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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:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-12
iVoice, 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 transaction applies:
__________________________________________________________________
2. Aggregate number of securities to which transaction applies:
__________________________________________________________________
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)
__________________________________________________________________
4. Proposed maximum aggregate value of transaction:
__________________________________________________________________
5. Total fee paid:
__________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: __________________________________________
(2) Form, Schedule or Registration Statement No.: ____________________
(3) Filing Party: ____________________________________________________
(4) Date Filed: ______________________________________________________
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IVOICE, INC.
750 HIGHWAY 34
MATAWAN, NJ 07747
Dear Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of the
shareholders of iVoice, Inc. to be held on January 19, 2006, at the xxxx at
11:00 a.m., local time. All holders of our Class A Common Stock and Class B
Common Stock as of the close of business on November 21, 2005 are entitled to
vote at the 2005 Annual Meeting.
Enclosed is a copy of the notice of 2005 Annual Meeting of shareholders, a
proxy statement, a proxy card, an Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2004 and certain other financial information.
We hope you will be able to attend the meeting. Whether or not you plan to
attend, please sign and date the enclosed proxy card as promptly as possible in
order to ensure your representation at the meeting. Returning the signed proxy
card will not prevent you from voting in person at the meeting, if you so
desire, but will help us to secure a quorum and reduce the expense of additional
proxy solicitation.
Sincerely,
Jerome Mahoney
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President and
Chief Executive Officer
December 16, 2005 Matawan, New Jersey
IVOICE, INC.
750 HIGHWAY 34
MATAWAN, NJ 07747
NOTICE OF 2005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 19, 2006
_____________________
NOTICE IS HEREBY GIVEN that the 2005 Annual Meeting of the shareholders of
iVoice, Inc. ("iVoice" or the "Company")) is to be held on January 19, 2006, at
the XXXXXXXX at 11:00 a.m., local time, for the following purposes:
1. To approve the grant of discretionary authority for the Board of
Directors to declare a cash dividend to Class A Common Stock
shareholders of $1.5 million.
2. To approve the grant of discretionary authority for the Board of
Directors to effect the repurchase of sixty percent (60%) of the
issued and outstanding Class B Common Stock shares for $1.5 million.
3. To approve the grant of discretionary authority for the Board of
Directors to effect a 1 for 200 reverse split of the Class A Common
Stock by amending the Certificate of Incorporation.
4. To consider and approve the authorization of 10 billion or 20 billion
shares of Class A Common Stock, as the case may be.
5. To approve the grant of discretionary authority for the Board of
Directors to effect the buyback by the Company of the Class A Common
Stock.
6. To elect Jerome Mahoney and Frank Esser to the Board of Directors.
7. To consider and approve the iVoice, Inc. Amended and Restated 2003
Stock Incentive Plan (the "2003 Plan").
8. To ratify our Board of Directors' selection of Bagell Josephs Levine &
Company, LCC to audit our financial statements for the fiscal year
ending December 31, 2005.
9. To transact such other business as may properly come before this 2005
Annual Meeting or any adjournment or postponement thereof.
The foregoing proposals are more fully described in the accompanying proxy
statement.
The Board of Directors has fixed the close of business on November 21,
2005, as the record date for the determination of shareholders entitled to
notice of and to vote at this 2005 Annual Meeting and at any adjournment or
postponement thereof.
We are first mailing this proxy statement on or about December 16, 2005.
By Order of the Board of Directors
Jerome Mahoney
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President and
Chief Executive Officer
December 16, 2005 Matawan, New Jersey
All shareholders are cordially invited to attend the 2005 Annual Meeting in
person. Whether or not you expect to attend the meeting, we urge you to
complete, date, sign and return the enclosed proxy card as promptly as possible
in order to ensure your representation at the 2005 Annual Meeting. Returning the
signed proxy card will not prevent you from voting in person at the 2005 Annual
Meeting, if you so desire, but will help us to secure a quorum and reduce the
expense of additional proxy solicitation.
IVOICE, INC.
PROXY STATEMENT FOR 2005 ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON
JANUARY 19, 2006
________________________
PROXY STATEMENT
________________________
VOTING AND PROXY
iVoice, Inc. ("iVoice") is furnishing this proxy statement in connection
with the solicitation of proxies by the Board of Directors of iVoice for use at
the 2005 Annual Meeting of shareholders to be held on January 19, 2006, at
XXXXXXX at 11:00 a.m., local time, or at any adjournment or postponement of the
meeting. This proxy statement and the accompanying notice of 2005 Annual
Meeting, proxy card and Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004 are first being mailed to shareholders on or about December
16, 2005.
GENERAL INFORMATION FOR SHAREHOLDERS
We are soliciting proxies on behalf of the Board of Directors of iVoice,
Inc., a New Jersey corporation, for use at the 2005 Annual Meeting of
Shareholders to be held at 11:00 a.m. local time on January 19, 2006, at the
XXXXX and at any adjournment. This proxy statement is being first sent to our
shareholders on or about December 16, 2005.
RECORD DATE AND VOTING
The proposals to be voted on at the 2005 Annual Meeting are described in
detail in this proxy statement. Shareholders of record at the close of business
on November 21, 2005, are entitled to notice of, and to vote at the 2005 Annual
Meeting. At the close of business on that date, there were outstanding and
entitled to vote 9,994,728,373 shares of our Class A Common Stock and 1,670,514
Class B Common Stock shares that may vote an equivalent of 27,385,475,410 Class
A Common Stock shares. Each holder of Class A Common Stock is entitled to one
vote for each share of Class A Common Stock held by that shareholder on the
record date and each share of Class B Common Stock may exercise that number of
Class A Common Stock votes equal to the number of Class A Common Stock shares
that each Class B Common Stock share may be converted into on the record date of
the 2005 Annual Meeting.
If a choice as to the matters coming before the 2005 Annual Meeting has
been specified by a shareholder on a returned proxy card, the shares will be
voted accordingly. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED IN FAVOR
OF THE PROPOSALS DESCRIBED IN THE NOTICE OF 2005 ANNUAL MEETING SENT TO
SHAREHOLDERS AND IN THIS PROXY STATEMENT.
Abstentions and broker non-votes (that is, shares voted by means of a proxy
card submitted by a broker or nominee that specifically indicates the lack of
discretionary authority to vote on the proposals) are counted for purposes of
determining the presence or absence of a quorum at the 2005 Annual Meeting. For
purposes of determining whether a majority of votes present at the 2005 Annual
Meeting have approved a given proposal, abstentions will have the same effect as
negative votes, whereas broker non-votes will not be counted.
To ensure that your shares are voted at the 2005 Annual Meeting, please
complete, date, and sign the enclosed proxy card and return it as soon as
possible in the accompanying postage-prepaid return envelope.
REVOCABILITY OF PROXIES
Any shareholder giving a proxy pursuant to this solicitation may revoke it
at any time before it is exercised. A shareholder may revoke a proxy either by
filing with our corporate secretary at our principal
executive offices at 750 Highway 34, Matawan, New Jersey 07747, a duly executed
proxy card bearing a later date or by attending the 2005 Annual Meeting and
voting that shareholder's shares in person. Persons who hold shares of our Class
A Common Stock in street name may revoke their proxy by contacting their broker
to obtain a legal ballot and filing that ballot bearing a later date with our
corporate secretary at our principal executive offices or by attending the 2005
Annual Meeting and voting that ballot in person.
SOLICITATION
We will pay all expenses related to soliciting proxies in connection with
the 2005 Annual Meeting, including the cost of preparing, assembling, printing,
and mailing all materials being sent to our shareholders. We will furnish copies
of those materials to any brokerage house, fiduciary, or custodian holding in
its name shares that are beneficially owned by others so that they may forward
those materials to the beneficial owners. To ensure that a quorum is present in
person or by proxy at the 2005 Annual Meeting, it may be necessary for certain
of our officers, directors, employees, or other agents to solicit proxies by
telephone, facsimile, or other means. Currently we do not intend to solicit
proxies other than by mail.
SHAREHOLDER PROPOSALS
If you wish to present a shareholder proposal at the next meeting of
shareholders that we hold after the meeting to be held on January 19, 2006, you
must send us that proposal by October 1, 2006. If, however, the date of the next
Annual Meeting is changed by more than 30 days from December 23, 2006, then the
deadline is a reasonable time before we begin to print and mail our proxy
materials.
ADDITIONAL MATERIALS
We are mailing with this proxy statement a copy of our Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2004. These documents are
incorporated in, and constitute a part of this proxy statement.
OTHER MATTERS
Other than the proposals described in this proxy statement, we know of no
matters that will be presented for consideration at the 2005 Annual Meeting. If
any other matters properly come before the 2005 Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote as our
Board of Directors recommends the shares they represent by signing and returning
the enclosed proxy card, you are granting the named persons discretionary
authority with respect to such other matters.
Approval of Proposal 1, approval of the grant of discretionary authority
for the Board of Directors to declare a $1.5 million cash dividend, requires the
affirmative vote of a majority of the shares of iVoice common stock entitled to
vote at and present in person or represented by proxy at the meeting.
Approval of Proposal 2, approval of the grant of discretionary authority
for the Board of Directors to repurchase of sixty percent (60%) of the issued
and outstanding Class B Common Stock shares requires the affirmative vote of a
majority of the shares of iVoice common stock entitled to vote at and present in
person or represented by proxy at the meeting.
Approval of Proposal 3, approval of the grant of discretionary authority
for the Board of Directors to declare a 1 for 200 reverse split of the Class A
Common Stock requires the affirmative vote of a majority of the shares of iVoice
common stock entitled to vote at and present in person or represented by proxy
at the meeting.
Approval of Proposal 4, authorization of 10 billion or 20 billion shares of
Class A Common Stock, as the case may be, requires the affirmative vote of a
majority of the shares of iVoice common stock entitled to vote at and present in
person or represented by proxy at the meeting.
