryor, Jr., are assigned responsibility for recommending the
accounting firm to be engaged as independent auditors; consulting with the
independent auditors regarding the adequacy of internal accounting controls; and
reviewing the scope of the audit and the results of the audit examination.
During 2000, the Audit Committee held three meetings.
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The Nominating Committee held one meeting in 2000. The Committee
reviews and makes recommendations to the Board of Directors regarding the
selection of nominees to serve as committee members of the Board as well as
directors of the Company. Messrs. Bueschel, Leopold and Isaac M. Pollak are
members of the Nominating Committee.
The Compensation & Stock Option Committee held one meeting in 2000. The
Compensation & Stock Option Committee reviews and makes recommendations to the
Board of Directors regarding the compensation and benefits policies and
practices of the Company. The Committee is also assigned responsibility for
reviewing and approving the compensation of officers of the Company. Messrs.
Glazer, Pollak and Pryor are the members of the Compensation Committee.
During 2000, each director attended at least 75% of the aggregate of
the total meetings of the Board of Directors and the Committees of the Board on
which he served.
ELECTION OF DIRECTORS
Seven directors are to be elected by the shareholders, each director so
elected to hold office until the next Annual Meeting of Shareholders and until
his successor is elected and qualified. The persons named as proxies in the
enclosed form intend to cast all votes for the election of the seven nominees of
the Board of Directors listed below, unless the proxy instructs otherwise. In
the event that any of the seven nominees should not continue to be available for
election, discretionary authority will be exercised to seek a substitute. No
circumstances are now known which would render any nominee unavailable.
Information About Nominees
The ages, principal occupations, and employment during the past five
years for each nominee for director are set forth below:
Richard T. Bueschel Age 68 Director since 1992
Mr. Bueschel has been the Chairman of the Board of Directors and the
Chairman of the Executive Committee of the Company since January 1993 and was
acting Chief Executive Officer of the Company from April 1997 to November 1997,
and again from July 1998 through October 1998. Since 1988, he has been the Chief
Executive Officer of Northern Equities, Inc., an investment and management firm.
Mr. Bueschel is Chairman of the Board of Communications Management Systems,
Inc., a developer of telco back-office management software systems; a director
of Buckaroo.com, Inc., an online exchange for dynamic random access memory
(DRAM); and a director of Study.Net Corporation, a provider of internet-based
software applications.
Alan S. Fisher Age 40 Director since 1997
Mr. Fisher has been a director of the Company since July 1997 and its Vice
Chairman since July 1998. Mr. Fisher is presently a Managing Director of iMinds
Ventures, LLC, a venture capital firm. In January 2000, Mr. Fisher co-founded
Wingspring, Inc., a venture capital firm, and has been a general partner since
that time. In July 1994, he co-founded ONSALE, Inc. (now Egghead.com), a company
engaged in online retail. From July 1994 to December 1999, Mr. Fisher was the
Vice President of Development & Operations, the Chief Technology Officer, and
director of ONSALE, Inc. Mr. Fisher was a co-founder and, from 1988 to July
1997, President and Chairman of Software Partners, Inc., a software development
company and parent of Ambia Corporation. Mr. Fisher is a director of
Buckaroo.com, Inc., an online exchange for DRAM; and RedKnife, Inc., an
enterprise software company specializing in trading partner integration. From
1988 to February 2001, he was a director of Claria Corporation, an online hiring
partner for technology start-ups.
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Christine Hughes Age 54 Director since 2000
Ms. Hughes has been a director of the Company since August 2000. Since
1999, Ms. Hughes has been the Chairman of Highway 1, a 501(c)(3) non-profit
organization that educates the government on the potential of information
technology. From 1996 to 1999, Ms. Hughes was the Senior Vice President of
Marketing and Business Development for Secure Computing Corporation, a provider
of e-commerce security solutions. Ms. Hughes currently serves as a director of
Interactive Software Systems, a private workforce management software company;
and is on the Advisory Board of Whale Communications, a private security
software company.
Robert M. Leopold Age 75 Director since 1992
Mr. Leopold has been a director of the Company since 1992. Since 1977,
Mr. Leopold has been President of Huguenot Associates, Inc., a financial and
business consulting firm. Currently, he is Chairman of the Board of
International Asset Management Group, Inc., a director of Standard Security Life
Insurance Company of New York, a wholly owned subsidiary of Independence Holding
Company, Inc. From 1988 to 1997, he was a director of Windsor Capital.
Isaac M. Pollak Age 50 Director since 1993
Mr. Pollak has been a director of the Company since 1993. Since 1980,
Mr. Pollak has been President and Chief Executive Officer of LGP Ltd., a
developer and marketer of promotional items.
Millard H. Pryor, Jr. Age 68 Director since 1992
Mr. Pryor has been a director of the Company since 1992. He has been
Managing Director of Pryor & Clark Company, an investment holding company, since
September 1970. He is a Director of CompuDyne Corporation, a manufacturing and
engineering firm; Hoosier Magnetics, Inc., a producer of hard ferrite magnetic
powders; and The Hartford Funds, an investment company.
Steven M. Samowich Age 50 Director since 1998
Mr. Samowich has been the President, Chief Executive Officer, and a
director of the Company since November 1998. From January 1997 to October 1998,
he served as Vice President and General Manager of the Time Data Systems
Division of Simplex Time Recorder Company. From December 1995 through 1996, Mr.
Samowich was the North American General Manager of Sales, Marketing & Services
for Visix Software and from 1984 to 1995 he was with Computervision where he
served as its National Sales Manager from 1993 to 1995.
PROPOSALS NO. 2 & 3 - AMENDMENTS TO THE 1995 STOCK OPTION PLAN
The shareholders of the Company are being asked to approve two
amendments to the Company's 1995 Stock Option Plan (the "1995 Plan" or the
"Plan"). Proposal 2 asks the shareholders to approve an increase in the number
of shares of Common Stock reserved for issuance under the Plan from 2,011,000
shares to 2,261,000 shares. Proposal 3 asks the shareholders to approve an
annual increase in the number of shares of Common Stock reserved for issuance
under the Plan equal to 2% of the total number of authorized shares of Common
Stock beginning in 2002. The demand for highly qualified technical, sales, and
marketing professionals in high-technology industries currently outpaces the
supply. Stock options are an integral part of the compensation package needed to
attract and retain these individuals.
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The following description of the 1995 Plan is qualified in its entirety
by reference to the 1995 Plan, a copy of which is attached as Exhibit A to this
proxy statement.
Background
In 1995, the Board of Directors adopted and the Company's shareholders
approved the 1995 Plan, which (i) consolidated the Company's 1991 Incentive
Stock Option Plan and 1992 Non-Qualified Stock Option Plan and (ii) provided for
the automatic grant of stock options to the members of the Compensation
Committee of the Company's Board of Directors. A total of 2,011,000 shares of
Common Stock have been authorized for issuance under options granted pursuant to
the 1995 Plan at exercise prices which are not less than 100% of the fair market
value of the underlying shares on the date of grant of the option. As of June 8,
2001, there were 180,570 shares available for the granting of additional options
in the future.
The purpose of the 1995 Plan is to attract, retain and motivate
selected employees, officers, consultants and directors of the Company, as well
as officers and selected employees of any subsidiary thereof, by affording them
an opportunity to acquire a proprietary interest in the Company and to thereby
create in such persons an increased interest and a greater concern for the
welfare of the Company. The approval of the amendments to the Plan will enable
the Company to continue offering valuable, long-term incentives to existing and
future personnel and representatives of the Company in addition to enhancing our
ability to attract and retain high-quality technical, sales, and marketing
employees in a fiercely competitive job market.
The Plan is unfunded, is not a "qualified plan" within the meaning of
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code") and is
not subject to the provisions of the Employee Retirement Income Security Act of
1974.
Plan Administration
The 1995 Plan is administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), which consists of not less than
two members of the Board of Directors who qualify as "non-employee directors" of
the Company within the meaning of Rule 16b-3 promulgated by the Securities and
Exchange Commission pursuant to Section 16(b) of the Securities Exchange Act of
1934 (the "Exchange Act"). The present members of the Committee are Laurence C.
Glazer, Isaac M. Pollak and Millard H. Pryor, Jr. The Committee administers the
1995 Plan so as to conform with the provisions of Rule 16b-3.
Authorized Shares
Subject to possible adjustment in the event of a recapitalization,
stock split or similar transaction, a total of 2,011,000 shares of Common Stock
may be issued upon the exercise of options granted under the 1995 Plan. As of
June 8, 2001, there were 180,570 shares available for the granting of additional
options in the future. Proposal 2 calls for the approval by the shareholders of
an additional 250,000 shares of Common Stock to be authorized and reserved for
issuance under the 1995 Plan.
Proposal 3 calls for the approval by the shareholders of an annual
increase in the number of shares of Common Stock authorized and reserved for
issuance under the Plan equal to 2% of the total number of authorized shares of
Common Stock (currently 240,000 shares) beginning on the date of the 2002 Annual
Meeting and continuing each year on the date of each subsequent Annual Meeting
of Shareholders of the Company.
Options to purchase an aggregate of 4,229,445 shares of Common Stock
under the 1995 Plan have been issued in the past, of which options to purchase
381,329 shares have been exercised and options to purchase 2,398,902 shares have
either terminated or lapsed. As of June 8, 2001, options to purchase a total of
1,449,214
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shares of Common Stock under the 1995 Plan, at prices ranging from $0.5625 to
$11.00 per share, were outstanding.
The 1995 Plan provides that if any shares underlying outstanding
options cease to be subject to purchase thereunder due to expiration or
termination of the options, such shares thereafter will be available to underlie
newly granted options under the 1995 Plan.
Eligibility and Participation
Options may be granted under the 1995 Plan to four categories of
optionees: (i) certain selected employees and officers of the Company or any
subsidiary thereof who are regularly employed on a salaried basis (the
"Officer/Employee Participants"); (ii) directors of the Company, other than
members of the Committee, who are not officers or employees of the Company (the
"Director Participants"); (iii) consultants or advisors to the Company, provided
that the services rendered by such persons are not in connection with the offer
or sale of securities in a capital-raising transaction (the "Consultant
Participants"); and (iv) members of the Committee (the "Committee
Participants").
The Committee has the authority and discretion to determine the
Officer/Employee Participants, the Director Participants and the Consultant
Participants and the terms of the options to be granted under the 1995 Plan to
such persons. Those three categories of optionees are hereinafter referred to as
the "Grant Participants." The Committee has no authority or discretion under the
1995 Plan with respect to options granted to Committee Participants, the terms
of which are fixed under the provisions of the 1995 Plan.
Options for Grant Participants
Options granted to Grant Participants may either be incentive stock
options within the meaning of Section 422 of the Code ("Incentive Options") or
options that do not meet the requirements for Incentive Options ("Non-Qualified
Options"), provided that Incentive Options may be granted only to
Officer/Employee Participants. Grant Participants receiving options may not sell
or otherwise dispose of any Common Stock acquired upon the exercise of such
options for a period of six months following the date of grant of the options.
The terms of each option are set forth in a stock option agreement
entered into by the Company with the optionee. The exercise price will be not
less than 100% of the fair market value per share of the Common Stock on the
date of grant; provided, however, that in the case of an Incentive Option
granted to a person who owns more than 10% of the Company's outstanding shares,
the exercise price will be not less than 110% of the fair market value per share
on the date of grant. The fair market value of the Common Stock is the average
of the high and low sale prices of the Common Stock on the date of such
determination or, if there are no sales on such date, the average reported
closing bid and asked prices for a share of Common Stock on such date. If the
shares are not listed on a national securities exchange or quoted by NASDAQ, the
fair market value of the Common Stock will be determined in good faith by the
Committee.
The exercise price of an option is payable upon the exercise thereof
and may be made (i) in cash; (ii) by a commitment by a broker-dealer to pay to
the Company that portion of any sale proceeds receivable by the optionee upon
exercise of the option and sale of the underlying shares; or (iii) in the
discretion of the Committee, by delivery to the Company of shares of Common
Stock owned by the optionee and valued as of the business day immediately
preceding the date of exercise of the option.
Options vest and become exercisable upon the dates and in the amounts
set forth in the particular stock option agreement between the Company and the
optionee. Options expire not later than ten years from the date of grant of the
option under the 1995 Plan.
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Except as otherwise provided below, in the event of the death or
termination of employment due to disability of an optionee, the option vests in
full and becomes immediately exercisable and remains exercisable for one year
after the date of such death or termination of employment (but not after the
expiration or termination of the option); provided, however, that in the event
an Officer/Employee Participant retires, the options held by such optionee vest
in full and become immediately exercisable and remain exercisable for three
months after such termination of employment (but not after the expiration or
termination of the option). If the employment of an Officer/Employee Participant
is terminated for any reason other than death, disability or retirement, such
optionee has the right to exercise the option, to the extent it is then
exercisable, for 30 days after such termination of employment (but not after the
expiration or termination of the option). In the event a Director Participant
ceases to be a director of the Company, such optionee has the right to exercise
the option, to the extent it is exercisable, for 90 days after the date of such
cessation of directorship (but not after the expiration or termination of the
option).
