SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section
14(c) of the Securities Exchange Act of 1934
Check the appropriate box:
/X/ Preliminary Information Statement.
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2).
/ / Definitive Information Statement
Commission File No. 000-30294
DIALOG GROUP, INC.
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(Name of Registrant as Specified in its Charter)
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Dialog Group, Inc
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Notice of Annual Meeting
10:00 O'clock AM, Wednesday, May 14, 2003
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Please take notice that the Annual Meeting of the holders of the Common
Stock and the Class B and B-1 Preferred Stock of Dialog Group, Inc, (the
"Company") shall be held at the Offices of the Company 257 Park Avenue South,
New York, New York 10010 at ten o'clock, AM on the 14th day of May 2003 to
consider all of the following:
1. Election of five Directors for a term of one year.
2. Approval of Amendments to the 2002 Employee Stock Option Plan
3. Increase in Authorized Shares
4. Any other business as may properly come before the meeting.
No proxies will be solicited by the Company's management in connection
with this meeting.
Respectfully submitted,
Mark Alan Siegel
Secretary of the Company
Dialog Group, Inc.
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INFORMATION STATEMENT
Annual Meeting of Stockholders
to be held May 14th, 2003
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This Information Statement is furnished by Dialog Group, Inc. (the "Company") in
connection with the Company's Annual Meeting of Stockholders to be held on May
14, 2003 at 10:00 A.M. at the Company's offices, 257 Park Avenue South (Twelfth
Floor Conference Room), New York, New York. This Information Statement was first
mailed to holders of Class B and B-1 Preferred and Common Stock on or about
April 25, 2003. The mailing address of the Company's executive office is 257
Park Avenue South, New York, NY 10010.
Annual Report
A copy of the Company's Annual Report on Form 10-KSB, including consolidated
financial statements for the Fiscal Year concluded on December 31, 2002 ("FY
2002"), has been mailed to all the Company's stockholders of record with this
Information Statement. The Annual Report is not part of this Information
Statement.
Outstanding Voting Securities and Voting Rights
The Board of Directors fixed the close of business on April 15th, 2003 as the
record date for determining the stockholders eligible to vote at the meeting. As
of the record date, the Company had outstanding 215,570 shares of its Class B
Preferred Stock, 227,547 shares of its B-1 Preferred Stock, and _____________*
shares of its Common Stock. The holder of each share of Class B or B-1 Preferred
Stock is entitled to 40 votes per share with respect to the election of
directors and one vote per share on all other questions. The holder of each
share of Common Stock is entitled to one vote per share on all questions.
None of the Company's________ outstanding Class D Preferred Shares are entitled
to vote at this Annual Meeting.
You may vote your shares either by attending the meeting or submitting a written
consent in lieu of a meeting indicating how you would vote on any question
scheduled to come before the Annual Meeting. The number of shares held by
investors who are present or who have submitted a written consent will determine
the presence of a quorum.
We Are Not Asking You for a Proxy and
You are Requested Not To Send Us a Proxy
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* Does not include approximately 163,485 111,460 -182+25,000+26,843 shares to
which creditors are entitled under the Plan of Reorganization which have not
been claimed.
On the record date, Stephen Dean, Chairman of the Board and a Director of the
Company, controlled, directly or indirectly, 142,810 shares Class B Preferred
Stock, constituting over 66 % of the outstanding Class B Preferred Shares (32.5%
of all Class B preferred shares as a group) and 17,373,353 shares of Common
Stock, constituting ___% of the outstanding Common Shares. Mr. Dean has informed
the Company that he intends to vote his shares for the election of the entire
slate of directors and in favor of all the other agenda items.
On the record date, Peter V. DeCrescenzo, President, Chief Executive Officer,
and a Director of the Company, controlled, directly or indirectly, 110,295
shares Class B-1 Preferred Stock, constituting almost 48.5 % of the outstanding
Class B-1 Preferred Shares (25 % of all Class B preferred shares as a group) and
18,514,260 shares of Common Stock, constituting ___% of the outstanding Common
Shares. Mr. DeCrescenzo has informed the Company that he intends to vote his
shares for the election of the entire slate of directors and in favor of all the
other agenda items.
Common Stock Ownership by Directors and Executive Officers
The following table sets forth information, as of April 15, 2003, with respect
to the beneficial ownership of the Company's Common Stock by (a) the present
executive officers and directors of the Company and (b) the present directors
and officers of the Company as a group.
Unless otherwise noted, the shares are owned directly or indirectly with sole
voting and investment power.
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Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership (1) Class (1)
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Stephen Dean 23,090,753 (2) __ %
6 Lloyds Avenue
London, England EC3N 3AX
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Peter V. DeCrescenzo 22,935,060 (3) __ %
257 Park Avenue South
New York, NY 10010
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Vincent DeCrescenzo 3,736,790 (4) __ %
257 Park Avenue South
New York, NY 10010
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Adrian Stecyk 5,000 (5) * %
17 State Street
New York, New York 10021
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Cindy Lanzendoen 5,542,745 (6) ___ %
257 Park Avenue South
New York, NY 10010
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Robin Smith 1,477,650 (7) ___ %
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Lyndon Chapman None (8) 0 %
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Andrejs Faj 181,657 (9) * %
257 Park Avenue South
New York, NY 10010
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Edward Fleiss 83,680 (10) * %
257 Park Avenue South
New York, NY 10010
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Tonya Brooks 9,200 (11) * %
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All present officers and directors (12) __ %
as a group (__ persons)
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* Less than one percent
(1) All numbers do not reflect approximately 163,485 shares to which creditors
are entitled under the Plan of Reorganization which has not been claimed.
They are based upon information furnished to the Company by the security
holders or obtained from the stock transfer books of the Company. Other
than indicated in the notes, the Company has been informed that these
persons have sole voting and investment power with respect to their
shares. Certain options disclosed hereunder may not have been fully vested
as of the date of this report.
(2) Includes of 14,828,353 common shares held by Cater Barnard and its
subsidiaries, 2,550,000 common shares held by Envesta, and 5,712,400
common shares issuable upon conversion of the 142,810 shares of Class B
Preferred Stock held by Cater Barnard.
(3) This includes 18,514,260 shares of Common Stock now held and 4,411,800
shares of Commons Stock issuable upon conversion of 110,295 shares Class
B-1 Preferred.
(4) This includes 3,072,030 shares of Common Stock now held and 664,760 shares
of Commons Stock issuable upon conversion of 16,619 shares Class B-1
Preferred.
(5) Does not include any shares held by the companies of which Mr. Stecyk is
an officer or director.
(6) This includes 4,502,385 shares of Common Stock now held and 1,040,360
shares of Commons Stock issuable upon conversion of 26,009 shares Class
B-1 Preferred.
(7) This includes 1,126,650 shares of Common Stock now held, 251,000 shares of
Commons Stock issuable upon conversion of 6,275 shares Class B-1
Preferred, and 100,000 shares of Common Stock issuable upon exercise of
Stock Options. 1,127,650 of Ms. Smith's shares are held in escrow pursuant
to the Agreement for Merger between the Company and IP2M.
(8) Does not include any shares held by the companies of which Mr. Chapman is
an officer or director.
(9) This includes 146,853 shares of Common Stock now held and 34,800 shares of
Commons Stock issuable upon conversion of 870 shares Class B-1 Preferred.
(10) This consists of 83,680 shares of Common Stock (issuable upon conversion
of 2,092 shares Class B Preferred).
(11) This includes 9,200 shares of Common Stock (issuable upon conversion of
230 shares Class B Preferred).
(12) Includes 4,750 shares that represent one-half of the beneficial interest
in a trust of which Mr. Siegel, the Company's Secretary, is a co-trustee
but excludes 44,312 shares of Class B-1 Preferred and 6,191,029 shares of
Common Stock which Mr. Siegel holds as Escrow Agent under the Company's
Agreement for Merger with IP2M and in which he disclaims any beneficial
interest. Mr. Siegel also holds _________ preferred shares of Envesta
representing ___ percent of its equity pursuant to an escrow agreement
between the Company and Cater Barnard. The escrow provides no voting power
and Mr. Siegel disclaims any beneficial interest.
Principal Holders of Common Stock.
The following table sets forth information, as of April 15, 2003 with respect to
the beneficial ownership of the Company's Common Stock by each person known by
the Company to be the beneficial owner of more than five percent (5%) of the
Company's outstanding Common Stock
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Name and Address of Beneficial Owner Amount and Nature of Percent of Class
Beneficial Ownership (1) (1)
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Cater Barnard, plc (2) 20,540,753 (3) __ %
6 Lloyds Avenue
London, England EC3N 3AX
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Envesta, plc (2) 2,550,000 __ %
6 Lloyds Avenue
London, England EC3N 3AX
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Stephen Dean 23,090,753 (4) __ %
6 Lloyds Avenue
London, England EC3N 3AX
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Peter V. DeCrescenzo 22,935,060 (5) __ %
257 Park Avenue South
New York, NY 10010
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Cindy Lanzendoen 5,542,745 (6) __ %
257 Park Avenue South
New York, NY 10010
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(1) All numbers do not reflect approximately 163,485 shares to which creditors
are entitled under the Plan of Reorganization which have not been claimed.
They are based upon information furnished to the Company by the security
holders or obtained from the stock transfer books of the Company. Other
than indicated in the notes, the Company has been informed that such
persons have sole voting and investment power with respect to their
shares. Certain options disclosed hereunder may not have been fully vested
as of the date of this report.
(2) This Company is controlled by Stephen Dean, one of the Company's
Directors. (3) Includes 427,000 shares held by subsidiaries but excludes
shares held by Envesta, plc.