Approval of Proposal 5, approval of the grant of discretionary authority
for the Board of Directors to buyback of the Class A Common Stock from time to
time requires the affirmative vote of a majority of the shares of iVoice common
stock entitled to vote at and present in person or represented by proxy at the
meeting.
Directors are elected by a plurality. Therefore, for Proposal 6, the
election of Jerome Mahoney and Frank Esser as directors, the two nominees
receiving the highest number of votes will be elected. Abstentions and broker
non-votes will have no effect on Proposal 6.
Approval of Proposal 7, approval of the iVoice, Inc. 2003 Plan requires the
affirmative vote of a majority of the shares of iVoice common stock entitled to
vote at and present in person or represented by proxy at the meeting.
Approval of Proposal 8, ratification of the Board of Directors' selection
of Bagell, Josephs, Levine & Company, LLC to audit our financial statements for
the fiscal year ending December 31, 2005 requires the affirmative vote of a
majority of the shares of iVoice common stock entitled to vote at and present in
person or represented by proxy at the meeting.
AVAILABILITY OF ACCOUNTANTS
A representative of Bagell, Josephs, Levine & Company, LLC, iVoice's
Independent Registered Public Accountants, is not expected to be present at the
2005 Annual Meeting.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT.
The date of this Proxy Statement is December 16, 2005
PROPOSAL 1
APPROVAL THE GRANT OF DISCRETIONARY AUTHORITY TO
THE BOARD OF DIRECTORS TO DECLARE A CASH DIVIDEND
As of the quarter ended September 30, 2005, we held cash and cash
equivalents valued at over $11 million. The Board of Directors has determined
that we have sufficient cash available to fund our activities for the
foreseeable future. With the present number of outstanding Class A Common Stock
shares, 9,994,728,373 shares, each holder of 1000 Class A Common Stock shares
would receive a cash dividend payment of $.15. Therefore, the Board of Directors
has proposed and hereby seeks the grant of discretionary authority for the Board
of Directors to declare a cash dividend for $1.5 million, at the Board of
Directors' sole discretion in determining whether to declare a dividend at all
or the amount of the cash dividend, payable to all shareholders of Class A
Common Stock, as of the dividend record date, as determined by the Board of
Directors. The Board of Directors reserves the right to determine that it is not
in the best interests of the Company to: (i) declare a cash dividend for the
full $1.5 million and may reduce the amount of the cash dividend or (ii) not
declare a cash dividend at all. It is the Board of Directors' position that
shareholder approval for the declaration of a cash dividend is not required
under the New Jersey Business Corporation Act. Approval of Proposal 1requires
the affirmative vote of a majority of the shares of iVoice common stock entitled
to vote at and present in person or represented by proxy at the meeting.
Abstentions and broker non-votes will have no effect on Proposal 1.
THE BOARD OF DIRECTORS OF IVOICE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE CASH DIVIDEND PROPOSAL 1 AS DESCRIBED ABOVE.
PROPOSAL 2
APPROVAL OF THE GRANT OF DISCRETIONARY AUTHORITY TO
THE BOARD OF DIRECTORS TO REPURCHASE OF UP TO 60% OF THE
OUTSTANDING CLASS B COMMON STOCK SHARES FOR $1.5 MILLION
As of the record date there are 1,670,514 shares of Class B Common Stock,
no par value per share, outstanding. These shares are convertible into Class A
Common Stock at a conversion price calculated by dividing the number of Class B
Common Stock Shares being converted by fifty percent (50%) of the lowest price
that the Company had previously issued its Class A Common Stock since the Class
B Common Stock Shares were issued. As of the record date, this conversion price
is $.000061. All of the outstanding Class B Common Stock could be converted into
27,385,475,410 shares of Class A Common Stock using the conversion price of
$.000061, as calculated on the record date. The Board of Directors after due
consideration determined that it would be in the shareholder's best interest for
the Company to repurchase sixty percent (60%) of the outstanding Class B Common
Stock, or 1,002,308 shares, that would substantially eliminate this potential
large block Class A Common Stock that could have a material adverse impact upon
the stock price and be a source of substantial dilution to the interest of other
shareholders. Based upon the conversion price of the Class B Common Stock, as
calculated on the record date, sixty percent of the Class B Common Stock would
have a market value of $4,929,386. Therefore, the repurchase of the Class B
Common Stock for $1.5 million would be at a discount of 69.6% from the market
price of the Class A Common Stock. Jerome Mahoney, President, Chief Executive
Officer, Chief Financial Officer and Director of the Company is the sole holder
of the Class B Common Stock of the Company. If approved by the shareholders, the
consummation of this repurchase plan is contingent upon the holder of the Class
B Common Stock agreeing to the terms and conditions of any repurchase offer made
by the Board of Directors. Mr. Mahoney has advised the Board of Directors that
he would agree to the terms and conditions, as set forth above, but reserves the
right to revise his intention to sell the Class B Common Stock on these terms
and conditions at anytime.
The proposal set forth herein seeks approval by the shareholders for the
Board of Directors of the Company to grant sole discretionary authority to
consummate the repurchase of up to sixty percent of the outstanding Class B
Common Stock shares of the Company for a total purchase price of $1.5 million.
It is the Board of Directors' position that shareholder approval for the
repurchase of the Class B Common Stock is not required under the New Jersey
Business Corporation Act. Approval of Proposal 2 requires the affirmative vote
of a majority of the shares of iVoice common stock entitled to vote at and
present in person or represented by proxy at the meeting. Abstentions and broker
non-votes will have no effect on Proposal 2.
THE BOARD OF DIRECTORS OF IVOICE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" REPURCHASE OF UP TO 60% OF THE OUTSTANDING CLASS B COMMON STOCK
SHARES FOR $1.5 MILLION
PROPOSAL 3
APPROVAL THE GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF DIRECTORS
TO AMEND IVOICE'S CERTIFICATE OF INCORPORATION TO EFFECT A ONE FOR TWO
HUNDRED REVERSE SPLIT OF THE CLASS A COMMON STOCK
GENERAL
The Board of Directors has unanimously approved a proposal to amend the
Company's Certificate of Incorporation to implement a reverse stock split of the
Company's Class A Common Stock equal to a ratio of one-for-two hundred ("Reverse
Split"), at any time within 90 days after stockholder approval of this proposal
is obtained at the 2005 Annual Meeting, with the Board having sole discretion as
to whether or not to effect the Reverse Split. The Board of Directors also may
choose not to implement the Reverse Split at all in its sole discretion.
After the filing of an amendment to the Certificate of Incorporation
("Amendment") with the State of New Jersey, the Reverse Split will be effective
("Effective Date"), and each stock certificate representing shares of Class A
Common Stock outstanding immediately prior to the Reverse Split ("Old Shares")
will
be deemed automatically, without any action on the part of the stockholders, to
represent a fraction of such number of shares of Class A Common Stock after the
Reverse Split ("New Shares"). No fractional New Shares will be issued as a
result of a Reverse Split. In lieu thereof, each stockholder whose Old Shares
are not evenly divisible will receive one additional New Share for the
fractional New Share that such stockholder would otherwise be entitled to
receive as a result of a Reverse Split. After the Reverse Split becomes
effective, stockholders will be asked to surrender certificates representing Old
Shares in accordance with the procedures set forth in a letter of transmittal to
be sent by the Company. Upon such surrender, a certificate representing the New
Shares will be issued and forwarded to the stockholders; however, each
certificate representing Old Shares will continue to be valid and represent New
Shares equal to a fraction of the number of Old Shares (plus one additional New
Share where such Old Shares are not evenly divisible).
The number of shares of capital stock authorized by the Certificate of
Incorporation will not change as a result of the proposed Reverse Split. The
Class A Common Stock issued pursuant to the Reverse Split will be fully paid and
nonassessable. The voting and other rights that presently characterize the Class
A Common Stock will not be altered by the Reverse Split.
PURPOSES OF A REVERSE SPLIT
The Board of Directors believes that the Reverse Split is desirable for
several reasons:
The Reverse Split also should enhance the acceptability of the Class A
Common Stock by the financial community and investing public. The reduction in
the number of issued and outstanding shares of Class A Common Stock caused by
the Reverse Split is expected to increase the market price of the Class A Common
Stock. A variety of brokerage house policies and practices tend to discourage
individual brokers within those firms from dealing with lower priced stocks.
Some of those policies and practices pertain to time-consuming procedures that
function to make the handling of lower priced stocks economically unattractive
to brokers. In addition, the structure of trading commissions also tends to have
an adverse impact upon holders of lower priced stock because the brokerage
commission on a sale of lower priced stock generally represents a higher
percentage of the sales price than the commission on a relatively higher priced
issue. A Reverse Split should result in a price level for the Class A Common
Stock that will reduce, to some extent, the effect of the above-referenced
policies and practices of brokerage firms and diminish the adverse impact of
trading commissions on the market for the Class A Common Stock. The expected
increased price level also may encourage interest and trading in the Class A
Common Stock and possibly promote greater liquidity for the Company's
stockholders, although such liquidity could be adversely affected by the reduced
number of shares of Class A Common Stock outstanding after the Effective Date.
However, there can be no assurance that any or all of these results will
occur. If, for example, a one-for-two hundred Reverse Split is implemented,
there can be no assurance that the market price per New Share after the Reverse
Split will be two hundred times the market price per Old Share before the
Reverse Split, or that such price will either exceed or remain in excess of the
current market price. Further, there can be no assurance that the market for the
Class A Common Stock will improve. Stockholders should note that the Board of
Directors cannot predict what effect a Reverse Split will have on the market
price of the Class A Common Stock.
