SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
|X| Preliminary information statements
|_| Definitive information statements
|_| Confidential, for use of the Commission only (as permitted by Rule
14c-5(d)(2))
Datametrics Corporation
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(Name of Registrant as Specified in Its Charter)
Delaware 95-3545701
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(State or other jurisdiction of (I.R.S. Employer
incorporation organization) Identification No.)
1717 Diplomacy Row, Orlando, Florida 32809
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(Address of Principal Executive Offices)
407-251-4577
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(Issuer's telephone number)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
I. Title of each class of securities to which transaction applies:
Common Stock
II. Aggregate number of securities to which transaction applies:
III. Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
IV. Proposed maximum aggregate value of transaction:
INFORMATION STATEMENT OF DATAMETRICS CORPORATION
1717 Diplomacy Row, Orlando, Florida 32809
1
This Information Statement is being furnished to advise the stockholders
of Datametrics Corporation, a Delaware corporation with principal offices at
1717 Diplomacy Row, Orlando, Florida 32809 (the "Company"), of actions taken
without a meeting upon the written consent of the holders of a majority of the
outstanding shares of the common stock of the Company. The Company's telephone
number is 407-251-4577.
This information statement was first sent to the stockholders of the
Company on or about January 20, 2006.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
I. PROPOSED ACTIONS TO BE TAKEN
In order to eliminate the costs and management time involved in holding a
special meeting and in order to effect an amendment to the Certificate of
Incorporation (the "Amendment") and to effect the Company's 2005 Stock Incentive
Plan as early as possible in order to accomplish the purposes of the Company as
hereafter described, the Board of Directors of the Company voted to utilize, and
did in fact obtain, the written consent of the holders of a majority in the
interest of the voting capital stock of the Company. Accordingly, the
stockholders will not be asked to take action on the Amendment at any future
meeting. No dissenters' or appraisal rights under Delaware Law are afforded to
the Company's stockholders as a result of the approval of the Amendment or the
Incentive Stock Option Plan.
This Information Statement is being provided pursuant to Rule 14C under
the Securities Exchange Act of 1934, as amended requiring notice to be sent to
the stockholders of the Company.
The actions taken by means of the written consent consisted of the
following:
1. The stockholders approved an amendment to the Company's Certificate of
Incorporation to decrease the number of authorized shares of the Company's
Common Stock, $.01 par value, from 800,000,000 to 75,000,000 shares and to
decrease the number of authorized shares of the Company's Preferred Stock, $.01
par value, from 40,000,000 to 5,000,000.
2
2. The stockholders approved an amendment to the Company's Certificate of
Incorporation to effect a stock combination through a reverse stock split
pursuant to which every thirty (30) shares of outstanding Common Stock would be
reclassified into one (1) share of Common Stock.
3. The stockholders approved a Stock Incentive Plan, whereby employees,
officers, directors, and certain consultants and independent contractors of the
Company may acquire the Common Shares of the Company pursuant to grants of stock
awards, including incentive stock options.
For more information on the actions approved by the stockholders, see
"Actions Taken Pursuant to the Written Consent" below. These actions were
approved by holders of a majority of the Common Stock outstanding on December
28, 2005 and their written consent shall be effective 20 days after proper
notice of these actions has been delivered to all nonconsenting stockholders.
The Company is sending this Information Statement to all stockholders of
record as of December 28, 2005 ("Record Shareholders") and we will begin mailing
these materials on or about January 20, 2006. The effective date for these
corporate actions will be 20 days after mailing of the materials.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
REORGANIZATION OF THE COMPANY
The Shareholder actions referenced herein were proposed in the context of
the ongoing reorganization and refinancing of the Company. Additionally, the
Company has engaged in the following transactions pursuant to its reorganization
and refinancing:
1. Sale of Real Estate. On November 4, 2005, the Company closed on the
sale of its headquarters building located at 1717 Diplomacy Row, Orlando Florida
to SG DMTI LLC ("SG DMTI") for gross proceeds of $1,500,000. The net proceeds of
the sale, after satisfaction of mortgage, taxes, liens, and other obligations of
the Company were approximately $117,000.
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2. Acquisition of Lease. Concurrent with the closing of the sale of the
property, the Company and SG DMTI entered into a five-year triple-net lease for
rent in amount of $150,000 per year. The lease also has an additional five-year
renewal option.
3. Bridge Note. On November 7, 2005, the Company received a $200,000
short-term loan from SG DMTI (the "Bridge Note"). The Bridge Note was evidenced
by a promissory note secured by substantially all of the Company's assets. The
note accrued interest at a rate of ten percent (10%) per annum and matured on
December 30, 2005 pursuant to an amendment to extend the original December 7,
2005 maturity date.
4. Secured Note. On December 30, 2005, the Company also issued SG DMTI
Capital LLC ("SG Capital") a secured promissory note in the principal amount of
$500,000 (the "Secured Note"). The Secured Note accrues interest at a rate of
ten (10%) percent per annum and matures on December 31, 2006. Accrued interest
on the Secured Note shall be paid quarterly commencing March 31, 2006. The
Secured Note is secured by a first priority lien on all of the Company's assets,
which lien was placed on the Company's assets at the time of issuance of the
Bridge Note. The Company used the proceeds of the Secured Note to (i) repay the
Bridge Note and all accrued interest thereon, (ii) pay interest on the Notes
exchanged for the Series B Preferred Stock (see Subsection 6, below), (iii) pay
for certain expenses incurred in connection with the transactions with SG DMTI
and SG Capital and (iv) for general working capital.
5. Conversion of DMTR LLC Debt and Series A Cumulative Convertible
Redeemable Preferred Stock. On December 30, 2005, the Company converted certain
debt and all of its outstanding shares of Series A Cumulative Convertible
Redeemable Preferred Stock (the "Series A Preferred Stock") into Common Stock of
the Company (the "Restructuring") as follows:
a. Pursuant to a Loan Termination and Conversion Agreement between
the Company and DMTR, LLC ("DMTR"), DMTR agreed to convert debt owed to DMTR by
the Company (which debt consisted of an aggregate principal amount of $2,900,000
and accrued, but unpaid interest on the unpaid principal amount) (the "DMTR
Loan") into 244,736,145 shares of common stock of the Company. DMTR also agreed
to terminate its security interest in the Company's assets that it held as
security for the DMTR loan. The 244,736,145 shares do not give effect to the
proposed one (1) for thirty (30) reverse stock-split as described below (the
"Reverse Stock Split").
4
b. The Company and the holders of the Company's issued and
outstanding 892,652 shares of Series A Preferred Stock, representing all of the
issued and outstanding shares of Series A Preferred Stock of the Company,
converted such shares into 48,947,229 shares of common stock of the Company,
before giving effect to the Reverse Stock Split.