(4) Includes of 14,828,353 common shares held by Cater Barnard and its
subsidiaries, 2,550,000 common shares held by Envesta, and 5,712,400
common shares issuable upon conversion of the 142,810 shares of Class B
Preferred Stock held by Cater Barnard.
(5) This includes 18,514,260 shares of Common Stock now held and 4,411,800
shares of Commons Stock issuable upon conversion of 110,295 shares Class
B-1 Preferred.
(6) This includes 4,502,385 shares of Common Stock now held and 1,040,360
shares of Commons Stock issuable upon conversion of 26,009 shares Class
B-1 Preferred.
Change in Control
Before the acquisition of HealthCare Dialog and IP2M, Stephen Dean, owned
approximately 53% of Cater Barnard, and, together with Cater Barnard, owns 54%
of Envesta. Collectively, Cater Barnard, Envesta and their subsidiaries owned
approximately 66% of the Class B Preferred Stock and 87% of the outstanding
Common Stock.
After the acquisitions, Peter V. DeCrescenzo owned approximately 48.5 % of the
outstanding Class B-1 Preferred Shares (25 % of all Class B preferred shares as
a group) and 28.5% of the outstanding Common Stock and Mr. Dean controlled,
directly or indirectly, over 66 % of the outstanding Class B Preferred Shares
(32% of all Class B preferred shares as a group) and 27% of the outstanding
Common Stock.
As a result of these transactions, Mr. DeCrescenzo joined Stephen Dean as one of
the Company's control people.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, the Company's
directors, executive officers, and beneficial holders of more than 10% of the
Company's Common Stock are required to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Based on our records and
other information, the Company believes that during FY 2002, all applicable
Section 16(a) filing requirements were met. Messers Eaker and Dean were
approximately 10 days late in filing their Forms 3, initial statement of
ownership.
Agenda Item 1 Election of Directors
Five directors are to be elected to hold office until the next Annual Meeting
and until their successors have been duly elected and qualified. All nominees
are presently members of the Board of Directors. The present directors were
appointed by the Board at various times since the effective date of the
Company's Plan of Reorganization. The Company has no reason to believe that any
of the nominees will not serve if elected.
The five directors receiving the highest number of votes will be elected. When
voting on the election of directors, each share of Class B or B-1 Preferred
Stock casts forty votes. The Company's Certificate of Incorporation does not
provide cumulative voting rights to the stockholders of either class. Mr. Dean
and Mr. DeCrescenzo have informed the Company that they will vote all the Common
and Class B and B-1 Preferred shares under their control for the election of
each nominated director. These votes constitute more than a majority of the
votes that may be cast by each class of stock for the election of directors and
assure that they will all be elected.
All the nominees who were members of the Board of Directors participated in
every meeting held during their term. The Board of Directors has no committees.
The following sets forth information about each nominee for election at this
Annual Meeting and the Company's other executive officers.
Stephen Dean (52) Nominee for Director, Director and Chairman of the Board since
December 2001.
Mr. Dean's currently has directorships in two companies listed on the
London Stock Exchange - Cater Barnard plc and Envesta plc, and one
listed on OFEX - Cater Barnard (USA) plc. As chairman of Voyager IT.com
(renamed Cater Barnard, plc in 2000), Mr. Dean orchestrated the
acquisition of 20 smaller companies within the emerging IT, Internet
and media sectors, 12 of which were subsequently listed. Mr. Dean
remains its chairman and has also served as non-executive chairman of
Envesta since 2000. Mr. Dean has also, in the past, held directorships
of a number of other Official List and AIM companies. He was born in
1950.
Peter V. DeCrescenzo (XX) Nominee for Director, Director and President of the
Company and Chief Executive Officer since March 2003.
He has served as Chief Executive Officer and President of the Company
since its acquisition of HealthCare Dialog on March 2003. Prior to that
he served as President, Chief Executive Officer and a director of
HealthCare Dialog since November 2000 where he also headed its
strategic and creative services group, and our interactive group.
Before HealthCare Dialog was organized, Mr. DeCrescenzo was the
founding partner of PVD and Partners, a full-service healthcare
marketing communications agency. He was also senior vice president and
partner at MD Direct, a healthcare marketing communications company
specializing in direct marketing to physicians and consumers, where he
developed Patient Select, the first and largest direct-to-consumer
database of its kind. MD Direct was later acquired by Carlson
Marketing. Peter DeCrescenzo's healthcare marketing career began at
Sterling Drugs, where he held positions in sales, promotional services,
and group brand management. After 14 years with Sterling Drugs, he
joined American Home Products Corporation as director of marketing for
Ayerst Labs. From American Home Products, he joined Sandoz
Pharmaceuticals as product marketing director. Peter DeCrescenzo left
Sandoz to become a partner at MD Direct.
Vincent DeCrescenzo, Sr. (XX) Nominee for Director, Director and Executive
Vice-President of the Company and Chief Operating Officer since March 2003.
He has served as Chief Operating Officer and Executive Vice-President
of the Company since its acquisition of HealthCare Dialog on March
2003. Prior to that he served as Chief Operating Officer and a director
of HealthCare Dialog since November 2000 where he lead the production
services orgainzation. Before joining Healthcare Dialog, Mr.
DeCrescenzo was the Chief Operating Officer of PVD and Partners and of
four spin-off companies. Vincent DeCrescenzo worked for Bradlees
Discount Stores for over a decade beginning in 1980, starting as a
single unit store manager and progressing to Regional Vice President
for New England and membership in the Bradlees Operating Committee. As
Regional Vice President, he had full profit and loss responsibility for
50 stores, over $500,000,000 in sales, and a store population that
peaked at over 10,000 employees.
Adrian Stecyk (42) Nominee for Director, Director and Senior Vice President of
the Company since March 2003.
From December 2001 until March 2003 he served as the Company's
President. He is the Chief Executive Officer and Director of Griffin
Securities, Inc., a US based investment banking and NASD registered
brokerage firm and has served in that position since 1997. He has been
a director of Cater Barnard and Cater Barnard (USA) since July 2000.
Mr. Stecyk has a B.S. in Engineering and M.B.A. from Boston University.
From 1980 to 1986, Mr. Stecyk was member of the Technical Staff at
Charles Stark Draper Laboratory, a technology research and development
company. Mr. Stecyk co-founded Griffin Capital Management Corp., a
registered Investment Advisor, where he was responsible for asset
management and investment advisory services to major institutions.
Cindy Lanzendoen, (40) Senior Vice President and Chief Operating Officer of
the HealthCare Dialog Division
Ms. Lanzendoen has served as a Senior Vice President of the Company
since March 1, 2003, the effective date of the Company's acquisition of
HealthCare Dialog. Ms. Lanzendoen helped found HealthCare Dialog where
she served as Executive Vice President - Client Services since November
2000 where she was the head of its account services group. Ms.
Lanzendoen was the Executive Vice President and a founder of PVD and
Partners, and prior to that, worked for Carlson Healthcare
Communications and Dugan/Farley Communications, as well as taught the
Laboratory Medicine curriculum at Bergen Community College. Ms.
Lanzendoen has more than 20 years of experience in the healthcare
industry.
Robin Smith, (39), Senior Vice-President and Chief Operating Officer of the
IP2M Division
Ms. Smith has served as a Senior Vice President, and Chief Operating
Officer of the Company's IP2M Division since _______ 2003, shortly
after the Company acquired IP2M. Ms. Smith founded IP2M in _________
and served as its Chief Executive from then until the acquisition.
Prior to IP2M, Ms. Smith,__________.
Lyndon Chapman, (51) Managing Director of Findstar.
Mr. Chapman has served as a Director of the Company since April 2002.
Mr. Chapman is currently Chairman and Managing Director of Panda
Software UK Ltd (a subsidiary of Findstar), Chairman of Seven Telecom
Ltd, and a non- executive and audit committee member of Envesta. He is
also the founder and director of Dean Corp., which is now called Lupus
Capital Plc.
Edward Fleiss (46), Vice President
Mr. Fleiss, who joined TDMI in October 1998, heads the DigitalData
division of TDMI. He had been the Vice President and Chief Technology
Officer of PC411, Inc. since May 1997. Prior to that, he served as the
Chief Technology Officer at Electronic Pictures Corp. From 1993 to 1996
he served as Technology Sales Manager for Marcus Technology, Inc., a
New York-based network integration firm specializing in printing and
publishing systems.
Andreja Fah (XX), Chief Technical Officer
Mr. Fah has served the Company as Chief Technical Officer since the
acquisition of HealthCare Dialog, where he served as CTO since November
2000. Joining HealthCare Dialog, Mr. Fah was the Senior Art Director at
several ad agencies including JW Thompson, Young & Rubicam and Saatchi
& Saatchi, and was the Founder and Managing Partner of Corporate Design
Group, a developer of corporate interactive media. Mr. Fah has more
than 25 years of experience in consumer- and healthcare-related graphic
design and technical development. He is also a Sun Certified Solaris
Systems Administrator Level II and Sun/Javasoft Certified Java
Developer. He received a B.F.A degree in communication design, M.F.A.
degree in industrial design and M.S. degree in economics from the
University of Zurich, Switzerland.
Tonya Brooks (27), Vice President
Ms. Brooks is the head of DMQ and Mail Mogul, the Company's mailshop
service division. She joined the Company in 2001, the effective date of
the Company's acquisition of DMQ. Ms Brooks helped found DMQ, where she
has served as Vice President since 1999. Previously, she was the Site
Manager for AutobodyOnline. Ms. Brooks graduated cum laude from Truman
State University with a BA in communications.
Peter DeCrescenzo and Vincent DeCrescenzo are brothers. The Company
knows as of no other family relationships among its senior leadership.