Options for Compensation Committee Members
Under the 1995 Plan, a Non-Qualified Option to purchase 4,666 shares of
Common Stock will be granted to each Committee Participant (i) on the date that
such director commences service on the Compensation Committee and (ii) on the
date of any subsequent Annual Meeting of Shareholders of the Company at which
the director is elected and appointed or reappointed to serve on the Committee.
Such grants occur automatically under the 1995 Plan and the options become fully
exercisable immediately upon grant as to all of the shares covered thereby.
Committee Participants may not sell or otherwise dispose of any Common Stock
acquired upon the exercise of an option for a period of six months following the
date of grant.
The exercise price of options granted to Committee Participants will be
equal to the fair market value per share of the Common Stock as of the date the
option is granted. The exercise price may be paid by any of the methods
described above with respect to options exercised by Grant Participants. Options
granted to Committee Participants expire five years from the date of grant;
provided, however, that such options will earlier expire 90 days after the
Committee Participant ceases to be a director of the Company. In the event of
the death of any Committee Participant, however, the estate of the Committee
Participant will have the right for one year after the date of death (but not
after the expiration or termination of the option) to exercise such Committee
Participant's options.
Options for Employees and Consultants of AMBIA Corporation
On July 22, 1997, the Company acquired 100% of the issued and
outstanding capital stock of Ambia Corporation, a California corporation
("Ambia"), through the issuance of 400,000 shares of the Company's common stock,
par value $.03 per share (the "Common Stock"), to Ambia's shareholders, Alan
Fisher and Razi Mohiuddin (collectively, the "Ambia Shareholders"). The
acquisition was accomplished by means of a merger (the "Merger") of Ambia
Acquisition Corporation, a Delaware corporation ("Acquisition") and wholly-owned
subsidiary of the Company, with and into Ambia, pursuant to the terms of the
Agreement of Merger and Plan of Reorganization, dated as of July 22, 1997 (the
"Merger Agreement"), by and among the Company, Ambia, the Ambia Shareholders,
Software Partners, Inc., a Delaware corporation ("SPI"), and Acquisition.
As a result of the Merger, all of the issued and outstanding shares of
Ambia were exchanged for and converted into 400,000 shares of the Company's
Common Stock, of which one share was paid to the Ambia Shareholders in cash in
lieu of a fractional share, 339,999 shares were delivered to the Shareholders
and 60,000 shares were delivered to an escrow agent. In addition, each
outstanding option ("Ambia Stock Option") to purchase shares of Ambia common
stock under the former Ambia Equity Incentive Plan (as defined in the Merger
Agreement) was converted into an option ("Replacement Option") to acquire, on
the same terms and
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conditions as were applicable under such Ambia Stock Option, 4/45 of a share of
Common Stock of the Company, at an exercise price of $1.69 per share with the
same expiration date as each such Ambia Stock Option. Replacement Options to
purchase a total of 34,665 shares of the Company's Common Stock were granted to
replace the previously granted Ambia Stock Options. Pursuant to the Merger
Agreement, each Replacement Option is to be treated as a non-qualified stock
option under the Code and, if possible, as granted pursuant to the terms and
conditions of the 1995 Plan and the Ambia Stock Option agreement entered into by
Ambia and the participant in the Ambia Equity Incentive Plan. The 34,665 shares
of the Company's Common Stock underlying the outstanding Replacement Options are
not included in the 2,011,000 shares presently authorized (or 2,261,000 shares
proposed to be authorized) under the Plan.
Change of Control
The 1995 Plan provides that upon the occurrence of an event
constituting a "change of control," all options granted under the 1995 Plan
immediately become fully exercisable. A "change of control" will be deemed to
have occurred under the 1995 Plan if any person or organization becomes the
beneficial owner, directly or indirectly, of either (i) a majority of the
Company's outstanding shares of Common Stock or (ii) securities of the Company
representing a majority of the combined voting power of the Company's then
outstanding voting securities.
Non-transferability
Options granted under the 1995 Plan may not be assigned or transferred
by an optionee except by will or the laws of descent and distribution or, except
as to Incentive Options, pursuant to a qualified domestic relations order as
defined in the Code. During the lifetime of the optionee, options granted under
the 1995 Plan will be exercisable only by the optionee or the optionee's
guardian or legal representative.
Amendment of the 1995 Plan
The Board of Directors of the Company has the right to amend, modify,
suspend or terminate the 1995 Plan at any time, provided that no amendment may
be made without shareholder approval to (i) increase the number of shares of
Common Stock which may be issued pursuant to the 1995 Plan, (ii) materially
increase the benefits accruing to participants under the 1995 Plan, (iii)
decrease the minimum exercise price in the case of an Incentive Option or (iv)
materially modify the provisions of the 1995 Plan relating to eligibility to
receive options. The 1995 Plan provides that no amendment, modification,
suspension or termination of the 1995 Plan may, without the consent of the
optionee, adversely alter or impair any previously granted option.
Federal Income Tax Treatment
The following is a brief description of the federal income tax
treatment which generally applies to options granted under the 1995 Plan, based
on federal income tax laws in effect on the date hereof.
Incentive Stock Options
Pursuant to the 1995 Plan, Officer/Employee Participants may be granted
options which are intended to qualify as Incentive Options under the provisions
of Section 422 of the Code. Generally, the optionee is not taxed and the Company
is not entitled to a deduction on the grant or the exercise of an Incentive
Option. However, if the optionee disposes of the shares acquired upon the
exercise of an Incentive Option at any time within (i) one year after the date
the shares are transferred to the optionee pursuant to the exercise of such
Incentive Option or (ii) two years after the date of grant of such Incentive
Option (a "disqualifying disposition"), the optionee will recognize ordinary
income in an amount equal to the excess, if any, of the lesser of the amount
realized on the date of such disposition or the fair market value of the
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Company's stock on the date of exercise, over the exercise price of such
Incentive Option (with any remaining gain being taxed as a capital gain). In
such an event, the Company generally will be entitled to a deduction in an
amount equal to the amount of ordinary income recognized by such optionee. If
the optionee does not dispose of the option shares within the above described
time limits, there will be no ordinary income recognized upon any subsequent
sale or other disposition of the shares, but rather capital gain or loss will be
recognized in an amount equal to the difference between the amount realized on
the sale or disposition and the exercise price. The Company will not be entitled
to any deduction in this event. Finally, exercise of an Incentive Option may
result in alternative minimum tax liability for the optionee. Any excess of the
fair market value of the stock on the date the Incentive Option is exercised
over the option exercise price will be included in the calculation of the
optionee's alternative minimum taxable income, which may subject the optionee to
the alternative minimum tax. The portion of any such alternative minimum tax
attributable to the exercise of an Incentive Option can be credited against the
optionee's regular tax liability in later years to the extent that in any such
year the optionee's regular tax liability exceeds the alternative minimum tax.
Non-Qualified Stock Options
The grant of an option which does not qualify for treatment as an
Incentive Option generally is not a taxable event for the optionee. However,
upon exercise, the optionee generally will recognize ordinary income in an
amount equal to the excess of the fair market value of the stock acquired upon
exercise (determined as of the date of exercise) over the exercise price of such
option, and the Company will generally be entitled to a deduction equal to such
amount. Upon the later disposition of the option shares acquired upon exercise,
appreciation (or depreciation) after the date of exercise will be treated as
capital gain (or loss) to the optionee and will have no tax effect as to the
Company.
Special Rules for Section 16 Insiders
If a Non-Qualified Option has been held for less than six months at the
time of exercise, and the exercise price of the option is equal to or less than
the fair market value of the acquired shares at the time of exercise, an
officer, director or more than 10% shareholder of the Company subject to the
provisions of Section 16 of the Exchange Act (an "Insider") will not be taxed
until the earlier of (i) the expiration of the six-month holding period
beginning on the date of grant of the Non-Qualified Option, or (ii) the sale of
the acquired shares, at which time the Insider will recognize ordinary income in
an amount equal to the excess, if any, of the then fair market value of the
acquired shares over the exercise price of the Non-Qualified Option.
Alternatively, pursuant to Section 83(b) of the Code, the Insider may file a
written election with the IRS within 30 days after exercise of the Non-Qualified
Option to recognize ordinary income equal to the excess, if any, of the fair
market value of the Common Stock on the date of exercise over the exercise
price. The capital gains holding period for the acquired shares will commence
immediately following the date on which the optionee is required to recognize
ordinary income, and any appreciation (or depreciation) realized following such
date will be taxed as a capital gain (or loss).
Section 162(m)
Section 162(m) of the Code precludes a public corporation from taking
an income tax deduction for certain compensation in excess of $1 million paid to
its chief executive officer or any of its four other highest paid executive
officers. This limitation does not apply to certain performance-based
compensation. Based upon the Code and the regulations under Section 162(m), the
Company believes that any compensation expense generated upon the exercise of
stock options granted under the Plan will be deductible by the Company for
federal income tax purposes to the extent the options are tied to
performance-based criteria.
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Plan Benefits
The table below shows the number of shares underlying stock options
that were granted during the following periods to the following individuals and
groups under the 1995 Plan:
Year Ended December 31, Year Ended December 31,
----------------------- -----------------------
2000 1999
---- ----
Name and Position/Group
Steven M. Samowich, 20,000 --
President, Chief
Executive Officer and
Director
Harry Kaplowitz, 4,549 42,791(3)
Executive Vice President
Curtis D. Carlson, 8,500 5,751(4)
Secretary
Gary I. Gordon, 8,750 1,000
Chief Accounting Officer
Current directors who 149,665(1) 18,664
are not executive
officers as a group
(7 persons)
All employees (other 477,122(2) 233,269(5)
than current executive
officers) as a group
(105 persons)
(1) During the period from January 1, 2000 through December 31, 2000, the
current directors who are not executive officers as a group exercised
options to purchase a total of 4,666 shares at an average exercise
price of $1.32 per share.
(2) During the period from January 1, 2000 through December 31, 2000,
employees who are not current executive officers as a group exercised
options to purchase a total of 47,015 shares at an average exercise
price of $1.905 per share.
(3) The amount reported consists of an option that was granted in April
1991 and an option that was granted in May 1996 but each repriced in
February 1999.
(4) The amount reported consists of an option that was granted in October
1996, an option that was granted in May 1997 (each repriced in February
1999), and an option to purchase 2,500 shares that was granted in
February 1999.
(5) During the period from January 1, 1999 through December 31, 1999,
employees who are not current executive officers as a group exercised
options to purchase a total of 1,282 shares at an average exercise
price of $1.93 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE 1995 PLAN DESCRIBED ABOVE UNDER PROPOSALS 2 AND 3.
PROPOSAL NO. 4 - AMENDMENT TO THE 1997 EMPLOYEE STOCK PURCHASE PLAN
Effective May 28, 1997, the Infodata Systems Inc. 1997 Employee Stock
Purchase Plan (the "1997 Plan") was adopted by the Company and approved by its
shareholders at the Company's Annual Meeting of Shareholders. A total of 200,000
shares of the Company's authorized Common Stock are reserved for issuance under
the 1997 Plan. The purpose of the 1997 Plan is to provide
10
eligible employees an opportunity to purchase Common Stock through payroll
deductions. Proposal 4 asks the shareholders to approve an increase in the
number of shares of Common Stock reserved for issuance under the 1997 Plan from
200,000 shares to 400,000 shares.
Background
The Employee Retirement Income Security Act of 1974 does not apply to
the 1997 Plan. The 1997 Plan is entitled to qualify as an "Employee Stock
Purchase Plan" within the meaning of Section 423 of the Code and, consequently,
employees will be afforded favorable tax treatment under Sections 421 and 423 of
the Code, as discussed below under "Federal Income Tax Consequences." There are
no provisions in the 1997 Plan imposing charges, deductions or liens in
connection with the purchase of shares under the 1997 Plan.
The following description of the material provisions of the 1997 Plan
is qualified by reference to the full provisions of the 1997 Plan, a copy of
which is set forth on Exhibit B to this proxy statement.
Administration
The 1997 Plan is administered by the Board of Directors of the Company
and/or a duly appointed committee of non-employee members of the Board having
such powers as are specified by the Board. All references herein to the Board
also includes any such committee of the Board. All questions of interpretation
of the 1997 Plan are determined by the Board and are final and binding upon all
persons having an interest in the 1997 Plan. Subject to the provisions of the
1997 Plan, the Board determines all of the relevant terms and conditions
governing purchases of Common Stock under the 1997 Plan, so long as participants
in the 1997 Plan who are granted Purchase Rights (as defined below) have the
same rights and privileges within the meaning of Section 423(b)(5) of the Code.
