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 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
I/OMAGIC CORPORATION
--------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(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)(1) 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):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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:________________________________________
I/OMAGIC CORPORATION
4 MARCONI
IRVINE, CA 92618
December 2, 2004
Dear Stockholders:
You are cordially invited to attend the I/OMagic Corporation 2004 Annual
Meeting of stockholders that will be held on December 21, 2004 at 9:00 a.m.
local time, at the Hyatt Regency Irvine, 17900 Jamboree Boulevard, Irvine,
California 92614. All holders of our outstanding common stock as of the close of
business on November 22, 2004 are entitled to vote at the 2004 Annual Meeting.
Enclosed are a copy of the Notice of Annual Meeting of Stockholders, a
Proxy Statement, a Proxy Card and our latest Annual Report on Form 10-K. A
current report on the business operations of I/OMagic Corporation will be
presented at the meeting, and stockholders will have an opportunity to ask
questions.
We hope you will be able to attend the 2004 Annual Meeting. Whether or not
you expect to attend, it is important that you complete, sign, date and return
the Proxy Card in the enclosed envelope in order to make certain that your
shares will be represented at the 2004 Annual Meeting.
Sincerely,
/s/ Tony Shahbaz
Tony Shahbaz,
Chairman, President, Chief Executive Officer,
and Secretary
I/OMAGIC CORPORATION
4 MARCONI
IRVINE, CALIFORNIA 92618
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 21, 2004
______________________
NOTICE IS HEREBY GIVEN that the 2004 Annual Meeting of stockholders of
I/OMagic Corporation, a Nevada corporation, will be held at the Hyatt Regency
Irvine, 17900 Jamboree Boulevard, Irvine, California 92614, on December 21, 2004
at 9:00 a.m. local time, for the following purposes:
1. To elect five directors to the board of directors.
2. To ratify the appointment of Singer Lewak Greenbaum & Goldstein LLP
as I/OMagic's independent auditors for the fiscal year ending
December 31, 2004.
3. To transact such other business as may properly come before the 2004
Annual Meeting or any adjournment or adjournments thereof.
Our board of directors has fixed the close of business on November 22, 2004
as the record date for determining those stockholders who will be entitled to
notice of and to vote at the meeting. Only holders of our common stock at the
close of business on the record date are entitled to vote at the meeting.
Stockholders whose shares are held in the name of a broker or other nominee and
who desire to vote in person at the meeting should bring with them a legal
proxy.
As of the close of business on the record date, Tony Shahbaz, who is our
Chairman, President, Chief Executive Officer, and Secretary, and certain of his
affiliates owned approximately 52.4% of our issued and outstanding common stock.
Mr. Shahbaz and certain of his affiliates have already indicated that they
intend to vote in favor of Proposals 1 and 2 at the meeting.
By Order of the Board of Directors,
/s/ Tony Shahbaz
Tony Shahbaz,
Chairman, President,
Chief Executive Officer, and Secretary
Irvine, California
December 2, 2004
I/OMAGIC CORPORATION
4 MARCONI
IRVINE, CALIFORNIA 92618
__________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 21, 2004
__________________
VOTING AND PROXY
We are furnishing this proxy statement in connection with the solicitation
of proxies by our board of directors for use at the 2004 Annual Meeting of
stockholders to be held at 9:00 a.m., local time, on December 21, 2004, at the
Hyatt Regency Irvine, 17900 Jamboree Boulevard, Irvine, California 92614, and at
any and all adjournments of the meeting. This proxy statement and the
accompanying notice of annual meeting and proxy card are first being mailed to
stockholders on or about December 10, 2004. Our latest Annual Report on Form
10-K is being mailed to stockholders concurrently with this proxy statement.
This Annual Report is not to be regarded as proxy solicitation material or as a
communication through which any solicitation of proxies is made.
RECORD DATE; SHARES OUTSTANDING; VOTING
Only stockholders of record at the close of business on November 22, 2004,
are entitled to notice of and to vote their shares at the 2004 Annual Meeting.
As of the close of business on that date, we had 4,529,672 shares of common
stock outstanding. The inspector of election appointed for the 2004 Annual
Meeting will separately tabulate the affirmative and negative votes, abstentions
and "broker non-votes."
Section 2115 of the California General Corporation Law provides that
corporations such as I/OMagic Corporation that are incorporated in jurisdictions
other than California and that meet various tests are subject to several
provisions of the California General Corporation Law, to the exclusion of the
law of the jurisdiction in which the corporation is incorporated. As of December
31, 2003, we met the tests contained in Section 2115. Consequently, as of that
date we were subject to, among other provisions of the California General
Corporation Law, Section 708 which governs cumulative voting.
Each share of common stock entitles the holder of record to one vote on any
matter coming before the 2004 Annual Meeting. In voting for directors, however,
shares may be voted cumulatively for persons whose names have been placed in
nomination prior to the voting for the election of directors, but only if a
stockholder present at the 2004 Annual Meeting gives notice at the 2004 Annual
Meeting, prior to the voting for the election of directors, of his or her
intention to vote cumulatively. Notice of intention to vote cumulatively may not
be given by simply marking and returning a proxy.
If any stockholder gives proper notice of his or her intention to vote
cumulatively, then each stockholder eligible to vote will be entitled to
cumulate his or her votes and to give any one or more of the nominees whose
names have been placed in nomination prior to the voting a number of votes equal
to the total number of directors to be elected multiplied by the number of
shares that the stockholder is entitled to vote. In addition, the person or
persons holding the proxies solicited by our board of directors will exercise
their cumulative voting rights, at their discretion, to vote the shares they
hold in such a way as to ensure the election of as many of the nominees of the
board of directors as they deem possible. This discretion and authority of the
proxy holders may be withheld by checking the box on the proxy card marked
"withhold authority to vote for all nominees." However, such an instruction will
also deny the proxy holders the authority to vote for any or all of the nominees
of the board of directors, even if cumulative voting is not called for at the
2004 Annual Meeting.
A stockholder may choose to withhold from the proxy holder the authority to
vote for any of the individual candidates nominated by our board of directors by
marking the appropriate box on the proxy card and striking out the names of the
disfavored candidates as they appear on the proxy card. In that event, the proxy
holder will not cast any of the stockholder's votes for candidates whose names
have been crossed out, whether or not cumulative voting is called for at the
2004 Annual Meeting. However, the proxy holder will retain the authority to vote
for the candidates nominated by the board of directors whose names have not been
struck out and for any candidates who may be properly nominated at the 2004
Annual Meeting. If a stockholder wishes to specify the manner in which his or
her votes are allocated in the event of cumulative voting, he or she must appear
and vote in person at the 2004 Annual Meeting. Ballots will be available at the
2004 Annual Meeting for stockholders who desire to vote in person.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Under Nevada law and our bylaws, holders of a majority of the outstanding
shares entitled to vote must be present, in person or by proxy, at the 2004
Annual Meeting in order to have the required quorum for the transaction of
business. Generally, if a quorum is present, then the affirmative vote of a
majority of the shares represented and voting on any matter other than the
election of directors will constitute the act of the stockholders, so long as
the number of shares voting in favor of any proposal equals at least a majority
of the quorum. If the shares present, in person and by proxy, at the meeting do
not constitute the required quorum, the meeting may be adjourned to a subsequent
date for the purpose of obtaining a quorum.
Votes cast at the 2004 Annual Meeting will be tabulated by the person
appointed by us to act as inspector of election for the 2004 Annual Meeting. The
inspector of election will treat shares of voting stock represented by a
properly signed and returned proxy as present at the 2004 Annual Meeting for
purposes of determining a quorum, without regard to whether the proxy is marked
as casting a vote or abstaining. Likewise, the inspector of election will treat
shares of voting stock represented by "broker non-votes" as present for purposes
of determining a quorum. "Broker non-votes" are shares of voting stock held in
record name by brokers and nominees concerning which: (i) instructions have not
been received from the beneficial owners or persons entitled to vote; (ii) the
broker or nominee does not have discretionary voting power under applicable
rules or the instrument under which it serves in such capacity; or (iii) the
record holder has indicated on the proxy or has executed a proxy and otherwise
notified us that it does not have authority to vote such shares on that matter.
Although abstentions and broker non-votes are not counted either "FOR" or
"AGAINST" any proposals, if the number of abstentions or broker non-votes
results in the votes "FOR" a proposal not equaling at least a majority of the
quorum required for the proposal, the proposal will not be approved. This will
be the case even though the number of votes "FOR" the proposal exceeds the
number of votes "AGAINST" the proposal.
In any election of directors, the candidates receiving the highest number
of affirmative votes of the shares entitled to be voted for them, up to the
number of directors to be elected by such shares, are elected. Votes against a
candidate and votes withheld have no legal effect.