Executive Compensation
Cash Compensation
The following table sets forth a summary of all compensation awarded
to, earned by or paid to, the Company's Chief Executive Officer and the other
executive officers of the Company whose compensation exceeded $100,000 per annum
for services rendered in all capacities to the Company and its subsidiaries
during Fiscal Years ended December 31, 2002, December 31, 2001, and December 31,
2000. Data with respect to Peter V. DeCrescenzo, Vincent DeCrescenzo, and Cindy
Lanzendoen reflects compensation received from Healthcare Dialog prior to its
acquisition.
SUMMARY COMPENSATION TABLE
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Annual Compensation Long Term Awards
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Securities
Name and Fiscal Other Annual Underlying All other
Principal Position Year Salary Bonus Compensation ($) Options Compensation
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Peter V. DeCrescenzo, 2002 $ 113,800 -0- -0- -0- -0-
Director, President, and Chief 2001 $ 227,600 -0- -0- -0- -0-
Executive Officer(1) 2000 $ 101,700 -0- -0- -0- -0-
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Vincent DeCrescenzo, Sr., 2002 $ 68,300 -0- -0- -0- -0-
Director, Executive Vice 2001 $ 136,500 -0- -0- -0- -0-
President, and Chief Operating 2000 $ 91,800 -0- -0- -0- -0-
Officer(2)
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Cindy Lanzendorn, Senior Vice 2002 $ 80,800 -0- -0- -0- -0-
President and head of the 2001 $ 136,500 -0- -0- -0- -0-
HealthCare Dialog Division(3) 2000 $ 51,900 -0- -0- -0- -0-
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Adrian Stecyk, Director and 2002 -0- -0- -0- -0- -0-
Senior Vice President(4) 2001 -0- -0- -0- -0- -0-
2000 -0- -0- -0- -0- -0-
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Dean Eaker, Director, Senior 2002 $ (80,000)(6) -0- -0- 19,800 (8) -0-
Vice President of the 2001 $ 160,000 (7) -0- -0- -0- -0-
Company(5) Chairman, CEO and 2000 $ 170,000 -0- -0- -0- -0-
Founder of TDMI.
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Bruce Biegel, Director, Senior 2002 $ (65,000)(10) -0- -0- 19,800 (6) -0-
Vice President and Chief 2001 $ 130,000 (11)
Financial Officer of the 2000 $ 131,667 -0- -0- -0- -0-
Company(9), President and Chief
Operating Officer of TDMI
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Keith Goodman, Senior 2002 $ (55,000)(13) -0- -0- 6,600 (6) -0-
Vice-President of TDMI(12) 2001 $ 110,000 (14) -0- -0- -0- -0-
2000 $ 114,375 -0- -0- -0- -0-
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Edward Flees, Vice-President, 2002 $ (48,300)(15) -0- -0- -0- -0-
Digital Data 2001 $ 100,000 (16) -0- -0- -0- -0-
2000 $ 112,708 -0- -0- -0- -0-
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Will Spero, Vice-President of 2002 $ (45,000) -0- -0- -0- -0-
the Company, President, DMQ(17) 2001 $ 76,500 -0- -0- -0- -0-
2000 -0- -0- -0- -0- -0-
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Lyndon Chapman Director of the 2002 $ 51,900 -0- -0- -0- -0-
Company(18) and President and 2001 $ -0- -0- -0- 0-
Chief Executive Officer of 2000 -0- -0- -0- -0- -0-
Findstar
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(1) Mr. Peter DeCrescenzo was elected to these positions effective March 1,
2003. All compensation shown was paid by HealthCare Dialog, Inc. prior to
its acquisition by the Company on that date.
(2) Mr. Vincent. DeCrescenzo was elected to these positions effective March 1,
2003. All compensation shown was paid by HealthCare Dialog, Inc. prior to
its acquisition by the Company on that date.
(3) Ms. Lanzendoen was elected to these positions effective March 1, 2003. All
compensation shown was paid by HealthCare Dialog, Inc. prior to its
acquisition by the Company on that date.
(4) Mr. Stecyk was elected a Director and appointed President and Chief
Executive Officer on December 11, 2001. On March 1, 2003, he was succedded
by Peter V. DeCrescenzo. He remains a Senior Vice President and a
Driector.
(5) Mr. Eaker was elected a Director and appointed Senior Vice-President on
January 31, 2002.
(6) Only $xxx,xxx of this amount was actually paid. The balance of $25,000 was
accrued.
(7) Only $145,000 of this amount was actually paid. The balance of $15,000 was
accrued.
(8) These options were issued in connection with the acquisition of TDMI to
replace existing options. They are subject to the approval of the 2002
Employee Stock Option Plan at the Annual Meeting.
(9) Mr. Biegel was elected a Director and appointed Senior Vice-President and
Chief Financial Officer on January 31, 2002 and resigned effective
October 4, 2002.
(10) Only $xxx,xxx of this amount was actually paid. The balance of $12,500 was
accrued.
(11) Only $122,500 of this amount was actually paid. The balance of $7,500 was
accrued.
(12) Mr. Goodman resigned effective October 4, 2002.
(13) Only $xxx,xxx of this amount was actually paid. The balance of $4,166 was
accrued.
(14) Only $107,500 of this amount was actually paid. The balance of $2,500 was
accrued.
(15) Only $xxx,xxx of this amount was actually paid. The balance of $8,333 was
accrued.
(16) Only $85,000 of this amount was actually paid. The balance of $5,000 was
accrued.
(17) Mr. Spero resigned effective October 31, 2002.
(18) Mr. Chapman was elected a Director April 30, 2002. He resigned effective
February 27, 2003.
Option Grants in the Last Fiscal Year
All option grants and plans predating the effective date of the Plan of
Reorganization in December 2001 were cancelled by the Plan.
In January 2002, the Board of Directors adopted the 2002 Employee Stock
Option Plan (the "Option Plan"), subject to the approval of the Company's
stockholders. In addition, as required by the TDMI Option, the Company granted
options to purchase 189,945 shares of its Common Stock to replace those then
held by TDMI's officers and employees on TDMI shares. This included grants of
Options to purchase a total of 19,800 shares to Dean Eaker, 19,800 shares to
Bruce Biegel, 6,600 shares to Keith Goodman, and 69,960 to the officers of TDMI
as a group.
Since then, the options for 98,338 shares have expired or been
terminated and new options to purchase 2,376 shares have been granted to a new
TDMI employee. After the end of the fiscal year, on March 1, 2003, the effective
date of the IP2M merger, the Company, as required by its agreement with IP2M,
issued options to purchase 320,400 shares Common Stock, including options to
purchase 100,000 shares granted to Robin Smith. The exercise price was fixed at
$0.25. As of April 15, 2003, options to purchase 414,383 shares were
outstanding.
Option Exercises and Holdings
The following table sets forth certain information relating to option
exercises effected during Fiscal 2002, and the value of options held as of such
date by each of the Chief Executive Officer and the other executive officers of
the Company whose compensation exceeded $100,000 per annum for services rendered
in all capacities to the Company and its subsidiaries during Fiscal 2002:
AGGREGATE OPTION EXERCISES FOR FISCAL 2002
AND YEAR END OPTION VALUES
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Number of Unexercised Value1 of Unexercised
Options at In-the-Money
Decmeber 31, 2002 (#) Options at
December 31, 2002 ($)
- ----------------------------------------------------------------------------------------------------------------------
Name Shares Acquired Value ($) Exercisable/ Exercisable/
on Exercise Realized(2) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
Adrian Stecyk -0- -0- -0-/-0- -0-
- ----------------------------------------------------------------------------------------------------------------------
Dean Eaker -0- -0- 19,800/-0-(3) -0-
- ----------------------------------------------------------------------------------------------------------------------
Bruce Biegel -0- -0- -0-/-0- -0-
- ----------------------------------------------------------------------------------------------------------------------
Keith Goodman -0- -0- -0-/-0- -0-
- ----------------------------------------------------------------------------------------------------------------------
Edward Fleiss -0- -0- -0-/-0- -0-
- ----------------------------------------------------------------------------------------------------------------------
William Spero -0- -0- -0-/-0- -0-
- ----------------------------------------------------------------------------------------------------------------------
Lyndon Chapman -0- -0- -0-/-0- -0-
- ----------------------------------------------------------------------------------------------------------------------
All officers and directors as a
group (10 in group) -0- -0- ???/??? -0-
- ----------------------------------------------------------------------------------------------------------------------
1 Total value of unexercised options is based upon sales of the Common Stock
as reported by the over-the-counter Bulletin Board at $ 0.XX on December
31, 2002.
2 Value realized in dollars is based upon the difference between the fair
market value of the Common Stock on the date of exercise, and the exercise
price of the option.
3 Granted upon the acquisition of TDMI to replace existing options to
purchase TDMI shares.
Executive Employment Agreements
Neither Mr. Dean, Mr. Stecyk, nor Mr. Chapman has an employment
agreement with the Company or any of its subsidiaries. Messers Eaker and Fleiss
have, and Messers Biegel, Goodman, and Spero had employment agreements with the
TDMI. Mr. Peter V. DeCrescenzo, Mr. Vincent DeCrescenzo, Ms. Cindy Lanzendoen,
and Ms. Robin Smith have executed employment agreements with the Company
effective March 1, 2003. The terms of the agreements and the termination
agreements reached with Messers Biegel and Goodman are described below.
New Employment Agreements
Effective March 1, 2003, Peter DeCrescenzo, Vincent DeCrescenzo, Cindy
Lanzendoen, and Robin Smith entered into employment agreements with the Company.