All expenses incurred in connection with the administration of the 1997 Plan are
paid by the Company.
Eligible Employees
The 1997 Plan provides that any employee of the Company is eligible to
participate in the 1997 Plan, on a purely voluntary basis, except no person who
owns or holds options to purchase, or as a result of participation in the 1997
Plan would own or hold options to purchase, 5% or more of the Company's
outstanding Common Stock. As more fully discussed below, an employee must be an
eligible participating employee at the time of the commencement of an offering
in order to participate in such offering.
Offerings Under the 1997 Plan
Each offering of Common Stock under the 1997 Plan (an "Offering") is
for a period of three months (an "Offering Period"), commencing on the first day
of January, April, July and October (beginning with July 1, 1997) and ending on
the last day of March, June, September and December, respectively, of the same
year. At the end of each Offering Period, shares are issued based on the payroll
deductions accumulated during that Offering Period. Notwithstanding the
foregoing, the Board may establish a different term of one or more Offerings
and/or different commencing and/or ending dates for such Offerings. An employee
who becomes eligible to participate in the 1997 Plan after an Offering Period
has commenced will not be eligible to participate in such Offering but may
participate in any subsequent Offering provided such employee is still eligible
to participate in the 1997 Plan as of the commencement of any such subsequent
Offering.
The first day of an Offering Period is the "Offering Date" for such
Offering Period and the last day of an Offering Period is the "Purchase Date"
for such Offering Period. In the event the first day of an Offering Period is
not a business day, the Offering Date is the first subsequent business day. In
11
the event the last day of an Offering Period is not a business day, the Purchase
Date is the first preceding business day.
An employee participating in the 1997 Plan (a "Participant") may
withdraw such Participant's accumulated payroll deductions and terminate
participation in the 1997 Plan or any Offering at any time during an Offering
Period. Accordingly, each Participant is, in effect, granted an option pursuant
to the 1997 Plan (a "Purchase Right") which may or may not be exercised at the
end of an Offering Period.
Participation in the 1997 Plan
Initial Participation. An eligible employee will become a Participant
on the first Offering Date after satisfying the eligibility requirements and
delivering to the Company's payroll office not later than the close of business
on the last business day before such Offering Date (the "Subscription Date") a
subscription agreement indicating the employee's election to participate in the
1997 Plan and authorizing payroll deductions.
Continued Participation. A Participant will automatically participate
in the Offering commencing immediately after the Purchase Date of each Offering
Period in which the Participant participates until such time as the Participant
(i) ceases to be eligible for participation under the 1997 Plan, (ii) withdraws
from the 1997 Plan or (iii) terminates his or her employment. If a Participant
automatically may participate in a subsequent Offering, the Participant is not
required to file any additional subscription agreement for such subsequent
Offering Period. However, the Participant may file a subscription agreement with
respect to a subsequent Offering Period if the Participant desires to change any
of the Participant's elections contained in the Participant's then effective
subscription agreement.
Purchases of Shares Under the 1997 Plan
The purchase price at which shares may be purchased in a given Offering
Period pursuant to the exercise of all or any portion of a Purchase Right
granted under the 1997 Plan will be determined by the Board; provided, however,
that the purchase price will be not less than 85% of the lesser of (i) the fair
market value of the Common Stock on the Offering Date of the Offering Period or
(ii) the fair market value of the Common Stock on the Purchase Date of the same
Offering Period. Unless otherwise provided by the Board prior to the
commencement of an Offering Period, the purchase price for that Offering Period
(the "Offering Exercise Price") will be 85% of the lesser of (i) the fair market
value of the Common Stock on the Offering Date of such Offering Period (or, if
there was no reported trading in the Company's shares on that date, the first
subsequent date on which the shares were traded) or (ii) the fair market value
of the Common Stock on the Purchase Date of such Offering Period (or, if there
was no reported trading in the Company's shares on that date, the first
preceding date on which the shares were traded). The fair market value of the
Common Stock on the applicable dates will be the closing price quoted by NASDAQ.
Shares acquired by a Participant pursuant to the exercise of all or any
portion of a Purchase Right may be paid for only by means of payroll deductions
from the Participant's compensation accumulated during the Offering Period. The
amount of payroll deductions to be withheld from a Participant's compensation
during each pay period, which is set forth in the Participant's subscription
agreement, must be at least 1% but not more than 15% of the Participant's
compensation.
During an Offering Period, a Participant may elect to decrease the
amount to be withheld from his or her compensation by filing an amended
subscription agreement with the Company on or before the "Change Notice Date."
That date will initially be the seventh day prior to the end of the first pay
period for which such election is to be effective; however, the Company may
change such Change Notice Date from time to time. A Participant may not elect to
increase the amount withheld from his or her compensation during an Offering
Period.
12
Individual accounts will be maintained for each Participant under the
1997 Plan. All payroll deductions from a Participant's compensation will be
credited to such account and will be deposited with the general funds of the
Company. All payroll deductions received or held by the Company may be used by
it for any corporate purpose. No interest will be paid or accrued on sums
withheld from a Participant's compensation under the 1997 Plan.
On the Purchase Date of an Offering Period, each Participant who has
not withdrawn from the Offering or whose participation in the Offering has not
terminated on or before such Purchase Date, will automatically acquire pursuant
to the exercise of the Participant's Purchase Right the number of whole shares
of Common Stock arrived at by dividing the total amount of the Participant's
accumulated payroll deductions for the Purchase Period by the Offering Exercise
Price. No shares will be purchased on a Purchase Date on behalf of a Participant
whose participation in the Offering or the 1997 Plan has terminated on or before
such Purchase Date.
Any cash balance remaining in a Participant's account will be refunded
to the Participant as soon as practicable after the Purchase Date. In the event
the cash to be returned to a Participant is an amount less than the amount
necessary to purchase a whole share, the Company will maintain such cash in the
Participant's account and apply it toward the purchase of shares in the next
Offering Period.
Any portion of a Participant's Purchase Right remaining unexercised
after the end of the Offering Period to which such Purchase Right relates will
expire immediately upon the end of such Offering Period.
No Participant will be entitled to purchase shares of Common Stock
under the 1997 Plan in an amount exceeding $25,000 in fair market value per
year.
A Participant will have no rights as a shareholder by virtue of his or
her participation in the 1997 Plan until the date of the issuance of a stock
certificate(s) for the shares being purchased pursuant to the exercise of the
Participant's Purchase Right. No adjustment will be made for cash dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate(s) is issued. Participation in the 1997 Plan does not
confer upon a Participant any right to continue his or her employment with the
Company or interfere in any way with the right of the Company to terminate the
Participant's employment.
Withdrawal from an Offering or the 1997 Plan
Withdrawal from an Offering. A Participant may withdraw from an
Offering by signing and delivering to the Company's payroll office a written
notice of withdrawal on a form provided by the Company for such purpose. Such
withdrawal may be elected at any time prior to the end of an Offering Period. A
Participant is prohibited from again participating in the same Offering at any
time after withdrawing from such Offering. Unless otherwise indicated,
withdrawal from an Offering will not result in a withdrawal from the 1997 Plan
or any subsequent Offerings.
Withdrawal from the 1997 Plan. A Participant may withdraw from the 1997
Plan by signing a written notice of withdrawal on a form provided by the Company
for such purpose and delivering such notice to the Company's payroll office.
Withdrawals made after a Purchase Date for an Offering Period will not affect
shares acquired by the Participant on such Purchase Date. In the event a
Participant voluntarily elects to withdraw from the 1997 Plan, the Participant
may not resume participation in the 1997 Plan during the same Offering Period,
but may participate in any subsequent Offering under the 1997 Plan by satisfying
the eligibility requirements and delivering a new subscription agreement to the
Company's payroll office not later than the close of business on the last
business day before such Offering Date.
13
Upon withdrawal from an Offering or the 1997 Plan, the Participant's
accumulated payroll deductions which have not been applied for the purchase of
shares will be returned as soon as practicable after the withdrawal, without the
payment of any interest, to the Participant, and the Participant's interest in
the Offering and/or the 1997 Plan will terminate. Such accumulated payroll
deductions may not be applied to any other Offering under the 1997 Plan
following the Participant's withdrawal.
Termination of Employment
Termination of a Participant's employment with the Company for any
reason, including retirement, disability or death, or the failure of a
Participant to remain an employee eligible to participate in the 1997 Plan, will
terminate the Participant's participation in the 1997 Plan immediately. In such
event, the payroll deductions credited to the Participant's account since the
last Purchase Date will, as soon as practicable, be returned to the Participant
or, in the case of the Participant's death, to the Participant's legal
representative, and all of the Participant's rights under the 1997 Plan will
terminate. Interest will not be paid on sums returned to a Participant as a
result of the termination of his or her employment.
Transfer of Control of the Company
In the event of a "transfer of control" of the Company, as defined in
the 1997 Plan, the surviving or acquiring corporation must either (i) assume the
Company's rights and obligations under the 1997 Plan or (ii) substitute rights
to purchase shares of the surviving or acquiring corporation's capital stock for
outstanding Purchase Rights, unless the Company's Board otherwise agrees. The
1997 Plan contains additional provisions providing certain Board discretion in
the event that, with the Board's consent, the surviving or acquiring corporation
elects not to assume or substitute its rights for outstanding purchase rights.
Changes in Capitalization
In the event of changes in the Company's Common Stock due to a stock
split, reverse stock split, stock dividend or other change in the Company's
capitalization, or in the event of any merger, sale or other reorganization,
appropriate adjustments will be made by the Company in the securities subject to
purchase under a Purchase Right, the number of shares authorized for issuance
under the 1997 Plan, the number of shares subject to a Purchase Right and the
purchase price per share.
Non-Transferability
A Purchase Right may not be transferred in any manner by a Participant
and will be exercisable during the lifetime of the Participant only by the
Participant.
Participant Reports
Each Participant who exercised all or part of his or her Purchase Right
for an Offering Period will receive, as soon as practicable after the Purchase
Date of such Offering Period, a report of such Participant's account setting
forth the total payroll deductions accumulated, the number of shares purchased,
the fair market value of such shares, the date of purchase and the remaining
cash balance to be refunded or retained in the Participant's account if any.
Amendment or Termination of the 1997 Plan
The 1997 Plan will continue to exist until terminated by the Board or
until all of the shares reserved for issuance thereunder have been issued,
whichever occurs first. The Board may at any time amend or terminate the 1997
Plan, except that such termination will not affect Purchase Rights previously
granted under the 1997 Plan, nor may any amendment make any change in a Purchase
Right previously granted under the 1997 Plan which would adversely affect the
14
right of any Participant (except as may be necessary to qualify the 1997 Plan as
an employee stock purchase plan pursuant to Section 423 of the Code). An
amendment authorizing the issuance of more than 200,000 shares under the 1997
Plan (other than due to a change in the capitalization of the Company) must be
approved by the shareholders of the Company within 12 months of the adoption of
such amendment.
The following description of the material provisions of the 1997 Plan
is qualified by reference to the full provisions of the 1997 Plan, a copy of
which is set forth as Exhibit A to this Prospectus.
The Employee Retirement Income Security Act of 1974 does not apply to
the 1997 Plan. Furthermore, the 1997 Plan is not qualified under Section 401(a)
of the Code.
Federal Income Tax Consequences
A Participant recognizes no taxable income either as a result of
commencing to participate in the Plan or purchasing shares of the Company's
Common Stock under the terms of the Plan. However, amounts deducted from a
Participant's paycheck in order to purchase shares under the Plan are taxable as
part of the Participant's compensation (and included in the Participant's W-2
income) and deductible to the Company.
If a Participant disposes of shares purchased under the Plan within two
years from the first day of the applicable Offering Period or within one year
from the date of purchase (which is the last day of an Offering Period) (a
"disqualifying disposition"), the Participant will recognize ordinary income in
the year of such disposition equal to the amount by which the fair market value
of the shares on the date the shares were purchased exceeds the purchase price.
The amount of the ordinary income will be added to the Participant's basis in
the shares, and any additional gain or resulting loss recognized on the
disposition of the shares will be a capital gain or loss. A capital gain or loss
will be long-term if the Participant holds the shares for more than 12 months;
otherwise it will be short-term.
If the Participant disposes of shares purchased under the Plan at least
two years after the first day of the applicable Offering Period and at least one
year after the date of purchase, the Participant will realize ordinary income in
the year of disposition equal to the lesser of (i) the excess of the fair market
value of the shares on the date of disposition over the purchase price or (ii)
15% of the fair market value of the shares on the first day of the applicable
Offering Period. The amount of any ordinary income will be added to the
Participant's basis in the shares, and any additional gain recognized upon the
disposition after such basis adjustment will be a long-term capital gain. If the
fair market value of the shares on the date of disposition is less than the
purchase price, there will be no ordinary income and any loss recognized will be
a long-term capital loss.