PROXIES
Whether or not you are able to attend the 2004 Annual Meeting, we urge you
to submit your proxy, which is solicited by our board of directors and which
when properly completed will be voted as you direct. In the event no directions
are specified, such proxies will be voted "FOR"
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each of the nominees of the board of directors, "FOR" the other proposal and, in
the discretion of the proxy holders, "FOR" any other matters that may properly
come before the 2004 Annual Meeting. You are urged to give direction as to how
to vote your shares. You may revoke or change your proxy vote at any time before
the 2004 Annual Meeting by delivering a written notice of revocation or
submitting another proxy card with a later date to the Secretary of I/OMagic
Corporation at our principal executive offices located at 4 Marconi, Irvine,
California 92618 before the beginning of the 2004 Annual Meeting. You may also
revoke your proxy vote by attending the 2004 Annual Meeting and voting in
person. However, the mere presence at the 2004 Annual Meeting of a stockholder
who has previously appointed a proxy will not revoke the prior appointment.
SOLICITATION OF PROXIES
We will bear the entire cost of this solicitation of proxies, including the
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional solicitation material furnished to our stockholders. Copies
of solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward the solicitation material to such beneficial owners and
the corresponding forwarding expenses will be reimbursed by us. Proxies may be
solicited personally, by mail or by telephone, or by our directors, officers and
regular employees who will not be additionally compensated for engaging in the
solicitation process. We have no present plans to hire special employees or paid
solicitors to assist in obtaining proxies, but we reserve the option to do so if
it appears that a quorum otherwise might not be obtained. The matters to be
considered and acted upon at the 2004 Annual Meeting are referred to in the
proceeding notice and are discussed below more fully.
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
The names, ages and positions held by our directors, director nominees and
executive officers as of November 22, 2004 and their business experience are as
follows:
NAME AGE TITLES
- ---------------------------- --- -------------------------------------------------
Tony Shahbaz . . . . . . . . 42 Chairman of the Board, President, Chief Executive
Officer, Secretary, Director and Director Nominee
Anthony Andrews . . . . . . . 42 Vice President of Product Development and
Engineering, Director and Director Nominee
Steel Su . . . . . . . . . . 52 Director and Director Nominee
Daniel Hou(1) . . . . . . . . 55 Director and Director Nominee
Daniel Yao(1) . . . . . . . . 48 Director and Director Nominee
Young-Hyun Shin . . . . . . . 51 Director
Steve Gillings. . . . . . . . 55 Chief Financial Officer
____________
(1) Member of the Audit Committee, Compensation Committee, and the Nominating
Committee.
TONY SHAHBAZ is a founder of I/OMagic Corporation and has served as our
Chairman of the Board, President, Chief Executive Officer, Secretary and as a
director since September 1993, and as our Chief Financial Officer from September
1993 to October 2002. Prior to founding I/OMagic Corporation, Mr. Shahbaz was
employed by Western Digital Corporation from September 1986 to March 1993.
During his tenure at Western Digital Corporation, Mr. Shahbaz held several
positions including Vice President of Worldwide Sales for Western Digital
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Paradise, and Regional Director of Asia Pacific Sales and Marketing Operations.
From 1985 to 1986, Mr. Shahbaz held management positions with Lapin Technology
and from 1979 to 1984, Mr. Shahbaz held management positions with Tandon
Corporation.
ANTHONY ANDREWS has served as our Vice President of Product Development and
Engineering since he joined I/OMagic Corporation in March 1994 and has served as
a director since October 1995. From 1988 to 1994, Mr. Andrews was a principal
engineer at Western Digital Corporation, where he was involved in product and
software design and played a key role in the development of portable notebook
power management designs that are used by companies such as IBM and AST. Prior
to that, Mr. Andrews was a staff engineer with Rockwell International from 1985
to 1988. Mr. Andrews earned a B.S. degree in Math and Computer Science from the
University of California at Los Angeles in 1985.
STEEL SU has served as a director of I/OMagic Corporation since September
2000 and is a founder of Behavior Tech Corporation and has served as its
Chairman since 1980. Mr. Su has served and continues to serve as a director or
chairman of the following affiliates of Behavior Tech Corporation: Behavior
Design Corporation (chairman), Behavior Tech Computer (USA) Corp. (chairman),
Behavior Tech Computer Affiliates, N.V. (chairman) and BTC Korea Co., Ltd.
(director). Mr. Su has served as chairman of Gennet Technology Corp., Emprex
Technologies Corp., MaxD Technology Inc. and Maritek Inc. since 1992, 1998, 2000
and 1999, respectively. Mr. Su has also served as a director of Aurora Systems
Corp. and Wearnes Peripherals International (PTE) Limited since 1998 and 2000,
respectively. Mr. Su earned a B.S. degree in Electronic Engineering from Ching
Yuan Christian University in 1974 and an M.B.A. from National Taiwan University
in 2001.
DANIEL HOU has served as a director of I/OMagic Corporation since January
1998. Since 1986, Mr. Hou has served as the President of Hou Electronics, Inc.,
a computer peripheral supplier that he founded. Mr. Hou is a prior President of
the Southern California Chinese Computer Association and is an active member of
the American Chemistry Society. Mr. Hou earned a B.A. degree in Chemistry from
National Chung-Hsing University, Taiwan in 1973 and a Masters degree in Material
Science from the University of Utah in 1978.
DANIEL YAO has served as a director of I/OMagic Corporation since February
2001 and has been a General Manager of the Global Strategy Investment Group for
Ritek Corporation, an affiliate of Citrine Group Limited, one of our stock
holders, since July 2000. Prior to joining Ritek, Mr. Yao served as the Senior
Investment Consultant for Core Pacific Securities Capital from July 1998 to July
2000. Prior to that, Mr. Yao was an Executive Vice President for ABN Amro Bank
in Taiwan from July 1996 to July 1998. Mr. Yao earned a B.A. degree in Business
Management from National Taiwan University in 1978 and a M.B.A. degree from the
University of Rochester in New York.
YOUNG-HYUN SHIN has served as a director of I/OMagic Corporation since
September 2000. Mr. Shin was the former President and Chief Executive Officer of
BTC Korea Co., Ltd. from March 1988 through October 2003. Mr. Shin has served
and continues to serve as a director of BTC Korea Co., Ltd. since March 1988.
Mr. Shin earned a B.S. degree in Electronics from Yonsei University in 1979.
STEVE GILLINGS has served as our Chief Financial Officer since October
2002. Prior to that, Mr. Gillings served as our Vice President of Finance from
October 2000 to October 2002 and as our Controller from November 1997 to October
2000. Mr. Gillings earned a B.S. degree in Accounting from the University of
California at Berkeley in 1971 and a Masters degree in Finance from California
State University Fullerton in 1992.
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EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides information concerning the annual and
long-term compensation for the years ended December 31, 2003, 2002 and 2001
earned for services in all capacities as an employee by our Chief Executive
Officer, our only executive officer who received an annual salary and bonus of
more than $100,000 for services rendered to us during 2003:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
--------------------
NAME AND PRINCIPAL POSITION. . . . . YEAR SALARY BONUS
- ------------------------------------ -------------------- ----------- -------
Tony Shahbaz . . . . . . . . . . . . 2003 $ 198,500 $28,259
Chairman, President, Chief. . . 2002 $ 202,259 $89,067
Executive Officer and Secretary 2001 $ 180,857(1)$ -
Steve Gillings . . . . . . . . . . . 2003 $ 95,000 $ 5,000
Chief Financial Officer . . . . 2002(2) $ 84,537 $12,000
- ---------------
(1) Includes $40,853 of salary earned by Mr. Shahbaz as an employee of IOM
Holdings, Inc.
(2) Mr. Gillings became an executive officer of I/OMagic on October 10,
2002.
OPTION GRANTS IN LAST FISCAL YEAR
We did not grant any stock options or stock appreciation rights to Mr.
Shahbaz or Mr. Gillings during 2003.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
Neither Mr. Shahbaz nor Mr. Gillings held any options as of December 31,
2003. Neither Mr. Shahbaz nor Mr. Gillings acquired any shares through the
exercise of any options during the year ended December 31, 2003.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On October 15, 2002, we entered into an employment agreement with Tony
Shahbaz. Under the terms of the employment agreement, which were retroactively
effective as of January 1, 2002, Mr. Shahbaz serves as our President and Chief
Executive Officer and is entitled to receive an initial annual salary of
$198,500 and is eligible to receive quarterly bonuses equal to 7% of our
quarterly net income. Mr. Shahbaz is also entitled to a monthly car allowance
equal to $1,200. The employment agreement terminates on October 15, 2007;
however, it is subject to automatic renewal. Under the terms of the employment
agreement, if Mr. Shahbaz is terminated for cause, he is entitled to receive
four times his annual salary and any and all warrants and options granted to him
shall be extended an additional seven years from date of termination and upon
termination without cause, he is entitled to receive his remaining salary amount
for the remaining outstanding term of the agreement. Mr. Shahbaz's employment
agreement further provides that the agreement shall not be terminated without
the prior written consent of Mr. Shahbaz in the event of a merger, transfer of
assets, or dissolution of I/OMagic, and that the rights, benefits, and
obligations under the agreement shall be assigned to the surviving or resulting
corporation or the transferee of our assets.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers served on the compensation committee of
another entity or on any other committee of the board of directors of another
entity performing similar functions during 2003. During 2003 and until April
2004, Mr. Shahbaz, our Chief Executive Officer, President and Secretary, was a
member of the Compensation Committee. While a member of that committee, Mr.