CERTAIN RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT
THERE CAN BE NO ASSURANCE THAT THE TOTAL MARKET CAPITALIZATION OF IVOICE'S
COMMON STOCK AFTER THE PROPOSED REVERSE SPLIT WILL BE EQUAL TO OR GREATER THAN
THE TOTAL MARKET CAPITALIZATION BEFORE THE PROPOSED REVERSE SPLIT OR THAT THE
PER SHARE MARKET PRICE OF IVOICE'S COMMON STOCK FOLLOWING THE REVERSE SPLIT WILL
EITHER EXCEED OR REMAIN HIGHER THAN THE CURRENT PER SHARE MARKET PRICE.
There can be no assurance that the market price per new share of iVoice
common stock (the "New Shares") after the Reverse Split will rise or remain
constant in proportion to the reduction in the number of old shares of iVoice
common stock (the "Old Shares") outstanding before the Reverse Split. For
example, based on the market price of iVoice's common stock on November 29, 2005
of $.0004 per share, if the Board of Directors decided to implement the Reverse
Split ratio of one-for-two hundred,
there can be no assurance that the post-split market price of iVoice's common
stock would be $.08 per share or greater.
Accordingly, the total market capitalization of iVoice's common stock after
the proposed Reverse Split may be lower than the total market capitalization
before the proposed Reverse Split and, in the future, the market price of
iVoice's common stock following the Reverse Split may not exceed or remain
higher than the market price prior to the proposed Reverse Split. In many cases,
the total market capitalization of a company following a Reverse Split is lower
than the total market capitalization before the Reverse Split.
THERE CAN BE NO ASSURANCE THAT THE REVERSE SPLIT WILL RESULT IN A PER SHARE
PRICE THAT WILL ATTRACT INSTITUTIONAL INVESTORS AND BROKERS.
While the Board of Directors believes that a higher stock price may help
generate investor interest, there can be no assurance that the Reverse Split
will result in a per share price that will attract institutional investors and
brokers.
THERE CAN BE NO ASSURANCE THAT THE REVERSE SPLIT WILL RESULT IN A PER SHARE
PRICE THAT WILL INCREASE IVOICE'S ABILITY TO ATTRACT AND RETAIN EMPLOYEES.
While the Board of Directors believes that a higher stock price may help
iVoice attract and retain employees who are less likely to work for a company
with a low stock price, there can be no assurance that the Reverse Split will
result in a per share price that will increase iVoice's ability to attract and
retain employees and other service providers.
A DECLINE IN THE MARKET PRICE FOR IVOICE'S COMMON STOCK AFTER THE REVERSE
SPLIT MAY RESULT IN A GREATER PERCENTAGE DECLINE THAN WOULD OCCUR IN THE ABSENCE
OF A REVERSE SPLIT, AND THE LIQUIDITY OF IVOICE'S COMMON STOCK COULD BE
ADVERSELY AFFECTED FOLLOWING A REVERSE SPLIT.
The market price of iVoice's common stock will also be based on iVoice's
performance and other factors, some of which are unrelated to the number of
shares outstanding. If the Reverse Split is effected and the market price of
iVoice's common stock declines, the percentage decline as an absolute number and
as a percentage of iVoice's overall market capitalization may be greater than
would occur in the absence of a reverse stock split. In many cases, both the
total market capitalization of a company and the market price of a share of such
company's common stock following a reverse stock split are lower than they were
before the reverse stock split. Furthermore, the liquidity of iVoice's common
stock could be adversely affected by the reduced number of shares that would be
outstanding after the reverse stock split.
EFFECT OF A REVERSE SPLIT
A Reverse Split will be effected by means of filing the Amendment to the
Certificate of Incorporation with the State of New Jersey. The Company is
authorized to issue 10 billion shares of Class A Common Stock. The par value of
the Company's Class A Common Stock will remain unchanged at no par value per
share and the number of authorized shares of the Company's Class A Common Stock
will remain unchanged. As of November 21, 2005, the record date of the 2005
Annual Meeting, there were 9,994,728,373 Old Shares issued and 9,994,128,373 Old
Shares outstanding.
Because the Reverse Split would apply to all issued and outstanding shares
of the Company's Class A Common Stock and outstanding rights to purchase the
Company's Class A Common Stock or to convert other securities into the Company's
Class A Common Stock, the proposed Reverse Split would not alter the relative
rights and preferences of existing stockholders. The Reverse Split would,
however, effectively increase the number of shares of the Company's Class A
Common Stock available for future issuances by the Board of Directors. As of the
record date of the 2005 Annual Meeting, there were 9,994,728,373 Class A Common
Stock shares issued with 5,271,627 shares remaining authorized and unissued.
If the proposed Reverse Split is approved at the 2005 Annual Meeting and
effected by the Board of Directors, some stockholders may consequently own less
than one hundred shares of the Company's
Class A Common Stock. A purchase or sale of less than one hundred shares (an
"odd lot" transaction) may result in incrementally higher trading costs through
certain brokers, particularly "full service" brokers. Therefore, those
stockholders who own less than one hundred shares following implementation of a
Reverse Split may be required to pay higher transaction costs should they
subsequently determine to sell their shares of Class A Common Stock.
If a Reverse Split is approved by the requisite vote of the stockholders,
stockholders have no right under New Jersey law or the Company's Certificate of
Incorporation or By-laws to dissent from a reverse stock split or to dissent
from the payment of cash in lieu of issuing fractional shares.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Date of a Reverse Split, the
Company will send a letter of transmittal to each holder of record of Old Shares
outstanding on the Effective Date. The letter of transmittal will contain
instructions for the surrender of certificate(s) representing such Old Shares to
Fidelity Transfer Company, the Company's exchange agent ("Exchange Agent"). Upon
proper completion and execution of the letter of transmittal and return thereof
to the Exchange Agent, together with the certificate(s) representing Old Shares,
a stockholder will be entitled to receive a certificate representing the number
of New Shares into which his Old Shares have been reclassified and changed as a
result of the Reverse Split. Shareholders should not submit any certificates
until requested to do so. No new certificate will be issued to a stockholder
until he or she has surrendered his or her outstanding certificate(s) together
with the properly completed and executed letter of transmittal to the Exchange
Agent.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of a Reverse
Split is not, and should not be relied on as, a comprehensive analysis of the
tax issues arising from or relating to the proposed Reverse Split. ACCORDINGLY,
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS FOR AN ANALYSIS OF THE
EFFECT OF THE TRANSACTION CONTEMPLATED BY THE PROPOSED AMENDMENT ON THEIR
RESPECTIVE TAX SITUATIONS.
The transactions contemplated by the Amendment constitute a
"recapitalization" of the Company within the meaning of Section 368(a)(1)(E) of
the Internal Revenue Code. Therefore, neither the Company nor its stockholders
will recognize any gain or loss for federal income tax purposes to the extent
that issued shares of Class A Common Stock are exchanged for a reduced number of
shares of Class A Common Stock.
The shares of Class A Common Stock to be issued to each stockholder will
have an aggregate basis, for computing gain or loss, equal to the aggregate
basis of the shares of Class A Common Stock held by such stockholder immediately
prior to the Effective Date. A stockholder's holding period for the shares of
Class A Common Stock to be issued will include the holding period for the shares
of Class A Common Stock held thereby immediately prior to the Effective Date
provided that such shares of Class A Common Stock were held by the stockholder
as capital assets on the Effective Date.
Approval of Proposal 3 requires the affirmative vote of a majority of the shares
of iVoice common stock entitled to vote at and present in person or represented
by proxy at the meeting. Abstentions and broker non-votes will have no effect on
Proposal 3.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO GRANT
DISCRETIONARY AUTHORITY TO IVOICE'S BOARD OF DIRECTORS TO AMEND IVOICE'S
CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF IVOICE'S CLASS A
COMMON STOCK EQUAL TO A RATIO OF ONE-FOR-TWO HUNDRED AT ANY TIME WITHIN 90 DAYS
AFTER STOCKHOLDER APPROVAL OF THIS PROPOSAL.
PROPOSAL 4
APPROVE THE AUTHORIZATION OF 10 BILLION OR 20 BILLION
SHARES OF CLASS A COMMON STOCK, AS THE CASE MAY BE
As of the record date for this 2005 Annual Meeting, the Company had 10
billion Class A Common Stock shares authorized, 9,994,728,373 Class A Common
Stock shares issued and 5,271,627 Class A Common Stock shares remaining
authorized and unissued. Therefore, for the Company to continue to raise capital
through the issuance of its Class A Common Stock and fund its working capital
needs, the number of authorized Class A Common Stock shares must be increased.
However, should Proposal 3 be approved by shareholders, the number of issued and
outstanding Class A Common Stock shares will be reduced to approximately 50
million shares, once the one-for-two hundred reverse stock split is completed.
Therefore, based upon the foregoing, the Board of Directors has proposed that 10
billion Class A Common Stock shares be authorized resulting in 9,950,000,000
shares available for future issuance,. However, should Proposal 3 not be
approved by shareholders and the number of authorized, issued and outstanding
shares remain at 9,994,728,373 shares, then the Board has proposed an increase
in the authorized number of shares to 20 billion. If either of these proposals
are approved by shareholders at this 2005 Annual Meeting, management will file
an Amendment to the Company's Certificate of Incorporation to effect whichever
proposal is approved by shareholders.
Approval of Proposal 4 requires the affirmative vote of a majority of the
shares of iVoice common stock entitled to vote at and present in person or
represented by proxy at the meeting. Abstentions and broker non-votes will have
no effect on Proposal 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO AMEND
THE CERTIFICATE OF INCORPORATION WHEREBY THE NUMBER OF AUTHORIZED CLASS A COMMON
STOCK SHARES SHALL BE EITHER 10 BILLION OR 20 BILLION SHARES, AS THE CASE MAY
BE.