If the Participant still owns the shares at the time of death, the
lesser of (i) the excess of the fair market value of the shares on the date of
death over the purchase price or (ii) 15% of the fair market value of the shares
on the first day of the Offering Period in which the shares were purchased will
constitute ordinary income in the year of death.
The Company will be entitled to a deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the Participant as a result of the disposition. In all other cases, no deduction
is allowed to the Company except as otherwise described above.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT TO THE 1997 PLAN.
15
EXECUTIVE COMPENSATION, TRANSACTIONS AND EMPLOYEE BENEFIT PLANS
The following Summary Compensation Table sets forth for the Company's President and all other executive officers whose
total annual salary and bonuses exceeded $100,000, the amount and nature of all compensation awarded to, earned by or paid to such
individual for the fiscal year indicated for services rendered in all capacities.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
---------------------------------- -----------------------------------------------
Awards Payout
------------------------------ --------------
Securities Long-Term
Restricted Underlying Incentive All Other
Name and Stock Options/SARs Plan Compensation
Principal Position Year Salary ($) Bonus ($) Other ($) Awards(s) ($) (#) Payouts ($) ($)
------------------ ---- ---------- --------- --------- ------------- ------------- -------------- ------------
Steven M. Samowich(1) 2000 $251,000 $38,000 -- -- 20,000 -- --
President and Chief 1999 $251,000 $45,000 -- -- -- -- --
Executive Officer 1998 $ 28,000 $32,000 -- -- 220,000 -- --
James W. Myers(2) 2000 $186,000 -- -- -- 50,000 -- --
Chief Operating 1999 $ 54,000 $23,000 -- -- 50,000 -- --
Officer 1998 -- -- -- -- -- -- --
Harry Kaplowitz(3) 2000 $160,000 $42,500 -- -- 4,549 -- --
Executive Vice 1999 $160,000 $20,000 -- -- 42,791 -- --
President 1998 $150,000 $24,000 -- -- -- -- --
Gary I. Gordon(4) 2000 $95,450 $7,500 -- -- 8,750 -- $3,000
Chief Accounting 1999 $85,000 $7,500 -- -- 1,000 -- --
Officer 1998 $68,500 $3,500 -- -- 2,750 -- --
16
(1) The amount reported above for the 2000 bonus was paid in 2001. The
amount reported above for the 1999 bonus was paid in 2000. The amount
reported above for the 1998 bonus was paid in 1999. The employment of
Steven M. Samowich commenced on November 3, 1998.
(2) With respect to the 1999 bonus amount reported above, $15,000 was paid
in 1999 and the balance of $8,000 was paid in 2000. The employment of
James W. Myers commenced on September 20, 1999 and terminated on
November 20, 2000.
(3) The amount reported above for the 2000 bonus was paid in 2001. The
amount reported above for the 1999 bonus was paid in 2000. The amount
reported above for the 1998 bonus was paid in 1999. The amount reported
for the 1999 Securities Underlying Options/SARS consists of an option
that was granted in April 1991 and an option that was granted in May
1996 but each repriced in February 1999. Mr. Kaplowitz served as the
Company's president from 1991 to November 5, 1997.
(4) The amount reported above for the 2000 bonus was paid in 2001. The
amount reported above for the 1999 bonus was paid in 2000. The amount
reported for the 1998 Securities Underlying Options/SARS consists of an
option that was granted in November 1997 and an option that was granted
in August 1998 but each repriced in December 1998.
Stock Options
The following tables set forth certain information regarding the grant
and exercise of options to purchase the Company's Common Stock with respect to
the named executive officers during 2000.
OPTION GRANTS IN 2000
Individual Grants
Number of
Securities % of Total
Underlying Options Granted
Options To Employees Exercise Expiration
Name Granted (#) During Year Price($/SH) Date
---- ----------- ----------- ----------- ----
Steven M. Samowich 20,000(1) 3.50% $5.44 1/19/2010
James W. Myers 50,000(2) 8.80% $5.44 1/19/2010
Harry Kaplowitz 4,549(3) 0.80% $5.44 1/19/2010
Gary I. Gordon 2,250(4) 0.40% $5.44 1/19/2010
6,500(5) 1.10% $2.09 8/03/2010
(1) Exercisable as follows: 12.5% on July 19, 2000 and 6.25% every three
months thereafter.
(2) Exercisable as follows: 12.5% on July 19, 2000 and 6.25% every three
months thereafter.
(3) Exercisable as follows: 12.5% on July 19, 2000 and 6.25% every three
months thereafter.
(4) Exercisable as follows: 12.5% on July 19, 2000 and 6.25% every three
months thereafter.
(5) Exercisable as follows: 12.5% on February 03, 2001 and 6.25% every
three months thereafter.
17
AGGREGATE OPTION EXERCISES IN 2000 AND
DECEMBER 31, 2000 OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
12/31/00(#) 12/31/00($)(1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized Unexercisable Unexercisable
---- --------------- -------- ------------- -------------
Steven M. Samowich -- -- 113,750/126,250 $0/$0
James W. Myers(2) -- -- 0/0 $0/$0
Harry Kaplowitz -- -- 104,304/3,696 $0/$0
Gary I. Gordon -- -- 3,283/9,217 $0/$0
(1) Fiscal year ended December 31, 2000. The closing market price on the
last trading day in 2000, December 29, 2000, for the Company's Common
Stock was $0.75.
(2) The employment of James W. Myers terminated on November 20, 2000.
Agreements With Executives
On April 23, 2001, the Company entered into Executive Separation
Agreements with Curtis D. Carlson and Gary I. Gordon. In the event that either
officer's employment is terminated involuntarily, without cause, within six
months following a change in control of the Company, as defined, that officer is
entitled to separation pay equal to four months base salary and continuation of
life and health insurance coverage for four months.
The Company entered into a letter employment agreement ("Letter
Agreement") with Steven M. Samowich on November 3, 1998. Pursuant to the Letter
Agreement, Mr. Samowich is serving as the Company's President and Chief
Executive Officer, and receives an annual base salary of $251,000 plus an annual
incentive bonus based on the achievement of certain management objectives and
financial performance measures. In addition, Mr. Samowich received options to
acquire 220,000 shares of the Company's Common Stock at a price of $3.00 per
share (repriced to $2.875 per share on February 25, 1999), vesting over a four
year period from the date of the Letter Agreement, a $32,000 hiring bonus paid
in January 1999, health insurance, life insurance and $30,000 for relocation
expenses. Mr. Samowich's employment with the Company is terminable at will and
is not for a definite term. However, if Mr. Samowich is terminated by the
Company, other than "for cause", as defined in the Letter Agreement, he will
continue to be paid his base salary in monthly increments for a period of 12
months.
On November 4, 1998 the Company and Mr. Samowich entered into an
Agreement on Confidential Information, Inventions and Ideas (the
"Confidentiality Agreement"). The Confidentiality Agreement provides that Mr.
Samowich will not disclose any confidential information during and after his
employment and, if his employment is terminated by the Company with cause or if
he terminates his employment without cause, for a period of one year following
the termination of his employment with the Company, he will not solicit clients,
consultants or suppliers of the Company or otherwise compete with the Company on
the sale or licensing of any products or services that are competitive with the
products or services developed or marketed by the Company in the United States.
The Confidentiality Agreement also provides that Mr. Samowich will not solicit
any employee of the Company for a period of one year following the date of
termination of his employment.
During 1986, the Company entered into Executive Separation Agreements
with Mr. Kaplowitz and Dr. Loane. In the event that either officer's employment
is terminated involuntarily, without cause, following a change in control of the
18
Company, as defined, that officer is entitled to separation pay equal to two
years base salary and continuation of life and health insurance coverage for two
years. Additionally, any type of pension or profit-sharing credited service will
be extended for two years. There were no separation payments accrued or paid
under the Executive Separation Agreements in 2000.
Director Compensation
During 2000, Laurence C. Glazer, Isaac M. Pollak and Millard H. Pryor,
Jr., as the members of the Compensation Committee, were each granted a
non-qualified option under the Company's 1995 Stock Option Plan to purchase
4,666 shares of Common Stock at an exercise price of $1.625 per share.
During 2000, non-employee directors received quarterly non-qualified
stock option grants to purchase a predetermined number of shares of Common Stock
at an exercise price equal to the fair market value of the Company's Common
Stock as of the date of issuance.
Any director who is an employee of the Company receives no additional
compensation for serving as a director. During 2000, no Executive Committee
meeting fees were accrued or paid to Executive Committee members.
Stock Option Plan
In 1995, the Board of Directors adopted and the Company's shareholders
approved the 1995 Stock Option Plan (the "1995 Plan"), which (i) consolidated
the Company's 1991 Incentive Stock Option Plan and 1992 Non-Qualified Stock
Option Plan and (ii) provided for the automatic grant of stock options to the
members of the Compensation Committee of the Company's Board of Directors. A
total of 2,011,000 shares of Common Stock have been authorized for issuance
under options granted and to be granted under the 1995 Plan at exercise prices
that will not be less than 100% of the fair market value of the underlying
shares on the date of grant of the option. As of June 8, 2001, options to
purchase a total of 1,449,214 shares of Common Stock under the 1995 Plan, at
prices ranging from $0.56 to $11.00 per share, were outstanding, including the
13,998 shares which underlie options granted in 2000 to members of the
Compensation Committee. As of June 8, 2001, a total of 180,570 shares were
available for options not yet granted.
Other Information
For the year ended December 31, 2000, the Company made business
management consulting fee payments totaling $39,500 to Bermuda Capital for the
services of Mr. Richard T. Bueschel, the Company's Chairman.
For the year ended December 31, 2000, the Company made payments
totaling $62,000 to Huguenot Associates, Inc. for the consulting services of its
President, Robert M. Leopold, a director of the Company.
Reports Under Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than 10% of the Company's outstanding Common Stock, to file reports of
securities ownership and changes in such ownership with the Securities and
Exchange Commission. A Statement of Changes of Beneficial Ownership of
Securities on Form 4 is required to be filed by the tenth day of the month
following the month during which a change in a reporting person's beneficial
ownership of securities occurred. An Annual Statement of Changes in Beneficial
Ownership on Form 5 is required to be filed by February 15th of each year to
report certain specified transactions, including transactions occurring during
the prior year that were not timely reported on a Form 4.
Based on its review of the reports filed under Section 16(a) of the
Exchange Act, the Company believes that all reports of securities ownership and
changes in such ownership required to be filed during 2000 were timely filed
19
except that an acquisition of an option in November 2000 by Laurence C. Glazer,
a director of the Company, which should have been reported by December 10, 2000
was reported on January 10, 2001.
BENEFICIAL OWNERSHIP OF SECURITIES
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to each person or
group known to be a beneficial owner of more than five percent of the Common
Stock of the Company as of June 8, 2001. Each beneficial owner has sole voting
and investment power with respect to such shares, unless otherwise specified
below.
Name and Address Percent
Of Beneficial Owner Number of Shares of Class
- --------------------------------------------------------------------------------
Richard T. Bueschel 282,435(1) 5.62%
Northern Equities, Inc.
Balch Hill Road, Box 301
Hanover, NH 03755
Alan S. Fisher 476,866(2) 9.14%
8 Deer Oaks Drive
Pleasanton, CA 94588
(1) Includes 208,718 shares subject to presently exercisable stock options.
(2) Includes 429,075 shares owned by The Fisher Trust for which Mr. Fisher
has sole voting and investment power. Includes 47,791 shares subject to
presently exercisable stock options.
20
Security Ownership of Management
The following table sets forth certain information regarding the
beneficial ownership of the Company's shares of Common Stock owned on June 8,
2001 by each of the Company's directors and by all directors and executive
officers as a group. Each person has sole voting and investment power with
respect to such securities, unless otherwise specified below.
Amount and Nature of Percent
Name of Individual Beneficial Ownership of Class
- --------------------------------------------------------------------------------
Richard T. Bueschel 282,435(1) 5.62%
Curtis D. Carlson 12,188(2) 0.26%
Alan S. Fisher 476,866(3) 9.14%
Laurence C. Glazer 130,065(4) 2.67%
Gary I. Gordon 5,610(5) 0.12%
Christine Hughes 43,167(6) 0.90%
Harry Kaplowitz 108,052(7) 2.23%
Robert M. Leopold 178,720(8) 3.63%
Isaac M. Pollak 202,083(9) 4.09%
Millard H. Pryor, Jr. 86,157(10) 1.78%
Steven M. Samowich 158,750(11) 3.24%
All directors and
Executive officers as a group (11 persons) 1,684,093(12) 26.20%
(1) Includes 208,718 shares subject to presently exercisable stock options.
(2) Includes 7,189 shares subject to presently exercisable stock options or
stock options exercisable within 60 days.
(3) Includes 429,075 shares owned by The Fisher Trust for which Mr. Fisher
has sole voting and investment power. Includes 47,791 shares subject to
presently exercisable stock options.
(4) Includes 42,664 shares subject to presently exercisable stock options.