Shahbaz did not make any salary recommendations to our Compensation Committee or
our board of directors regarding salary increases for key executives.
COMPENSATION OF DIRECTORS
Our directors do not receive any compensation for their services, however
each director is entitled to reimbursement of his reasonable expenses incurred
in attending board of directors' meetings.
INFORMATION ABOUT OUR BOARD OF DIRECTORS,
COMMITTEES OF THE BOARD AND RELATED MATTERS
BOARD OF DIRECTORS
Our business, property and affairs are managed under the direction of our
board of directors. Directors are kept informed of our business through
discussions with our executive officers, by reviewing materials provided to them
and by participating in meetings of our board of directors and its committees.
Our bylaws provide that our board of directors shall consist of at least six
directors.
During 2003, our board of directors held eight meetings and approved resolutions
by written consent once. During 2003, our incumbent directors attended at least
75% of the aggregate of the total number of meetings of the board of directors
for which he has been a director and the total number of meetings held by all
committees of the board on which he served during the periods that he served.
BOARD COMMITTEES
Our board of directors currently has an Audit Committee, a Compensation
Committee and a Nominating Committee.
The Audit Committee selects our independent auditors, reviews the results
and scope of the audit and other services provided by our independent auditors
and reviews our financial statements for each interim period and for our year
end. Since November 2002, this committee has consisted of Mr. Hou and Mr. Yao.
The Audit Committee held four meetings during 2003. Our board of directors has
determined that Mr. Yao is an Audit Committee financial expert. Our board of
directors has also determined that Mr. Hou and Mr. Yao are "independent" as
defined in NASD Marketplace Rule 4200(a)(15). The Audit Committee operates
pursuant to a charter approved by our board of directors and Audit Committee,
according to the rules and regulations of the Securities and Exchange
Commission. A copy of the charter is attached as Appendix A to this proxy
statement. Our Nominating Committee is presently conducting a search for a third
independent director to become a member of our Audit Committee in order to
satisfy the requirements of Nasdaq that we have an Audit Committee comprised of
at least three independent directors.
The Compensation Committee is responsible for establishing and
administering our policies involving the compensation of all of our executive
officers and establishing and recommending to our board of directors the terms
and conditions of all employee and consultant compensation and benefit plans.
Our entire board of directors also may perform these functions with respect to
our employee stock
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option plans. From September 29, 2001 to April 11, 2004, the
Compensation Committee consisted of Messrs. Shahbaz and Su. Since April 12,
2004, this committee has consisted of Mr. Hou and Mr. Yao. The Compensation
Committee did not hold any meetings during 2003. The Compensation Committee
operates pursuant to a charter approved by our board of directors and
Compensation Committee. A copy of the charter is attached as Appendix B to this
proxy statement.
The Nominating Committee selects nominees for the board of directors. Since
April 2004, the Nominating Committee has consisted of Mr. Hou and Mr. Yao. The
Nominating Committee utilizes a variety of methods for identifying and
evaluating nominees for director, including candidates that may be referred by
stockholders. Stockholders that desire to recommend candidates for evaluation
may do so by contacting I/OMagic in writing, identifying the potential candidate
and providing background information. Candidates may also come to the attention
of the Nominating Committee through current board members, professional search
firms and other persons. In evaluating potential candidates, the Nominating
Committee will take into account a number of factors, including, among others,
the following:
- independence from management;
- relevant business experience and industry knowledge;
- judgment, skill, integrity and reputation;
- existing commitments to other businesses;
- corporate governance background;
- financial and accounting background, to enable the Nominating Committee
to determine whether the candidate would be suitable for Audit Committee
membership; and
- the size and composition of the board.
The Nominating Committee was not formed until April 2004. Accordingly, the
Nominating Committee did not hold any meetings during 2003. The Nominating
Committee operates pursuant to a charter approved by our board of directors and
Nominating Committee. A copy of the charter is attached as Appendix C to this
proxy statement. The nominees named in our proxy card for the 2004 annual
meeting was selected by our Nominating Committee and ratified during a meeting
of the board of directors.
SECURITY HOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The board of directors has established a process to receive communications
from security holders. Security holders and other interested parties may contact
any member (or all members) of the board of directors, or the independent
directors as a group, any committee of the board of directors or any chair of
any such committee, by mail or electronically. To communicate with the board of
directors, any individual directors or any group or committee of directors,
correspondence should be addressed to the board of directors or any such
individual directors or group or committee of directors by either name or title.
All such correspondence should be sent "c/o General Counsel" at 4 Marconi,
Irvine, California 92618. To communicate with any of our directors
electronically, security holders should send an email to our General Counsel at:
clo@iomagic.com.
All communications received as set forth in the preceding paragraph will be
opened by the General Counsel for the sole purpose of determining whether the
contents represent a message to our
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directors. Any contents that are not in the nature of advertising, promotions of
a product or service, patently offensive material or matters deemed
inappropriate for the board of directors will be forwarded promptly to the
addressee. In the case of communications to the board of directors or any group
or committee of directors, our General Counsel will make sufficient copies (or
forward such information in the case of e-mail) of the contents to send to each
director who is a member of the group or committee to which the envelope or
e-mail is addressed.
POLICY WITH REGARD TO BOARD MEMBERS' ATTENDANCE AT ANNUAL MEETINGS
It is our policy that our directors are invited and encouraged to attend
all of our annual meetings. At the date of our 2003 Annual Meeting, we had six
members on our board of directors, two of whom were in attendance at the 2003
Annual Meeting.
COMPENSATION OF DIRECTORS
We do not provide any cash compensation to our directors for their services
on the board of directors or any committee. However, we reimburse all directors
for out-of-pocket expenses incurred in connection with attendance at board of
directors and committee meetings.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is provided by the compensation committee of I/OMagic
Corporation's board of directors to assist stockholders in understanding
I/OMagic Corporation's objectives, policies and procedures in establishing its
executive compensation structure and system. The compensation committee is
responsible for reviewing and approving base salaries, bonuses and incentive
awards for all executive officers, reviewing and establishing the base salary,
bonuses and incentive awards for the chief executive officer, and reviewing,
approving and recommending to the board of directors the content, terms and
conditions of all employee compensation and benefit plans, or changes to those
plans.
The goals of the Compensation Committee are to:
- attract, retain and motivate highly-qualified executive officers
who can provide operational and strategic excellence that will
produce on-going success for I/OMagic;
- align compensation for the executive officers with our business
objectives and performance; and
- align incentives for executive officers with the interests of
stockholders to enhance financial performance and stockholder
value.
We emphasize performance-based compensation that is competitive with the
marketplace, and the importance of clearly communicating performance objectives.
Our compensation program for employees includes both cash and equity-based
elements. Consistent with competitive practices, we also use a cash bonus plan
based on achievement of financial performance and key operational objectives.
The Compensation Committee did not meet during the fiscal year ended
December 31, 2003. Nevertheless, the compensation policies adopted by the
Compensation Committee during prior fiscal years were carried over during fiscal
2003.
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CASH COMPENSATION
Salary. We set individual salaries for each executive officer based on
sustained individual performance, contribution to our results and internal
comparison of duties and responsibilities.
Cash Bonus. In order to help recruit, retain and motivate executives with
market-competitive incentives in the current business environment, during fiscal
2003, we provided a cash bonus program for Mr. Shahbaz, our Chief Executive
Officer, and Mr. Gillings, our Chief Financial Officer, based on performance.
During fiscal 2004, we will employ similar performance measures for cash bonus
incentives.
EQUITY-BASED COMPENSATION
Historically, options granted to our Chief Executive Officer and Chief
Financial Officer were subject to vesting over time. In the future, options
granted to other executive officers will also vest over time. In addition, we
expect that initial or "new-hire" options will be granted to executive officers
when they first join us. All options to be granted to executive officers will
be issued with an exercise price at the then-current fair market value and thus
become valuable only if the executive officer continues to serve at I/OMagic
Corporation and the price of our stock subsequently increases.