PROPOSAL 5
APPROVE THE GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF
DIRECTORS TO BUYBACK UP TO $1 MILLION OF THE CLASS A COMMON STOCK
The Board of Directors has proposed the grant of discretionary authority to the
Board of Directors to the buyback of up to $1 million of the Company's Class A
Common Stock in the open market. The Board of Directors feels that this use of a
portion of the cash reserves may benefit shareholders by improving the market
price of the Company's Class A Common Stock as traded on the NASD Over the
Counter Bulletin Board. There can be no guarantee that the buyback of the Class
A Common Stock will have a positive effect, or any effect, upon the stock price.
It is the Board of Directors' position that shareholder approval is not required
under the New Jersey Business Corporation Act for the Board to properly
authorize the buyback of the Company's Class A Common Stock.
Approval of Proposal 5 requires the affirmative vote of a majority of the
shares of iVoice common stock entitled to vote at and present in person or
represented by proxy at the meeting. Abstentions and broker non-votes will have
no effect on Proposal 5.
THE BOARD OF DIRECTORS OF IVOICE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE GRANT OF DISCRETIONARY AUTHORITY TO THE BOARD OF DIRECTORS TO BUYBACK
UP TO $1 MILLION OF THE CLASS A COMMON STOCK
PROPOSAL 6
ELECTION OF DIRECTORS
iVoice's bylaws provide that the Board of Directors shall consist of at
least one and no more than five directors, with the exact number set by the
Board of Directors. The current number is set at two. iVoice's current board
consists of two directors, Jerome Mahoney and Frank Esser who have both been
nominated and have agreed to stand for reelection to the Board of Directors.
Their term shall each be for one year, or until the next shareholders' meeting,
whichever is earlier, and shall serve until there replacement is elected and
duly qualified.
The proxy holders intend to vote all proxies received by them in favor of
the election of both Messrs. Mahoney and Esser, unless instructions to the
contrary are marked on the proxy card. If Messrs. Mahoney and Esser are either
unable or decline to serve as a director subsequent to their election at the
2005 Annual Meeting, an event not now anticipated, the proxies will be voted for
any nominee designated by the Company's present board. However, the proxy
holders may not vote proxies for a greater number of persons than the number of
nominees named on the proxy card.
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Directors are elected by a plurality vote of shares present in person or
represented by proxy at the meeting. This means that the director nominee with
the most votes for a particular slot on the board is elected for that slot. In
an uncontested election for directors, the plurality requirement is not a
factor. Abstentions and broker non-votes will have no effect on Proposal 6.
IVOICE'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ELECTION OF JEROME MAHONEY AND FRANK ESSER AS A DIRECTOR.
PROPOSAL 7
APPROVAL OF THE AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN
iVoice's Board of Directors has unanimously approved the 2003 Plan and
recommends that the shareholders approve and adopt the 2003 Plan proposal. The
2003 Plan is included as APPENDIX A to this proxy statement.
PURPOSE
The 2003 Plan was adopted to provide a means by which employees, members of
the Board of Directors or consultants of iVoice (and any subsidiary of iVoice
designated by the iVoice Board of Directors to participate in the 2003 Plan) may
be given an opportunity to acquire shares of iVoice common stock.
ADMINISTRATION
The Board of Directors of iVoice or a committee composed of two or more
members of the board, is authorized to administer the 2003 Plan. If
administration is delegated to a committee, such committee will have, in
connection with the administration of the 2003 Plan, the powers possessed by the
board. As used herein with respect to the 2003 Plan, the "board" refers to the
committee as well as the board itself.
The board has the power to construe and interpret the 2003 Plan and,
subject to the provisions of the 2003 Plan, to determine the persons to whom and
the dates on which options will be granted, what type of option will be granted,
the number of shares to be subject to each option, the time or times during the
term of each option within which all or a portion of such option may be
exercised, the exercise price, the type of consideration, in addition to cash,
that may be used to pay the purchase price upon exercise of the option, and
other terms of the option.
SHARES SUBJECT TO THE 2003 PLAN
Pursuant to the 2003 Plan, the Class A Common Stock underlying the options
that may be issued pursuant to awards under the 2003 Plan shall not exceed in
the aggregate twenty percent (20%) of the outstanding number of iVoice Class A
Common Stock shares, as determined by the Board of Directors or the committee
that administrators the 2003 Plan, from time to time. If any option is
surrendered (except surrender for shares of common stock) or for any other
reason ceases to be exercisable, in whole or in part, without having been
exercised in full, the stock not purchased under such option will revert to and
again become available for issuance under the 2003 Plan.
ELIGIBILITY
Incentive stock options may be granted only to employees (including
officers and directors who are employees). Non-statutory stock options may be
granted to employees, directors, officers, independent contractors, and
consultants. All of iVoice's executive officers, employees, consultants and
directors are eligible to receive grants under the 2003 Plan.
No person is eligible for the grant of an incentive stock option, if at the
time of grant, such person owns stock possessing more than 10% of the total
combined voting power of all classes of stock of iVoice (a "10% Shareholder")
unless the exercise price of such option is at least 110% of the fair market
value of such common stock subject to the option at the date of grant and the
option is not exercisable after the expiration of five years from the date of
grant. The aggregate fair market value, determined at the time of grant, of the
shares of common stock with respect to which incentive stock options are
exercisable for the first time during any calendar year (under all such plans of
iVoice and its affiliates) may not exceed $100,000 dollars.
TERMS OF OPTIONS
TERM. No option is exercisable after the expiration of ten (10) years from
the date it was granted, except for a 10% Shareholder for which the expiration
shall be no more than five (5) years.
EXERCISE/PURCHASE PRICE. The exercise price of each option will not be less
than 100% of the fair market value of the common stock on the date of grant,
except for a 10% Shareholder for which the exercise price shall be no less than
110% of the fair market value of the common stock on the date of grant.
CONSIDERATION. The purchase price of stock acquired pursuant to an option
is paid either in cash at the time the option is exercised or at the discretion
of the committee, (i) by delivery of already owned common stock of iVoice or by
withholding common stock otherwise deliverable upon exercise of the
discretionary option, (ii) by delivery on a form prescribed by the committee of
an irrevocable direction to a securities broker approved by the Committee to
sell shares of stock and deliver all or a portion of the proceeds to iVoice in
payment for the stock, (iii) by delivery of the optionee's promissory note with
such provisions as the committee determines appropriate, or (iv) any combination
of the foregoing (including cash). If the exercise price of an option is paid by
withholding common stock otherwise deliverable upon exercise of the option, the
committee may issue the optionee an additional option to purchase a number of
shares of common stock equal to the number of shares withheld. This additional
option shall have the same terms as the option that was exercised except that
its exercise price shall be the fair market value of the common stock on the
date of grant of the additional option.
The committee may, in its sole discretion, authorize the surrender of all
or part of an unexercised option (excluding non-discretionary options described
below) and authorize a payment thereof of an amount equal to the difference
between the aggregate fair market value of the common stock subject to such
option and the aggregate option price of such common stock. Such payment may be
made in cash, shares of common stock (using the fair market value on the date of
surrender), or some combination thereof.
TRANSFERABILITY. An incentive stock option shall not be transferable except
by will or by the laws of descent and distribution, and shall be exercisable
during the lifetime of the person to whom the incentive stock option is granted
only by such person. A non-statutory stock option shall
be transferable to the extent permitted by the option agreement covering the
option.
VESTING. The vesting schedule of each stock option granted under the 2003
Plan will be determined by the committee. If any option ceases to be exercisable
in whole or in part, the shares which were subject to such option but as to
which the option had not been exercised shall continue to be available under the
Plan.
EFFECT OF CERTAIN CORPORATE EVENTS
If any change is made in the common stock subject to the 2003 Plan or
subject to any option granted under the 2003 Plan through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock dividend
or other change in the capital structure of iVoice, appropriate adjustments
shall be made by the committee in order to preserve but not increase the
benefits to the individual, including adjustments to the number and kind of
shares and the price per share subject to outstanding options.
A stock option agreement may provide for accelerated vesting in the event
of certain changes in control (all grants to non-employee directors shall so
provide). If a stock option agreement contains a change in control provision, it
will also provide that the stock option will remain exercisable for the
remainder of its term except that it will terminate upon the effective date of a
change in control in which iVoice is not the surviving entity, or in which all
or substantially all assets of the company are disposed of, sold or transferred,
or upon the complete liquidation or dissolution of iVoice.
AMENDMENT OF PLAN AND GRANTS
The board at any time, and from time to time, may amend the 2003 Plan.
However, no amendment will be effective without the consent of shareholders then
sufficient to approve the 2003 Plan in the first instance where the amendment
will increase the maximum number of shares subject to stock options issued under
the 2003 Plan, except as presently permitted under the 2003 Plan or change the
designation or class of persons eligible to receive incentive stock options
under the 2003 Plan.
The board may amend the terms of any outstanding option. However, any
amendment which would adversely affect the optionee's rights under an
outstanding option shall not be made without optionee's written consent.
Notwithstanding the foregoing, the board may, without written consent, cancel
any outstanding option or accept any outstanding option in exchange for a new
option.
TERMINATION OF PLAN
The board may suspend or terminate the 2003 Plan at any time or from time
to time. Unless sooner terminated by the board, the 2003 Plan will terminate on
November 16, 2013.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Options granted under the 2003 Plan which are
designated as incentive stock options are intended to be eligible for the
favorable federal income tax treatment accorded "incentive stock options" under
Section 422 of the Code.