6. Series B Preferred Stock and Warrant Purchase Agreement and Secured
Loan. On December 30, 2005 the Company entered into a Series B Preferred Stock
and Warrant Purchase Agreement (the "Purchase Agreement") with SG Capital
pursuant to which SG Capital purchased 500,000 shares of the Company's Series B
Preferred Stock and has the right to purchase an additional 500,000 shares of
Series B Preferred Stock at a price of $1.00 per share. On December 30, 2005,
the Company issued SG Capital 500,000 shares of Series B Preferred Stock in
exchange for the cancellation of an aggregate of $499,563 in principal and $467
in accrued interest on certain promissory notes (the "Notes") issued by the
Company and held by SG Capital. The obligation of SG Capital to purchase
additional shares of Series B Preferred Stock is contingent upon the
satisfaction of certain conditions, including that:
a. the Company shall be current and shall have timely filed with the
SEC reports, schedules, registration statements and definitive proxy statements
that the Company is required to file with the SEC; and
b. the Company shall have been in compliance with a budget in
accordance with the Purchase Agreement for at least 6 months.
Upon satisfaction of the aforementioned conditions, the Company will have
the right to request SG Capital to purchase an additional 125,000 shares of
Series B Preferred Stock for $125,000 for each quarter in which the Company's
quarterly revenues for the fiscal quarter immediately preceding it are of at
least $1,500,000, and/or the Company's average quarterly revenues for the two
fiscal quarters immediately preceding it are of at least $1,500,000. In the
event that the Company should not meet the $1,500,000 threshold in any fiscal
quarter, but the average quarterly revenues of this quarter and the fiscal
quarter immediately following it are of at least $1,500,000, then the Company
will have the right to request SG Capital to purchase an additional 250,000
shares of Series B Preferred Stock for $250,000.
5
The holders of Series B Preferred Stock shall be entitled to receive,
before any dividend shall be declared and paid upon or set aside for any other
capital stock, dividends payable in cash or common stock of the Company, at the
option of the Company, at the rate per annum per share equal to four percent
(4%). Dividends shall accrue and be cumulative. The Series B Preferred Stock is
not convertible into Common Stock and has a liquidation preference of $1.50 per
share in the event of a liquidation of the Company.
Pursuant to the Purchase Agreement, the Company issued SG Capital a
warrant (the "Warrant") to purchase an aggregate of 386,314,860 shares of the
Company's common stock (the "Warrant Shares"). Such amount represents 50% of the
issued and outstanding shares of common stock of the Company on a fully diluted
basis (including 60,000,000 shares of common stock issuable under the Company's
2005 Stock Incentive Plan, none of which have been granted to date), before
giving effect to the Reverse Stock Split. The Warrant is exercisable immediately
for a period of ten (10) years at an exercise price of $.01 per share, and is
subject to adjustments for, among other things, anti-dilution protection.
In connection with the Purchase Agreement, the Company and SG Capital also
entered into a registration rights agreement whereby SG Capital has the right to
require the Company to register the Warrant Shares at the Company's expense.
As a result of the loan conversion, DMTR now owns 75.21% of the issued and
outstanding common stock of the Company. Such percentage ownership does not give
effect to the Warrant Shares issuable under the Warrant or any shares issuable
by the Company under the 2005 Stock Incentive Plan. In the event that the
Warrant were exercised in full, DMTR's percentage ownership of the issued and
outstanding shares of common stock of the Company would be reduced to 34.44%,
without giving effect to any shares issuable under the Company's 2005 Stock
Incentive Plan (as further described below). In the event that SG Capital
exercised the Warrant in full, the Warrant would represent 54.20% of the issued
and outstanding shares of the Company as of December 30, 2005, without giving
effect to any shares issuable by the Company under the 2005 Stock Incentive
Plan.
6
II. ACTIONS TAKEN PURSUANT TO THE WRITTEN CONSENT
1. Decrease in Authorized Capital Stock. Stockholders of record as of the
close of business on December 28, 2005 owning a majority of the Company's voting
securities entitled to vote on the proposed actions to be taken by the Company
(including the issued and outstanding shares of Common Stock and Series A
Preferred Stock (voting on an "as-converted basis") voting together as a single
class), approved, adopted and ratified an amendment to the Certificate of
Incorporation (the "Amendment") as described below. Of the 32,631,486 shares of
Common Stock issued and outstanding on that date, stockholders owning 18,587,477
shares, or 56.96% of the outstanding Common Stock, voted to approve the
Amendment. Of the 892,652 shares of Preferred Series A Stock issued and
outstanding on that date, 499,998 shares, or 8,333,300 of the 14,877,533 shares
voting on an "as-converted basis" (56.01% of the outstanding Preferred Series A
Stock), voted to approve the Amendment. In the aggregate, shareholders of
26,920,777 shares of capital stock (56.66% of the 47,509,019 shares of voting
securities entitled to vote on the proposed action) consented to the Amendment.
The amendment to the Certificate of Incorporation to decrease the authorized
capital stock is described as follows:
The Board of Directors unanimously adopted a resolution declaring it
advisable to amend the Company's Certificate of Incorporation to decrease the
number of authorized shares of Common Stock and Preferred Stock. The amendment
decreases the number of authorized shares of Common Stock from 800,000,000 to
75,000,000 shares and the number of authorized shares of Preferred Stock from
14,000,000 to 5,000,000 shares. As a result of the Restructuring, there are
currently 326,314,860 shares of Common Stock issued and outstanding, no shares
of Series A Preferred Stock outstanding (the 892,652 shares of Series A
Preferred Stock were converted by the shareholders into 48,947,229 shares of
Common Stock), and 500,000 shares of Series B Preferred Stock outstanding (owned
entirely by SG Capital). Taking into account the Warrant owned by SG Capital,
and the 2005 Stock Incentive Plan, there are 772,629,720 shares of common stock
issued and outstanding on a fully diluted basis without giving effect to the
Reverse Stock Split. The Certificate of Incorporation authorizes the Board of
Directors to adopt by resolution, without further stockholder action, the terms,
designations and preferences of the Preferred Stock.
Following the effectiveness of the decrease in the number of authorized
shares of Common Stock and the Reverse Stock Split; the Company will have
10,877,162 shares of Common Stock issued and outstanding, without giving effect
to the Stock Incentive Plan. Giving effect to the Stock Incentive Plan will add
an additional 2,000,000 shares of Common Stock, for total of 12,877,162 shares
issued and outstanding. Conversion of the Warrant for 12,877,162 shares of
Common Stock would create 25,754,324 shares of Common Stock of the Company
issued and outstanding on a fully diluted basis, post-Reverse Stock Split.
7
While the Board of Directors has not made any other specific arrangements
which contemplate the issuance of additional shares of Common Stock or Preferred
Stock, the Board deems it advisable to authorize for issuance a sufficient
number of shares of Common Stock and Preferred Stock for proper corporate
purposes and to enable the Company to take advantage of favorable opportunities
which may arise in the future, including the raising of additional capital. At
such time as the Company determines to issue additional shares of Common Stock
or Preferred Stock, the purpose of such issuance and the nature of any
consideration that may be received therefor will be determined without further
authorization or action by stockholders. The issuance of any additional shares
of Common Stock or Preferred Stock may result in a dilution of the voting power
of holders of outstanding shares of Common Stock and their equity interest in
the Company. Holders of Common Stock do not have pre-emptive rights.