Each agreement has an initial term which ends December 31, 2004 and provides for
automatic annual renewals thereafter. The initial annual salaries are $250,000,
150,000, 150,000, and 150,000, respectively. The agreements provide for an
annual bonus of up to 25% of the base salary if the executive meets performance
goals fixed annually by the Board of Directors. The agreements also provide for
automobile allowances, health insurance and other insurance benefits, health
club access, and with the exception of Ms. Lanzendoen, a housing allowance or
access to apartments leased by the Company for the executives' use. At the end
of each term, the agreements provide for automatic annual renewals (including a
cost of living increase of at least the increase in the Consumer Price Index)
or, if not renewed, for the payment of one year's additional salary.
Dean Eaker
Mr. Eaker served as the TDMI's Chief Executive Officer until December
31, 2002.. Until then, he was paid under an Employment Agreement entered into as
of September 29, 2000, which superseded a prior employment contract. Under the
Agreement, this continues until January 31, 2003 and provided for automatic
annual renewals after that or, if not renewed, for the payment of one year's
additional salary. Mr. Eaker is to receive an annual base salary of $150,000,
and is eligible to receive an annual bonus up to an amount of $25,000 depending
reaching certain goals set by the Company. During 2001, and 2002, Mr. Eaker was
paid $15,000 and $25,000, respectively, less than was provided in his contract.
Bruce Biegel
Mr. Biegel served as the TDMI's President and Chief Operating Officer
until October 4, 2002. Until then, he was paid under an Employment Agreement
entered into as of September 29, 2000, which superseded a prior employment
contract. Under the Agreement, this was to continue until January 31, 2003 and
provided for automatic annual renewals after that or, if not renewed, for the
payment of one year's additional salary. Mr. Biegel was to receive an annual
base salary of $120,000, and was eligible to receive an annual bonus up to an
amount of $25,000 depending reaching certain goals set by the Company. During
2001 and 2002, Mr. Biegel was paid $7,500 and $12,500, respectively, less than
was provided in his contract; the balance was accrued. Under his termination
agreement, Mr. Biegel received his salary to the date of termination, his
deferred salary, his accrued vacation, and twelve monthly payments of $10,000.
As of April 15, 2003, ___ monthly payments remain to be made.
Keith Goodman
Mr. Goodman currently served as the TDMI's Senior Vice-President and
head of the ThinkDirectMail division until October 4, 2002. Until then, he was
paid under an Employment Agreement entered into as of September 29, 2000, which
superseded a prior employment contract. Under the Agreement, this was to
continue until January 31, 2003 and provided for automatic annual renewals after
that or, if not renewed, for the payment of six month's additional salary. Mr.
Goodman is to receive an annual base salary of $110,000, and is eligible to
receive an annual bonus up to an amount of $25,000 depending reaching certain
goals set by the Company. During 2001 and 2002, Mr. Goodman was paid $2,500 and
$4,166 less than was provided in his contract. Under his termination agreement,
Mr. Goodman received his salary to the date of termination, his deferred salary,
his accrued vacation, and six monthly payments of $10,000. As of April 15, 2003,
___ monthly payments remain to be made.
Ed Fleiss
Mr. Fleiss currently serves as TDMI's Vice-President and head of
Digitaldata. He is paid under an Employment Agreement entered into as of
September 29, 2000, which superseded a prior employment contract. Under the
Agreement, this continues until January 31, 2003 and provides for automatic
annual renewals after that or, if not renewed, for the payment of three month's
additional salary. Mr. Fleiss was to receive an annual base salary of $100,000,
and is eligible to receive an annual bonus up to an amount of $25,000 depending
reaching certain goals set by the Company. During 2001 and 2002, Mr. Fleiss was
paid $5,000 and $8.333, respectively, less than was provided in his contract.
William Spero
Mr. Spero served as TDMI's vice-President and President of its
DirectMailQuotes subsidiary until October 31, 2002. He was paid under an
Employment Agreement entered into as of March 1, 2001, which superseded a prior
employment contract. The Agreement, which would have continued until February
28, 2004, provided for automatic annual renewals after that or, if not renewed,
for the payment of six month's additional salary. Mr. Spero received an annual
base salary of $90,000, and was eligible to receive an annual bonus up to an
amount of $25,000 depending reaching certain goals set by the Company. His
resignation cancelled his employment agreement with no liability to the Company.
Board of Directors
Prior to December 31, 2002, the members of the Board of Directors
receive no additional compensation for their attendance at meetings or other
performance of their duties as directors. After that date, the Company will pay
Cater Barnard (pound)2,000 per month for each director it appoints, currently
two. Cater Barnard will compensate its directors for their services to the
Company. All directors are reimbursed for their expenses associated with their
performance.
On April 30, 2002, the Board unanimously chose Lyndon Chapman, the
Chief Executive Officer of its Findstar subsidiary, to replace Mark Garratt
after his resignation. After the end of the fiscal year, on March 1, the
effective date of the HealthCare Dialog acquisition, Mr. Chapman resigned from
the Board and was replaced by Peter DeCrescenzo and Vincent DeCrescenzo, Sr.
STOCK PERFORMANCE CHART
- -----------------------------------------------------------------------------------------------------
High Bid Low Bid
- -----------------------------------------------------------------------------------------------------
2003
First Quarter $ 0.60 $ 0.31
Second Quarter (through April __, 2003) $ X.XX $ X.XX
- -----------------------------------------------------------------------------------------------------
2002
First Quarter $ 3.00 $ 0.25
Second Quarter $ 2.05 $ 0.21
Third Quarter $ 0.80 $ 0.15
Fourth Quarter $ 1.50 $ 0.15
- -----------------------------------------------------------------------------------------------------
2001
First Quarter $ 2.60 $ 0.02
Second Quarter $ .02 $ 0.02
Third Quarter $ 1.00 $ 0.02
Fourth Quarter $ 0.20 $ 0.20
- -----------------------------------------------------------------------------------------------------
Certain Relationships and Related Transactions
Stephen Dean, through Cater Barnard and Envesta, plc, a company in
which Cater Barnard holds approximately 54% of the equity ("Envesta"),
controlled the Company throughout the fiscal year.
Bankruptcy and Plan of Reorganization
On November 20, 2000 the Company and its wholly-owned subsidiary,
imx-eti LifePartners, Inc. ("imx-eti") filed voluntary petitions for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of Florida, West Palm Beach Division.
On September 10, 2001, the Bankruptcy Court dismissed imx-eti's Bankruptcy Case.
On August 10, 2001, the Company filed its Third Amended Plan of
Reorganization (the "Plan"). The Plan provides that all administrative expenses,
priority tax claims, and US Trustee's fees will be paid in full. The Plan also
provides for nine Classes of Claims, each treated in its own way. Class 1
(unpaid wages) and Classes 2, 3, 4, and 7 (allowed secured claims) will be paid
in full. Classes 5 and 6, disputed secured claims, will be paid a mixture of
cash and the Company's common stock, $.001 par value, ("Common Stock") and Class
8 (allowed unsecured claims) will be paid one share of Common Stock for each
$4.00 dollars of allowed claim. Class 9 (the existing equity holders) will have
their present holdings replaced by one share of Common Stock for each 20 shares
they now own. No fractional shares will be issued. Any partial shares due to
members of Classes 8 or 9 will be rounded up to a full share.
On September 26, 2001, after a hearing, the Court confirmed the Plan.
The order was entered on October 11, 2001. The Plan was declared effective on
December 11, 2001.
Cater Barnard was a Class 8 (allowed unsecured) creditor in the amount
of $655,000. It received 163,750 shares of Common Stock in settlement of its
claim.
Acquisitions
At the end of 2001, Envesta transferred all of its ownership of
Findstar and Cater Barnard transferred all its interests in TDMI to the Company.
Cater Barnard's interests in TDMI consisted of $4,000,000 of TDMI convertible
promissory notes, seventeen and one-half percent (17.5%) of the equity of TDMI,
and an option ("Option") to acquire the remaining eighty-two and one-half
percent (82.5%) of the TDMI equity. On January 31, 2002, the Company exercised
the Option and acquired the balance of the TDMI equity.
In exchange for Cater Barnard's and Envesta's interests, the Company
issued to them a total of 225,000 shares of its newly created Class B
Convertible Preferred Stock, its promissory notes in the aggregate principal
amount of $3,000,000, and 1,500,000 shares of its Common Stock. Until
conversion, each share of the Class B Preferred Stock will cast one vote for
each share of Common Stock into which it can be converted. Envesta has
subsequently converted its Class B Preferred into Common Stock and the notes
were converted into Common Stock as well.
Upon exercise of the Option, IMX issued to the holders of the remaining
TDMI equity a total of 81,010 shares of its Class B Preferred Stock. At the same
time, as required by the agreement creating the Option, IMX issued warrants to
purchase 168,056 shares of its Common Stock to the holders of TDMI warrants
("Warrants"), and stock options to the existing TDMI employees under the
Company's newly adopted 2002 Stock Option Plan (the "Plan") to purchase 189,945
shares of Common Stock ("Stock Options").
As part of this transaction 7,838 shares of the Preferred, warrants to
purchase 3,300 shares of Common Stock, and Options to purchase 19,800 shares of
Common Stock were issued to Mr. Eaker and 11,438 shares of the Preferred and
Options to purchase 19,800 shares of Common Stock were issued to Mr. Biegel.
Both Mr. Eaker and Mr. Biegel served as Directors and Officers of the Company or
its subsidiaries.
At the conclusion of this transaction, the issuance of new common stock
to creditors, and the consolidation of the old Company common stock, and
assuming full conversion of the Class B Preferred Stock and exercise of the
warrants, Cater Barnard and Envesta held approximately 86% of the equity of the
Company..
Immediately after the closing, Dean Eaker and Bruce Biegel, currently
officers and directors of TDMI were elected directors of IMX and Bruce Biegel
was elected a Senior Vice-President and designated as Chief Financial Officer to
replace Mark Garratt.