EXECUTIVE OFFICER COMPENSATION
Our Chief Executive Officer's base annual salary for fiscal 2003 and 2002
was $198,500 and $202,259. For fiscal 2004, our Chief Executive Officer's
target annual incentive will be consistent with market cash incentives. Our
Chief Executive Officer's compensation package is designed to be strongly
aligned with the interests of stockholders by making his cash incentives
directly tied to achieving specific targets. In the event we grant stock
options to our Chief Executive Officer, these stock options will become valuable
only if he continues to serve at I/OMagic Corporation and the price of our stock
subsequently rises.
Respectfully submitted,
Compensation Committee
I/OMagic Corporation
Daniel Hou, Member
Daniel Yao, Member
CODE OF ETHICS
Our board of directors has adopted a Code of Business Conduct and Ethics
that applies to all of our directors, officers and employees and an additional
Code of Business Ethics that applies to our Chief Executive Officer and Senior
Financial Officers. We have filed these codes as exhibits to our annual report
on Form 10-K for the year ended December 31, 2003.
We intend to satisfy the disclosure requirement under Item 10 of Form 8-K
relating to amendments to or waivers from provision of these codes that relate
to one or more of the items set forth in Item 406(b) of Regulation S-K, by
describing on our Internet website located at http://www.iomagic.com, within
five business days following the date of a waiver or a substantive amendment,
the date of the waiver or amendment, the nature of the amendment or waiver, and
the name of the person to whom the waiver was granted. Information on our
Internet website is not, and shall not be deemed to be, a part of
9
this document or incorporated into any other filings we make with the Securities
and Exchange Commission.
AUDIT COMMITTEE REPORT
Our Audit Committee oversees our financial reporting process. Management
has the primary responsibility for our financial statements and the overall
reporting process, including our system of financial controls. Prior to the
inclusion and filing with the Securities and Exchange Commission of the audited
financial statements in our annual report on Form 10-K for the year ended
December 31, 2003, the Audit Committee and our board of directors discussed with
management and reviewed our audited financial statements. In addition, we
obtained from the independent auditors a formal written statement describing all
relationships between the auditors and our company that might bear on the
auditors' independence consistent with Independence Standards Board Standard No.
1, "Independent Discussions with Audit Committees."
Prior to the filing of our Form 10-K, the Audit Committee reviewed and
discussed with management and the auditors our audited financial statements. In
addition, the Audit Committee and our board of directors obtained from the
auditors an updated formal written statement describing all relationships
between the auditors and our company that might bear on the auditors'
independence consistent with Independence Standards Board Standard No. 1,
"Independent Discussions with Audit Committees" and discussed with the auditors
any relationships that may impact the auditors' objectivity and independence and
satisfied itself as to the auditors' independence. Also, prior to the filing of
our Form 10-K, the Audit Committee discussed with the auditors all matters
required to be discussed by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees." In addition, prior to the filing with the
Securities and Exchange Commission of our Form 10-K, the Audit Committee
recommended to management that our audited financial statements should be
included in our Form 10-K. Our Audit Committee also approved the reappointment
of the auditors for the year ended December 31, 2004.
Respectfully submitted,
Audit Committee
I/OMagic Corporation
Daniel Hou, Member
Daniel Yao, Member
INDEPENDENT PUBLIC ACCOUNTANT FEES AND SERVICES
We anticipate that a representative of Singer Lewak Greenbaum & Goldstein
LLP, our independent public accountants for 2003 and for the current year, will
be present at our 2004 Annual Meeting, will have an opportunity to make a
statement if he or she desires to do so, and will be available to respond to
appropriate questions.
10
The following table sets forth the aggregate fees billed or expected to be
billed to us for services rendered to us for the years ended December 31, 2003
and 2002 by Singer Lewak Greenbaum & Goldstein LLP:
FEE CATEGORY 2003 2002
------------ -------- --------
Audit Fees $237,000 $322,000
Tax Fees 18,000 11,000
All Other Fees - -
-------- --------
Total $255,000 $333,000
Audit Fees. Consists of fees billed for professional services rendered for
the audit of I/OMagic's consolidated financial statements and review of the
interim consolidated financial statements included in quarterly reports and
services that are normally provided by Singer Lewak Greenbaum & Goldstein LLP in
connection with statutory and regulatory filings or engagements.
Tax Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include assistance
regarding federal, state and international tax compliance, tax audit defense,
customs and duties, mergers and acquisitions, and international tax planning.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT PUBLIC ACCOUNTANTS
Our audit committee pre-approves all services provided by Singer Lewak
Greenbaum & Goldstein LLP.
11
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on our common stock, based on its market price, with the cumulative total
return on companies on the Nasdaq Stock Market (U.S.) and the Nasdaq Computer &
Data Processing Index, assuming reinvestment of dividends for the period
beginning December 31, 1998 and ending December 31, 2003. This graph assumes
that the value of the investment in our common stock and each of the comparison
groups was $100 on December 31, 1998.
[PERFORMANCE GRAPH OMITTED]
EDGAR REPRESENATATION OF DATA POINTS USED IN PRINTED GRAPHIC
CUMULATIVE TOTAL RETURN
12/98 12/99 12/00 12/01 12/02 12/03
I/OMAGIC CORPORATION . . . . . . . 100.00 257.14 228.57 137.14 129.52 59.43
NASDAQ STOCK MARKET (U.S.) . . . . 100.00 196.90 129.48 68.38 62.54 89.39
NASDAQ COMPUTER & DATA PROCESSING. 100.00 208.81 109.10 87.84 60.75 80.09
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of November 22, 2004, a total of 4,529,672 shares of our common stock
were outstanding. The following table sets forth information as of that date
regarding the beneficial ownership of our common stock by:
- each person known by us to own beneficially more than five percent, in
the aggregate, of the outstanding shares of our common stock as of the
date of the table;
- each of our directors and director nominees;
- the named executive officers in the Summary Compensation Table contained
elsewhere in this Annual Report; and
- all of our directors, director nominees and executive officers as a
group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated in the footnotes to the
table, we believe each security holder possesses sole voting and investment
power with respect to all of the shares of common stock owned by such security
holder, subject to community property laws where applicable. In computing the
number of shares beneficially owned by a security holder and the percentage
ownership of that security holder, shares of common stock subject to options,
warrants or preferred stock held by that person that are currently exercisable
or convertible or are exercisable or convertible into shares of common stock
within 60 days after the date of the table are deemed outstanding. Those shares,
however, are not deemed outstanding for the purpose of computing the percentage
ownership of any other person or group.
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER(1) TITLE OF CLASS OWNERSHIP OF CLASS OF CLASS
- ----------------------------------------------- ----------------- ------------------ --------
Tony Shahbaz Common 2,392,108(2) 52.4%
Steel Su Common 575,211(3) 12.7%
Sung Ki Kim Common 375,529(4) 8.3%
Daniel Yao Common 342,568(5) 7.6%
Daniel Hou Common 135,086(6) 3.0%
Anthony Andrews Common 10,250(7) *
Steve Gillings Common 7,584(8) *
Young-Hyun Shin Common 1,750(9) *
All executive officers, directors and director
nominees as a group (7 persons) Common 3,464,557(10) 75.5%
- --------------------
* Less than 1.00%
(1) Unless otherwise indicated, the address of each person in this table is
c/o I/OMagic Corporation, 4 Marconi, Irvine, CA 92618. Messrs. Shahbaz and
Gillings are executive officers of I/OMagic Corporation. Messrs. Shahbaz,
Andrews, Su, Hou, Shin, and Yao are directors.
(2) Consists of: (i) 510,795 shares of common stock and 34,416 shares of
common stock underlying options held individually by Mr. Shahbaz; (ii) 1,240,423
shares of common stock held by Susha, LLC, a California limited liability
company, or Susha California; (iii) 566,668 shares of common stock held by
Susha, LLC, a Nevada limited liability company, or Susha Nevada; and (iv) 39,806
shares of common stock held by King Eagle Enterprises, Inc., a California
corporation. Mr. Shahbaz has sole voting and sole investment power over all of
the shares held by Susha California
13
and Susha Nevada. Mr. Shahbaz and Behavior Tech Computer Corp. are equal owners
of the membership interests in Susha California and Susha Nevada.
(3) Consists of 406,794 shares of common stock and 1,750 shares of common
stock underlying options held individually by Mr. Su, and 166,667 shares of
common stock held by Behavior Tech Computer Corp. Mr. Su is the Chief Executive
Officer of Behavior Tech Computer Corp. and has sole voting and sole investment
power over the shares held by Behavior Tech Computer Corp.