The proposed decrease in the number of shares of the Company's authorized
Common Stock and Preferred Stock was effectuated by the approval and adoption by
the Company's stockholders of the following resolution amending the Company's
Certificate of Incorporation:
RESOLVED, that the Company's Certificate of
Incorporation be amended by deleting the first paragraph
of Article IV of the Certificate of Incorporation of the
Company in its entirety and substituting in lieu thereof
the following:
FOURTH: The total number of shares of capital stock
which the corporation shall have the authority to issue
is 75,000,000 of which 5,000,000 shall be Preferred
Stock, par value $0.01 per share, and 70,000,000 shall
be Common Stock, par value $0.01 per share."
2. Reverse Stock Split. The Amendment additionally effected the Reverse
Stock Split as hereinafter described:
8
The Company is to effect a stock combination (reverse stock split)
pursuant to which every thirty (30) shares of outstanding Common Stock would be
reclassified into one (1) share of Common Stock. The Company will use its best
efforts to have the Reverse Stock Split consummated by February 15, 2006.
Pursuant to the reverse split, each thirty (30) of the Company's outstanding
shares of Common Stock owned by a stockholder (referred to as "Old Shares") will
be reclassified into one (1) share of Common Stock (referred to as "New
Shares"). The number of Old Shares for which each New Share is to be exchanged
is referred to as the "exchange number." The reverse split will be effected
simultaneously for all Common Stock and the exchange number will be the same for
all Common Stock. Upon effectiveness of the reverse split, each option for
Common Stock will entitle the holder to acquire a number of shares equal to the
number of shares which the holder was entitled to acquire prior to the reverse
split divided by the exchange number at the exercise price in effect immediately
prior to the reverse split multiplied by the exchange number.
The principal purpose of the Reverse Stock Split, in conjunction with its
decrease in the number of shares of Authorized Common Stock, is to reduce the
Company's Delaware Franchise Tax burden, which is in part determined by the
number of shares of Authorized Common Stock of the Company. The Company
currently has no foreseeable business use for such a large number of shares of
Authorized Common Stock, but would consider increasing its number of shares of
Authorized Common Stock should the need arise.
The reverse split proposal will likely have the secondary effect of
increasing the market price of the Company's Common Stock. However, the effect
of the reverse split upon the market price for the Company's Common Stock cannot
be predicted, and the history of similar stock split combinations for companies
in like circumstances is varied. There can be no assurance that the market price
per New Share of Common Stock after the reverse split will rise in proportion to
the reduction in the number of Old Shares of Common Stock outstanding resulting
from the reverse split. There can be no assurance that the market price per New
Share will either exceed or remain in excess of the $1.00 minimum bid price as
required by NASDAQ, or otherwise meet the requirements of NASDAQ for inclusion
for trading on NASDAQ Small Cap Market, including the minimum public float
requirement. The market price of the Company's Common Stock may also be based on
its performance and other factors, some of which may be unrelated to the number
of shares outstanding.
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SUMMARY OF THE REVERSE SPLIT
The following discussion sets forth questions that a stockholder may have
with respect to the reverse split.
What effect will the reverse split have on a stockholder?
Each stockholder will receive one (1) New Share for each thirty (30) Old
Shares that he owns. No fractional shares will be issued.
Is a stockholder entitled to dissent from the reverse split?
No. Under the Delaware General Corporation Law, the Company's stockholders
are not entitled to dissenter's rights with respect to the proposed amendment to
the Company's charter to effect the reverse split and the Company will not
independently provide stockholders with any such right.
What are the federal income tax consequences of the reverse split?
The Company expects that its stockholders generally will not recognize tax
gain or loss as a result of the reverse split. However, the tax consequences to
each stockholder will depend on his particular situation.
What vote was required to approve the reverse split?
The affirmative vote of a majority of all Old Shares (including the shares
of Common Stock issuable to the holders of the Series A Preferred Stock on an
"as-converted basis", voting together with the Old Shares) outstanding on the
record date was required to approve the amendment of the Certificate of
Incorporation to effect the reverse split.
The reverse split will affect all stockholders uniformly and will not
affect any stockholder's percentage ownership interests in the Company or
proportionate voting power, except to the extent that the reverse split results
in any of the Company's stockholders owning a fractional share. The Company will
not issue fractional shares on account of the reverse split, and any fraction of
..50 or greater shall entitle the holder to one share of Common Stock and any
fraction of less than .50 shall be deemed cancelled.
10
The principal effect of the reverse split will be that (i) the number of
shares of Common Stock issued and outstanding will be reduced and (ii) all
outstanding options entitling the holders thereof to purchase shares of common
stock will enable such holders to purchase, upon exercise of their options,
one-thirtieth of the number of shares of Common Stock which such holders would
have been able to purchase upon exercise of their options immediately preceding
the reverse split at an exercise price equal to thirty times the exercise price
specified before the reverse split, resulting in the same aggregate price being
required to be paid therefor upon exercise thereof immediately preceding the
reverse split.
The reverse split will not affect the par value of the Company's Common
Stock. As a result, on the effective date of the reverse split, the stated
capital on the Company's balance sheet attributable to the Common Stock will be
reduced to 1/30th of its present amount, and the additional paid-in capital
account shall be increased with the amount by which the stated capital is
reduced. The per share net income or loss and net book value of the Company's
Common Stock will be increased because there will be fewer shares of Common
Stock outstanding.
The reverse split will not change the proportionate equity interests of
stockholders, nor will the respective voting rights and other rights of
stockholders be altered, except for possible immaterial changes due to the
treatment of fractional shares as described above. The Common Stock issued
pursuant to the reverse split will remain fully paid and non-assessable. The
Company will continue to be subject to the periodic reporting requirements of
the Securities Exchange Act of 1934.
Upon effectiveness of the reverse split, the number of authorized shares
of Common Stock that are not issued or outstanding or reserved for issuance will
decrease.
11
Certain effects of the reverse split
Stockholders should recognize that upon completion of the reverse split
they will own a fewer number of shares than they presently own (a number equal
to the number of shares owned immediately prior to the filing of the certificate
of amendment divided by thirty). While the Company expects that the reverse
split will result in an increase in the market price of the Company's Common
Stock, there can be no assurance that the reverse split will increase the market
price of the Company's Common Stock by a multiple equal to the exchange number
or result in the permanent increase in the market price (which is dependent upon
many factors, including the Company's performance and prospects). Also, should
the market price of the Company's Common Stock decline, the percentage decline
as an absolute number and as a percentage of the Company's overall market
capitalization may be greater than would pertain in the absence of a reverse
split. Furthermore, the possibility exists that liquidity in the market price of
the Company's Common Stock could be adversely affected by the reduced number of
shares that would be outstanding after the reverse split. In addition, the
reverse split will increase the number of stockholders of the Company who own
odd lots (fewer than 100 shares). Stockholders who hold odd lots typically will
experience an increase in the cost of selling their shares, as well as possible
greater difficulty in effecting such sales. Consequently, there can be no
assurance that the reverse split will achieve the desired results that have been
outlined above.