(5) Includes 5,610 shares subject to presently exercisable stock options or
stock options exercisable within 60 days.
(6) Includes 37,667 shares subject to presently exercisable stock options.
(7) Includes 62,366 shares subject to presently exercisable stock options
or stock options exercisable within 60 days.
(8) Includes 102,395 shares subject to presently exercisable stock options.
(9) Includes 55,106 shares subject to presently exercisable stock options.
(10) Includes 42,664 shares subject to presently exercisable stock options.
(11) Includes 158,750 shares subject to presently exercisable stock options
or stock options exercisable within 60 days.
(12) Includes 770,920 shares subject to presently exercisable stock options
or stock options exercisable within 60 days.
21
AUDIT COMMITTEE REPORT
The Audit Committee of the Company's Board of Directors, which
currently consists of Messrs. Leopold (Chairman), Glazer and Pryor, is governed
by its charter, a copy of which is attached Exhibit C to this Proxy Statement.
All the members of the Audit Committee are "independent" as defined in the rules
of NASDAQ, which means that they have no relationship which, in the opinion of
the Company's Board of Directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director.
The Audit Committee reviewed and discussed the Company's audited
financial statements for the year ended December 31, 2000 with management of the
Company and its independent auditing firm, PricewaterhouseCoopers LLP ("PwC").
In that connection, the Audit Committee discussed with PwC the matters required
to be discussed by Statement of Accounting Standards No. 61 ("SAS 61"). SAS 61
requires an auditor to communicate certain matters relating to the conduct of an
audit to the Audit Committee, including (i) methods used to account for
significant unusual transactions; (ii) the effect of significant accounting
policies in controversial or emerging areas for which there is a lack of
authoritative guidance or consensus; (iii) the process used by management in
formulating particularly sensitive accounting estimates and the basis for the
auditor's conclusions regarding the reasonableness of those estimates; (iv) any
disagreements with management regarding the application of accounting
principles, the basis for management's accounting estimates, the disclosures in
the financial statements and the wording of the auditor's report; (v) the
auditor's judgments about the quality, and not just the acceptability, of the
Company's accounting principles as applied in its financial reporting; and (vi)
the consistency of application of the accounting principles and underlying
estimates and the clarity, consistency and completeness of the accounting
information contained in the financial statements, including items that have a
significant impact on the representational faithfulness, verifiability and
neutrality of the accounting information.
In addition, the Audit Committee received from PwC the written
disclosures and the letter required by Independence Standards Board Statement
No. 1 ("ISB 1") and discussed PwC's independence with PwC. Pursuant to ISB 1,
PwC (i) disclosed to the Audit Committee all relationships between PwC and its
related entities that in PwC's professional judgment may reasonably be thought
to bear on independence, and (ii) confirmed in the letter that, in its
professional judgment, it is independent of the Company.
Based on the above-referenced review and discussions, the Audit
Committee recommended to the Board of Directors that the financial statements be
included in the Company's Annual Report on Form 10-KSB for filing with the
Securities and Exchange Commission. Reference is made to the Audit Committee's
charter attached as Exhibit C to this Proxy Statement for additional information
as to the responsibilities and activities of the Audit Committee.
Audit Committee of the Board of Directors
Robert M. Leopold (Chairman)
Laurence C. Glazer
Millard H. Pryor, Jr.
INDEPENDENT PUBLIC ACCOUNTANTS
PwC was engaged to perform an audit of the Company's financial
statements for the year ended December 31, 2000. A representative of PwC is
expected to be available during the Company's Annual Meeting of Shareholders via
telephone and will be available to respond to appropriate questions. The Audit
Committee of the Board of Directors has not yet recommended an independent
public accounting firm to audit the Company's financial statements for the year
ending December 31, 2001.
22
AUDIT AND NON-AUDIT FEES
The total fee billed for professional services rendered by PwC for the
audit of the Company's consolidated financial statements for the year ended
December 31, 2000, the reviews of the Company's financial statements included in
its Quarterly Reports on Form 10-QSB during 2000 was $63,000. The Company did
not engage PwC to render services related to financial information systems
design and implementation or any other information technology services. During
2000, fees for all other non-audit services were $26,640 including fees for
tax-related services and a filing of a registration statement.
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. In addition
to solicitation by the use of mails, some officers, without extra compensation,
may solicit proxies personally and by telephone and telegraph. The Company may
request banks, brokers, nominees, custodians, and fiduciaries to forward
soliciting material to the beneficial owners of shares registered in their
names. The Company will reimburse such persons for their expense incurred in
such assistance.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 2002 Annual
Meeting must be received at the Company's Corporate Headquarters, 12150 Monument
Drive, Fairfax, Virginia 22033, for inclusion in the Company's Proxy Statement
and form of proxy relating to that Annual Meeting, no later than December 1,
2001. A shareholder desiring to submit a proposal to be voted on at next year's
Annual Meeting, but not desiring to have such proposal included in next year's
Proxy Statement relating to that meeting, should submit such proposal to the
Company by February 15, 2002 (i.e., at least 45 days prior to the expected
mailing of the Proxy Statement). Failure to comply with that advance notice
requirement will permit management to use its discretionary voting authority if
and when the proposal is raised at the Annual Meeting without having had a
discussion of the proposal in the Proxy Statement.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, to shareholders at the Annual Meeting, any matter other than those
specifically referred to in this Proxy Statement. If any other matters properly
come before the Annual Meeting, it is intended that the holders of the proxies
will act in respect thereto in accordance with their best judgment. Abstentions,
broker non-votes, and withheld votes are voted neither "for" nor "against" a
proposal, but are counted in the determination of a quorum.
In accordance with the terms of indemnification agreements with each of
its directors and officers, the Company maintains directors and officers
liability insurance, $1,000,000 in the aggregate for the policy year, under an
agreement with Zurich Insurance Company. This policy, effective for the
three-year period June 15, 1998 to June 03, 2001, covers each director and
officer of the Company and required a one-time premium payment totaling $67,500.
During 2000, no sums were paid under this or any other indemnification insurance
contract.
By order of the Board of Directors
Curtis D. Carlson, Secretary
Dated: Fairfax, Virginia
July 30, 2001
23
EXHIBIT A
INFODATA SYSTEMS INC.
1995 STOCK OPTION PLAN
----------------------
1. Purpose
Infodata Systems Inc. (the "Company"), by means of this 1995 Stock
Option Plan (the "Plan"), desires to afford certain of its directors, officers
and certain selected employees, consultants and the officers and certain
selected employees of any subsidiary thereof now existing or hereafter formed or
acquired, an opportunity to acquire a proprietary interest in the Company, and
thus to create in such persons an increased interest in and a greater concern
for the welfare of the Company and any subsidiary. The Plan is the successor to
the Company's Incentive Stock Option Plan and Non-Qualified Stock Option Plan
that were approved by the Company's shareholders in 1991 and 1992, respectively
(the "Prior Plans"). As used in the Plan, the term "subsidiary" shall mean any
entity in which the Company, directly or indirectly, owns a controlling
interest.
The stock options described in Sections 6 and 7 hereof (the "Options"),
and the shares of common stock, par value $.03 per share, of the Company (the
"Common Stock") acquired pursuant to the exercise of such Options are a matter
of separate inducement and are not in lieu of any salary or other compensation
for services.
The Options granted under Section 6 hereof are intended to be either
incentive stock options ("Incentive Options") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), or options that
do not meet the requirements for Incentive Options ("Non-Qualified Options"),
but the Company makes no warranty as to the qualification of any Option as an
Incentive Option.
2. Administration
The Plan shall be administered by the Compensation Committee, or any
successor thereto, of the Board of Directors of the Company or by such other
committee as determined by the Board (the "Committee"). The Committee shall
consist of not less than two members of the Board of Directors of the Company,
each of whom shall qualify as a "disinterested person" to administer the Plan
within the meaning of Rule 16b-3, as amended, or other applicable rules under
Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Committee shall administer the Plan so as to conform at all times
with the provisions of Rule 16b-3 promulgated under the Exchange Act. A majority
of the Committee shall constitute a quorum, and subject to the provisions of
Section 5 hereof, the acts of a majority of the members present at any meeting
at which a quorum is present, or acts approved unanimously in writing by the
Committee, shall be the acts of the Committee.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may employ
one or more persons to render advice with respect to any responsibility the
Committee or such person may have under the Plan. The Committee may employ
attorneys, consultants, accountants, or other persons and the Committee, the
Company and its officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon all persons who have received grants under the Plan, the
Company and all other interested persons. No member or agent of the Committee
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan and all members and agents of the
Committee shall be fully protected by the Company in respect of any such action,
determination or interpretation.
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3. Shares Available
Subject to the adjustments provided in Section 9 hereof, the maximum
aggregate number of shares of Common Stock which may be purchased pursuant to
the exercise of Options granted under the Plan shall not exceed 2,011,000
shares. If, for any reason, any shares as to which Options have been granted
cease to be subject to purchase thereunder, including without limitation the
expiration of such Options, the termination of such Options prior to exercise or
the forfeiture of such Options, such shares thereafter shall be available for
grants to such individual or other individuals under the Plan. Options granted
under the Plan may be fulfilled in accordance with the terms of the Plan with
either authorized and unissued shares of Common Stock or issued shares of such
Common Stock held in the Company's treasury or both, at the discretion of the
Company.
4. Eligibility and Bases of Participation
Grants under the Plan (i) may be made, pursuant to Section 6 hereof, to
certain selected employees and officers (but not to any director who is not also
an employee) of the Company or any subsidiary thereof who are regularly employed
on a salaried basis and who are so employed on the date of such grant (the
"Officer and Certain Selected Employee Participants"); (ii) may be made,
pursuant to Section 6 hereof, to directors of the Company, other than Committee
Participants (as defined below), who are not employees and who are retained by
the Company in such capacity on the date of such grant (the "Director
Participants"); (iii) may be made, pursuant to Section 6 hereof, to consultants
or advisors, provided that the services rendered by such consultants or advisors
shall not be in connection with the offer or sale of securities in a
capital-raising transaction (the "Consultant Participants") (the Officer and
Certain Selected Employee Participants, Director Participants and Consultant
Participants are hereinafter collectively referred to as the "Grant
Participants"); and (iv) may be made, pursuant to Section 7 hereof, to
individuals who serve on the Committee or have been named to serve on the
Committee in the future (the "Committee Participants").
5. Authority of Committee
Subject to and not inconsistent with the express provisions of the Plan
and the Code, the Committee shall have plenary authority, in its sole
discretion, to:
a. other than with respect to Committee Participants, determine
the persons to whom Options shall be granted, the time when
such Options shall be granted, the number of shares of Common
Stock underlying each Option, the purchase price or exercise
price of each Option, the restrictions to be applicable to
Options and the other terms and provisions thereof (which need
not be identical);
b. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
optionee by the broker-dealer for the purpose of assisting the
optionee in the exercise of an Option;
c. establish procedures for an optionee to pay the exercise price
of an Option in whole or in part by delivering that number of
shares of Common Stock owned by such optionee; or for the
collection of any taxes required by any government to be
withheld or otherwise deducted and paid by the Company or any
subsidiary in respect of the issuance or disposition of Common
Stock acquired pursuant to the exercise of an Option granted
hereunder, which procedures may include payment in whole or in
part through the delivery of shares of Common Stock owned by
the optionee valued on the basis of the Fair Market Value (as
defined in Section 11 hereof) on the date preceding such
exercise;
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d. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
e. make all determinations specified in or permitted by the Plan
or deemed necessary or desirable for its administration or for
the conduct of the Committee's business; and
f. establish any procedures determined to be appropriate in
discharging its responsibilities under the Plan.