(4) Represents 375,529 shares of common stock held by BTC Korea Co., Ltd.,
or BTC Korea. Since October 22, 2003, Mr. Kim has served as Chief Executive
Officer and President of BTC Korea and has sole voting and sole investment power
over the shares held by BTC Korea. The address for Mr. Kim is c/o BTC Korea Co.,
Ltd., 160-5, Kajwa-Dong Seo-Ku, Incheon City, Korea.
(5) Consists of 1,750 shares of common stock underlying options held
individually by Mr. Yao and 340,818 shares of common stock held by Citrine Group
Limited, a wholly owned subsidiary of Ritek Corporation. Mr. Yao currently
serves as the Chief Strategy Officer of Ritek Corporation. Mr. Yao has sole
voting and sole investment power over the shares held by Citrine Group Limited.
The address for Mr. Yao is c/o Citrine Group Limited, No. 42, Kuanfu N. Road,
30316 R.O.C., HsinChu Industrial Park, Taiwan.
(6) Consists of 1,750 shares of common stock underlying options held
individually by Mr. Hou, and 133,336 shares of common stock held by Hou
Electronics, Inc. Mr. Hou has sole voting and sole investment power over the
shares held by Hou Electronics, Inc.
(7) Consists of 2,491 shares of common stock and 7,584 shares of common
stock underlying options held individually by Mr. Andrews, and 175 shares of
common stock underlying options held individually by Mr. Andrews' wife, Nancy
Andrews.
(8) Consists of 7,584 shares of common stock underlying options held
individually by Mr. Gillings.
(9) Consists of 1,750 shares of common stock underlying options held
individually by Mr. Shin.
(10) Includes 56,759 shares of common stock underlying options.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about our common stock issuable
upon the exercise of options, warrants, and rights under all of our existing
equity compensation plans as of December 31, 2003.
NUMBER OF SECURITIES NUMBER OF SECURITIES
TO WEIGHTED- REMAINING AVAILABLE FOR
BE ISSUED UPON AVERAGE FUTURE ISSUANCE UNDER
EXERCISE EXERCISE PRICE EQUITY COMPENSATION
OF OUTSTANDING OF OUTSTANDING PLANS (EXCLUDING
OPTIONS, WARRANTS OPTIONS, WARRANTS SECURITIES REFLECTED
PLAN CATEGORY AND RIGHTS AND RIGHTS IN COLUMN (A))
- ------------- --------------------- --------------------- ------------------------
(a) (b) (c)
Equity compensation plans approved
by security holders . . . . . . . . . - $ - 533,334
Equity compensation plans not approved
by security holders . . . . . . . . . - $ - -
Warrants issued for services . . . . . 40,008 $ 8.49 -
--------------------- ---------------------- ------------------------
Total . . . . . . . . . . . . . . . . 40,008 $ 8.49 533,334
===================== ====================== ========================
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2003, we entered into a trade credit facility with Lung Hwa
Electronics, one of our stockholders and subcontract manufacturers. Under the
terms of the facility, Lung Hwa Electronics has agreed to purchase inventory on
our behalf. We can purchase up to $10.0 million of this inventory from Lung Hwa
Electronics, with payment terms of 120 days following the date of invoice. Lung
Hwa Electronics charges us a 5% handling fee on a supplier's unit price. A 2%
discount of the handling fee, so that the net handling fee is 3%, is applied if
we reach an average running monthly purchasing volume of $750,000. Returns made
by us, which are agreed to by a supplier, result in a credit to us for the
handling charge. As security for the trade credit facility, we paid Lung Hwa
Electronics a $1.5 million security deposit during 2003. As of September 30,
2004, $750,000 of this deposit had been applied against outstanding trade
payables as allowed under the trade credit facility agreement. In November 2004,
the remaining $750,000 deposit was applied against our outstanding trade
payables. This trade credit facility is for an indefinite term, however, either
party has the right to terminate the facility upon 30 days' written notice to
the other party. As of September 30, 2004, we owed Lung Hwa Electronics $1.2
million in trade payables net of the remaining $750,000 deposit. During the
first nine months of 2004, we purchased a total of $2.5 million of inventory
from Lung Hwa Electronics. During 2003, we purchased $12.7 million of inventory
from Lung Hwa Electronics. During 2002, we purchased no inventory from Lung Hwa
Electronics.
We believe that many of the terms available to us under our trade credit
facility with Lung Hwa Electronics are advantageous as compared to terms
available from unrelated third parties. For example, Lung Hwa Electronics
extends us 120 day payment terms. We believe that the best payment terms that we
could likely obtain from unrelated third parties would be 60-day payment terms;
however, payment in advance or within 30 days is more customary. Also, Lung Hwa
Electronics charges us a 5% handling fee on a supplier's unit price, but applies
a 2% discount of the handling fee, so that the net handling fee is 3%, if we
reach an average running monthly purchasing volume of $750,000. In addition,
under our trade credit facility with Lung Hwa Electronics, the level of security
provided by us to Lung Hwa Electronics was initially $1.5 million and is
currently $0 for a $10.0 million trade credit facility. We believe that
the payment terms, handling fee and the level of security required are all
substantially better terms that we could obtain from unrelated third parties. In
fact, we believe that our trade credit facility is likely unique and could not
be replaced through a relationship with an unrelated third party.
Our relationship and our trade credit facility with Lung Hwa Electronics
enables us to acquire products from manufacturers who we believe are some of the
largest electronics manufacturers in the world. We buy products through Lung Hwa
Electronics by using Lung Hwa Electronics' size and purchasing power as a source
of credit strength. If we were to acquire these products directly from the
manufacturers, we would likely be required to send payment in advance of
shipment of those products. Due to our relatively small size, we would likely be
unable to qualify for extended payment terms of even 30 days. Accordingly, we
believe that our relationship and trade credit facility with Lung Hwa
Electronics is likely unique, could not be replaced through a relationship with
an unrelated third party and is important in enabling us to secure certain
products that we sell.
In February 2003, we entered into a Warehouse Services and Bailment
Agreement with BTC USA, an affiliate of several of our stockholders, namely BTC,
BTC Korea Co., Ltd., Behavior Tech Computer (BVI) Corp. and BTC Taiwan, as well
as an affiliate of one of our principal subcontract manufacturers, namely
Behavior Tech Computer Corp. Under the terms of the agreement, BTC USA has
agreed to supply and store at our warehouse up to $10.0 million of inventory on
a consignment basis. We are responsible for insuring the consigned inventory,
storing the consigned inventory for no charge; and
15
furnishing BTC USA with weekly statements indicating all products received and
sold and the current level of consigned inventory. The agreement also provides
us with a trade line of credit of up to $10.0 million with payment terms of net
60 days, without interest. The agreement may be terminated by either party upon
60 days' prior written notice to the other party. As of September 30, 2004, we
owed BTC USA $1.4 million under this arrangement. As of December 31, 2003, we
owed BTC USA $8.3 million under this arrangement. As of December 31, 2002, we
owed BTC USA $2.4 million under a prior arrangement. During the first nine
months of 2004, we purchased $10.9 million of inventory from BTC USA. During
2003 we purchased $20.1 million of inventory from BTC USA. During 2002, we
purchased $10.0 million of inventory from BTC USA; however, all purchases within
the previous two years and prior to February 2003, when we entered into our
Warehouse Services and Bailment Agreement with BTC USA, were on a purchase order
basis and our payment terms were 75 days. Prior to February 2003, although not
formally documented, in practice, our trade line of credit allowed us to
purchase up to $5.0 million of inventory. Steel Su, a director of I/OMagic, is
the Chief Executive Officer of BTC. BTC USA, its affiliates and Mr. Su also have
beneficial ownership in or are otherwise affiliated with the following
affiliates of BTC and BTC USA: BTC Korea Co., Ltd., Behavior Tech Computer (BVI)
Corp., BTC Taiwan, Susha, LLC, a Nevada limited liability company, and Susha,
LLC, a California limited liability company, each of which is also a stockholder
of our company. Mr. Shahbaz, our Chief Executive Officer, President, Secretary
and a Director, also has beneficial ownership in, and sole voting control of,
Susha, LLC, a Nevada limited liability company, and Susha, LLC, a California
limited liability company. See "Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters."
We believe that many of the terms available to us under our Warehouse
Services and Bailment Agreement with BTC USA are advantageous as compared to
terms available from unrelated third parties. For example, this Agreement allows
us to store up to $10.0 million of consigned inventory at our warehouse, without
obligation to pay BTC USA for the inventory until 60 days after we take title to
the inventory. We believe that it is unlikely that unrelated third parties would
permit this consignment arrangement and that we would instead be subject to
standard payment terms, the best of which would likely be 60-day payment terms;
however, either payment in advance or within 30 days is more customary. Our
$10.0 million line of credit with 60 days payment terms without interest may
also permit terms better than we could obtain from unrelated third parties. The
best payment terms under a line of credit with an unrelated third party
subcontract manufacturer would likely be 60 day payment terms; however, payment
in advance or within 30 days is more customary.