The Company will promptly file a Certificate of Amendment with the
Secretary of State of the State of Delaware. The reverse split will become
effective on the date of filing the Certificate of Amendment, which we will
refer to as the "effective date." Beginning on the effective date, each
certificate representing Old Shares will be deemed for all corporate purposes to
evidence ownership of New Shares.
As soon as practicable after the effective date, stockholders will be
notified that the reverse split has been effected. The Company's transfer agent
will act as exchange agent for purposes of implementing the exchange of stock
certificates. Holders of Old Shares will be asked to surrender to the exchange
agent certificates representing Old Shares in exchange for certificates
representing New Shares in accordance with the procedures to be set forth in a
letter of transmittal to be sent by the Company. No new certificates will be
issued to a stockholder until such stockholder has surrendered such
stockholder's outstanding certificate(s) together with the properly completed
and executed letter of transmittal to the exchange agent. Stockholders should
not destroy any stock certificate and should not submit any certificates until
requested to do so.
12
Fractional shares
The Company will not issue fractional certificates for New Shares in
connection with the Reverse Stock Split. Any fraction of a share of less than
..50 will be deemed canceled and any fraction of .50 or greater will be treated
as one share issuable to a holder.
The Reverse Split Resolutions
The proposed Reverse Stock Split and the decision not to issue fractional
shares that may result from the reverse split was effected by the approval and
adoption by the Company's stockholders of the following resolution amending the
certificate of Incorporation:
FURTHER RESOLVED, that upon the filing of the Amendment,
(the "Effective Date"), a one (1) for thirty (30)
reverse stock split, (the "Reverse Stock Split"), as to
all outstanding shares of Common Stock of the
Corporation shall be effective as to holders of record
of shares of Common Stock on the filing of the
Amendment; and it is
FURTHER RESOLVED, that, if as a result of the Reverse
Stock Split, a stockholder should hold a fractional
share of .50 or greater, such fractional share shall be
converted to one (1) full share, and if a stockholder
should hold a fractional share of .50 or less, such
fractional share shall be cancelled; and it is
3. 2005 Stock Incentive Plan. Stockholders of record as of the close of
business on December 28, 2005 owning a majority of the Company's Common Stock,
and a majority of the Company's Series A Preferred Stock voting together with
the holders of the Company's Common Stock on an "as converted basis," approved,
adopted and ratified the 2005 Stock Incentive Plan (the "Stock Incentive Plan"
or the "Plan") as set forth and described below. Holders of capital stock of the
Company consented to the Plan in identical proportions as approved the
Amendment. Effective December 28, 2005, the Stock Incentive Plan provides for
the grant of: (i) qualified or non-qualified stock options and incentive stock
options (within the meaning of Section 422 of the Code) (collectively "Stock
Options"; (ii) stock appreciation rights ("SARs"); (iii) stock and restricted
stock (collectively a "Stock Award"); and (iv) cash or cash units (a "Cash
Award"). The maximum number of shares of post-Reverse Stock Split common stock
that may be issued in connection with awards under the Stock Incentive Plan is
2,000,000 (60,000,000 pre-Reverse Stock Split).
13
A summary of the significant provisions of the Plan is set forth below. A
copy of the full Plan is annexed as Exhibit A to this Information Statement. The
following description of the Plan is qualified in its entirety by reference to
the Plan itself.
The purpose of the Plan is to, among other things, further the long-term
stability, continuing growth and financial success of the Company by attracting
and retaining key employees, directors and selected advisors through the use of
stock incentives, while stimulating the efforts of these individuals upon whose
judgment and interest the Company is and will be largely dependent for the
successful conduct of its business. The Company believes that the Plan will
strengthen these persons' desire to remain with the Company and will further the
identification of those persons' interests with those of the Company's
shareholders.
The Plan shall be administered by the Board of Directors (or the
Compensation Committee of the Board of Directors, should one be appointed) (the
"Board"). The membership of the Committee, if appointed, shall be constituted so
as to comply at all times with the then applicable requirements under the
Exchange Act and Section 162(m) of the Internal Revenue Code.
All employees of the Company and its subsidiaries ("Employees"), including
Employees who are officers or members of the Board, and members of the Board who
are not Employees ("Non-Employee Directors") shall be eligible to participate in
the Plan. Consultants and advisors who perform services for the Company or any
of its subsidiaries ("Key Advisors") shall be eligible to participate in the
Plan if the Key Advisors render bona fide services to the Company or its
subsidiaries, the services are not in connection with the offer and sale of
securities in a capital-raising transaction, and the Key Advisors do not
directly or indirectly promote or maintain a market for the Company's
securities. The Board of Directors (or a committee thereof) will select those to
receive grants under the Plan in such manner as it determines.
The purchase price or the manner in which the purchase price is to be
determined for Stock Options granted under the Plan shall be determined by the
Board and set forth in the Agreement; provided, however, that the purchase price
per Share under each Incentive Stock Award (defined herein as an Award
satisfying the requirements of Section 422 of the Code and designated by the
Board as an Incentive Stock Award) shall not be less than 100% of the Fair
Market Value of a Share on the date the Incentive Stock Award is granted (110%
in the case of an Incentive Stock Award granted to a Ten-Percent Stockholder).
Notwithstanding the foregoing, the purchase price per Share under each
Nonqualified Stock Award may be less than the Fair Market Value of a Share on
the date the Nonqualified Stock Award is granted, at the discretion of the
Board, subject to the provisions of the Code and the federal securities laws.
14
The Board may determine the number of shares that may be awarded to a
participant as restricted stock and the provisions relating to risk of
forfeiture and may determine that the restricted stock is only earned upon the
satisfaction of performance goals established by the Board. The Board shall also
determine the nature, length and starting date of any performance period and the
terms thereof. The maximum number of shares that may be granted to any
participant may not exceed 20% of the total shares subject to the Plan.
As of the date of this information statement no options or restricted
stock have been granted under the Plan.
U.S. Federal Income Tax Consequences
The rules governing the U.S. federal tax treatment of stock options,
restricted stock and shares acquired upon the exercise of stock options are
quite technical. Therefore, the description of U.S. federal income tax
consequences set forth below is necessarily general in nature and does not
purport to be complete. Moreover, the statutory provisions are subject to
change, as are their interpretations, and their application may vary in
individual circumstances. In particular, the "American Jobs Creation Act of
2004" imposed new rules concerning the taxation of various deferred compensation
arrangements. It is not clear whether, and to what extent, these new rules apply
to awards under the Plan. Although the Company does not believe that awards
under the Plan are affected by the new rules, there can be no assurance to that
effect until adequate guidance is forthcoming from the U.S. Treasury Department.
Finally, the tax consequences under applicable state, local and foreign income
tax laws may not be the same as under the U.S. federal income tax laws.