The Medicis Options:
On March 20, 2002, the Company settled a portion of is debt to Cater
Barnard by assigning to it the Company's beneficial ownership of certain Options
issued to some of the Company's former officers. The Options provided for the
purchase of the common stock of Medicis Pharmaceutical Corporation of Phoenix,
Arizona ("Medicis") at a price of $24.67 per share ("Exercise Price"). 4,800
shares can be purchased in July 2002 and 4,800 shares in July 2003. On the date
of the settlement, the market price of Medicis common stock was $55.96 (Market
Price"). The amount of the settlement was a portion of the difference between
the Market Price and the Exercise Price ("Difference") multiplied by the number
of shares available for purchase. With respect to the 4,800 shares that could be
purchased within four months of the contract date, the portion was 90% of the
Difference. With respect to the 4,800 shares that could not be purchased for
over fifteen months, the portion was 70% of the Difference.
As a result of this transaction the principal of the Company's five
(5%) percent Promissory Note to Cater Barnard, dated December 11, 2001, was
reduced by $240,307.
The Forster Agreement
On December 11, 2001, the Company and Shalom Y'all, Inc., a company
wholly owned by William A. Forster, the Company's former Chairman and CEO,
executed and consummated an agreement providing for the deferred payment of Mr.
Forster's secured claim (Class 4), the settlement and payment of his
administrative claim in Common Stock at $4.00 per share, the sale to Shalom
Y'all of all of the Company's subsidiaries, and its indemnification of the
Company for any claims against it arising from the operation of the
subsidiaries' businesses.
The agreement provides for a payment of $50,000 to induce Shalom Y'all
to provide the indemnity. $35,000 of the indemnity amount was paid at closing.
The balance, together with the $67,000 secured claim, was evidenced by the
Company's $82,000. The note was paid during the fiscal year.
In settlement of Mr. Forster's administrative claims, the Company
issued 95,000 shares of its Common Stock.
The purchase price for the subsidiaries is $100,000. The obligation to
make this payment is evidenced by Shalom Y'All's three-year promissory note.
This note is secured by the pledge of 25,000 of Mr. Forster's Common Stock.
Subsidiary Debt Transactions
During January 2002, Envesta elected, with the consent of the Company,
to convert its 85,000 shares of Class B Preferred Stock and its note from the
Company for $1,133,333 in to a total of 1,983,333 shares of Common Stock.
During March 2002, the Company acquired $760,000 of additional debt of
TDMI from Cater Barnard. The Company paid for the debt, evidenced by TDMI Notes,
by issuing a Company promissory note in an equal amount. The note matures on
December 31, 2006 and bears interest at the rate of five (5%) percent per annum.
The Company can elect to pay the interest with Common Stock valued at $0.50 per
share. The holder can convert the notes into Common Stock at a price of $0.50
per share. On June 30th, 2002 the Company agreed to the conversion of this note
into 1,520,000 shares of Common Stock.
Cater Barnard has also agreed to settle the balance due on the
Company's December 11, 2001 note for 813,180 shares of Common Stock and to
accept 240,854 shares of Common Stock for a debt of $120,427 owed to it by the
Company and its subsidiaries. At the same time, CBUSA agreed to sell its claims
for $163,500 against the Company's TDMI subsidiary to the Company for 327,000
shares of Common Stock.
The Company has consolidated its and its subsidiaries remaining debts
to Cater Barnard in a note in the principal amount of $1,075,000. This note,
which matures on August 1, 2004, bears interest at the rate of 5% until June 30,
2003 and 7.8% thereafter.
On June 28, 2002, the Company acquired from Envesta debts owed to
Envesta by the Company's Findstar subsidiaries in the face amount of
(pound)664,149 for $200,000 in cash.
On August 1, 2002 the Company entered into a Loan Agreement with Cater
Barnard. The agreement provides an additional borrowing line of $750,000 to be
drawn upon as the Company needs. The interest rate is 7.8% and the total balance
outstanding must be paid on August 1, 2004. The Company has pledged all its
equity ownership in its Findstar and TDMI subsidiaries and all debt due from
them as collateral for this loan. As of September 5, 2002, the Company had
borrowed $750,000 under this agreement.
During the Fiscal year, CBUSA provided office facilities and services
and communication services to the Company. As of December 31st, 2002, the
Company was indebted to CBUSA in the aggregate amount of $260,000. Part of this
balance was paid and the remainder was converted into Common Stock as described
in the next paragraph.
As of the end of the fiscal year, Cater Barnard converted the principal
and accrued interest on the Company's $1,075,000 note issued July 1, 2003, the
$750,000 secured loan note issued August 1, 2003, a note for $311,060 issued
September 3, 2003, and $115,000 of open account debt for a total of 9,274,280
shares of Common Stock.
As a result of these transactions, at the end of the Fiscal Year on
June 30, 2002, Stephen Dean's Companies owned a total of 17,373,353 shares of
Common Stock and 142,810 shares of Preferred Stock convertible into 5,712,400
shares of Common Stock.
In February 2003, Cater Barnard cancelled the warrants to purchase an
additional 675,000 shares of Common Stock it had received in connection with
Griffin Securities' role in the Company's acquisition of Findstar and TDMI.
The Spero Debt
As part of its acquisition of DMQ, TDMI issued its note to Mr. Spero,
DMQ's principal owner, in the initial principal amount of $114,000. TDMI
defaulted under this note and under several subsequent settlement agreements. On
August 13, 2002, the Company and Cater Barnard agreed to pay Mr. Spero $172,000
to settle the Note, reclaim property to which Mr. Spero was entitled as a result
of the defaults, and pay his legal costs during the default period. This payment
has been made.
Agenda Item 2 Proposed 2002 Employee Stock Option Plan
All of the Company's previous stock option and other employee incentive
plans, and any options granted under them, were terminated by the Plan of
Reorganization.
In January 2002 the Board of Directors determined both that a stock
option plan was required to permit the acquisition of TDMI and that the
Company's other employees would perform better if their interests were linked to
those of the stockholders through equity based incentives. This key aspect of
both TDMI's and the Company's compensation program is designed to attract,
retain, and motivate the highly qualified individuals required by the knowledge
focus of the Company's business plan. The Board adopted the 2002 Employee Stock
Option Plan (the "Option Plan") to meet both needs. The Plan was approved by the
Stockholders on November 4, 2002.
The Board not proposes, in light of the over 600% expansion of the
number of shares issued and outstanding to double the number of shares subject
to grant under to Option Plan to 10,000,000. In addition, to simplify
administration, the number of shares that the Stock Option Committee is
authorized to issue to any Key Employee in any year has been increased from
100,000 to 250,000. Finally, the references to IMX have been changed to Dialog
Group.
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of Common and Classes B and B-1 Preferred Stock, casting
one vote each and counted as a single class. Mr. Dean and Mr. DeCrescenzo have
informed the Company that they will vote all the Common and Class B and B-1
Preferred shares under their control for the adoption of the amendments to the
Plan. These votes constitute more than a majority of the votes that may be cast
by each class of stock on this question and assure that the Plan Amendment will
be adopted.
The amendment to the Option Plan changing in the number of shares which
may be subject to option from 5,000,000 to 10,000,000. This change is found in
section 3 of the Option Plan. The change in the number of shares which the Stock
Option Committee may grant is found in section 5(c). A copy of the Option Plan,
with these amendments indicated therein, is included in this Information
Statement as Exhibit A and the description below is qualified in its entirety by
reference to the Option Plan. The changes in the Company's name are reflected
throughout the document
Number of Options Authorized and Maximum Individual Participation - The
Amendment to the Option Plan increases the reserved shares from 5,000,000 to
10,000,000 of the Company's Common Stock for the issuance of options under the
Option Plan. The Option Committee may not grant more than 250,000 shares
(increased from 100,000 by this amendment) to any Key Employee in any fiscal
year.
The Option Plan Administration - A committee of the Board of Directors
who are not employees of the Company may be selected to administer the Option
Plan. The Committee may designate two of the Company's officers to administer
the plan with respect to Key Employees who are not Officers or Directors of the
Company. If no Committee is designated, the Board of Directors shall administer
the Plan.
Term and Amendment of the Option Plan - The Option Plan was effective
as of January 31, 2002, and was approved by the Stockholders the 2002 Annual
Meeting. No Options may be granted on or after January 31, 2012. The Board of
Directors may suspend or terminate the Option Plan at any time and it shall
terminate when all the shares reserved for options have been purchased. The
Board may amend the Plan as its deems necessary and intends to make any
amendments necessary to comply with changes in the Income Tax or Securities Laws
of the United States or the State of its incorporation. The Amendment proposed
herein is subject to ratification of this Annual Meeting.
Stock Option Award - Stock options awarded may be either Qualified
under Section 442 of the Internal Revenue Code or are Non-Qualified because the
fall outside Section 442's requirements. The options generally expire 10 years
after the date of grant and are not all available for exercise immediately upon
grant. The exercise price of the options may not be less than the fair market
value on the date of grant. The Option Plan provides that the Committee for any
reason, including complying with state and Federal securities laws, may restrict
the transfer of Stock Options. The Stock Option Certificate utilized by the
Committee restricts transfer of the Option and allows exercise after termination
under limited circumstances.
Adjustments - The number of shares reserved for the exercise of Options
and the number of shares for which and outstanding Option shall be adjusted by
the Board in an equitable manner to reflect any change in the capitalization of
the Company, including, among other things, stock dividends and stock splits.
Federal Income Tax Consequences - The granting of Qualified Stock
Options or Nonqualified Stock Options does not result in immediate taxable
income to the optionee.