Our relationships with Lung Hwa Electronics and BTC USA provide us with
numerous advantages. We believe that both entities are significant suppliers
within their industries and have substantial manufacturing and product
development capabilities and resources. The advantageous terms we are able to
obtain from them allow us to utilize more capital resources for other aspects of
our business and to remain competitive with larger, more established companies.
In addition, we are better able to manage our cash flow as a result of our
significant trade line of credit with Lung Hwa Electronics and our consignment
arrangement with BTC USA. We believe that these advantageous terms contribute
positively to our results of operations.
In the past, equity investments by Lung Hwa Electronics and BTC USA, or its
affiliates, have enabled us to obtain inventory with little or no cash
expenditures, which we believe has helped us establish, maintain and grow our
business. We believe that our relationships with these related parties has in
the past benefited our business and contributed positively to our historical
results of operations.
We leased our previous facility, located in Santa Ana, California, from
January 2001 through September 2003 from Alex Properties, an entity owned
through late March 2003 by Mr. Shahbaz, our Chief Executive Officer, President,
Secretary and Director, and Mr. Su, a director and beneficial owner of I/OMagic.
In late March 2003, the ownership of Alex Properties was transferred to Mark
Vakili as part of
16
the settlement of a lawsuit. See "Business - Legal Proceedings" elsewhere in
this report. In 2003, we paid $86,000 to Alex Properties for rent while it was
owned by Mr. Shahbaz and Mr. Su.
We are a party to an employment agreement with Mr. Shahbaz, our Chief
Executive Officer, President, Secretary and a Director. See "Management -
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, or Exchange Act,
requires our executive officers, directors and persons who beneficially own more
than 10% of a registered class of our equity securities ("reporting persons") to
file initial reports of ownership and reports of changes in ownership of our
common stock and other equity securities with the United States Securities and
Exchange Commission, or SEC. The reporting persons are required by the SEC
regulations to furnish us with copies of all reports that they file.
Based solely upon a review of copies of the reports furnished to us during
our fiscal year ended December 31, 2003 and thereafter, or any written
representations received by us from reporting persons that no other reports were
required, we believe that all Section 16(a) filing requirements applicable to
our reporting persons during our fiscal year ended December 31, 2003 were met,
except that Mr. Shin filed a late Form 4 to report one transaction.
Based solely upon a review of copies of the reports furnished to us prior
to January 1, 2003, or written representations received by us from current
reporting persons that no other reports were required, we believe that all
Section 16(a) filing requirements applicable to our current reporting persons
prior to January 1, 2003 were met, except as described below:
The following individuals did not timely file the following numbers of
Forms 3, 4 or 5 to report the following numbers of transactions: Mr. Shahbaz - 7
reports, 12 transactions; Mr. Su - 7 reports, 10 transactions; Mr. Yao - 3
reports, 3 transactions; Mr. Andrews - 8 reports, 24 transactions; and Mr. Shin
- - 2 reports, 3 transactions. Mr. Shahbaz and Mr. Su are in the process of
preparing all required Forms 3, 4 or 5 to report their respective transactions.
Messrs. Yao, Andrews and Shin have each filed applicable forms to report their
respective transactions.
17
PROPOSAL 1
ELECTION OF DIRECTORS
Our bylaws currently provide for a board of directors of six directors.
Five directors are to be elected at the 2004 Annual Meeting. As a result, we
will have one vacancy on the board of directors. Unless otherwise instructed,
the proxy holder will vote the proxies received by him for the Nominating
Committee's nominees named above. Each nominee has consented to be named as a
nominee in the proxy statement and to serve as a director if elected. In the
event that any Nominating Committee nominee becomes unable or declines to serve
as a director, the proxies will be voted for any nominee who shall be designated
by the current board of directors to fill the vacancy. We are not aware of any
reason that any nominee will be unable or will decline to serve as a director.
The term of office of each person elected as a director will continue until the
next annual meeting or until a successor has been elected and qualified. There
are no arrangements or understandings between any director or executive officer
and any other person pursuant to which he is or was to be selected as a director
or officer of I/OMagic Corporation.
The names of the nominees, and certain information about them, are set
forth above under the caption "Directors, Director Nominees and Executive
Officers." All nominees for re-election as director are, at present, directors
of I/OMagic Corporation.
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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE ELECTION OF THE
NOMINEES SET FORTH HEREIN.
18
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our Audit Committee has selected Singer Lewak Greenbaum & Goldstein LLP,
independent public accountants, to audit our consolidated financial statements
for the fiscal year ending December 31, 2004, and our board of directors has
concurred in this selection. Singer Lewak Greenbaum & Goldstein LLP served as
our independent public accountants for the fiscal year ending December 31, 2003.
At the 2004 Annual Meeting, the stockholders are being asked to ratify the
appointment of Singer Lewak Greenbaum & Goldstein LLP as our independent public
accountants for the fiscal year ending December 31, 2004. Additional information
regarding our relationship with our independent public accountants is contained
in this proxy statement under the headings "Audit Committee Report,"
"Independent Public Accountant Fees and Services," and "Policy on Audit
Committee Pre-Approval of Audit and Non-Audit Services of Independent Public
Accountants."
REQUIRED VOTE OF STOCKHOLDERS AND BOARD RECOMMENDATION
Although stockholder ratification is not required, our board of directors
has directed that this selection be submitted to our stockholders for
ratification at our 2004 Annual Meeting. The affirmative vote of a majority of
the shares of our common stock entitled to vote at and present in person or
represented by proxy at the meeting will constitute stockholder ratification of
the selection. If stockholder ratification of this proposal is not obtained, our
Audit Committee and board of directors may reconsider our appointment of Singer
Lewak Greenbaum & Goldstein LLP as our independent public accountants.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF SINGER LEWAK GREENBAUM & GOLDSTEIN LLP AS OUR INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2004.
STOCKHOLDER PROPOSALS
Stockholders of I/OMagic Corporation may submit proposals for consideration
at future stockholder meetings, including director nominations. Proposals of
our stockholders, including director nominations, that are intended to be
presented by such stockholders at our next annual meeting of stockholders and
that such stockholders desire to have included in our proxy statement relating
to such meeting must be received by us no later than August 3, 2005 in order to
be considered for possible inclusion in our proxy statement and form of proxy
relating to that meeting.
If a stockholder wishes to present a proposal, including a director
nomination, at our 2005 annual meeting and the proposal is not intended to be
included in our proxy statement relating to that meeting, the stockholder must
give advance notice in writing to the Secretary of I/OMagic Corporation prior to
the deadline for such meeting determined in accordance with our Amended and
Restated Bylaws (the "Bylaw Notice Deadline"). The Bylaw Notice Deadline with
respect to the 2005 annual meeting is August 3, 2005. If a stockholder gives
notice of a proposal outside of the Bylaw Notice Deadline, the stockholder will
not be permitted to present the proposal to the stockholders for a vote at the
meeting according to our bylaws.
Any proposals submitted by stockholders must comply with the requirements
for stockholder proposals set forth in our Amended and Restated Bylaws. A copy
of the full text of the applicable bylaw provisions may be obtained by writing
to our Secretary. All notices of proposals by stockholders,
19
whether or not included our proxy materials, should be sent to I/OMagic
Corporation, 4 Marconi, Irvine, California 92618, Attention: Secretary.
We have not been notified by any stockholder of his intent to present a
stockholder proposal from the floor at the 2004 Annual Meeting. Accordingly, no
stockholder motions from the floor will be considered at the meeting. The
enclosed proxy card grants the proxy holders discretionary authority to vote on
any matter properly brought before the 2004 Annual Meeting.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934. In accordance with that act, we file reports, proxy statements and
other information with the Securities and Exchange Commission. These materials
can be inspected and copied at the Public Reference Room maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. Copies of these materials can also be obtained from the
Securities and Exchange Commission at prescribed rates by writing to the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Our common stock trades on the OTC Bulletin Board
under the symbol "IOMG."
ANNUAL REPORT
A copy of our annual report on Form 10-K for the year ended December 31,
2003 accompanies this proxy statement. The annual report is not incorporated by
reference into this proxy statement and is not deemed to be a part of this proxy
solicitation material.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN PROMPTLY THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
20
APPENDIX A
----------
March 15, 2004
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
I/OMAGIC CORPORATION
PURPOSE AND SCOPE
The primary function of the Audit Committee (the "Committee") of the Board
of Directors (the "Board") of I/OMagic Corporation (the "Company") is to (a)
assist the Board in fulfilling its responsibilities by reviewing: (i) the
financial reports provided by the Company to the Securities and Exchange
Commission ("SEC"), the Company's shareholders or to the general public, and
(ii) the Company's internal financial and accounting controls, (b) oversee the
appointment, compensation, retention and oversight of the work performed by any
independent public accountants engaged by the Company and (c) recommend,
establish and monitor procedures designed to improve the quality and reliability
of the disclosure of the Company's financial condition and results of
operations.