15
STOCK OPTION. A Stock Option represents a right to purchase a specified
number of Shares during a specified period at a price per Share. A Stock Option
may be in the form of an incentive stock option or in another form that may or
may not qualify for favorable federal income tax treatment. The Shares covered
by a stock option may be purchased by means of a cash payment or such other
means as the Board may from time-to-time permit, including (i) tendering (either
actually or by attestation) Shares valued using the market price at the time of
exercise, (ii) authorizing a third party to sells Shares (or a sufficient
portion thereof) acquired upon exercise of a Stock Option and to remit to the
Company a sufficient portion of the sale proceeds to pay for all the Shares
acquired through such exercise and any tax withholding obligations resulting
from such exercise; (iii) by converting Shares subject to options granted
hereunder having a value equal to the exercise price of the Options being
exercised on such terms and conditions as the Board determines; or (iv) any
combination of the above.
STOCK APPRECIATION RIGHT. A SAR is a right to receive a payment in cash,
Shares or a combination, equal to the excess of the aggregate market price at
time of exercise of a specified number of Shares over the aggregate exercise
price of the stock appreciation right being exercised. The longest term a stock
appreciation right may be outstanding shall be ten years. Such exercise price
shall be based on one hundred percent (100%) of the per Share amount stipulated
by Section 2(c) of Exhibit A.
STOCK AWARD. A Stock Award is a grant of Shares or of a right to receive
Shares (or their cash equivalent or a combination of both) in the future. Except
in cases of certain terminations of employment or an extraordinary event, each
stock award shall be earned and vest over at least three years and shall be
governed by such conditions, restrictions and contingencies as the Board shall
determine. These may include continuous service and/or the achievement of
performance goals. The performance goals that may be used by the Committee for
such Awards shall consist of: operating profits (including EBITDA), net profits,
earnings per Share, profit returns and margins, revenues, shareholder return
and/or value, stock price and working capital. Performance goals may be measured
solely on a corporate, subsidiary or business unit basis, or a combination
thereof. Further, performance criteria may reflect absolute entity performance
or a relative comparison of entity performance to the performance of a peer
group of entities or other external measure of the selected performance
criteria. Profit, earnings and revenues used for any performance goal
measurement shall exclude: gains or looses on operating asset sales or
dispositions; asset write-downs; litigation or claim judgments or settlements;
effect of changes in tax law or rate on deferred tax liabilities; accruals for
reorganization and restructuring programs; uninsured catastrophic property
losses; the cumulative effect of changes in accounting principles; and any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management's discussion and analysis of financial
performance appearing in the Company's annual report to shareholders for the
applicable year.
16
CASH AWARD. A Cash Award is a right denominated in cash or cash units to
receive a cash payment, based on the attainment of pre-established performance
goals and, subject to a vesting period and such other conditions, restrictions,
and contingencies as the Board shall determine.
The proposed decrease in the number of shares of the Company's authorized
Common Stock and Preferred Stock was effected by the approval and adoption by
the Company's stockholders of the following resolution:
FURTHER RESOLVED, that the Corporation be, and it hereby is,
authorized to adopt the 2005 Stock Incentive Plan,
substantially in the form attached hereto as Exhibit A;
III. PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of January 3, 2006, the number and
percentage of shares of the Company's Common Stock owned beneficially, by class
and on a combined basis, by (i) each current director, (ii) each executive
officer, (iii) all executive officers and directors as a group, and (iv) each
person who is known by us to own beneficially more than 5% of our Common Stock.
Except as otherwise indicated, the beneficial owners listed in the table have
sole voting and investment powers with respect to the shares. The number of
shares beneficially owned by the shareholders listed below does not give effect
to the approved one (1) for thirty (30) reverse split.
Name and Address of Number of Shares Percentage of Shares
Beneficial Owner Beneficially Owned Beneficially Owned
------------------- ------------------ --------------------
SG DMTI Capital LLC 386,314,860 54.2 (1)
DMTR, LLC 245,436,145 75.2
Daniel Bertram (2) 2,303,220 0.7
Bruce Galloway (2)(3) 1,879,928 0.5
Gary Herman (2)(4) 1,320,000 0.3
Ed Kroning (2)(5) 256,048 0.1
Rafik Moursalien (2) 0 0
Thomas Leonardis (2) 0 0
All Executive Officers &
Directors as a Group 5,759,196 1.6
17
Notes:
(1) Giving effect to the Warrant for 386,314,860 shares, the shareholder would
own 54.2% of the common stock of the Company. SG Phoenix Ventures LLC is the
managing member of SG DMTI Capital LLC. SG Phoenix Ventures LLC disclaims
beneficial ownership of such securities beneficially owned by SG DMTI Capital
LLC. Philip S. Sassower and Andrea Goren are managing members of SG Phoenix
Ventures LLC, and each are members of DMTR, owning one-seventh of the membership
interests of DMTR Messrs. Sassower and Goren disclaim beneficial ownership of
such securities beneficially owned by SG DMTI Capital LLC and DMTR.
(2) The addresses of each of these persons is c/o Datametrics Corporation, 1717
Diplomacy Row, Orlando, Florida 32809.
(3) Mr. Galloway is the managing member of DMTR. Mr. Galloway disclaims
beneficial ownership of the shares owned by DMTR. His ownership includes
1,634,928 shares he owns directly and 245,000 shares of common stock over which
Mr. Galloway has indirect beneficial ownership.
(4) Includes 120,000 shares of common stock issued to Digital Creative
Development Corporation, of which Mr. Herman is Chairman and Chief Executive
Officer.
(5) Includes 14,592 shares of common stock jointly owned with Karen Kroning.
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
/s/ Daniel Bertram
----------------------------------
Daniel Bertram, President
New York, New York
January 16, 2006
18
Exhibit A
2005 STOCK INCENTIVE PLAN
1. THE PLAN
a) Purpose. This DataMetrics Corporation 2005 Stock Incentive Plan (the
"Plan") is intended to benefit the stockholders of DataMetrics Corporation (the
"Company") by providing a means to attract, retain and reward individuals who
can and do contribute to the longer-term financial success of the Company.
Further, the recipients of stock-based awards under the Plan should identify
their success with that of the company's shareholders and therefore will be
encouraged to increase their proprietary interest in the Company.
b) Effective Date. To serve this purpose, the Plan will become effective
upon its approval by the affirmative vote of a majority of the Company's
directors provided the Plan is approved by the affirmative vote of a majority of
the Company's outstanding shares of voting securities within twelve (12) months
after such approval by the Board of Director (the "Board").