6. Stock Options for Grant Participants
The Committee shall have the authority, in its sole discretion, to
grant Incentive Options or Non-Qualified Options or both Incentive Options and
Non-Qualified Options to Grant Participants (any such Options are hereinafter
collectively referred to as the "Participant Options") during the period
beginning on the date on which the Plan is approved by the holders of a majority
of the Company's outstanding shares of Common Stock and Preferred Stock, voting
as a class (the "Effective Date") and ending on the tenth anniversary of the
Effective Date (the "Termination Date"). Notwithstanding anything contained
herein to the contrary, Incentive Options may be granted only to Officer and
Certain Selected Employee Participants. As a condition to the granting of any
Option, the Committee shall require that the person receiving such Option agree
not to sell or otherwise dispose of any Common Stock acquired pursuant to such
Option for a period of six months following the date of the grant of such
Option. The terms and conditions of the Participant Options shall be determined
from time to time by the Committee; provided, however, that the Participant
Options granted under the Plan shall be subject to the following:
a. Exercise Price. The exercise price for each share of Common
Stock purchasable under any Participant Option granted
hereunder shall be such amount as the Committee, in its best
judgment, shall determine to be not less than 100% of the Fair
Market Value (as defined in Section 11 hereof) per share on
the date the Participant Option is granted; provided, however,
that in the case of an Incentive Option granted to a person
who, at the time such Incentive Option is granted, owns shares
of capital stock of the Company, or of any subsidiary of the
Company, having more than 10% of the total combined voting
power of all classes of shares of capital stock of the Company
or of such subsidiary, the exercise price for each share shall
be not less than 110% of the Fair Market Value (as defined in
Section 11 hereof) per share on the date the Incentive Option
is granted. In determining the stock ownership of a person for
purposes of this Section 6, the rules of Section 424(d) of the
Code shall be applied and the Committee may rely on
representations of fact made to it by such person and believed
by it to be true. The exercise price of the Participant
Options will be subject to adjustment in accordance with the
provisions of Section 9 hereof.
b. Payment. The exercise price per share of Common Stock with
respect to each Participant Option shall be payable at the
time the Participant Option is exercised. Such price shall be
payable in cash, which may be paid by wire transfer in
immediately available funds, by check, by a commitment by a
broker-dealer to pay to the Company that portion of any sale
proceeds receivable by the optionee upon exercise of a
Participant Option or by any other instrument acceptable to
the Company or, in the discretion of the Committee, by
delivery to the Company of shares of Common Stock. Shares
delivered to the Company in payment of the exercise price
shall be valued at the Fair Market Value (as defined in
Section 11 hereof) of the Common Stock on the business
3-A
day immediately preceding the date of the exercise of the
Participant Option.
c. Exercisability of Participant Options. Subject to this Section
6 and Section 8 hereof, each Participant Option shall vest and
become exercisable on the dates and in the amounts set forth
in the particular stock option agreement between the Company
and the optionee; provided, however, that a Participant Option
shall expire not later than ten years from the date such
Option is granted. The right to purchase shares shall be
cumulative so that when the right to purchase any shares has
accrued, such shares or any part thereof may be purchased at
any time thereafter until the expiration or termination of the
Participant Option.
d. Death. In the event of the death of an optionee, all
Participant Options held by such optionee on the date of such
death shall vest in full and become immediately exercisable.
Upon such death, the legal representative of such optionee, or
such person who acquired such Participant Options by bequest
or inheritance or by reason of the death of the optionee,
shall have the right for one year after the date of death (but
not after the expiration or termination of the Participant
Options), to exercise such optionee's Participant Options with
respect to all or any part of the shares of Common Stock
subject thereto.
e. Disability. If the employment of an optionee is terminated
because of Disability (as defined in Section 11 hereof), all
Participant Options held by such optionee on the date of such
termination shall vest in full and become immediately
exercisable. Such optionee shall have the right for one year
after the date of such termination (but not after the
expiration or termination of the Participant Options), to
exercise such optionee's Participant Options with respect to
all or any part of the shares of Common Stock subject thereto.
f. Retirement. In the event the employment of an Officer and
Certain Selected Employee Participant is terminated by reason
of the Retirement (as defined in Section 11 hereof) of the
optionee, all Participant Options held by such optionee on the
date of such termination shall vest in full and become
immediately exercisable. Such optionee shall have the right
for three months after the date of such termination (but not
after the expiration or termination of the Participant
Options), to exercise such optionee's Participant Options with
respect to all or any part of the shares of Common Stock
subject thereto. The Committee, in its discretion, shall
determine whether an optionee's employment was terminated by
reason of Retirement and whether such optionee is entitled to
the treatment afforded by this subsection f.
g. Other Termination. If the employment of an Officer and Certain
Selected Employee Participant is terminated for any reason
other than those specified in subsections d, e, and f of this
Section 6, such optionee shall have the right for 30 days
after the date of such termination (but not after the
expiration or termination of the Participant Options), to
exercise such optionee's Participant Options with respect to
all or any part of the shares of Common Stock which such
optionee was entitled to purchase immediately prior to the
time of such termination.
h. Cessation of Directorship. In the event a Director Participant
shall cease to be a director of the Company, such optionee
shall have the right for 90 days after the date of such
cessation (but not after the
4-A
expiration or termination of the Participant Options), to
exercise such optionee's Participant Options with respect to
all or any part of the shares of Common Stock subject thereto.
i. Maximum Exercise. To the extent the aggregate Fair Market
Value (as defined in Section 11 hereof) of Common Stock
(determined at the time of the grant) with respect to which
Incentive Options are exercisable for the first time by an
optionee during any calendar year under all plans of the
Company or any subsidiary, exceeds $100,000, or such other
amount as may be prescribed under Section 422 of the Code or
applicable regulations or rulings from time to time, the
excess thereof shall be treated as Non-Qualified Options and
not as Incentive Options.
7. Stock Option Grants to Committee Participants
During the term of the Plan, on the date that a director of the Company
commences service on the Committee (which in the case of the initial members of
the Committee shall be deemed to be the Effective Date), and on the date of any
subsequent annual meeting of the holders of the Common Stock at which a director
is elected and appointed or reappointed to serve on the Committee, such
Committee Participant automatically shall be granted a Non-Qualified Option to
purchase 2,000 shares of Common Stock, which Non-Qualified Option, except as
otherwise provided in this Section 7 or Section 8 hereof, shall become fully
exercisable immediately upon grant as to all of the shares covered thereby. (A
Non-Qualified Option granted to a Committee Participant pursuant to this Section
7 is referred to as a "Committee Option".) As a condition to the granting of any
Committee Option, the person receiving such Committee Option shall agree not to
sell or otherwise dispose of any Common Stock acquired pursuant to such Option
for a period of six months following the date of the grant of such Option. The
terms and conditions of the Committee Options shall be as follows:
a. Option Price. The exercise price of each share of Common Stock
purchasable under any Committee Options shall be such amount
as the Committee, in its best judgment, shall determine to be
100% of the Fair Market Value (as defined in Section 11
hereof) per share at the date the Committee Option is granted.
b. Payment. The exercise price per share of Common Stock with
respect to each Committee Option and any withholding tax due
in connection with such exercise may be paid by any of the
methods described under Section 6b hereof.
c. Exercisability. Except as provided in subsection d of this
Section 7, no Committee Option shall be exercisable after the
earlier of (i) the expiration of five years from the date such
Committee Option is granted and (ii) 90 days after such
Committee Participant ceases for any reason to be a director
of the Company.
d. Death. In the event of the death of any Committee Participant,
the estate of the Committee Participant shall have the right
for one year after the date of death (but not after the
expiration or termination of such Committee Options), to
exercise such Committee Participant's Committee Options with
respect to all or any part of the shares of Common Stock
subject thereto.
e. Amendment. The provisions of this Section 7 shall not be
amended more than one time in any six-month period, other than
to comport with any amendments to the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the
rules and regulations thereunder.
5-A
8. Change of Control
Notwithstanding any provision herein to the contrary, upon the
occurrence of an event constituting a Change of Control (as defined in Section
11 hereof), all Options granted under the Plan immediately shall become fully
exercisable.
9. Adjustment of Shares
In the event the outstanding shares of Common Stock shall be increased
or decreased or changed into or exchanged for a different number of kind of
shares of stock or other securities of the Company or another corporation by
reason of any consolidation, merger, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in capital
structure of the Company, the number or kind of shares or interests subject to
an Option and the per share price or value thereof shall be appropriately
adjusted by the Committee at the time of such event. Any fractional shares or
interests resulting from such adjustment shall be eliminated. Notwithstanding
the foregoing, (i) each such adjustment with respect to an Incentive Option
shall comply with the rules of Section 424(a) of the Code and (ii) in no event
shall any adjustment be made that would result in an Incentive Option failing to
be treated as an "incentive stock option" for purposes of Section 422 of the
Code. In addition, in such event the Board of Directors of the Company shall
appropriately adjust the number of shares of Common Stock for which Options may
be granted under the Plan.
10. Miscellaneous Provisions
a. Assignment or Transfer. No grant of any "derivative security"
(as defined by Rule 16a-1(c) under the Exchange Act) made
under the Plan or any rights or interests therein shall be
assignable or transferable by an optionee except by will or
the laws of descent and distribution or, except as to
Incentive Options, pursuant to a qualified domestic relations
order as defined in the Code. During the lifetime of an
optionee, Options granted hereunder shall be exercisable only
by the optionee or the optionee's guardian or legal
representative.
b. Investment Representation. If a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock issuable upon exercise of an
Option is not in effect at the time such Option is exercised,
the Company may require, for the sole purpose of complying
with the Securities Act, that prior to delivering such Common
Stock to the exercising optionee such optionee must deliver to
the Secretary of the Company a written statement (i)
representing that such Common Stock is being acquired for
investment only and not with a view to the resale or
distribution thereof, (ii) acknowledging that such Common
Stock may not be sold unless registered for sale under the
Securities Act or pursuant to an exemption from such
registration and (iii) agreeing that the certificates
evidencing such Common Stock shall bear a legend to the
foregoing effect.
c. Costs and Expenses. The costs and expenses of administering
the Plan shall be borne by the Company and shall not be
charged against any Option nor to any person receiving an
Option.
d. Funding of Plan. The Plan shall be unfunded. The Company shall
not be required to make any segregation of assets to assure
the satisfaction of any Option under the Plan.
e. Other Incentive Plans. The adoption of the Plan does not
preclude the adoption by appropriate means of any other
incentive plan for
6-A
officers, directors or employees.
f. Effect on Employment. Nothing contained in the Plan or any
agreement related hereto or referred to herein shall affect,
or be construed as affecting, the terms of employment of any
Grant Participants except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any
agreement related hereto or referred to herein shall impose,
or be construed as imposing, an obligation on (i) the Company
or any subsidiary to continue the employment of any Grant
Participant or (ii) any Grant Participant to remain in the
employ of the Company or any subsidiary.
g. Termination or Suspension of the Plan. The Board of Directors
may at any time suspend or terminate the Plan. The Plan,
unless sooner terminated under Section 12 of the Plan or by
action of the Board of Directors, shall terminate at the close
of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated.
Rights and obligations under any Option granted while the Plan
is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person
to whom the Option was granted. The power of the Committee to
construe and administer any Option granted prior to the
termination or suspension of the Plan nevertheless shall
continue after such termination or during such suspension.
h. Savings Provision. With respect to persons subject to Section
16 of the Exchange Act, the transactions under the Plan are
intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails so
to comply, it shall be deemed null and void to the extent
permitted by law.
i. Partial Invalidity. The invalidity or illegality of any
provision herein shall not be deemed to affect the validity of
any other provision.
11. Definitions
a. "Fair Market Value", as it relates to the Common Stock, shall
mean the average of the high and low sale prices of such
Common Stock on the date such determination is required
herein, or if there were no sales on such date, the average
closing bid and asked prices, as reported on the national
securities exchange on which the Company's Common Stock is
listed or, in the absence of such listing, on the NASDAQ
National Market or Small Cap Market or, if such Common Stock
is not at the time listed on a national securities exchange or
traded on the NASDAQ National Market or Small Cap Market, the
value of such Common Stock on such date as determined in good
faith by the Committee.
b. "Disability" shall have the meaning set forth in Section
22(e)(3) of the Code.
c. "Change of Control" shall be deemed to have occurred if,
subsequent to the Effective Date of this Plan, any "person"
(as such term is defined in Section 13(d) of the Exchange Act)
becomes the beneficial owner, directly or indirectly, of
either (x) a majority of the Common Stock or (y) securities of
the Company representing a majority of the combined voting
power of the Company's then outstanding voting securities.
d. "Retirement" shall mean the date upon which a Grant
Participant,
7-A
having attained an age as may be determined by the Committee
in its sole discretion, terminates his employment with the
Company or any subsidiary, provided that such Grant
Participant has been employed by the Company or any
subsidiary.
12. Amendment of Plan
The Board of Directors of the Company shall have the right to amend,
modify, suspend or terminate the Plan at any time, provided that no amendment
shall be made without shareholder approval which shall (i) increase the total
number of shares of the Common Stock of the Company which may be issued and sold
pursuant to Options granted under the Plan (except for increases due to
adjustments in accordance with Section 9 hereof), (ii) materially increase the
benefits accruing to participants under the Plan, (iii) decrease the minimum
exercise price in the case of an Incentive Option or (iv) materially modify the
provisions of the Plan relating to eligibility with respect to Options. In no
event may the Plan be amended in any way that would retroactively impair the
Committee's discretion. The Board of Directors shall be authorized to amend the
Plan and the Options granted thereunder (A) to qualify such Options as
"incentive stock options" within the meaning of Section 422 of the Code or (B)
to comply with Rule 16b-3 (or any successor rule) under the Exchange Act. No
amendment, modification, suspension or termination of the Plan, without the
consent of the holder thereof, shall adversely alter or impair any Options
previously granted under the Plan.
13. Effective Date
The Plan shall become effective on the Effective Date. Subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Section 12 hereof, the Plan shall remain in effect until the earlier of (i) the
date that Options covering all shares of Common Stock issuable under the Plan
have been granted or (ii) the Termination Date.