There generally are no federal income tax consequences to the optionee or
iVoice by reason of the grant or exercise of an incentive stock option. However,
the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be capital gain or loss. Generally, if the optionee disposes of the
stock before the expiration of either of these holding periods (a "disqualifying
disposition"), at the time of disposition, the optionee will realize taxable
ordinary income equal to the lesser of (a) the excess of the stock's fair market
value on the date of exercise over the exercise price, or (b) the optionee's
actual gain, if any, on the purchase and sale. The
optionee's additional gain, or any loss, upon the disqualifying disposition will
be a capital gain or loss, which will be long-term or short-term depending on
how long the optionee holds the stock. Capital gains are generally subject to
lower tax rates than ordinary income. Slightly different rules may apply to
optionees who acquire stock subject to certain repurchase options or who are
subject to Section 16 of the Exchange Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, iVoice will generally be entitled (subject to the
requirement of reasonableness, the provision of 162(m) of the Code, and the
satisfaction of a tax reporting obligation) to a corresponding business expense
deduction in the tax year in which the disqualifying disposition occurs.
NON-STATUTORY STOCK OPTIONS. Options granted under the 2003 Plan which are
not designated as incentive stock options are "non-statutory stock options"
which generally have the federal income tax consequences described below:
There are no tax consequences to the optionee or iVoice by reason of the
grant of a non-statutory stock option. Upon exercise of a non-statutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, iVoice is required
to withhold from regular wages or supplemental wage payments an amount based on
the ordinary income recognized. Subject to the requirement of reasonableness,
the provisions of Section 162(m) of the Code, and the satisfaction of a tax
reporting obligation, iVoice will generally be entitled to a business expense
deduction equal to the taxable ordinary income realized by the optionee. Upon
disposition of the stock, the optionee will recognize a capital gain or loss
equal to the difference between the selling price and the sum of the amount paid
for such stock plus any amount recognized as ordinary income upon exercise of
the option. Such gain or loss will be long-term or short-term depending on how
long the optionee holds the stock. Slightly different rules may apply to
optionees who acquire stock subject to certain repurchase options or who are
subject to Section 16 of the Exchange Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain employees in a taxable year to the extent that compensation exceeds $1
million for a covered employee. It is possible that compensation attributable to
awards granted under the 2003 Plan, when combined with all other types of
compensation received by a covered employee from iVoice, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m) of the Code,
compensation attributable to stock options will qualify as performance-based
compensation, provided that the option is granted by a compensation committee
comprised solely of "outside directors" and either: (i) the stock option plan
contains a per-employee limitation on the number of shares for which stock
options may be granted during a specified period, the per-employee limitation is
approved by the shareholders and the exercise price of the option is no less
than the fair market value of the stock on the date of grant; or (ii) the option
is granted (or exercisable) only upon the achievement (as certified in writing
by the compensation committee) of an objective performance goal established in
writing by the compensation committee while the outcome is substantially
uncertain and the option is approved by shareholders. Stock options granted
under the 2003 Plan are intended to qualify for the exemption for
performance-based compensation.
POSSIBLE ANTI-TAKEOVER EFFECTS
Although not intended as an anti-takeover measure by iVoice's Board of
Directors, one of the possible effects of the 2003 Plan could be to place
additional shares, and to increase the percentage of the total number of shares
outstanding, in the hands of directors and key employees. These persons may be
viewed as part of, or friendly to, incumbent management and may, therefore,
under certain circumstances be expected to make investment and voting decisions
in response to a hostile takeover attempt that may serve to discourage or render
more difficult the accomplishment of an attempt.
NEW PLAN BENEFITS
As stated above, the committee has the authority to determine the amounts,
terms and grant dates of options to be granted in the future to eligible
employees or eligible directors or consultants under the 2003 Plan. To date, no
such determinations have been made and, as a result, it is not possible to state
such information.
EQUITY COMPENSATION PLAN INFORMATION
Information regarding securities authorized for issuance under iVoice's
existing equity compensation plans is included under the heading "Information
Relating to iVoice- Equity Compensation Plan Information."
Approval of Proposal 7 requires the affirmative vote of a majority of the
shares of iVoice common stock entitled to vote at and present in person or
represented by proxy at the meeting. Abstentions and broker non-votes will have
no effect on Proposal 7.
THE BOARD OF DIRECTORS OF IVOICE UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE 2003 PLAN PROPOSAL.
PROPOSAL 8
RATIFICATION OF SELECTION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Our board has appointed the firm of Bagell, Josephs, Levine & Company, LLC,
independent registered public accountants, to audit our financial statements for
the year ending December 31, 2005, and is asking the shareholders to ratify this
appointment. Bagell, Josephs, Levine & Company, LLC had audited our financial
statements for the fiscal year ended December 31, 2004. Bagell, Josephs, Levine
& Company, LLC has advised us that neither the firm nor any of its associates
has any material relationship with iVoice or any of its subsidiaries.
If our shareholders fail to ratify appointment of Bagell, Josephs, Levine &
Company, LLC, the board will reconsider its selection. Even if the selection is
ratified, the board in its discretion may direct the appointment of a different
independent registered public accounting firm at any time during the year if the
board believes that such a change would be in the best interests of iVoice and
its shareholders.
No representative of Bagell, Josephs, Levine & Company, LLC will be present
at the 2005 Annual Meeting.
Approval of Proposal 8 requires the affirmative vote of a majority of the
shares of iVoice common stock entitled to vote at and present in person or
represented by proxy at the meeting. Abstentions and broker non-votes will have
no effect on Proposal 8.
AUDIT FEES
The following table sets forth fees billed to the Company by the Company's
independent registered public accounting firm for the year ended December 31,
2004 and December 31, 2003 for (i) services rendered for the audit of the
Company's annual financial statements and the review of the Company's quarterly
financial statements, (ii) services rendered that are reasonably related to the
performance of the audit or review of the Company's financial statements that
are not reported as Audit Fees, and (iii) services rendered in connection with
tax preparation, compliance, advice and assistance.
SERVICES 2004 2003
-------- -------- --------
Audit Fees $ 19,299 $ 19,775
Audit - Related Fees -- --
Tax fees $ 2,350 $ 1,000
All Other Fees -- --
Total $ 21,649 $ 20,775
Prior to engaging our accountants to perform a particular service, our
Audit Committee obtains an estimate for the service to be performed. All of the
services described above were approved by the Audit Committee in accordance with
its procedures.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF BAGELL, JOSEPHS, LEVINE & COMPANY, LLC TO SERVE
AS IVOICE'S INDEPENDENT AUDITORS FOR THE YEAR ENDED DECEMBER 31, 2005.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(A) OF THE EXCHANGE ACT.
The Company has two directors and one principal officer. Mr. Mahoney has
served as President, Chief Executive Officer, Chief Financial Officer and
Director shown since May 1999, and is expected to continue to serve until the
next Annual Meeting of Shareholders. Mr. Esser has served as a Director since
February 24, 2004.
Period Served as
Name Age Position Officer\Director
- ----------------- ----- --------------- ------------------
Jerome R. Mahoney 44 President, CEO, 5-21-99 to present
CFO, Director
Frank V. Esser 66 Director 2-24-04 to present
BUSINESS EXPERIENCE
JEROME R. MAHONEY. Mr. Mahoney has been our Chief Executive Officer and our
sole director since May 21, 1999. Mr. Mahoney started at Executone Information
Systems, a telephone systems manufacturer, and was Director of National Accounts
from 1988 to 1989. In 1989, Mr. Mahoney founded Voice Express, Inc., a New York
company that sold voicemail systems and telephone system service contracts and
installed these systems. Mr. Mahoney sold Voice Express Systems in 1993. From
1993 to 1997, Mr. Mahoney was President of IVS Corp., and on December 17, 1997,
he established International Voice Technologies, which we merged with on May 21,
1999. Since January 2003, Mr. Mahoney has served as Non-Executive Chairman of
the Board of Directors of Trey Resources, Inc. Since August 2004, Mr. Mahoney
has served as Non-Executive Chairman of the Board of Directors of Deep Field
Technologies, Inc., iVoice Technology, Inc. and SpeechSwitch, Inc. Since
December 2004, Mr. Mahoney has served as Non-Executive Chairman of the Board of
Directors of MM2 Group, Inc. Mr. Mahoney received a B.A. in finance and
marketing from Fairleigh Dickinson University, Rutherford, N.J. in 1983.
FRANK V. ESSER. Board Member since February 2004 and the Head of The Audit
Committee. Mr. Esser, who is a Certified Public Accountant, from 1959 to 1968,
he functioned as Transfer Agent and Head
Bookkeeper in the Treasury Department of Texaco Inc. As a certified public
accountant with Ernst & Young from 1968 to 1981, he participated in the audits
of major publicly traded companies such as J.P. Stevens & Co., Dynamics
Corporation of America, and Phillips - Van Heusen Corporation, along with law
firms, banks, manufacturing companies and other organizations. He also
participated in the public offerings of equity and debt and the preparation of
SEC filings. In 1981, Mr. Esser accepted the position of Corporate Controller
with a client, Grow Group, Inc., a Fortune 500 manufacturer of paints, solvents,
and household products. Ascending to the position of Chief Financial Officer in
1987. In 1998, Mr. Esser accepted the position of Senior Associate at Beacon
Consulting Associates, adding the title of Vice President in 1999. Since June
2005, Mr. Esser has served as a Director of iVoice Technology, Inc. Mr. Esser
holds a BBA degree from Baruch College of the City University of New York and is
a Certified Public Accountant in New York State.
There are no agreements or understandings for the officer or directors to
resign at the request of another person and the above-named officers and
director is not acting on behalf of nor will act at the direction of any other
person.
The Board of Directors did not meet in 2004 and acted through written
unanimous consent on three occasions in 2004.
Due to the limited number of directors, only one being an independent
director, it is not feasible for the Company to have a standing nominating
committee. The full Board of Directors considers and participates in the
nomination of the director nominees.