2. ADMINISTRATION
a) Committee. The Plan shall be administered by a Committee, appointed by
the Board which shall consist of no less than two of its members, all of whom
shall not be employees of the Company (the "Committee") or by the Board;
provided, however, that from time to time the Board may assume, at its sole
discretion, administration of the Plan. Except with regard to awards to
employees subject to Section 16 of the Securities Exchange Act of 1934, the
Committee may delegate certain responsibilities and powers to any executive
officer or officers selected by it. Any such delegation may be revoked by the
Committee at any time.
b) Powers and Authority. The Committee's powers and authority include, but
are not limited to: selecting individuals, who are either employees of the
Company and any subsidiary of the Company or other entity in which the Company
has a significant equity or other interest as determined by the Committee,
non-employee members of the Board or independent consultants or other persons
who perform services for or on behalf of the Company, to receive awards
("Awards"); determining the types and terms and conditions of all Awards
granted, including performance and other earn out and/or vesting contingencies;
permitting transferability of Awards to eligible third parties; interpreting the
Plan's provisions; and administering the Plan in a manner that is consistent
with its purpose. The Committee's decision in carrying out the Plan and its
interpretation and construction of any provisions of the Plan or any award
granted or agreement or other instrument executed under it shall be final and
binding upon all persons. No members of the Board shall be liable for any action
or determination made in good faith in administering the Plan.
c) Award Prices. All Awards denominated or made in shares of common stock
shares shall use as the per Share price as the fair market value as established
by the Board in good faith. In the case of an Incentive Stock Award, in
accordance with Section 422 of the Internal Revenue Code (the "Code"), the fair
market value (the "Fair Market Value") means the average of the high and low
sales prices of the Shares on such date on the principal securities exchange on
which such Shares are listed, or if such Shares are not so listed or admitted to
trading, the arithmetic mean of the per Share closing bid price and closing
asked price per Share on such date as quoted on the quotation system of the
Nasdaq Stock Market, Inc. or such other market in which such prices are
regularly quoted.
3. SHARES SUBJECT TO THE PLAN AND ADJUSTMENTS
a) Maximum Shares Available for Delivery. Subject to adjustments under
Section 3(c), the maximum number of Shares that may be delivered to participants
and their beneficiaries under the Plan shall be 2,000,000, after giving effect
to the proposed one (1) for thirty (30) reverse stock split. In addition, any
Shares delivered under the Plan or any prior plan of the Company which are
forfeited back to the Company because of the failure to meet an award
contingency or condition shall again be available for delivery pursuant to new
Awards granted under the Plan. Any Shares covered by an award (or portion of an
award) granted under the Plan which is forfeited or canceled, expires or is
settled in cash, including the settlement of tax withholding obligations using
Shares, shall be deemed not to have been delivered for purposes of determining
the maximum number of Shares available for delivery under the Plan. Likewise, if
any stock option is exercised by tendering Shares, either actually or by
attestation, to the Company as full or partial payment for such exercise under
this Plan or any prior plan of the Company, only the number of Shares issued net
of the Shares tendered shall be deemed delivered for purposes of determining the
maximum number of Shares available for delivery under the Plan. Further, Shares
issued under the Plan through the settlement, assumption or substitution of
outstanding Awards or obligations to grant future Awards as a condition of the
Company acquiring another entity shall not reduce the maximum number of Shares
available for delivery under the Plan. In addition, shares available for
delivery in settlement of Awards under the Plan may be increased by the Board by
the number of shares purchased or acquired by the Company using amounts
equivalent to the cash proceeds received by the company from the exercise of
stock options, granted under any plan of the Company.
b) Payment Shares. Subject to the overall limitation on the number of
Shares that may be delivered under the Plan, the Committee may, in addition to
granting awards under Section 4, use available Shares as the form of payment for
compensation, grants or rights earned or due under any other compensation plans
or arrangements of the Company, including those of any entity acquired by the
Company.
c) Adjustments for Corporate Transactions.
(i) The Committee may determine that a corporate transaction has
affected the price per Share such that an adjustment or adjustments to
outstanding Awards are required to preserve (or prevent enlargement of) the
benefits or potential benefits intended at time of grant. For this purpose a
corporate transaction will include, but is not limited to, any stock dividend,
stock split, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination or exchange of shares, or
other similar occurrence. In the event of such a corporate transaction, the
Committee shall, in such manner as the Committee deems equitable, adjust (i) the
number and kind of shares which may be delivered under the Plan pursuant to
Section 3(a) and 3(b); (ii) the number and kind of shares subject to outstanding
Awards; and (iii) the exercise price of outstanding stock options and stock
appreciation rights
(ii) In the event that the Company is not the surviving company of a
merger, consolidation or amalgamation with another company, or in the event of a
liquidation or reorganization of the Company, and in the absence of the
surviving corporation's assumption of outstanding Awards made under the Plan,
the Committee may provide for appropriate adjustments and/or settlements of such
grants either at the time of grant or at a subsequent date. The Committee may
also provide for adjustments and/or settlements of outstanding Awards as it
deems appropriate and consistent with the Plan's purpose in the event of any
other change-in-control of the Company.
4. ELIGIBILITY
a) Eligible Persons. All employees of the Company and its subsidiaries
("Employees"), including Employees who are officers or members of the Board, and
members of the Board who are not Employees ("Non-Employee Directors") shall be
eligible to participate in the Plan. Consultants and advisors who perform
services for the Company or any of its subsidiaries ("Key Advisors") shall be
eligible to participate in the Plan if the Key Advisors render bona fide
services to the Company or its subsidiaries, the services are not in connection
with the offer and sale of securities in a capital-raising transaction, and the
Key Advisors do not directly or indirectly promote or maintain a market for the
Company's securities.
b) Selection of Eligible Individuals. The Committee shall select the
Employees, Non-Employee Directors and Key Advisors (collectively referred to as
"Eligible Individuals") to receive grants and shall determine the number of
shares of Company Stock subject to a particular grant in such manner as the
Committee determines. Incentive Stock Awards (as defined in Section 5(b)(i)) may
not be granted to Non-Employee Directors.
5. TYPES OF AWARDS
a) General. An award may be granted singularly, in combination with
another award(s) or in tandem whereby exercise or vesting of one award held by a
participant cancels another award held by the participant. Subject to the
limitations of Section 2(c), an award may be granted as an alternative to or
replacement of an existing award under the Plan or under any other compensation
plans or arrangements of the Company, including the plan of any entity acquired
by the Company. The types of Awards that may be granted under the Plan include:
A) Stock Option. A stock option represents a right to purchase a
specified number of Shares during a specified period at a price per Share. A
stock option may be in the form of an incentive stock option or in another form
that may or may not qualify for favorable federal income tax treatment. The
Shares covered by a stock option may be purchased by means of a cash payment or
such other means as the Committee may from time-to-time permit, including (i)
tendering (either actually or by attestation) Shares valued using the market
price at the time of exercise, (ii) authorizing a third party to sells Shares
(or a sufficient portion thereof) acquired upon exercise of a stock option and
to remit to the Company a sufficient portion of the sale proceeds to pay for all
the Shares acquired through such exercise and any tax withholding obligations
resulting from such exercise; (iii) by converting Shares subject to options
granted hereunder having a value equal to the exercise price of the Options
being exercised on such terms and conditions as the Committee determines; or
(iv) any combination of the above.
B) Stock Appreciation Right. A stock appreciation right is a right
to receive a payment in cash, Shares or a combination, equal to the excess of
the aggregate market price at time of exercise of a specified number of Shares
over the aggregate exercise price of the stock appreciation right being
exercised. The longest term a stock appreciation right may be outstanding shall
be ten years. Such exercise price shall be based on one hundred percent (100%)
of the per Share amount stipulated by Section 2(c).