The exercise of a Qualified Stock Option will not result in taxable
income to the optionee if the optionee does not dispose of the stock within two
years of the date the option was granted and one year after the option is
exercised. If these requirements are met, any gain realized by the optionee will
be taxed as a long-term capital gain. The Company will not receive a tax
deduction for the resulting gain. If these holding periods are not met, the
option will be treated generally as a nonqualified Stock Option for tax
purposes.
The exercise of a Nonqualified Stock Option award will result in
taxable income to the optionee. The amount by which the market price exceeds the
exercise price would be taxable as ordinary income. Income tax obligations may
be met either through cash payments at the time of exercise or through share
withholding. At the discretion of the Committee, optionees may be allowed to
elect to defer the receipt of the taxable shares resulting form the exercise. If
this election is made, the optionee will be liable for the taxes on the full
value of the shares plus any accumulated dividends at their value upon
distribution. The Company will receive a tax deduction for the compensation that
corresponds to the compensation gain.
Agenda Item 3 Authorization of Additional Shares Of Stock
The Company is presently authorized to issue 100,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock. Each issue of Preferred
Stock has those rights and privileges established for it by the Board of
Directors. As a result of the transactions and financing activity, the Company
has exhausted its authorized shares. As a result, the Board of Directors has
proposed to increase the number of shares of Common Stock which it is authorized
to issue to 175,000,000 and the number of shares of Preferred Stock to
1,500,000.
The Company presently has XX,XXX,XXX shares of Common Stock outstanding
and had committed itself to issue, upon exercise of options or warrants or
conversion of Preferred Stock, and additional XX,XXX,XXX. The Company presently
has 215,560 shares of it Class B Preferred Stock, 227,547 shares of its Class
B-1 Preferred Stock, and _____ shares of its Class D Preferred Stock
outstanding. No other class of Preferred Stock is outstanding at this time.
The Board of Directors has concluded that an increase in the number of
authorized shares is necessary to provide sufficient shares to allow the Company
to acquire others and provide for conversion of additional classes of preferred
stock, warrants, or options. If approved, the increase in authorized capital
will allow the Company to respond promptly and effectively to opportunities
involving the issuance of shares of Common Stock.
The Company is continuously evaluating financing opportunities and
potential acquisitions that could result in the issuance of preferred or common
stock or securities convertible into common stock.
The Board of Directors is not proposing the increased capitalization as
a means of discouraging tender offers or takeover attempts. However, in the
event of an unsolicited tender offer or takeover proposal, the increased number
of shares could give the Company greater opportunity to issue shares to persons
who are friendly to management. The shares might also be available to make
acquisitions or enter into other transactions that might frustrate potential
offerors.
The vote of a majority of the holders of both the Common and the
Preferred Stock is necessary to approve this change. Mr. Dean and Mr.
DeCrescenzo have informed the Company that he will vote all the Common and Class
B and Class B-1 Preferred shares under their control in favor of this item.
These votes constitute more than a majority of the votes that may be cast by
each class of stock and assures that it will be approved. If the change is
approved at the Annual Meeting, the Company's Certificate of Incorporation shall
be amended to reflect the proposed number of shares.
Agenda Item 4 Other Matters
Management knows of no other matters to be brought before the Annual
Meeting, but if other matters properly come before the meeting, the votes cast
as directed by Mr. Dean and Mr. DeCrescenzo will determine the outcome of any
ballot.
Stockholder Proposals for the 2003 Annual Meeting
Stockholder proposals relating to the Company's 2004 Annual Meeting
must be received by the Company at its principal executive offices, 257 Park
Avenue South, New York, NY 10010, Attention: President, no later than February
15th, 2004.
Expenses of Meeting
The Company will bear the expenses in preparing, printing, and mailing
the Information Statement and Annual Report on Form 10-KSB to the stockholders.
No proxies will be solicited by the Company's management in connection with this
meeting. We are not asking you for a proxy and you are requested not to send us
a proxy.
By Order of the Board of Directors,
Mark Alan Siegel
Secretary of the Company
Dated: April __, 2003
Exhibit A
Dialog Group, Inc.
2002 STOCK OPTION PLAN
Section 1 PURPOSE
The purpose of this Plan is to promote the interests of Dialog Group,
Inc. (the "Company") by granting Options to purchase Stock to Key Employees,
Outside Directors and Key Consultants in order to (a) attract and retain Key
Employees and Key Consultants; (b) provide an additional incentive to each Key
Employee and Key Consultant to work to increase the value of the Stock; and (c)
provide each such Key Employee, Outside Director and Key Consultant with a stake
in the future of the Company which corresponds to the stake of each of the
Company's stockholders.
Section 2 DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and for any Option granted under
this Plan. For purposes of such definitions, the singular shall include the
plural and the plural shall include the singular. Unless otherwise expressly
indicated, all Section references herein shall be construed to mean references
to a particular Section of this Plan.
2.1 Board means the Board of Directors of the Company.
2.2 Change of Control means any of the following:
(i) the acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section 13(d) or
14(d)(2) of the Securities Exchange Act of 1934, as amended from time
to time) (the "Exchange Act"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or
more of either (A) the then outstanding shares of Stock (the
"Outstanding Company Common Stock") or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Company Voting
Securities"); provided, however, that any acquisition by (x) the
Company or any of its subsidiaries, or any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following
such acquisition, more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such acquisition in
substantially the same portion as their ownership, immediately prior to
such acquisition of the Outstanding Company Common Stock and Company
Voting Securities, as the case may be, shall not constitute a change in
control of the Company; or
(ii) individuals who, as of January 31, 2002, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any individual becoming a director subsequent to January 31, 2002,
whose election or nomination for election by the Company's shareholders
was approved by a vote of at least a majority of the directors then
comprising the incumbent Board shall be considered as though such
individual was elected prior to January 31, 2002, even if his initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the
Company (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or
(iii) approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, with respect to which all or substantially all of the
individuals and entities who were the respective beneficial owners of
the Outstanding Company Common Stock and Company Voting Securities
immediately prior to such Business Combination do not, following such
Business Combination, beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock
and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination in
substantially the same proportion as their ownership immediately prior
to such Business Combination or the Outstanding Company Common Stock
and Company Voting Securities, as the case may be; or
(iv) (A) a complete liquidation or dissolution of the Company
or a (B) sale or other disposition of all or substantially all of the
assets of the Company other than to a corporation with respect to
which, following such sale or disposition, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors is then owned
beneficially, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Company
Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding
Company Common Stock and Company Voting Securities, as the case may be,
immediately prior to such sale or disposition.
2.3 Code means the Internal Revenue Code of 1986, as amended.
2.4 Committee means the committee of Non-Employee Directors appointed
by the Board to administer this Plan as contemplated by Section 5.
2.5 Company means Dialog Group, Inc., a Delaware corporation, and any
successor to this corporation.
2.6 Exchange Act means the Securities Exchange Act of 1934, as amended.
2.7 Designated Committee means a committee appointed by the Committee
in accordance with Section 5.
2.8 Fair Market Value in respect of the Stock on any day means (a) if
the principal market for the Stock is a national securities exchange, the
average between the high and low sales prices of the Stock on such day as
reported by such exchange or on a consolidated tape reflecting transactions on
such exchange; (b) if the principal market for the Stock is not a national
securities exchange and the Stock is quoted on The NASDAQ Stock Market
("NASDAQ"), and (i) if actual sales price information is available with respect
to the Stock, then the average between the high and low sales prices of the
Stock on such day on NASDAQ, or (ii) if such information is not available, then
the average between the highest bid and lowest asked prices for the Stock on
such day on NASDAQ; or (c) if the principal market for the Stock is not a
national securities exchange and the Stock is not quoted on NASDAQ, then the
average between the highest bid and lowest asked prices for the Stock on such
day as reported by The Nasdaq Bulletin Board, or a comparable service; provided
that if clauses (a), (b) and (c) of this Paragraph are all inapplicable, or if
no trades have been made or no quotes are available for such day, then the fair
market value of the Stock shall be determined by the Committee by any method
consistent with applicable regulations adopted by the Treasury Department
relating to stock options. The determination of the Committee shall be
conclusive in determining the fair market value of the stock.
2.9 For cause, when used in connection with termination of a grantee's
employment, shall have the meaning set forth in any then-effective employment
agreement between the grantee and the Company or Subsidiary. In the absence of
such an employment agreement, "for cause" means: (a) charge or conviction of a
felony or any other crime (whether or not involving the Company or a
Subsidiary); (b) engaging in any substantiated act involving moral turpitude;
(c) the continual or frequent possession by grantee of an illegal substance or
abuse by the grantee of a controlled substance or alcohol resulting in a pattern
of behavior disruptive to the business operations of the Company or a
Subsidiary; (d) engaging in any act which, in each case, subjects, or if
generally known would subject, the Company or a Subsidiary to public ridicule or
embarrassment; (e) any action by the grantee which constitutes dishonesty
relating to the Company or a Subsidiary, a willful violation of law (other than
traffic and similar minor offenses) or a fraud against the Company or a
Subsidiary; (f) material violation of the Company's or a Subsidiary's written
policies, including, without limitation, those relating to sexual harassment or
the disclose or misuse of confidential information; (g) misappropriation of the
Company's or a Subsidiary's funds or assets by the grantee for personal gain; or
(h) serious neglect or misconduct in the performance of the grantee's duties for
the Company or a Subsidiary or willful or repeated failure or refusal to perform
such duties; in each case determined by the Committee or the Designated
Committee, which determination shall be final, binding and conclusive.
2.10 Insider shall mean an employee who is, at the time of an award
made under this Plan, an insider pursuant to ss. 16 of the Exchange Act.
2.11 ISO means any option granted under this Plan to purchase Stock
which satisfies the requirements of Section 422 of the Code. Any Option that is
not specifically designated as an ISO shall under no circumstances be considered
an ISO.