COMPOSITION
The Committee shall be comprised of a minimum of three directors as
appointed by the Board of Directors, who shall meet the independence, audit
committee composition requirements promulgated by the SEC, the National
Association of Securities Dealers, any exchange upon which securities of the
Company are traded, or any governmental or regulatory body exercising authority
over the Company (each a "Regulatory Body" and collectively, the "Regulatory
Bodies"), as in effect from time to time, and each member of the Committee shall
be free from any relationship that, in the opinion of the Board of Directors,
would interfere with the exercise of his or her independent judgment as a member
of the Committee.
At the time of his or her appointment to the Committee, each member of the
Committee shall be able to read and understand fundamental financial statements,
including a balance sheet, cash flow statement and income statement. At least
one member of the Committee shall have employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities. Further, at least one member of the Committee shall qualify as
an "audit committee financial expert" as such term is defined by Item 401(h) of
Regulation S-K of the Securities Act of 1933, as amended.
The members of the Committee shall be elected by the Board of Directors at
the meeting of the Board of Directors following each annual meeting of
stockholders and shall serve until their successors shall be duly elected and
qualified or until their earlier resignation or removal. Unless a Chair is
elected by the full Board of Directors, the members of the Committee may
designate a Chair by majority vote of the full Committee membership.
RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee shall carry out
the following specific activities:
A. DOCUMENT REVIEW
---------------
1. Review and reassess the adequacy of this Charter periodically as
conditions dictate, but at least annually, and recommend any proposed changes
to the Board of Directors for approval.
2. Review with representatives of management and representatives of the
independent accounting firm the Company's audited annual financial statements
prior to their filing as part of the Annual Report on Form 10-K. After such
review and discussion, the Committee shall recommend to the Board of Directors
whether such audited financial statements should be published in the Company's
annual report on Form 10-K. The Committee shall also review the Company's
quarterly financial statements prior to their inclusion in the Company's
quarterly SEC filings on Form 10-Q.
3. Take steps designed to insure that the independent accounting firm
reviews the Company's interim financial statements prior to their inclusion in
the Company's quarterly reports on Form 10-Q.
B. INDEPENDENT ACCOUNTING FIRM
---------------------------
1. The Committee shall be directly responsible for the appointment,
compensation, retention and oversight of the work of any independent accounting
firm engaged by the Company for the purpose of preparing or issuing an audit
report or related work. The Committee shall have the ultimate authority and
responsibility to appoint, evaluate and, when warranted, replace such
independent accounting firm (or to recommend such replacement for shareholder
approval in any proxy statement).
2. Resolve any disagreements between management and the independent
accounting firm as to financial reporting matters.
3. Instruct the independent accounting firm that it should report directly
to the Committee on matters pertaining to the work performed during its
engagement and on matters required by applicable Regulatory Body rules and
regulations.
4. On an annual basis, receive from the independent accounting firm a formal
written statement identifying all relationships between the independent
accounting firm and the Company consistent with Independence Standards Board
Standard 1. The Committee shall actively engage in a dialogue with the
independent accounting firm as to any disclosed relationships or services that
may impact its independence. The Committee shall take appropriate action to
oversee the independence of the independent accounting firm.
5. On an annual basis, discuss with representatives of the independent
accounting firm the matters required to be discussed by Statement on Auditing
Standards 61, as it may be modified or supplemented.
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6. Meet with the independent accounting firm prior to the audit to review
the planning and staffing of the audit and consider whether or not to approve
the auditing services proposed to be provided.
7. Evaluate the performance of the independent accounting firm and consider
the discharge of the independent accounting firm when circumstances warrant. The
independent accounting firm shall be ultimately accountable to the Board of
Directors and the Committee.
8. Consider in advance whether or not to approve any non-audit services to
be performed by the independent accounting firm required to be approved by the
Committee pursuant to the rules and regulations of any applicable Regulatory
Body.
9. The Committee shall have the authority to oversee and determine the
compensation of any independent accounting firm engaged by the Company.
10. Ensure the rotation of the audit partners as required by Section 10A(j)
of the Securities Exchange Act of 1934, as amended, and consider whether, in
order to assure continuing auditor independence, it is appropriate to adopt a
policy of rotating the independent auditing firm on a regular basis.
11. Recommend to the Board of Directors policies for the Company's hiring of
employees or former employees of the independent auditor consistent with Section
10A(l) of the Securities Exchange Act of 1934, as amended.
C. FINANCIAL REPORTING PROCESSES
-----------------------------
1. In consultation with the independent accounting firm and management,
review annually the adequacy of the Company's internal financial and accounting
controls.
2. Review disclosures made to the Committee by the Company's chief executive
officer and chief financial officer in connection with their certifications of
the Company's reports on Form 10-K and Form 10-Q, including disclosures
concerning (a) evaluations of the design and operation of the Company's internal
financial and accounting controls, (b) any significant deficiencies discovered
in the design and operation of the Company's internal controls which could
adversely affect the Company's ability to record, process, summarize, and report
financial data, and (c) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls. The Committee shall direct the actions to be taken and/or
make recommendations to the Board of Directors of actions to be taken to the
extent such disclosures indicate the finding of any significant deficiencies in
internal controls or fraud.
3. Regularly review the Company's critical accounting policies and
accounting estimates resulting from the application of these policies and
inquire at least annually of both the Company's internal auditors and the
independent accounting firm as to whether either has any concerns relative to
the quality or aggressiveness of management's accounting policies.
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D. COMPLIANCE
----------
1. Obtain from the independent auditor assurance that Section 10A(b) of the
Securities Exchange Act of 1934, as amended, has not been implicated.
2. Obtain reports from management and the independent auditor that the
Company and its subsidiaries and affiliated entities are in conformity with
applicable legal requirements and the Company's Code of Business Conduct and
Ethics.
3. To the extent deemed necessary by the Committee, it shall have the
authority to engage outside counsel, independent accounting consultants and/or
other experts at the Company's expense to review any matter under its
responsibility.
4. Establish written procedures for (a) the receipt, retention, and
treatment of complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters; and (b) the confidential, anonymous
submission by employees of the Company of concerns regarding questionable
accounting or auditing matters.
5. Investigate any allegations that any officer or director of the Company,
or any other person acting under the direction of any such person, took any
action to fraudulently influence, coerce, manipulate, or mislead any independent
public or certified accountant engaged in the performance of an audit of the
financial statements of the Company for the purpose of rendering such financial
statements materially misleading and, if such allegations prove to be correct,
take or recommend to the Board of Directors appropriate disciplinary action.
6. Discuss with the Company's general counsel matters that may have a
material impact on the financial statements or the compliance policies.
7. Review and approve in advance any proposed related party transactions.
D. REPORTING
---------
1. Prepare, in accordance with the rules of the SEC as modified or
supplemented from time to time, a written report of the audit committee to be
included in the Company's annual proxy statement for each annual meeting of
stockholders.
2. To the extent required by any Regulatory Body, instruct the Company's
management to disclose in its Form 10-K and Form 10-Q's the approval by the
Committee of any nonaudit services performed by the independent accounting firm,
and review the substance of any such disclosure.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
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APPENDIX B
----------
April 12, 2004
CHARTER OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF
I/OMAGIC CORPORATION
PURPOSE
The purpose of the Compensation Committee of I/OMagic Corporation (the
"Company") established pursuant to this charter is to (i) act as Administrator
of the Company's various Stock Option Plans (collectively, the "Plans") as
described in each of the Plans, (ii) review forms of compensation to be provided
to the officers and employees of the Company, including stock compensation,
(iii) grant options to purchase common stock of the Company to employees and
executive officers of the Company and (iv) review and make recommendations to
the Board of Directors regarding all forms of compensation to be provided to the
directors of the Company, including stock compensation. The Compensation
Committee has the authority to undertake the specific duties and
responsibilities listed below and will have the authority to undertake such
other specific duties as the Board of Directors from time to time prescribes.
MEMBERSHIP
The Compensation Committee shall consist of a minimum of two (2)
"non-employee directors" of the Company as such term is defined in Rule
16b-3(b)(3)(i) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The members of the Compensation Committee will be outside directors
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended. The members of the Compensation Committee are appointed by and serve
at the discretion of the Board of Directors.
RESPONSIBILITIES
The responsibilities of the Compensation Committee are set forth below:
- The Compensation Committee shall review and make recommendations to the
Board of Directors regarding the compensation policy for executive officers and
directors of the Company, and such other officers of the Company as directed by
the Board of Directors.