C) Stock Award. A stock award is a grant of Shares or of a right to
receive Shares (or their cash equivalent or a combination of both) in the
future. Except in cases of certain terminations of employment or an
extraordinary event, each stock award shall be earned and vest over at least
three years and shall be governed by such conditions, restrictions and
contingencies as the Committee shall determine. These may include continuous
service and/or the achievement of performance goals. The performance goals that
may be used by the Committee for such Awards shall consist of: operating profits
(including EBITDA), net profits, earnings per Share, profit returns and margins,
revenues, shareholder return and/or value, stock price and working capital.
Performance goals may be measured solely on a corporate, subsidiary or business
unit basis, or a combination thereof. Further, performance criteria may reflect
absolute entity performance or a relative comparison of entity performance to
the performance of a peer group of entities or other external measure of the
selected performance criteria. Profit, earnings and revenues used for any
performance goal measurement shall exclude: gains or looses on operating asset
sales or dispositions; asset write-downs; litigation or claim judgments or
settlements; effect of changes in tax law or rate on deferred tax liabilities;
accruals for reorganization and restructuring programs; uninsured catastrophic
property losses; the cumulative effect of changes in accounting principles; and
any extraordinary non-recurring items as described in Accounting Principles
Board Opinion No. 30 and/or in management's discussion and analysis of financial
performance appearing in the Company's annual report to shareholders for the
applicable year.
D) Cash Award. A cash award is a right denominated in cash or cash
units to receive a cash payment, based on the attainment of pre-established
performance goals and, subject to a vesting period and such other conditions,
restrictions, and contingencies as the Committee shall determine.
b) Purchase Price. The purchase price or the manner in which the purchase
price is to be determined for Shares under each Award shall be determined by the
Committee and set forth in the Agreement; provided, however, that
(i) the purchase price per Share under each Incentive Stock Award
(defined herein as an Award satisfying the requirements of Section 422 of the
Code and designated by the Committee as an Incentive Stock Award) shall not be
less than 100% of the Fair Market Value of a Share on the date the Incentive
Stock Award is granted (110% in the case of an Incentive Stock Award granted to
a Ten-Percent Stockholder) and
(ii) the purchase price per Share under each Nonqualified Stock
Award may be less than the Fair Market Value of a Share on the date the
Nonqualified Stock Award is granted, at the discretion of the Committee, subject
to the provisions of the Code and the federal securities laws.
c) Maximum Duration. Awards granted hereunder shall be for such term as
the Committee shall determine, provided that an Incentive Stock Award granted
hereunder shall not be exercisable after the expiration of ten (10) years from
the date it is granted (five (5) years in the case of an Incentive Stock Award
granted to a Ten-Percent Stockholder), and a Nonqualified Stock Award shall not
be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Award, extend the
term thereof but in no event shall the term as so extended exceed the maximum
term provided for in the preceding sentence.
6. AWARD SETTLEMENTS AND PAYMENTS
a) Dividends and Dividend Equivalents. An award may contain the right to
receive dividends or dividend equivalent payments that may be paid either
currently or credited to a participant's account. Any such crediting of
dividends or dividend equivalents or reinvestment in Shares may be subject to
such conditions, restrictions and contingencies as the Committee shall
establish, including the reinvestment of such credited amounts in Share
equivalents.
b) Payments. Awards may be settled through cash payments, the delivery of
Shares, the delivery of Awards in accordance with cashless exercise provisions,
the granting of Awards or combination thereof as the Committee shall determine.
Any award settlement, including payment deferrals, may be subject to such
conditions, restrictions and contingencies as the Committee shall determine. The
Committee may permit or require the deferral of any award payment, subject to
such rules and procedures as it may establish, which may include provisions for
the payment or crediting of interest, or dividend equivalents, including
converting such credits into deferred Share equivalents.
7. PERFORMANCE SHARES
The Committee is authorized to grant Performance Shares to Eligible Individuals
on the following terms and conditions:
a) Performance Period. The Committee shall determine a performance period
(the "Performance Period") of one or more years and shall determine the
performance objectives for grants of Shares ("Performance Shares"). Performance
objectives may vary from Eligible Individual to Eligible Individual and shall be
based upon such performance criteria as the Committee may deem appropriate.
Performance periods may overlap and Eligible Individuals may participate
simultaneously with respect to Performance Shares for which different
Performance Periods are prescribed.
b) Award Value. At the beginning of a Performance period, the Committee
shall determine for each Eligible Individual or group of Eligible Individuals
with respect to that Performance Period the range of number of Shares, if any,
in the case of Performance Shares which may be fixed or may vary in accordance
with such performance or other criteria specified by the Committee, which shall
be paid to an Eligible Individual as an Award if the relevant measure of Company
performance for the Performance Period is met.
c) Significant Events. If during the course of a Performance Period there
shall occur significant events as determined by the Committee which the
Committee expects to have a substantial effect on a performance objective during
such period, the Committee may revise such objectives; provided, however, that,
if an Award Agreement so provides, the Committee shall not have any discretion
to increase the amount of compensation payable under the Award to the extent
such an increase would cause the Award to lose its qualification as
performance-based compensation for purposes of Section 162m(4)(C) of the Code
and the regulations thereunder.
d) Forfeiture. Except as otherwise determined by the Committee, at the
date of grant or thereafter, upon termination of employment during the
applicable Performance Period, Performance Shares for which the Performance
Period was prescribed shall be forfeited; provided, however, that the Committee
may provide, by rule or regulation or in any Award Agreement, or may determine
in an individual case, that restrictions or forfeiture conditions relating to
Performance Shares will be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Performance Shares.
e) Payment. Each Performance Share may be paid in whole Shares, or cash,
or a combination of Shares and cash either as a lump sum payment or in
installments, all as the Committee shall determine, at the time of grant of the
Performance Share or otherwise, commencing as soon as practicable after the end
of the relevant Performance Period.
8. TERMS AND CONDITIONS APPLICABLE TO ALL AWARDS
a) Duration. Each Award shall terminate on the date which is the tenth
anniversary of the grant date, unless terminated earlier as follows:
(i) If the employment or services of an Eligible Individual
terminates for any reason other than disability (as defined by the Committee),
death or cause, the Eligible Individual may, for a period of three (3) months
after such termination, exercise his or her Award to the extent, and only to the
extent, such Award or portion thereof was vested and exercisable as of the date
of the Eligible Individual's employment or service terminated, after which time
the Award shall automatically terminate in full.
(ii) If an Eligible Individual's employment or service terminates by
reason of the Eligible Individual's disability, the Eligible Individual may
exercise his or her Award for up to twelve (12) months after the date of
termination to the extent, and only to the extent, such Award or portion thereof
was vested and exercisable as of the date the Eligible Individual's employment
or service terminated, after which time the Award shall automatically terminate
in full.
(iii) If an Eligible Individual's employment or service terminates
for Cause, the Award granted to the Eligible Individual hereunder shall
immediately terminate in full and no rights thereunder may be exercised.