2.12 Key Consultant means any consultant or independent contractor of
the Company or a Subsidiary (other than a Non-Employee Director) or any such
consultant or contractor who is a Non-Employee Director and who serves as such a
consultant or contractor pursuant to a written agreement with the Company which
has been approved by the Board, in either case who, in the judgment of the
Committee acting in its absolute discretion, is a key to the success of the
Company or a Subsidiary.
2.13 Key Employee means any employee of the Company or a Subsidiary,
who, in the judgment of the Committee acting in its absolute discretion, is a
key to the success of the Company or a Subsidiary.
2.14 Non-Employee Director means any member of the Board of Directors
of the Company qualified as such under SEC Rule 16b-3(b)(3)(i) under the
Exchange Act, or any successor rule.
2.15 Non-ISO means any option granted under this Plan to purchase stock
that fails to satisfy the requirements of Section 422 of the Code or has been
specifically denominated as a non-ISO by the Committee as of the time the option
is granted.
2.16 Option means an ISO or a Non-ISO.
2.17 Option Certificate means the written agreement or instrument which
sets forth the terms of an Option granted to a Key Employee, Key Consultant or
Outside Director under this Plan.
2.18 Option Price means the price which shall be paid to purchase one
share of stock upon the exercise of an Option granted under this Plan.
2.19 Outside Director means any member of the Board of Directors of the
Company who is not employed by the Company, regardless of whether such person
qualifies as a Non-Employee Director.
2.20 Parent Corporation means any corporation which is a parent
corporation of the Company within the meaning of Section 424(e) of the Code.
2.21 Plan means this Dialog Group, Inc. 2000 Stock Option Plan, as
amended from time to time.
2.22 Principal Officer means the Chairman of the Board (if the Chairman
of the Board is a payroll employee), the Chief Executive Officer, the President,
any Executive Vice President, any Senior Vice President, any Vice President and
the Treasurer of the Company and any other person who is an "officer" of the
Company as that term is defined in SEC Rule 16a-1(f) under the Exchange Act or
any successor rule there under.
2.23 Securities Act means the Securities Act of 1933, as amended.
2.24 SEC means the Securities Exchange Commission.
2.25 Stock means the Common Stock, $.01 par value per share, of the
Company.
2.26 Subsidiary means any corporation that is a subsidiary corporation
of the Company within the meaning of Section 424(f) of the Code.
2.27 Ten Percent Shareholder means a person who owns after taking into
account the attribution rules of Section 424(d) of the Code more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, a Subsidiary or a Parent Corporation.
Section 3. SHARES SUBJECT TO OPTIONS
There shall be 5,000,000 10,000,000 shares of Stock reserved for
issuance in connection with ISOs and Non-ISOs granted under this Plan. Such
shares of Stock shall be reserved to the extent that the Company deems
appropriate from authorized but unissued shares of Stock and from shares of
Stock which have been reacquired by the Company. Any shares of Stock subject to
an Option which remain after the cancellation, expiration or exchange of such
Option for another Option thereafter shall again become available for use under
this Plan.
Section 4. EFFECTIVE DATE
The effective date of this Plan shall be January 31, 2002, subject to
approval by the stockholders of the Company acting at a duly called meeting of
such stockholders or acting by unanimous written consent in lieu of a meeting,
provided such stockholder approval occurs within twelve (12) months after the
date the Board approves and adopts this Plan.
Section 5. COMMITTEE
(a) A Committee consisting solely of not less than two (2) Non-Employee
Directors shall administer this Plan. The members of the Committee shall be
appointed by, and serve at, the pleasure of the Board. To the extent required
for transactions under the Plan to qualify for the exemptions available under
Rule 16b-3 promulgated under the Exchange Act, all actions relating to awards to
persons subject to Section 16 of the Exchange Act shall be taken by the
Committee and not any Designated Committee (as defined below). In addition, to
the extent required for compensation realized from awards under the Plan to be
deductible by the Company pursuant to Section 162(m) of the Code, all actions
relating to awards to persons subject to Section 162(m) of the Code shall be
taken by the Committee and not any Designated Committee (as defined below).
(b) The Committee acting in its absolute discretion shall exercise such
powers and take such action as expressly called for under this Plan.
Furthermore, the Committee shall have the power to interpret this Plan and to
take such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be binding
on the Company, on each affected Key Employee, Key Consultant or Outside
Director and on each other person directly or indirectly affected by such
action.
(c) The Committee may appoint a separate committee comprised of two (2)
or more persons, both of whom are members of the Board (and who may also be a
Key Employee or a Key Consultant) (the "Designated Committee"), to administer
this Plan with respect to Key Employees who are not Principal Officers or Ten
Percent Shareholders, and to Key Consultants who are not Ten Percent
Shareholders, subject to such conditions, restrictions and limitations as may be
imposed by the Committee: including (i) Options to purchase not more than
1,000,000 shares of Stock may be granted by the Designated Committee in any one
calendar year to all employees of the Company in the aggregate; and (ii) the
Committee shall establish a maximum number of shares that may be subject to
Options granted under the Plan in any one calendar year to any single Key
Employee or Key Consultant by the Designated Committee. Unless and until the
Committee shall take further action, the maximum number of shares that may be
subject to Options granted under the Plan in any one calendar year by the
Designated Committee to any single Key Employee or Key Consultant shall be
100,000 250,000. Any actions duly taken by the Designated Committee with respect
to the grant of Options to Key Employees who are not Principal Officers and to
Key Consultants shall be deemed to have been taken by the Committee for purposes
of the Plan.
Section 6. ELIGIBILITY
Only Key Employees, Key Consultants and Non-Employee Directors shall be
eligible for the grant of Options under this Plan.
Section 7. GRANT OF OPTIONS
7.1 Committee Action. The Committee or the Designated Committee, as the
case may be, acting in its absolute discretion, shall grant Options to Key
Employees and Key Consultants under this Plan from time to time to purchase
shares of Stock and, further, shall have the right to grant new Options in
exchange for outstanding Options. Options shall be granted to Non-Employee
Directors as provided in Section 7.3 of this Plan. Each grant of an Option shall
be evidenced by an Option Certificate, and each Option Certificate shall:
(a) specify whether the Option is an ISO or Non-ISO; and
(b) incorporate such other terms and conditions as the
Committee or the Designated Committee, as the case may be, acting in
its absolute discretion deems consistent with the terms of this Plan,
including, without limitation, a limitation on the number of shares
subject to the Option which first became exercisable or subject to
surrender during any particular period.
If the Committee or the Designated Committee, as the case may be, grants an ISO
and a Non-ISO to a Key Employee on the same date, the right of the Key Employee
to exercise or surrender one such Option shall not be conditioned on his or her
failure to exercise or surrender the other such Option. In connection with the
termination for any reason of employment by or service to the Company or any
Subsidiary of any particular holder of any Option, the Committee may, in its
discretion, determine to accelerate the time such Option first becomes
exercisable during any particular period as provided in the related Option
Certificate; provided, however, that the Committee may not extend any such
period with respect to any shares of Stock subject to such Option. The Committee
may also, in its discretion, condition the grant of an ISO or a Non-ISO upon the
acceptance by a Key Employee or Key Consultant of one or more modifications to
outstanding options, including but not limited to, forfeiture of all profits if
the Key Employee provides services to a competitor within a reasonable time as
determined in the discretion of the Committee or the improper disclosure of the
Company's confidential or proprietary information.
7.2 $100,000 Limitation. To the extent that the aggregate Fair Market
Value of the stock with respect to which ISOs and other incentive stock options
satisfying the requirements of Section 422 of the Code granted to a Key Employee
under this Plan and under any other stock option plan adopted by the Company, a
Subsidiary or a Parent Corporation first become exercisable in any calendar year
exceeds $100,000 (based upon the Fair Market Value on the date of the grant),
such Options shall be treated as Non-ISOs.
Section 8. OPTION PRICE
The Option Price for each share of Stock subject to an ISO shall not be
less than the Fair Market Value of a share of Stock on the date the Option is
granted. If the Option is an ISO and the Key Employee is a Ten Percent
Shareholder, the Option Price for each share of Stock subject to such Option
shall not be less than 110% of the Fair Market Value of a share of Stock on the
date the Option is granted. The Option Price shall be payable in full upon the
exercise of any Option, and an Option Certificate at the discretion of the
Committee (except for an Option granted to a Non-Employee Director) may provide
for the payment of the Option Price either in cash or in Stock acceptable to the
Committee or in any combination of cash and Stock acceptable to the Committee.
Any payment made in Stock shall be treated as equal to the Fair Market Value of
such Stock on the date the properly endorsed certificate for such Stock is
delivered to the Committee.
Section 9. EXERCISE PERIOD
(a) Each Option granted under this Plan shall be exercisable in whole
or in part at such time or times as set forth in the related Option Certificate,
but no Option Certificate shall provide that:
(1) an Option is exercisable before the date such Option is
granted, or
(2) an Option is exercisable after the date which is the tenth
anniversary of the date such Option is granted.
If an option that is an ISO is granted to a Key Employee who is a Ten Percent
Shareholder, the Option Certificate shall provide that the Option is not
exercisable after the expiration of five years from the date the Option is
granted. An Option Certificate may provide for the exercise of an Option after
the employment of a Key Employee or service by a Key Consultant has terminated
for any reason whatsoever, including death or disability. In connection with the
termination for any reason of employment by or service to the Company or any
Subsidiary of any particular holder of any Option, the Committee may, in its
discretion, determine to extend the period during which such Option may be
exercised as provided in the related Option Certificate; provided, however, that
no such extension shall permit an Option to be exercised beyond the date
specified in paragraph (b) of this Section or the date applicable to Options
granted to a Ten Percent Shareholder, as the case may be.