8-A
EXHIBIT B
---------
INFODATA SYSTEMS INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
1. Purpose. The Infodata Systems Inc. 1997 Employee Stock Purchase Plan
(the "Plan") is established to provide eligible employees of Infodata Systems
Inc., a Virginia corporation, and its wholly-owned subsidiaries (the "Company"),
with an opportunity to acquire a proprietary interest in the Company by the
purchase of shares of common stock, par value $.03 per share (the "Common
Stock") of the Company.
The Company intends that the Plan shall qualify as an "employee stock
purchase plan" under section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"), including any amendments or replacements of such Code
section, and the Plan shall be so construed. Any term not expressly defined in
the Plan but defined for purposes of section 423 of the Code shall have the same
definition herein.
An employee participating in the Plan (a "Participant") may withdraw
such Participant's accumulated payroll deductions (if any) and terminate
participation in the Plan or any Offering (as defined below) therein at any time
during an Offering Period (as defined below). Accordingly, each Participant is,
in effect, granted an option pursuant to the Plan (a "Purchase Right") which may
or may not be exercised at the end of an Offering Period.
2. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board") and/or by a duly appointed committee of
non-employee members of the Board having such powers as shall be specified by
the Board. Any subsequent references to the Board shall also mean the committee
if a committee has been appointed. All questions of interpretation of the Plan
or of any Purchase Right shall be determined by the Board and shall be final and
binding upon all persons having an interest in the Plan and/or any Purchase
Right. Subject to the provisions of the Plan, the Board shall determine all of
the relevant terms and conditions of Purchase Rights granted pursuant to the
Plan; provided, however, that all Participants granted Purchase Rights pursuant
to the Plan shall have the same rights and privileges within the meaning of
section 423(b)(5) of the Code. All expenses incurred in connection with the
administration of the Plan shall be paid by the Company.
3. Share Reserve. The maximum number of shares which may be issued
under the Plan shall be 200,000 shares of the Company's authorized but unissued
Common Stock or Common Stock which is treasury stock (the "Shares"). In the
event that any Purchase Right for any reason expires or is canceled or
terminated, the Shares allocable to the unexercised portion of such Purchase
Right may again be subjected to a Purchase Right.
4. Eligibility. Any employee of the Company is eligible to participate
in the Plan except employees who own or hold options to purchase or who, as a
result of participation in the Plan, would own or hold options to purchase,
stock of the Company possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company within the meaning
of section 423(b)(3) of the Code. Notwithstanding anything herein to the
contrary, any individual performing services for the Company solely through a
leasing agency or employment agency shall not be deemed an "employee" of the
Company.
5. Offering Dates.
--------------
(a) Offering Periods.Except as otherwise provided below, the
Plan shall be implemented by offerings (individually, an "Offering") of three
(3)
1-B
months duration (an "Offering Period"); commencing on January 1, April 1, July 1
and October 1 of each year (beginning with July 1, 1997) and ending on the first
March 31, June 30, September 30 and December 31, respectively, occurring
thereafter. Notwithstanding the foregoing, the Board may establish a different
term for one or more Offerings and/or different commencing and/or ending dates
for such Offerings. An employee who becomes eligible to participate in the Plan
after an Offering Period has commenced shall not be eligible to participate in
such Offering but may participate in any subsequent Offering provided such
employee is still eligible to participate in the Plan as of the commencement of
any such subsequent Offering. Eligible employees may not participate in more
than one Offering at a time. The first day of an Offering Period shall be the
"Offering Date" for such Offering Period and the last day of an Offering Period
shall be the "Purchase Date" for such Offering Period. In the event the first
day of an Offering Period is not a business day, the Offering Date shall be the
first subsequent business day. In the event the last day of an Offering Period
is not a business day, the Purchase Date shall be the first preceding business
day.
(b) Governmental Approval; Stockholder Approval. Notwithstanding any
other provision of the Plan to the contrary, any Purchase Right granted pursuant
to the Plan shall be subject to (i) obtaining all necessary governmental
approvals and/or qualifications of the sale and/or issuance of the Purchase
Rights and/or the Shares, and (ii) obtaining stockholder approval of the Plan.
6. Participation in the Plan.
-------------------------
(a) Initial Participation. An eligible employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements and delivering to the Company's payroll office not later than the
close of business for such payroll office on the last business day before such
Offering Date (the "Subscription Date") a subscription agreement indicating the
employee's election to participate in the Plan and authorizing payroll
deductions. An eligible employee who does not deliver a subscription agreement
to the Company's payroll office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Company may, from time to time, change the
Subscription Date as deemed advisable by the Company in its sole discretion for
proper administration of the Plan.
(b) Continued Participation. A Participant shall automatically
participate in the Offering Period commencing immediately after the Purchase
Date of each Offering Period in which the Participant participates until such
time as such Participant (i) ceases to be eligible as provided in paragraph 4,
(ii) withdraws from the Plan pursuant to paragraph 11(b) or (iii) terminates
employment as provided in paragraph 12. If a Participant automatically may
participate in a subsequent Offering Period pursuant to this paragraph 6(b),
then the Participant is not required to file any additional subscription
agreement for such subsequent Offering Period in order to continue participation
in the Plan. However, a Participant may file a subscription agreement with
respect to a subsequent Offering Period if the Participant desires to change any
of the Participant's elections contained in the Participant's then effective
subscription agreement.
7. Right to Purchase Shares. Subject to the terms and limitations set
forth below, during an Offering Period each Participant in such Offering Period
shall have a Purchase Right consisting of the right to purchase that number of
whole Shares determined in accordance with paragraphs 8 and 9 hereof.
8. Purchase Price. The purchase price at which Shares may be acquired
in a given Offering Period pursuant to the exercise of all or any portion of a
Purchase Right granted under the Plan (the "Offering Exercise Price") shall be
set
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by the Board; provided, however, that the Offering Exercise Price shall not be
less than eighty-five percent (85%) of the lesser of (a) the fair market value
of the Shares on the Offering Date of the Offering Period, or (b) the fair
market value of the Shares on the Purchase Date of the same Offering Period.
Unless otherwise provided by the Board prior to the commencement of an Offering
Period, the Offering Exercise Price for that Offering Period shall be
eighty-five percent (85%) of the lesser of (a) the fair market value of the
Shares on the Offering Date of such Offering Period or (b) the fair market value
of the Shares on the Purchase Date of such Offering Period. The fair market
value of the Shares on the applicable dates shall be the closing price quoted on
the National Association of Securities Dealers Automated Quotation System (or
the average of the closing bid and asked prices if the Shares are so quoted
instead and the quoted closing price is not readily available), or as reported
on such other stock exchange or market system if the Shares are traded on such
other exchange or system instead, or as determined by the Board if the Shares
are not so reported.
9. Payment of Purchase Price.Shares which are acquired pursuant to the
exercise of all or any portion of a Purchase Right may be paid for only by means
of payroll deductions from the Participant's Compensation accumulated during the
Offering Period. For purposes of the Plan, a Participant's "Compensation" with
respect to an Offering (a) shall include all salaries, before deduction for any
contributions to any plan maintained by the Company and described in Section
401(k) or Section 125 of the Code, and (b) shall not include commissions,
advances paid against future commissions, overtime, bonuses, annual awards,
other incentive payments, shift premiums, long-term disability, worker's
compensation or any other payments not specifically referenced in (a). Except as
set forth below, the amount of Compensation to be withheld from a Participant's
Compensation during each pay period shall be determined by the Participant's
subscription agreement.
(a) Election to Decrease Withholding. During an Offering
Period, a Participant may elect to decrease the amount withheld from his or her
Compensation by filing an amended subscription agreement with the Company on or
before the "Change Notice Date." The "Change Notice Date" shall initially be the
seventh (7th) day prior to the end of the first pay period for which such
election is to be effective; however, the Company may change such Change Notice
Date from time to time. A Participant may not elect to increase the amount
withheld from the Participant's Compensation during an Offering Period.
(b) Limitations on Payroll Withholding. The amount of payroll
withholding with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed fifteen percent (15%) of
the Participant's Compensation for such pay period. Notwithstanding the
foregoing, the Board may change the limits on payroll withholding effective as
of a future Offering Date, as determined by the Board. Amounts withheld shall be
reduced by any amounts contributed by the Participant and applied to the
purchase of Company stock pursuant to any other employee stock purchase plan
qualifying under section 423 of the Code.
(c) Payroll Withholding. Payroll deductions shall commence on
the first payday following the Offering Date and shall continue to the end of
the Offering Period unless sooner altered or terminated as provided in the Plan.
(d) Participant Accounts. Individual accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.
(e) No Interest Paid.Interest shall not be paid on sums
withheld from a Participant's Compensation.
3-B
(f) Exercise of Purchase Right. Subject to the limitations
contained in paragraph 10 of the Plan, on the Purchase Date of an Offering
Period each Participant who has not withdrawn from the Offering or whose
participation in the Offering has not terminated on or before such Purchase Date
shall automatically acquire pursuant to the exercise of the Participant's
Purchase Right the number of whole Shares arrived at by dividing the total
amount of the Participant's accumulated payroll deductions for the Purchase
Period by the Offering Exercise Price. No Shares shall be purchased on a
Purchase Date on behalf of a Participant whose participation in the Offering or
the Plan has terminated on or before such Purchase Date.
(g) Return of Cash Balance. Any cash balance remaining in the
Participant's account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole Share, the Company may establish procedures
whereby such cash is maintained in the Participant's account and applied toward
the purchase of Shares in the subsequent Offering Period.
(h) Tax Withholding. At the time the Purchase Right is
exercised, in whole or in part, or at the time some or all of the Shares are
disposed of, the Participant shall make adequate provision for the foreign,
federal and state tax withholding obligations of the Company, if any, which
arise upon exercise of the Purchase Right and/or upon disposition of Shares,
respectively. The Company may, but shall not be obligated to (except as required
by federal or state law), withhold from the Participant's Compensation the
amount necessary to meet such withholding obligations.
(i) Company Established Procedures. The Company may, from time
to time, establish (i) a minimum required withholding amount for participation
in an Offering, (ii) limitations on the frequency and/or number of changes in
the amount withheld during an Offering, (iii) an exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, (iv) payroll withholding
in excess of or less than the amount designated by a Participant in order to
adjust for delays or mistakes in the Company's processing of subscription
agreements, and/or (v) such other limitations or procedures as deemed advisable
by the Company in the Company's sole discretion which are consistent with the
Plan and in accordance with the requirements of section 423 of the Code.
(j) Expiration of Purchase Right. Any portion of a
Participant's Purchase Right remaining unexercised after the end of the Offering
Period to which such Purchase Right relates shall expire immediately upon the
end of such Offering Period.
10. Limitations on Purchase of Shares: Rights as a Stockholder.
(a) Fair Market Value Limitation. Notwithstanding any other
provision of the Plan, no Participant shall be entitled to purchase Shares under
the Plan (or any other employee stock purchase plan which is intended to meet
the requirements of section 423 of the Code sponsored by the Company) at a rate
which exceeds $25,000 in fair market value, which fair market value is
determined for Shares purchased during a given Offering Period as of the
Offering Date for such Offering Period (or such other limit as may be imposed by
the Code), for each calendar year in which Participant participates in the Plan
(or any other employee stock purchase plan described in this sentence).
(b) Pro Rata Allocation. In the event the number of Shares
which might be purchased by all Participants in the Plan exceeds the number of
Shares available in the Plan, the Company shall make a pro rata allocation of
the remaining Shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable.
4-B
(c) Rights as a Stockholder and Employee. A Participant shall
have no rights as a stockholder by virtue of the Participant's participation in
the Plan until the date of the issuance of a stock certificate(s) for the Shares
being purchased pursuant to the exercise of the Participant's Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate(s) are issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Company or interfere in any way with any right of the Company to
terminate the Participant's employment at any time.
11. Withdrawal.
----------
(a) Withdrawal From an Offering. A Participant may withdraw
from an Offering by signing and delivering to the Company's payroll office, a
written notice of withdrawal on a form provided by the Company for such purpose.
Such withdrawal may be elected at any time prior to the end of an Offering
Period. Unless otherwise indicated, withdrawal from an Offering shall not result
in a withdrawal from the Plan or any subsequent Offerings. A Participant is
prohibited from again participating in the same Offering at any time after
withdrawing from such Offering. The Company may impose, from time to time, a
requirement that the notice of withdrawal be on file with the Company's payroll
office for a reasonable period prior to the effectiveness of the Participant's
withdrawal from an Offering.