(iv) If an Eligible Individual dies while employed or in the service
of the Company or an Affiliate or within the three (3) month or twelve (12)
month period described in clause (i) or (ii), respectively, of this Section 8
the Award granted to the Eligible Individual may be exercised at any time within
twelve (12) months after the Eligible Individual's death by the person or
persons to whom such rights under the Award shall pass by will, or by the laws
of descent and distribution, after which time the Award shall terminate in full;
provided, however, that an Award may be exercised to the extent, and only to the
extent, such Award or portion thereof was exercisable on the date of death or
earlier termination of the Eligible Individual's services as a Director,
employee, consultant or otherwise.
(v) Upon retirement of an Eligible Individual, Stock Award
privileges shall apply to those Shares immediately exercisable at the date of
retirement. The Committee, however, in its discretion, may provide that any
Stock Awards outstanding but not yet exercisable may be exercised in accordance
with a schedule to be determined by the Committee. Stock Award privileges shall
expire unless exercised within such period of time as may be established by the
Committee, but in no event later than the expiration date of the Stock Award.
Notwithstanding clauses (ii) through (v) above, the agreement
evidencing the grant of an Incentive Stock Award or clauses (i) through (v) with
respect to Nonqualified Stock Awards ("Award Agreement") may, in the Committee's
sole and absolute discretion, set forth additional or different terms and
conditions applicable to Awards upon a termination or change in status of the
employment or service of an Eligible Individual. Such terms and conditions may
be determined at the time the employee Award is granted or thereafter.
b) Non-transferability. No Award (except for vested Shares) granted
hereunder shall be transferable by the Eligible Individual to whom granted
except by will or the laws of descent and distribution, and an Award may be
exercised during the lifetime of such Eligible Individual only by the Eligible
Individual or his or her guardian or legal representative. The terms of such
Award shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Eligible Individual.
c) Method of Exercise. The exercise of an Award shall be made only by a
written notice delivered in person or by mail to the Secretary or Chief
Financial Officer of the Company at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied by payment
therefor and otherwise in accordance with the Award Agreement pursuant to which
the Award was granted. The purchase price for any Shares purchased pursuant to
the exercise of an Award shall be paid in accordance with Section 8(e). The
Eligible Individual shall deliver the Award Agreement evidencing the Award to
the Secretary or Chief Financial Officer of the Company who shall endorse
thereon a notation of such exercise and return such Agreement to the Eligible
Individual. No fractional Shares (or cash in lieu thereof) shall be issued upon
exercise of an Award and the number of Shares that may be purchased upon
exercise shall be rounded to the nearest number of whole Shares.
d) Rights of Eligible Individuals. No Eligible Individual shall be deemed
for any purpose to be the owner of any Shares subject to any Award unless and
until (I) the Award shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the Shares to the Eligible
Individual and (iii) the Eligible Individual's name shall have been entered as a
stockholder of record on the books of the Company. Thereupon, the Eligible
Individual shall have full voting, dividend and other ownership rights with
respect to such Shares, subject to such terms and conditions as may be set forth
in the applicable agreement evidencing such Award.
e) Effect of Change in Control. In the event of a Change in Control, (as
defined in Section 8(e), then the amount of shares that will vest in an Eligible
Person or Eligible Individual shall be determined by the Committee. In the event
an Eligible Person's or Eligible Individual's employment or service with the
Company is terminated by the Company following a Change in Control, each Award
held by the Eligible Person or Eligible Individual that was exercisable as of
the date of termination of Eligible Person's or Eligible Individual's employment
or service shall remain exercisable for a period ending not before the earlier
of the first anniversary of the termination of the Eligible Person's or Eligible
Individual's employment or service or the expiration of the stated term of the
Award.
For the purposes of the Agreement, "Change of Control" shall mean the
occurrence of any of the following: (i) any "person" as defined in Sections
13(d) and 14(d) of the Exchange Act other than the persons or the group of
persons in control of the Company on the date hereof is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Corporation's then outstanding
securities; (ii) within any period of two consecutive years) not including any
period prior to the effective date of this Plan) there shall cease to be a
majority of the Board comprised as follows: individuals who at the beginning of
such period constitute the Board any new director(s) whose election was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved; (iii) the shareholders of
the Company approve a merger of, or consolidation involving, the Company in
which (A) the Company's Common Stock, with no par value per share (such stock,
or any other securities of the Company into which such stock shall have been
converted through a reincorporation, recapitalization or similar transaction
hereinafter called "Common Stock of the Company"), is converted into shares or
securities of another corporation or into cash or other property, or (B) the
Common Stock of the Company is not converted as described in Clause (A), but in
which more than fifty percent (50%) of the Common Stock of the surviving
corporation in the merger is owned by shareholders other than those who owned
such amount prior to the merger; in each case, other than a transaction solely
for the purpose of reincorporating the Company in another jurisdiction or
recapitalizing the Common Stock of the Company; or (iv) the shareholders of the
Company approve a plan or complete liquidation of the Company, or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, either of which is followed by a distribution of all or
substantially all of the proceeds to the shareholders.
f) Limits on Incentive Stock Awards. Except as may otherwise be permitted
by the Code, the Committee shall not grant to an Eligible Individual Incentive
Stock Awards, that, in the aggregate, are first exercisable during any one
calendar year to the extent that the aggregate fair market value of the Common
Stock, at the time the Incentive Stock Awards are granted, exceeds $100,000.
g) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares, or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments.
9. PLAN AMENDMENT AND TERMINATION
a) Amendments. The Board may amend this Plan as it deems necessary and
appropriate to better achieve the Plan's purpose provided, however, that: (I)the
Share and other Award limitations set forth in Sections 3(a) and 3(b) cannot be
increased and (ii) the minimum stock option and stock appreciation right
exercise prices set forth in Sections 2(C) and 5(b) and (c) cannot be changed
unless such a plan amendment is properly approved by the Company's stockholders.
b) Plan Suspension and Termination. The Board may suspend or terminate
this Plan at any time. Any such suspension or termination shall not of itself
impair any outstanding award granted under the Plan or the applicable
participant's rights regarding such award.
10. MISCELLANEOUS
a) No Individual Rights. No person shall have any claim or right to be
granted an award under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee or other person any right to continue
to be employed by or to perform services for the Company, any subsidiary or
related entity. The right to terminate the employment of or performance of
services by any Plan participant at any time and for any reason is specifically
reserved tithe employing entity.
b) Unfunded Plan. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any participant or
beneficiary of a participant. To the extent any person holds any obligation of
the Company by virtue of an award granted under the Plan, such obligation shall
merely constitute a general unsecured liability of the Company and accordingly
shall not confer upon such person any right, title or interest in any assets of
the Company.
c) Other Benefit and Compensation Programs. Unless otherwise specifically
determined by the Committee, settlements of Awards received by participants
under the Plan shall not be deemed a part of a participant's regular, recurring
compensation for purposes of calculating payments or benefits from any Company
benefit plan or severance program. Further, the Company may adopt other
compensation programs, plans or arrangements as it deems appropriate.
d) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid or transferred in lieu of any fractional Shares, or whether
such fractional Shares or any rights thereto shall be canceled.
e) Governing Law. The validity, construction and effect of the Plan and
any Award, agreement or other instrument issued under it shall be determined in
accordance with the laws of the state of Florida without reference to principles
of conflict of law.