The Company's shareholders may communicate in writing with the Board of
Directors by directing their written communication directly to the Board of
Director by addressing their communication to the Board of Directors, c/o of the
Company, or to an individual member of the Board of Directors, c/o of the
Company. Upon receipt of any written communication addressed to the Board of
Directors or to an individual member of the Board of Directors, the Company's
receptionist will make copies of the communication and will distribute the
communication to all members of the Board of Directors, or will distribute a
communication addressed to an individual member of the Board of Directors
directly to that member of the Board of Directors.
Attendance by the members of the Board of Directors at the Company's Annual
Meeting of Shareholders is requested for all independent board members and is
required for all directors who also serve as officers of the Company.
Board Committees
The Board of Directors only has one committee, the Audit Committee. The
Audit Committee selects our independent auditors, reviews the results and scope
of the audit and other services provided by our independent auditors, reviews
our financial statements for each interim period and for our year end and our
internal financial and accounting controls, and recommends, establishes and
monitors our disclosure controls and procedures. For the fiscal year ended
December 31, 2004, Frank V. Esser was the sole member and Chairman of the Audit
Committee. The Audit Committee met one time in 2004. The Audit Committee has not
adopted a written charter.
AUDIT COMMITTEE REPORT
(1) The Audit Committee has reviewed and discussed the audited financial
statements for the fiscal year ended December 31, 2004 with
management;
(2) The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61, as may be modified or
supplemented;
(3) The Audit Committee has received the written disclosures and the
letter from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES), as may be modified or supplemented, and has discussed
with the independent accountant the independent accountant's
independence; and
(4) Based on the review and discussions referred to in paragraphs (1)
through (3) of this section, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included
in the Company's Annual Report on Form 10-KSB for the last fiscal year
for filing with the Commission.
Frank Esser
Chairman of the Audit Committee
The Company had a number of related party transactions with Mr. Mahoney.
Please see below for this information in the section entitled: "Certain
Relationships and Related Transactions".
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CHANGE OF CONVERSION PRICE OF CLASS B COMMON STOCK
On October 15, 2002, our stockholders approved a change in the conversion
price of our Class B common stock held by Jerome R. Mahoney, our president,
chief executive officer, chief financial officer and director. On January 13,
2003, we amended our certificate of incorporation to provide that the Class B
common stock is convertible into the number of shares of Class A common stock
determined by dividing the number of Class B common stock being converted by 50%
of the lowest price that we had previously issued our Class A common stock.
Previously, each share of Class B common stock was convertible into 100 shares
of Class A common stock. Accordingly, the number of shares of Class A common
stock to be received by Mr. Mahoney upon conversion of the Class B common stock
will be greater as the price of the Class A common stock declines.
ISSUANCE AND AMENDMENT OF CONVERTIBLE PROMISSORY NOTE
During the period from June 2000 through December 2002, Mr. Mahoney had
sold personal holdings of shares of our Class A common stock and loaned the
proceeds of these sales to us to fund our working capital requirements. On March
20, 2001, we executed a promissory note and security agreement in favor of Mr.
Mahoney with respect to such loans. As a result, all of our assets are subject
to a security agreement with Mr. Mahoney.
On August 13, 2002, our board of directors approved amendments to the
promissory note dated March 20, 2001, to allow for the conversion of amounts due
thereunder into (i) one share of Class B common stock for each dollar owed, or
(ii) the number of shares of Class A common stock calculated by dividing (x) the
sum of the amount being prepaid by (y) 50% of the lowest issue price of our
Class A common stock since the first advance of funds under the note, whichever
the note holder chooses, or (iii) payment of the principal of the principal of
note, before any repayment of interest.
As of September 30, 2002, the outstanding loan balance including interest,
monies loaned from the proceeds of stock sales, unpaid compensation, income
taxes incurred from the sale of stock and unreimbursed expenses, totaled
$2,009,822. On October 14, 2002, Mr. Mahoney converted $1,504,875 of the amounts
owed to him under the promissory note into 1,504,875 shares of Class B common
stock. On February 11, 2004, Trey Resources assumed $250,000 of such outstanding
indebtedness upon consummation of the spin-off. On August 5, 2005, iVoice
Technology, Inc., Deep Field Technologies, Inc. and SpeechSwitch, Inc., each
assumed $190,000 of such outstanding indebtedness upon consummation of the
spin-offs of these three subsidiaries. As of November 11, 2004, the total
balance owed to Mr. Mahoney is $40,172, convertible into 40,172 shares of our
Class B common stock, or 658,550,328 shares of our Class A common stock.
Since we do not have a sufficient number of authorized shares of Class A
common stock to issue all of the shares of Class A common stock issuable upon
the exercise or conversion of all of our outstanding options, warrants,
debentures and Class B common stock, Mr. Mahoney has agreed that, until such
time as our right to receive advances under the Equity Line of Credit Agreement
expires and until we have increased the number of authorized shares of Class A
common stock in an amount sufficient to issue all
shares of our Class A common stock underlying all then-outstanding options,
warrants, debentures, Class B common stock or other obligations to issue shares
of our Class A common stock, Mr. Mahoney will not convert any of his shares of
Class B common stock or the balance due under his convertible promissory note,
if any such conversion or conversions, in the aggregate, would result in our
issuance to Mr. Mahoney of more than 1,200,000,000 shares of our Class A common
stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
We are not aware of any officer or director that did not comply with
Section 16(a) of the Securities Exchange Act of 1934, as amended, during the
fiscal year ended December 31, 2004, except for Jerome R. Mahoney who was late
in filing Form 4, but has now filed all required Form 4 for the period ended
December 31, 2004 and Frank Esser who failed to file a Form 3 upon his initial
election to the Board of Directors. Mr. Mahoney was late filing a Form 4
reporting the sale of an aggregate of 165,063,000 shares of Class A Common Stock
in 36 distinct trades during the period of February 13, 2004 through March 30,
2004. Mr. Esser will file his Form 3 within ten days of the date hereof.
CODE OF ETHICS.
The Company has adopted a Code of Ethics for adherence by its Chief Executive
Officer, Chief Financial Officer, Chief Accounting Officer and Controller to
ensure honest and ethical conduct; full, fair and proper disclosure of financial
information in the Company's periodic reports filed pursuant to the Securities
Exchange Act of 1934; and compliance with applicable laws, rules, and
regulations. Any person may obtain a copy of our Code of Ethics by mailing a
request to the Company at the address appearing on the front page of the Annual
Report on Form 10-KSB.
EXECUTIVE COMPENSATION.
The following table sets forth compensation information for services
rendered by certain of our executive officers in all capacities during the last
three completed fiscal years. The following information includes the dollar
value of base salaries, bonus awards, the number of stock options granted, and
certain other compensation, if any, whether paid or deferred.
SUMMARY COMPENSATION TABLE
Securities
Other Annual Restricted Underlying All Other
Name and Position(s) Year Salary($) Bonus Compensation Stock Options Compensation
- -------------------------- ---- -------- ----- ------------ ---------- ---------- ------------
Jerome R. Mahoney(1)
President, Chief 2004 $270,000 0 $0 0 0 $866 (4)
Executive Officer and 2003 $255,552 0 $0 0 0 $866 (4)
Chief Financial Officer, 2002 $232,320 0 $45,605 (3) 0 0 $866 (4)
Kevin Whalen (2) 2004 $ 0 0 0 0 0 0
Chief Financial Officer 2003 $ 33,333 0 0 0 0 0
2002 $100,000 0 0 0 0 0
(1) Mr. Mahoney has been serving as our Chief Financial Officer since May 1,
2003.
(2) Effective May 16, 2000, Mr. Whalen was promoted to Chief Financial Officer
and was not subject to any employment contract with iVoice, Inc. Mr.
Whalen's employment was terminated on Effective April 30, 2003.
(3) Represents amounts accrued for reimbursement of income taxes paid by Mr.
Mahoney on sales of personal holdings of iVoice Class A common shares, the
proceeds of which have been loaned to iVoice.
(4) Represents $866 in life insurance premiums paid on behalf of Mr. Mahoney
for the year ending December 31, 2004, 2003 and 2002.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Shares Acquired Underlying Unexercised In-the-Money
---------------- ----------------------- ------------
on Value Options/SARs at FY-End Options/SARs at FY-End
--- ------ ----------------------- ----------------------
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------- ---------------- -------- ------------------------- -------------------------
None 0 0 0 0 / 0
COMPENSATION OF DIRECTORS
Independent directors are paid $3,000 per quarter for serving on the Board
of Directors.
EMPLOYMENT CONTRACTS
On May 1, 1999, the Company entered into a five-year employment agreement
with its majority stockholder (the "Executive"). He will serve as the Company's
Chairman of the Board and Chief Executive Officer for a term of five years. As
consideration, the Company agrees to pay the Executive a sum of $180,000 the
first year with a 10% increase every year thereafter. The employment agreement
with Mr. Mahoney provides for a severance payment to him of three hundred
percent (300%), less $100, of his average annual amount actually paid by the
Company or any parent or subsidiary of the Company to the Executive and included
in the Executive's gross income for services rendered in each of the five prior
calendar years (or shorter period
during which the Executive shall have been employed by the Company) should his
employment be terminated following a Change in Control, as defined in the
agreement.
On November 15, 2004, the Company amended the employment agreement with
Jerome Mahoney and extended the term for an additional five-year period
commencing on May 1, 2004. He will serve as the Company's Chairman of the Board,
President and Chief Executive Officer for a term of five years. As
consideration, the Company agrees to pay Mr. Mahoney a sum of $270,000 the first
year with a 10% increase every year thereafter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following tables set forth certain information regarding the beneficial
ownership of our voting securities as of November 11, 2005 of (i) each person
known to us to beneficially own more than 5% of the applicable class of voting
securities, (ii) our directors, (iii) and each named executive officer and (iv)
all directors and executive officers as a group. As of November 11, 2005 a total
of 9,994,728,373 shares of Class A common stock outstanding and a total of
1,670,514 shares of our Class B common stock were outstanding. Each share of
Class A common stock and Class B common stock is entitled to one vote on matters
on which holders of common stock are eligible to vote. The column entitled
"Percentage of Total Voting Stock" shows the percentage of total voting stock
beneficially owned by each listed party.