- The Compensation Committee shall review and approve the Company's
compensation policy regarding all forms of compensation (including, to the
extent relevant, all "plan" compensation, as such term is defined in Item
402(a)(7) of Regulation S-K promulgated by the Securities and Exchange
Commission, and all non-plan compensation) to be provided to the officers and
employees of the Company.
- The Compensation Committee shall review recommendations from the Chief
Executive Officer of the Company regarding all forms of compensation (including,
to the extent relevant, all "plan" compensation, as such term is defined in Item
402(a)(7) of Regulation S-K promulgated by the Securities and Exchange
Commission, and all non-plan compensation) to be provided to the non-employee
directors of the Company.
- The Compensation Committee shall review and make recommendations to the
Board of Directors regarding general compensation goals and guidelines for the
Company's employees and officers and the criteria by which bonuses to the
Company's employees and officers are determined.
- The Compensation Committee shall review recommendations from the Chief
Executive Officer of the Company regarding all bonus and stock compensation to
all employees of the Company.
- The Compensation Committee shall act as Administrator (as described in each
of the Plans) of the Plans within the authority delegated by the Board of
Directors. In its administration of the Plans, the Compensation Committee may,
(i) grant stock options to individuals eligible for such grants (including
grants to individuals subject to Section 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") in compliance with Rule 16b-3 thereunder)
and (ii) amend such stock options.
- The Compensation Committee shall review and make recommendations to the
Board of Directors with respect to amendments to the Plans and changes in the
number of shares reserved for issuance thereunder.
- The Compensation Committee shall review and make recommendations to the
Board of Directors regarding other plans that are proposed for adoption or
adopted by the Company for the provision of compensation to employees of,
directors of and consultants to the Company.
- The Compensation Committee shall prepare a report (to be included in the
Company's proxy statement) that describes: (a) the criteria on which
compensation paid to the Chief Executive Officer for the last completed fiscal
year is based; (b) the relationship of such compensation to the Company's
performance; and (c) the Compensation Committee's executive compensation
policies applicable to executive officers.
- The Compensation Committee shall review and reassess the adequacy of this
Charter annually and recommend any proposed charges to the Board of Directors
for approval.
MEETINGS
It is anticipated that the Compensation Committee will meet at least twice
each year. However, the Compensation Committee may establish its own schedule,
which it will provide to the Board of Directors in advance. At a minimum of one
of such meetings annually, the Compensation Committee will consider stock plans,
performance goals and incentive awards, and the overall coverage and composition
of the compensation package.
MINUTES
The Compensation Committee will maintain written minutes of its meetings,
which minutes will be filed with the minutes of the meetings of the Board of
Directors.
REPORTS
The Compensation Committee will provide written reports to the Board of
Directors of the Company regarding recommendations of the Compensation Committee
submitted to the Board of Directors for action, and copies of the written
minutes of its meetings.
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APPENDIX C
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April 12, 2004
CHARTER OF THE
NOMINATING COMMITTEE
OF THE BOARD OF DIRECTORS
OF
I/OMAGIC CORPORATION
PURPOSE
The purpose of the Nominating Committee of the Board of Directors of
I/OMagic Corporation (the "Company") is to ensure that the Board of Directors is
properly constituted to meet its fiduciary obligations to stockholders and the
Company and that the Company has and follows appropriate governance standards.
To carry out this purpose, the Nominating Committee shall: (1) assist the Board
of Directors by identifying prospective director nominees and to recommend to
the Board of Director nominees for the next annual meeting of stockholders; (2)
develop and recommend to the Board of Directors the governance principles
applicable to the Company; (3) oversee the evaluation of the Board of Directors
and management; and (4) recommend to the Board of Directors nominees for each
committee.
COMMITTEE MEMBERSHIP AND ORGANIZATION
- The Nominating Committee shall be comprised of no fewer than three (3)
members.
- The members of the Nominating Committee shall meet the independence
requirements of the National Association of Securities Dealers.
- The members of the Nominating Committee shall be appointed and replaced by
the Board of Directors.
COMMITTEE RESPONSIBILITIES AND AUTHORITY
- Evaluate the current composition, organization and governance of the Board
of Directors and its committees, determine future requirements and make
recommendations to the Board of Directors for approval.
- Determine on an annual basis desired Board of Director qualifications,
expertise and characteristics and conduct searches for potential Board of
Director members with corresponding attributes. Evaluate and propose nominees
for election to the Board of Directors. In performing these tasks the
Nominating Committee shall have the sole authority to retain and terminate any
search firm to be used to identify director candidates.
- Oversee the Board of Directors performance evaluation process including
conducting surveys of director observations, suggestions and preferences.
- Form and delegate authority to subcommittees when appropriate.
- Evaluate and make recommendations to the Board of Directors concerning the
appointment of directors to Board of Directors committees, the selection of
Board of Directors committee chairs, and proposal of the Board of Directors
slate for election.
- Consider shareholder nominees for election to the Board of Directors.
- Evaluate and recommend termination of membership of individual directors in
accordance with the Board of Director's governance principles, for cause or for
other appropriate reasons.
- Conduct an annual review on succession planning, report its findings and
recommendations to the Board of Directors, and work with the Board of Directors
in evaluating potential successors to executive management positions.
- Coordinate and approve Board of Directors and committee meeting schedules.
- Make regular reports to the Board of Directors.
- Review and re-examine this Charter annually and make recommendations to the
Board Directors for any proposed changes.
- Annually review and evaluate its own performance.
- In performing its responsibilities, the Nominating Committee shall have the
authority to obtain advice, reports or opinions from internal or external
counsel and expert advisors.
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I/OMAGIC CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 21, 2004
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of I/OMagic Corporation (the "Company") hereby
appoints Tony Shahbaz, as the attorney, agent and proxy holder of the
undersigned, with the power to appoint his substitute, to represent and vote, as
designated below, all shares of common stock of the Company held of record by
the undersigned at the close of business on November 22, 2004, at the 2004
Annual Meeting of stockholders to be held at the Hyatt Regency Irvine, 17900
Jamboree Boulevard, Irvine, California 92614 on December 21, 2004, at 9:00 a.m.
local time, and at any and all adjournments thereof. Our board of directors
recommends a vote FOR each of the following proposals:
1. To elect five directors as follows:
[ ] FOR all nominees listed below, except [ ] WITHHOLD AUTHORITY to
as marked to the contrary below vote for all nominees
listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list provided below.)
Tony Shahbaz Daniel Hou Anthony Andrews
Steel Su Daniel Yao
IF THE UNDERSIGNED STOCKHOLDER WISHES TO CUMULATE VOTES IN THE ELECTION OF
DIRECTORS, THE UNDERSIGNED MUST APPEAR AND VOTE IN PERSON AT THE ANNUAL MEETING.
IF ANY STOCKHOLDER GIVES PROPER NOTICE AT THE ANNUAL MEETING OF HIS OR HER
INTENTION TO CUMULATE VOTES IN THE ELECTION OF DIRECTORS, THE PROXY HOLDER WILL
HAVE THE FULL DISCRETION AND AUTHORITY TO VOTE CUMULATIVELY EXCEPT TO THE EXTENT
DESCRIBED IN THE "VOTING AND PROXY" SECTION OF THE PROXY STATEMENT.
2. To ratify the appointment of Singer Lewak Greenbaum & Goldstein LLP as
independent auditors of the Company for the fiscal year ending December 31,
2004.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To vote in his discretion on such other business as may properly come
before the meeting, or any adjournment or adjournments thereof.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY CARD WILL BE
VOTED FOR THE PROPOSALS INDICATED AND IN ACCORDANCE WITH THE DISCRETION OF THE
PROXY HOLDER ON ANY OTHER BUSINESS. ALL OTHER PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED IN CONNECTION WITH THE ACTIONS PROPOSED ON THIS PROXY CARD ARE
HEREBY EXPRESSLY REVOKED. THIS PROXY CARD MAY BE REVOKED AT ANY TIME BEFORE IT
IS VOTED BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY, BY ISSUANCE OF A
SUBSEQUENT PROXY
CARD OR BY VOTING AT THE ANNUAL MEETING IN PERSON. HOWEVER, A
STOCKHOLDER WHO HOLDS SHARES THROUGH A BROKER OR OTHER NOMINEE MUST BRING A
LEGAL PROXY TO THE MEETING IF THAT STOCKHOLDER DESIRES TO VOTE AT THE MEETING.
Please mark, date, sign and return this proxy card promptly in the enclosed
envelope. When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
DATED:
_____________________________________________
(Signature of Stockholder(s))
_____________________________________________
(Print Name(s) Here)
[ ] PLEASE CHECK IF YOU ARE PLANNING
TO ATTEND THE ANNUAL MEETING
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