(b) Notwithstanding any other provision of this Section, upon a Change
of Control each Option granted under this Plan prior to such Change of Control
(whether prior to or after the amendment of the Plan to include this provision)
shall immediately become exercisable to the full extent of the original grant
and, in the case an Option held by a Key Employee shall remain exercisable for
three months (or such longer period as specified in the particular Option with
regard to all or any shares of Stock covered by such Option) after any
termination of employment of such Key Employee.
Section 10. TRANSFERABILITY
The Committee or the Designated Committee, as the case may be, shall
impose such restrictions on the transfer of options granted under the Plan as it
may deem advisable, including, without limitation, restrictions deemed necessary
or advisable under applicable federal securities laws, under the requirements of
any stock exchange or market upon which Stock is then listed in or traded, and
under any Blue Sky or state securities laws applicable to such Stock. Upon
request of any person receiving an award of an Option under the Plan, the
Committee may, in its sole and absolute discretion, determine to remove any such
transfer restriction originally imposed and may, in connection with the removal
of such transfer restriction, impose such conditions (including restrictions on
further transfers of the Option or upon transfers of the Stock upon exercise of
the Option) as the Committee or the Designated Committee, as the case may be, in
its discretion, may deem advisable, including, without limitation, restrictions
deemed by the Committee or the Designated Committee, as the case may be, to be
necessary or advisable in order to comply with applicable federal and state
securities laws or the requirements of any stock exchange or market upon which
the Stock is then listed or traded. Subject to its authority to impose such
conditions on further transfers, the Committee or the Designated Committee, as
the case may be, shall authorize the transfer of Options for bona fide estate
planning purposes or for contributions to qualified charities or charitable
trusts.
Section 11. SECURITIES REGISTRATION AND RESTRICTIONS
Each Option Certificate shall provide that, upon the receipt of shares
of Stock as a result of the exercise or surrender of an Option, the Key
Employee, Key Consultant or Outside Director shall, if so requested by the
Company, hold such shares of Stock for investment and not with a view toward
resale or distribution to the public and, if so requested by the Company, shall
deliver to the Company a written statement to that effect satisfactory to the
Company. Each Option Certificate shall also provide that, if so requested by the
Company, the Key Employee, Key Consultant or Outside Director shall represent in
writing to the Company that he or she will not sell or offer to sell any such
shares of Stock unless a registration statement shall be in effect with respect
to such Stock under the Securities Act and any applicable state securities law
or unless he or she shall have furnished to the Company an opinion, in form and
substance satisfactory to the Company, of legal counsel acceptable to the
Company, that such registration is not required. Certificates representing the
Stock transferred upon the exercise or surrender of an Option granted under this
Plan may at the discretion of the Company bear a legend to the effect that such
Stock has not been registered under the Securities Act or any applicable state
securities law and that such Stock may not be sold or offered for sale in the
absence of (i) an effective registration statement as to such Stock under the
Securities Act and any applicable state securities law or (ii) an opinion, in
form and substance satisfactory to the Company, of legal counsel acceptable to
the Company, that such registration is not required. Furthermore, the Company
shall have the right to require a Key Employee, Key Consultant or Outside
Director to enter into such stockholder or other related agreements as the
Company deems necessary or appropriate under the circumstances as a condition to
the issuance of any Stock under this Plan to a Key Employee, Key Consultant or
Outside Director.
Section 12. LIFE OF PLAN
No Option shall be granted under this Plan on or after the earlier of
(a) the tenth anniversary of the original effective date of
this Plan as determined under Section 4; provided, however, that after
such anniversary date this Plan otherwise shall continue in effect
until all outstanding Options have been exercised in full or no longer
are exercisable, or
(b) the date on which all of the Stock reserved under Section
3 of this Plan has, as a result of the exercise of Options granted
under this Plan, been issued or no longer is available for use under
this Plan, in which event this Plan also shall terminate on such date.
Section 13. ADJUSTMENT
The number of shares of Stock reserved under Section 3 of this Plan,
the number of shares of Stock to be granted from time to time pursuant to
Section 7.3 of this Plan (if permitted by the exemption in Rule 16b-3 under the
Exchange Act or any successor rule), the number of shares of Stock that may be
granted pursuant to Section 5 of this Plan by the Designated Committee to any
single Key Employee or Key Consultant, and the number of shares of Stock subject
to Options granted under this Plan and the Option Price of such Options shall be
adjusted by the Board in an equitable manner to reflect any change in the
capitalization of the Company, including, but not limited to, such changes as
stock dividends or stock splits. Furthermore, the Board shall have the right to
adjust in a manner which satisfies the requirements of Section 424(a) of the
Code the number of shares of Stock reserved under Section 3 of this Plan and the
number of shares subject to Options granted under this Plan and the Option Price
of such Options in the event of any corporate transaction described in Section
424(a) of the Code that provides for the substitution or assumption of such
Options. If any adjustment under this Section 13 would create a fractional share
of Stock or a right to acquire a fractional share of Stock, such fractional
share shall be disregarded and the number of shares of Stock reserved under this
Plan and the number subject to any Options granted under this Plan shall be the
next lower number of shares of Stock, rounding all fractions downward. An
adjustment made under this Section 13 by the Board shall be conclusive and
binding on all affected persons and, further, shall not constitute an increase
in "the number of shares reserved under Section 3" within the meaning of Section
15(a) of this Plan.
Section 14. SALE OR MERGER OF THE COMPANY
If the Company agrees to sell all or substantially all of its assets
for cash or property or for a combination of cash and property or agrees to any
merger, consolidation, reorganization, division or other corporate transaction
in which Stock is converted into another security or into the right to receive
securities or property and such agreement does not provide for the assumption or
substitution of the Options granted under this Plan, each then outstanding
Option, at the direction of the Board, may be canceled unilaterally by the
Company as of the effective date of such transaction in exchange for a payment
in cash or Stock, or in a combination of cash and Stock, equal in amount to the
excess of the Fair Market Value on such date of the shares represented by the
canceled Options over the Option Price for such shares.
Section 15. AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate; provided, however, that no such
amendment shall be made absent the approval of the stockholders of the Company
(a) to increase the aggregate number of shares reserved under Section 3, (b) to
change the class of persons eligible for Options under Section 6 or (c) to
materially modify the requirements as to eligibility for participation in this
Plan, (d) to otherwise materially increase the benefits accruing under this Plan
to Plan participants if such approval would be required in order for the Company
to comply with applicable law or the rules or regulations of any stock exchange
or market on which the Stock is traded or listed. The Board also may suspend the
granting of Options under this Plan at any time and may terminate this Plan at
any time; provided, however, that the Company shall not have the right to
unilaterally cancel or, in a manner which would materially adversely affect the
holder, amend or modify any Option granted before such suspension or termination
unless (i) the Key Employee, Key Consultant or Outside Director previously
consents in writing to such modification, amendment or cancellation or (ii)
there is a dissolution or liquidation of the Company or a transaction described
in Section 13 or Section 14 of this Plan.
It is the intention of the Company that the Plan shall comply with the
conditions of Rule 16b-3 of the Exchange Act, as such Rule may from time to time
be amended. The Board shall have the authority, without the approval of the
stockholders, to amend the Plan from time to time to include any conditions,
terms or other provisions which may be required to be set forth in a plan in
order for transactions by directors or officers to be exempt under Rule 16b-3 of
the Exchange Act or any successor exemption.
Section 16. CHANGE OF CONTROL
Notwithstanding any other provision of the Plan, upon a Change of
Control each Option granted under this Plan prior to such Change of Control
shall immediately become exercisable to the full extent of the original grant
and shall remain exercisable for three months (or such longer period as
specified in the particular Option with regard to all or any shares of Stock
covered by such Option) after (i) any termination of employment of any Key
Employee; or (ii) resignation or removal of any Outside Director from the
Company's Board of Directors.
Section 17. MISCELLANEOUS
17.1 No Stockholder Rights. No Key Employee, Key Consultant or Outside
Director shall have any rights as a stockholder of the Company as a result of
the grant of an Option to him or to her under this Plan or his or her exercise
or surrender of such Option pending the actual delivery of Stock subject to such
Option to such Key Employee, Key Consultant or Non-Employee Director.
17.2 No Contract of Employment. The grant of an Option to a Key
Employee, Key Consultant or Outside Director under this Plan shall not
constitute a contract of employment or consulting or right to continue to serve
on the Company's Board of Directors and shall not confer on a Key Employee, Key
Consultant or Outside Director any rights upon his or her termination of
employment or service in addition to those rights, if any, expressly set forth
in the Option Certificate which evidences his or her Option.
17.3 Withholding. The exercise or surrender of any Option granted under
this Plan shall constitute a Key Employee's full and complete consent to
whatever action the Committee elects to satisfy the federal and state tax
withholding requirements, if any, which the Committee in its discretion deems
applicable to such exercise or surrender.
17.4 Construction. This Plan and the Option Certificates shall be
construed under the laws of the State of Florida
17.5. Indemnification. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee or
the Designated Committee, the members of the Committee and the Designated
Committee shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and reasonably incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken by them as directors or members of the Committee and the Designated
Committee and against all amounts paid by them in settlement thereof (provided
such settlement is approved by the Board) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that the
director or Committee or Designated Committee member is liable for gross
negligence or willful misconduct in the performance of his or her duties. To
receive such indemnification, a director or Committee or Designated Committee
member must first offer in writing to the Company the opportunity, at its own
expense, to defend any such action, suit or proceeding.
The Company, the Board, the Committee, and the Designated Committee
shall not be required to give any security or bond for the performance of any
obligation that may be created by the Plan.
17.6 Governing Law. All rights and obligations under the Plan shall be
constructed and interpreted with the laws of the State of New York, without
giving effect to the principles of conflict of laws.