(b) Withdrawal from the Plan. A Participant may withdraw from
the Plan by signing a written notice of withdrawal on a form provided by the
Company for such purpose and delivering such notice to the Company's payroll
office. Withdrawals made after a Purchase Date for an Offering Period shall not
affect Shares acquired by the Participant on such Purchase Date. In the event a
Participant voluntarily elects to withdraw from the Plan, the Participant may
not resume participation in the Plan during the same Offering Period, but may
participate in any subsequent Offering under the Plan by again satisfying the
requirements of paragraphs 4 and 6(a) above. The Company may impose, from time
to time, a requirement that the notice of withdrawal be on file with the Company
s payroll office for a reasonable period prior to the effectiveness of the
Participant's withdrawal from the Plan.
(c) Return of Payroll Deductions. Upon withdrawal from an
Offering or the Plan, the Participant's accumulated payroll deductions which
have not been applied toward the purchase of Shares shall be returned as soon as
practicable after the withdrawal, without the payment of any interest, to the
Participant, and the Participant's interest in the Offering and/or the Plan, as
applicable, shall terminate. Such accumulated payroll deductions may not be
applied to any other Offering under the Plan following the Participant's
withdrawal.
(d) Participation Following Withdrawal; Resales of Shares by
Section 16 Persons. A Section 16 Person (as defined below) may not sell Shares
acquired by such Section 16 Person under the Plan until such Shares have been
held by such Section 16 Person for at least six (6) months. In addition, a
Section 16 Person who is deemed to "cease participation" in the Plan within the
meaning of either Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and amended from time to time or any
successor rule or regulation ("Rule 16b-3"), as a consequence of his or her
withdrawal from an Offering pursuant to paragraph 11(a) above, withdrawal from
the Plan pursuant to paragraph 11(b) above, or reduction in withholding pursuant
to paragraph 9(a) above, shall not again participate in the Plan for at least
six (6) months after the date of such withdrawal. A "Section 16 Person" shall
include an employee who is also an officer or director of the Company subject to
Section 16 of the Exchange Act.
(e) Waiver of Withdrawal Right. The Company may, from time to
5-B
time, establish a procedure pursuant to which a Participant may elect (an
"Irrevocable Election"), prior to the commencement of an Offering Period, to
have all payroll deductions accumulated in his or her Plan account as of one or
more subsequent Purchase Dates applied to purchase shares under the Plan, and
(i) to waive his or her right to withdraw from the Offering or the Plan, and
(ii) to waive his or her right to increase, decrease, or cease payroll
deductions from his or her Compensation for such Offering during the time such
election is in effect. Such election shall be made in writing on a form provided
by the Company for such purpose and must be delivered to the Company not later
than the close of business on a date prior to the first day of the Offering
Period for which such election is to first be effective, as determined by the
Company. (In order to comply with Rule 16b-3, a Section 16 Person (as defined in
paragraph 11(d) above) who does not make such an Irrevocable Election may be
required to hold any Shares acquired on a Purchase Date for at least six (6)
months following such Purchase Date.)
12. Termination of Employment.Termination of a Participant's employment
with the Company for any reason, including retirement, disability or death, or
the failure of a Participant to remain an employee eligible to participate in
the Plan, shall terminate the Participant's participation in the Plan
immediately. In such event, the payroll deductions credited to the Participant's
account since the last Purchase Date shall, as soon as practicable, be returned
to the Participant or, in the case of the Participant's death, to the
Participant's legal representative, and all of the Participant's rights under
the Plan shall terminate. Interest shall not be paid on sums returned to a
Participant pursuant to this paragraph 12. A Participant whose participation has
been so terminated may again become eligible to participate in the Plan by again
satisfying the requirements of paragraphs 4 and 6(a) above.
13. Transfer of Control. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to the
Company.
(a) any acquisition of the Company's stock or any
reorganization as defined in section 368(a)(1) of the Code to which the Company
is a party as defined in section 368(b) of the Code and in which the Company is
not the surviving corporation or is not immediately after the reorganization
engaged in the active conduct of a trade or business or in which the
stockholders of the Company will own less than fifty percent (50%) of the voting
securities of the surviving corporation; or
(b) any sale or conveyance of substantially all of the net
assets of the Company, unless immediately after such sale the Company is engaged
in the active conduct of a trade or business.
In the event of a Transfer of Control, the surviving, continuing,
successor, or purchasing corporation, as the case may be (the "Acquiring
Corporation"), shall either assume the Company's rights and obligations under
the Plan or substitute rights to purchase the Acquiring Corporation's stock for
outstanding Purchase Rights, unless the Company's Board otherwise agrees. In the
event that, with the Board's consent, the Acquiring Corporation elects not to
assume or substitute for such outstanding Purchase Rights in connection with a
merger in which the Company is not the surviving corporation or a reverse
triangular merger in which the Company is the surviving corporation where the
stockholders of the Company before such merger do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of the Company after such merger, the Board may, but shall not be obligated to,
provide that any outstanding Purchase Rights shall be exercised as of the date
of the Transfer of Control, as the Board so determines. The exercise of any
Purchase Right that was permissible solely by reason of this paragraph 13 shall
be conditioned upon the consummation of the Transfer of Control. Any Purchase
Rights which are neither assumed or substituted for by the Acquiring Corporation
nor exercised as of the date of the Transfer of
6-B
Control shall terminate effective as of the date of the Transfer of Control.
14. Capital Changes. In the event of changes in the common stock of the
Company due to a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, or like change in the Company's
capitalization, or in the event of any merger (including a merger effected for
the purpose of changing the Company's domicile), sale or other reorganization,
appropriate adjustments shall be made by the Company in the securities subject
to purchase under a Purchase Right, the Plan's share reserve, the number of
shares subject to a Purchase Right, and in the purchase price per share.
15. Non-Transferability. A Purchase Right may not be transferred in any
manner and shall be exercisable during the lifetime of the Participant only by
the Participant. The Company, in its absolute discretion, may impose such
restrictions on the transferability of the Shares purchasable upon the exercise
of a Purchase Right as it deems appropriate and any such restriction shall be
set forth in the respective subscription agreement and may be referred to on the
certificates evidencing such Shares.
16. Reports. Each Participant who exercised all or part of his or her
Purchase Right for an Offering Period shall receive, as soon as practicable
after the Purchase Date of such Offering Period, a report of such Participant's
account setting forth the total payroll deductions accumulated, the number of
Shares purchased, the fair market value of such Shares, the date of purchase and
the remaining cash balance to be refunded or retained in the Participant's
account pursuant to paragraph 9(g) above, if any.
17. Plan Term. This Plan shall continue until terminated by the Board
or until all of the Shares reserved for issuance under the Plan have been
issued, whichever shall first occur.
18. Restriction on Issuance of Shares. The issuance of shares under the
Plan shall be subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. A Purchase Right may not
be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations. In addition, no Purchase Right may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (ii) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. As a condition to the exercise of a
Purchase Right, the Company may require the Participant to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation, and to make any representation or warranty
with respect thereto as may be requested by the Company.
19. Legends. The Company may at any time place legends or other
identifying symbols referencing any applicable federal, state and/or foreign
securities restrictions or any provision convenient in the administration of the
Plan on some or all of the certificates representing shares of stock issued
under the Plan. The Participant shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to a Purchase Right in the possession of the Participant in order to
carry out the provisions of this paragraph.
20. Notification of Sale of Shares. The Company may require the
Participant to give the Company prompt notice of any disposition of Shares
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
7-B
Purchase Right. The Company may direct that the certificates evidencing Shares
acquired by exercise of a Purchase Right refer to such requirement to give
prompt notice of disposition.
21. Amendment or Termination of the Plan. The Board may at any time
amend or terminate the Plan, except that such termination shall not affect
Purchase Rights previously granted under the Plan, nor may any amendment make
any change in a Purchase Right previously granted under the Plan which would
adversely affect the right of any Participant (except as may be necessary to
qualify the Plan as an employee stock purchase plan pursuant to section 423 of
the Code or to obtain qualification or registration of the Shares under
applicable federal, state or foreign securities laws). In addition, an amendment
to the Plan must be approved by the stockholders of the Company within twelve
(12) months of the adoption of such amendment if such amendment would authorize
the sale of more shares than are authorized for issuance under the Plan.
8-B
EXHIBIT C
CHARTER OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS OF
INFODATA SYSTEMS INC.
---------------------
Purpose
The Purpose of the Audit Committee of the Board of Directors of
Infodata Systems Inc. (the "Company") is to assist the Board in carrying out its
oversight responsibilities with respect to the Company's financial reports and
compliance obligations, annual independent audit of its financial statements and
its internal financial and accounting controls.
Membership
The Committee will consist of not less than three independent members
of the Board of Directors. Each member of the Committee will meet the
requirements of the Audit Committee Policy of NASDAQ and, accordingly, (i) will
not be an officer or employee of the Company or its subsidiaries and will not
have a relationship which, in the Board's opinion, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director, and (ii) will be financially literate, or be able to become
financially literate within a reasonable period of time after appointment to the
Committee. At least one member of the Committee will have accounting or related
financial management expertise.
Responsibilities
The Committee's oversight responsibilities will include the following:
1. The Committee, subject to any action that may be taken by the full
Board of Directors, will have the ultimate authority and responsibility
to select (or nominate for shareholder approval), evaluate and, where
appropriate, replace the independent auditor.
2. The Committee will review with management and the auditor, the
audited financial statements to be included in the Company's Annual
Report on Form 10-KSB and review and consider with the auditor the
matters required to be discussed by Statement of Auditing Standards No.
61 ("SAS 61") as in effect at that time.
3. Either the whole Committee or the Chairperson of the Committee will
review with management and the auditor, the Company's quarterly
financial statements to be included in the Company's Quarterly Reports
on Form 10-QSB and review with the auditor the matters required to be
discussed by SAS 61 as in effect at that time.
4. The Committee will (i) review the annual written report from the
auditor discussing all relationships between the auditor and the
Company in accordance with Independence Standards Board Standard No. 1
("ISB") as in effect at that time; (ii) discuss with the auditor any
such disclosed relationships and their impact on the auditor's
independence; and (iii) recommend that the Board of Directors take
appropriate action in response to the auditor's report to satisfy
itself of the auditor's independence.
5. The Committee will review the comments from the auditor in the
auditor's annual report to management and the Board relating to the
Company's accounting procedures and systems of internal controls.
6. The Committee will review with management and the auditor,
compliance with laws, regulations and internal procedures and
contingent
1-C
liabilities and risks that may be material to the Company.
7. The Committee will prepare a report each year for inclusion in the
Company's annual proxy statement stating whether (i) the Committee
reviewed and discussed the audited financial statements with
management, (ii) the Committee discussed with the auditor the matters
required to be discussed by SAS 61, (iii) the Committee received the
written disclosures from the auditor required by ISB 1, and (iv) the
Committee recommended to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form
10-KSB.
8. The Committee will review the adequacy of this Charter on an annual
basis.
2-C
INFODATA SYSTEMS INC.
The undersigned hereby appoints STEVEN M. SAMOWICH and CURTIS D.
CARLSON, or either of them individually, with full power of substitution, to act
as proxy and to represent the undersigned at the 2001 annual meeting of
shareholders and to vote all shares of common stock of Infodata Systems Inc.
which the undersigned is entitled to vote and would possess if personally
present at said meeting to be held at the Company's Corporate Headquarters,
12150 Monument Drive, Fairfax, Virginia, on Wednesday, August 15, 2001, at 9:00
a.m. and at all adjournments thereof upon the following matters:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL LISTED ON THE
REVERSE SIDE. PROXIES ARE GRANTED THE DISCRETION TO VOTE UPON ALL OTHER MATTERS
THAT MAY PROPERLY BE BROUGHT BEFORE THE MEETING.
(Continued, and to be signed on the reverse side)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
INFODATA SYSTEMS INC.
August 15, 2001
Please Detach and Mail in the Envelope Provided
[X] Please mark your
votes as in this
example.
For Withhold The Board of Directors Recommends
a vote FOR the nominees
1. Election of [ ] [ ] Nominees: Richard T. Bueschel
Directors Alan S. Fisher
Christine Hughes
FOR, except vote withheld from the Robert M. Leopold
following nominees: Isaac M. Pollak
Millard H. Pryor, Jr.
___________________________________ Steven M. Samowich
Change of Address: [ ]
I plan to attend I do not
the meeting [ ] plan to
attend the [ ]
meeting
For Against Abstain
2. Approval of an amendment to the
Company's 1995 Stock Option Plan to [ ] [ ] [ ]
reserve 250,000 additional shares
of the Company's common stock
for issuance thereunder.
For Against Abstain
3. Approval of an amendment to the
Company's 1995 Stock Option Plan [ ] [ ] [ ]
that would annually reserve
additional shares of the
Company's common stock equal to
2% of the Company's total
authorized shares, for issuance
thereunder.
For Against Abstain
4. Approval of an amendment to the
Company's 1997 Employee Stock [ ] [ ] [ ]
Purchase Plan reserving 200,000
additional shares of the
Company's common stock for
issuance thereunder.
SIGNATURE(S)_________________________________________ DATE _____________________
NOTE: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full titles as such.