The number of shares beneficially owned is determined under rules
promulgated by the Securities and Exchange Commission, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
those rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares which
the individual has the right to acquire within 60 days of November 11, 2005,
through the exercise or conversion of any stock option, convertible security,
warrant or other right. Unless otherwise indicated, each person or entity named
in the table has sole voting power and investment power (or shares that power
with that person's spouse) with respect to all shares of capital stock listed as
owned by that person or entity.
OWNERSHIP OF COMMON STOCK
COMMON STOCK
BENEFICIALLY OWNED
------------------------------
NAME/ADDRESS TITLE OF CLASS NUMBER PERCENT
- -------------------- -------------------- -------------- ---------
Jerome R. Mahoney Class A Common Stock 28,044,475,738(1) 73.8%
c/o iVoice, Inc. Class B Common Stock 1,670,514(1) 100.0%
750 Highway 34
Matawan, New Jersey 07747
Frank V. Esser (Director) Class A Common Stock 14,178,571 0.0%
27 Arden Road
Old Bridge, New Jersey 08857
Director and executive officer as a group Class A Common Stock 28,058,654,309 73.8%
Class B Common Stock 1,670,514 100.0%
___________________
(1) Includes (i) 450,000 shares of our Class A common stock held by Mr.
Mahoney's minor children, (ii) 27,385,475,410 shares of our Class A common
stock issuable upon conversion of 1,670,514 shares of our Class B common
stock held by Mr. Mahoney, and (iii) 658,550,328 shares of our Class A
common stock issuable upon conversion of a promissory note dated March 20,
2001, as amended on August 13, 2002. Pursuant to such promissory note, Mr.
Mahoney may, at any time, convert amounts owed to him for monies loaned
thereunder and interest thereon into (i) one share of our Class B common
stock for each dollar owed, (ii) the number of shares of our Class A common
stock calculated by dividing (x) the sum of the amount being prepaid by (y)
50% of the lowest issue price of shares of our Class A common stock since
the first advance of funds under such note, or (iii) payment of the
principal of the note, before any repayment of interest. At November 11,
2005, the total balance owed to Mr. Mahoney was $40,172, convertible into
40,172 shares of our Class B common stock, or 658,550,328 shares of our
Class A common stock. Since we do not have a sufficient number of
authorized shares of Class A common stock to issue all of the shares of
Class A common stock issuable upon the exercise or conversion of all of our
outstanding options, warrants, debentures and Class B common stock, Mr.
Mahoney has agreed that, until such time as our right to receive advances
under the Equity Distribution Agreement expires and until we have increased
the number of authorized shares of Class A common stock in an amount
sufficient to issue all shares of our Class A common stock underlying all
then-outstanding options, warrants, debentures, Class B common stock or
other obligations to issue shares of our Class A common stock, Mr. Mahoney
will not convert any of his shares of Class B common stock or the balance
due under his convertible promissory note, if any such conversion or
conversions, in the aggregate, would result in our issuance to Mr. Mahoney
of more than 1,200,000,000 shares of our Class A common stock.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
During the year ended December 31, 1999, the Company adopted the iVoice Employee
Stock Option Plan (the "Plan") in order to attract and retain qualified
personnel. Under the Plan, the Board of Directors (the "Board"), in its
discretion may grant stock options (either incentive or non-qualified stock
options) to officers and employees to purchase the Company's common stock. In
accordance with the provisions of the plan, it has been concluded that the 1999
Employee Stock Option Plan was to automatically terminate if the plan did not
receive ratification and approval by the affirmative vote of the holders of the
majority of the Company's outstanding shares of capital stock within 12 months
following the plan adoption. Consequently, no such ratification or approval
occurred within the permitted time frame. As a result, all remaining issued and
outstanding employee options have been canceled as of December 31, 2003.
The following table sets forth information as of November 11, 2005 with
respect to compensation plans (including individual compensation arrangements)
under which our common shares are authorized for issuance, aggregated as
follows:
ALL COMPENSATION PLANS PREVIOUSLY APPROVED BY SECURITY HOLDERS; AND
ALL COMPENSATION PLANS NOT PREVIOUSLY APPROVED BY SECURITY HOLDERS.
Number of securities to Weighted average
be issued upon exercise exercise price of Number of securities
of outstanding options, outstanding options, remaining available
Plan category warrants and rights warrants and rights for future issuance
- --------------------------- --------------------- --------------------- -------------------
(a) (b) (c)
Equity compensation plans
approved by security holders 0 $0.00 0
Equity compensation plans not
approved by security holders 988,260(1) $0.107 0
Total 988,260 $0.107 0
(1) Consists of warrants to purchase 988,260 Class A common shares of iVoice,
Inc. issued to unrelated third parties for contractual services and fees
related to previous financing transactions of the Company. These warrants
have exercise prices ranging from $0.047 per share to $0.1458 per share,
with a weighted average exercise price of $0.107 per share. These warrants
will expire at various times through November, 2006
IVOICE, INC.
PROXY/VOTING INSTRUCTION CARD
750 HIGHWAY 34
MATAWAN, NJ 07747
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2005 ANNUAL MEETING ON JANUARY 19, 2006
The undersigned hereby appoints Jerome Mahoney and Mark Meller, and each or
any of them as the attorney, agent and proxy holder of the undersigned, with
full power of substitution, to vote all shares of iVoice, Inc. Class A Common
Stock entitled to be voted by the undersigned for Proposals 1, 2, 3, 4, 5, 6, 7
and 8 referred to on the reverse side of this Proxy Card and described in the
proxy statement, and on any other business as properly may come before the
annual meeting of shareholders of iVoice, Inc. on January 19, 2006, or any
adjournment or postponement thereof.
This proxy will be voted as directed. If no direction is given, this proxy
will be voted FOR the Proposals indicated.
PLEASE SIGN AND DATE ON THE REVERSE SIDE
AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
SEE REVERSE SIDE
_____________________
/\ FOLD AND DETACH HERE /\
YOUR VOTE IS IMPORTANT
Please sign, date and return your
proxy in the enclosed envelope.
PLEASE MARK YOUR
[X] VOTES AS IN
THIS EXAMPLE.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this proxy will be
voted FOR all Proposals. The board of directors recommends a vote FOR each of
the following Proposals.
1. To approve the grant of discretionary authority for the Board of Directors
to declare a cash dividend to Class A Common Stock shareholders of $1.5
million.
FOR |_| AGAINST |_| ABSTAIN |_|
2. To approve the grant of discretionary authority for the Board of Directors
to effect the repurchase of sixty percent (60%) of the issued and
outstanding Class B Common Stock shares for $1.5 million.
FOR |_| AGAINST |_| ABSTAIN |_|
3. To approve the grant of discretionary authority for the Board of Directors
to effect a 1 for 200 reverse split of the Class A Common Stock by amending
the Certificate of Incorporation.
FOR |_| AGAINST |_| ABSTAIN |_|
4. To consider and approve the authorization of 10 billion or 20 billion
shares of Class A Common Stock, as the case may be.
FOR |_| AGAINST |_| ABSTAIN |_|
5. To approve the grant of discretionary authority for the Board of Directors
to effect the buyback by the Company of the Class A Common Stock.
FOR |_| AGAINST |_| ABSTAIN |_|
6. To elect members of the Board of Directors:
Jerome Mahoney
FOR |_| TO WITHHOLD AUTHORITY |_|
Frank Esser
FOR |_| TO WITHHOLD AUTHORITY |_|
7. To consider and approve the iVoice, Inc. Amended and Restated 2003 Stock
Incentive Plan (the "2003 Plan").
FOR |_| AGAINST |_| ABSTAIN |_|
8. To ratify our Board of Directors' selection of Bagell Josephs Levine &
Company, LCC to audit our financial statements for the fiscal year ending
December 31, 2005.
FOR |_| AGAINST |_| ABSTAIN |_|
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ABOVE PROPOSALS. THIS PROXY,
WHEN PROPERLY, EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ABOVE. IN THE
ABSENCE OF DIRECTION FOR THE ABOVE PROPOSALS, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS.
(Continued on the other side.)
PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please print the shareholder name exactly as it appears on your stock
certificate. If the shares are registered in more than one name, the signature
of each person in whose name the shares are registered is required. A
corporation should sign in its full corporate name, with a duly authorized
officer signing on behalf of the corporation and stating his or her title.
Trustees, guardians, executors, and administrators should sign in their official
capacity, giving their full title as such. A partnership should sign in its
partnership name, with an authorized person signing on behalf of the
partnership.
Dated: _____________________________
____________________________________
(Print Name)
____________________________________
(Authorized Signature)
APPENDIX A
AMENDED AND RESTATED IVOICE, INC.
2003 STOCK INCENTIVE PLAN
1. PURPOSES.
The purpose of the Amended and Restated iVoice, Inc. 2003 Stock Incentive Plan
(the "Plan") is to (i) provide long-term incentives and rewards to employees,
directors, independent contractors or agents ("Eligible Participants") of
iVoice, Inc. ("the Company") and its subsidiaries; (ii) assist the Company in
attracting and retaining employees, directors, independent contractors or agents
with experience and/or ability on a basis competitive with industry practices;
and (iii) associate the interests of such employees, directors, independent
contractors or agents with those of the Company's stockholders.
2. EFFECTIVE DATE.
The Plan is effective as of the date it is adopted by the Board of Directors of
the Company and Awards may be made under the Plan on and after its effective
date.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Board of Directors or a committee
appointed by the Board of Directors of the Company (hereinafter referred to as
the "Board") and the Board shall be so constituted as to permit the Plan to
comply with the disinterested administration requirements under Rule 16b-3 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
"outside director" requirement of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code").
The Board shall have all the powers vested in it by the terms of the Plan, such
powers to include exclusive authority (within the limitations described herein)
to select the Eligible Participants to be granted awards under the Plan, to
determine the type, size and terms of awards to be made to each Eligible
Participant selected, to determine the time when awards will be granted, when
they will vest, when they may be exercised and when they will be paid, to amend
awards previously granted and to establish objectives and conditions, if any,
for earning awards and whether awards will be paid after the end of the award
period. The Board shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for the conduct of its
business as the Board deems necessary or advisable and to interpret same. The
Board's interpretation of the Plan, and all actions taken and determinations
made by the Board pursuant to the powers vested in it hereunder, shall be
conclusive and binding on all parties concerned, including the Company
stockholders, any participants in the Plan and any other Eligible Participant of
the Company.
All employees of the Company and all employees of Affiliates shall be eligible
to participate in the Plan. The Board, in its sole discretion, shall from time
to time designate from among the eligible employees and among directors,
independent contractors or agents those individuals who are to receive awards
under and thereby become participants in the Plan. For purposes of the Plan,
"Affiliate" shall mean any entity, as may from time to time be designated by the
Board, that is a subsidiary corporation of the Company (within the meaning of
Section 424 of the Code), and each other entity directly or indirectly
controlling or controlled by or under common control with the Company. For
purposes of this definition, "control" means the power to direct the management
and policies of such entity, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meaning correlative to the foregoing.
4. AWARDS.
(a) Types. Awards under the Plan shall be made with reference to shares of the
Company common stock and may include, but need not be limited to, stock options
(including non-statutory stock options and incentive stock options qualifying
under Section 422 of the Code), stock appreciation rights (including
free-standing, tandem and limited stock appreciation rights), warrants, dividend
equivalents, stock awards, restricted stock, phantom stock, performance shares
or other securities or rights that the Board determines to be consistent with
the objectives and limitations of the Plan. The Board may provide for the
issuance of shares of the Company common stock as a stock award for no
consideration other than services rendered or, to the extent permitted by
applicable state law, to be rendered. In the event of an award under which
shares of the Company common stock are or may in the future be issued for any
other type of consideration, the amount of such consideration shall (i) be equal
or greater than to the amount (such as the par value of such shares) required to
be received by the Company in order to assure compliance with applicable state
law and (ii) to the extent necessary to comply with Rule 16b-3 of the
Exchange Act, be equal to or greater than 50% of the fair market value of such
shares on the date of grant of such award. The Board may make any other type of
award which it shall determine is consistent with the objectives and limitations
of the Plan.
(b) Performance Goals. The Board may, but need not, establish performance goals
to be achieved within such performance periods as may be selected by it in its
sole discretion, using such measures of the performance of the Company and/or
its Affiliates as it may select.
(c) Rules and Policies. The Board may adopt from time to time written rules and
policies implementing the Plan. Such rules and policies may include, but need
not be limited to, the type, size and term of awards to be made to participants
and the conditions for the exercise or payment of such awards.
5. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be delivered or purchased or used for reference purposes
under the Plan shall not exceed an aggregate of twenty percent (20%) of the
issued and outstanding shares of the Company's Class A Common Stock, no par
value per share, as determined by the Board from time to time. Any shares
subject to an award which for any reason expires or is terminated unexercised as
to such shares shall again be available for issuance under the Plan.
6. PAYMENT OF AWARDS.
The Board shall determine the extent to which awards shall be payable in cash,
shares of the Company common stock or any combination thereof. The Board may
determine that all or a portion of a payment to a participant under the Plan,
whether it is to be made in cash, shares of the Company common stock or a
combination thereof shall be deferred. Deferrals shall be for such periods and
upon such terms as the Board may determine in its sole discretion.
7. VESTING.
The Board may determine that all or a portion of a payment to a participant
under the Plan, whether it is to be made in cash, shares of the Company common
stock or a combination thereof, shall be vested at such times and upon such
terms as may be selected by it in its sole discretion.
8. DILUTION AND OTHER ADJUSTMENT.
In the event of any change in the outstanding shares of the Company common stock
by reason of any split, stock dividend, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares or other similar
corporate change, such equitable adjustments shall be made in the Plan and the
awards thereunder as the Board determines are necessary or appropriate,
including, if necessary, any adjustments in the number, kind or character of
shares that may be subject to existing or future awards under the Plan
(including by substitution of shares of another corporation including, without
limitation, any successor of the Company ), adjustments in the exercise,
purchase or base price of an outstanding award and any adjustments in the
maximum numbers of shares referred to in Section 4 or Section 5 of the Plan. All
such adjustments shall be conclusive and binding for all purposes of the Plan.
9. MISCELLANEOUS PROVISIONS.
(a) Rights as Stockholder. A participant under the Plan shall have no rights as
a holder of the Company common stock with respect to awards hereunder, unless
and until certificates for shares of such stock are issued to the participant.
(b) Assignment to Transfer. No award under this Plan shall be transferable by
the participant or shall be subject to any manner of alienation, sale, transfer,
assignment, pledge, encumbrance or charge (other than by or to the Company),
except (i) by will or the laws of the descent and distribution (with all
references herein to the rights or duties of holders or participants to be
deemed to include such beneficiaries or legal representatives of the holders or
participant unless the context otherwise expressly requires); (ii) subject to
the prior approval of the Board, for transfers to members of the participant's
immediate family, charitable institutions, trusts whose beneficiaries are
members of the participant's immediate family and/or charitable institutions,
trusts whose beneficiaries are members of the participant's immediate family
and/or charitable institutions, or to such other persons or entities as may be
approved by the Board in each case subject to the condition that the Board be
satisfied that such transfer is being made for the estate and/or tax planning
purposes on a gratuitous or donative basis and without consideration (other than
nominal consideration) being received therefor. Except as provided above, during
the lifetime of a participant, awards hereunder are exercisable only by, and
payable only to, the participant.
(c) Agreements. All awards granted under the Plan shall be evidenced by
agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Board shall adopt.
(d) Compliance with Legal Regulations. During the term of the Plan and the term
of any awards granted under the Plan, the Company will at all times reserve and
keep available such number of shares as may be issuable under the Plan, and will
seek to obtain from any regulatory body having jurisdiction, any requisite
authority required in the opinion of counsel for the Company in order to grant
shares of the Company common stock, or options to purchase such stock or other
awards hereunder, and transfer, issue or sell such number of shares of common
stock as shall be sufficient to satisfy the requirements of any options or other
awards. If in the opinion of counsel for the Company the transfer, issue or sale
of any shares of its stock under the Plan shall not be lawful for any reason
including the inability of the Company to obtain from any regulatory body having
jurisdiction authority deemed by such counsel to be necessary to such transfer,
issuance or sale, the Company shall not be obligated to transfer, issue or sell
any such shares. In any event, the Company shall not be obligated to transfer,
issue or sell any shares to any participant unless a registration statement
which complies with the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), is in effect at the time with respect to such shares or
other appropriate action has been taken under and pursuant to the terms and
provisions of the Securities Act and any other applicable securities laws, or
the Company receives evidence satisfactory to the Board that the transfer,
issuance or sale of such shares, in the absence of an effective registration
statement or other appropriate action, would not constitute a violation of the
terms and provisions of the Securities Act. the Company's obligation to issue
shares upon the exercise of any award granted under the Plan shall in any case
be subject to the Company being satisfied that the shares purchased are being
purchased for investment and not with a view to the distribution thereof, if at
the time of such exercise a resale of such shares would otherwise violate the
Securities Act in the absence of an effective registration statement relating to
such shares.
(e) Withholding Taxes. the Company shall have the right to deduct from all
awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards and, with respect to
awards paid in stock, to require the payment (through withholding from the
participant's salary or otherwise) of any such taxes. The obligation of the
Company to make delivery of awards in cash or the Company common stock shall be
subject to currency or other restrictions imposed by any government.
(f) No Rights to Award. No Eligible Participant or other person shall have any
right to be granted an award under the Plan. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee any right to be
retained in the employ of the Company or any of its subsidiaries or shall
interfere with or restrict in any way the rights of the Company or its
subsidiaries, which are hereby reserved, to discharge the employee at any time
for any reason whatsoever, with or without good cause.
(g) Costs and Expenses. The costs and expenses of administering the Plan shall
be borne by the Company and not charged to any award or to any Eligible
Participant receiving an award.
(h) Funding of Plan. The Plan shall be unfunded. the Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under the Plan.
10. AMENDMENTS AND TERMINATION.
(a) Amendments. The Board may at any time terminate or from time to time amend
the Plan in whole or in part, but no such action shall adversely affect any
rights or obligations with respect to any awards theretofore made under the
Plan.
Unless the majority of the directors of the Company present, or represented, and
entitled to vote at a meeting of directors shall have first approved thereof, no
amendment of the Plan shall be effective which would (i) increase the maximum
number of shares referred to in section 5 of the Plan or the maximum awards that
may be granted pursuant to section 4 of the Plan to any one individual or (ii)
extend the maximum period during which awards may be granted under the Plan. For
purposes of this section 10 (a), any (A) cancellation and re-issuance or (B)
repricing of any awards made under the Plan at a new option price shall not
constitute an amendment of this Plan.
With consent of the Eligible Participant adversely affected, the Board may amend
outstanding agreements evidencing awards under the Plan in a manner not
inconsistent with the terms of the Plan.
(b) Termination. Unless the Plan shall theretofore have been terminated as
above provided, the Plan (but not the awards theretofore granted under the Plan)
shall terminate on and no awards shall be granted after November 16, 2013.