SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement |_| Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting Materials Under Rule 14a-12
IBX GROUP, INC.
---------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|X| Fee computed on table below per Exchange Act Rules 14a-6(i) and 0-11
(1) Title of each class of securities to which transaction applies: Common
Stock
(2) Aggregate number of securities to which transactions applies:
(3) 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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PROXY STATEMENT FOR
IBX GROUP, INC.
350 Jim Moran Boulevard
Deerfield Beach, Florida 33442
(954) 312-1660
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 24, 2004
Dear Shareholders:
At our annual meeting of shareholders (the "Annual Meeting") we will ask you to:
1. Elect four directors, each to serve for one year and until their successors
have been duly elected and qualified;
2. Approve an amendment to IBX Group's Articles of Incorporation to increase
the authorized common stock from 100,000,000 shares to 500,000,000 shares.
3. Approve the IBX 2003 Equity Incentive Plan; and
4 Transact any other business that may properly be presented at the Annual
Meeting or any adjournment thereof.
If you were a shareholder of record at the close of business on May 10, 2004,
you may vote at the Annual Meeting.
By the Order of the Board of Directors,
Evan Brovenick
President and Chief Executive Officer
Deerfield Beach, Florida
May 11, 2004
2
IBX GROUP, INC.
PROXY STATEMENT
DATED MAY 11, 2004
ANNUAL MEETING OF STOCKHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this proxy statement and the enclosed proxy card because
the board of directors of IBX Group, Inc., a Florida corporation (IBX or the
Company), is soliciting your vote at the 2004 annual meeting of stockholders
(Annual Meeting). This proxy statement summarizes the information you need to
vote in an informed manner on the proposals to be considered at the Annual
Meeting. However, you do not need to attend the Annual Meeting to vote your
shares. Instead you may simply complete, sign and return the enclosed proxy
card.
HOW MANY VOTES DO I HAVE?
We will be sending this proxy statement, the attached Notice of Annual
Meeting and the enclosed proxy card on or about May 12, 2004 to all
stockholders. Stockholders who owned IBX common stock at the close of business
on May 10, 2004 (Record Date) are entitled to one vote for each share of common
stock they held on that date on all matters properly brought before the Annual
Meeting. Similarly, the holder of Series A preferred stock is entitled to vote
with the common stock, voting together and not as separate classes, on an "as
converted" basis.
WHAT PROPOSALS WILL BE ADDRESSED AT THE ANNUAL MEETING?
We will address the following proposals at the Annual Meeting:
1. Election of four directors each to serve for one year and until
their successors have been duly elected and qualified;
2. Approval of an amendment to IBX's Articles of Incorporation to
increase the authorized common stock from 100,000,000 shares to
500,000,000 shares.
3. Approve the IBX 2003 Equity Incentive Plan; and
4. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
WHY WOULD THE ANNUAL MEETING BE POSTPONED?
The Annual Meeting will be postponed if a quorum is not present on June
24, 2004. If shares representing more than 50% of the votes entitled to be cast
at the Annual Meeting are present in person or by proxy, a quorum will be
present and business can be transacted. If a quorum is not present, the Annual
Meeting may be postponed to a later date when a quorum is obtained. Abstentions
and broker non-votes are counted for purposes of determining the presence of a
quorum for the transaction of business but are not counted as an affirmative
vote for purposes of determining whether a proposal has been approved.
3
HOW DO I VOTE IN PERSON?
If you plan to attend the Annual Meeting on June 24, 2004, or at a
later date if it is postponed, at iBX's offices at 350 Jim Moran Boulevard,
Deerfield Beach, Florida 33433 and vote in person, we will give you a ballot
when you arrive. However, if your shares are held in the name of your broker,
bank or other nominee, you must bring a power of attorney executed by the
broker, bank or other nominee that owns the shares of record for your benefit,
authorizing you to vote the shares.
HOW DO I VOTE BY PROXY?
Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Annual Meeting and vote in person.
If you properly fill in your proxy card and send it to us in time to
vote, your "proxy" (one of the individuals named on your proxy card) will vote
your shares as you have directed. If you sign the proxy card but do not make
specific choices, your proxy will vote your shares as recommended by the Board
of Directors as follows:
o "FOR" the election of four directors each to serve for one year and
until their successors have been duly elected and qualified;
o "FOR" approval of an amendment to IBX's Articles of Incorporation to
increase the authorized common stock from 100,000,000 shares to
500,000,000 shares.
o "FOR" approval of the 2003 Equity Incentive Plan
If any other matter is presented, your proxy will vote in accordance
with his best judgment. At the time this proxy statement went to press, we knew
of no matters that needed to be acted on at the Annual Meeting other than those
discussed in this Proxy Statement.
MAY I REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of three ways:
o You may send in another proxy with a later date.
o You may notify IBX in writing (by you or your attorney authorized in
writing, or if the stockholder is a corporation, under its corporate
seal, by an officer or attorney of the corporation) at our principal
executive offices, before the Annual Meeting, that you are revoking
your proxy.
o You may vote in person at the Annual Meeting.
WHERE ARE IBX'S PRINCIPAL EXECUTIVE OFFICES?
Our principal executive offices are located at 350 Jim Moran Boulevard,
Deerfield Beach, Florida 33442. Our telephone number is (954) 312-1660.
4
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL 1: ELECTION OF DIRECTORS.
A plurality of votes cast is required to elect director nominees. A
nominee who receives a "plurality" means he has received more votes than any
other nominee for the same director's seat. There are four nominees for the four
seats. In the event no other nominations are received, management's nominees
will be elected upon receiving one or more votes. All shares of IBX's common
stock and the Series A preferred stock, voting on an as-converted basis and
voting as a single class, will be entitled to vote. So, if you do not vote for
the nominee, or you indicate "withhold authority to vote" for the nominee on
your proxy card, your vote will not count either "for" or "against" the nominee.
PROPOSAL 2: APPROVAL OF AN AMENDMENT TO IBX'S ARTICLES OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK FROM 100,000,000 SHARES TO
500,000,000 SHARES.
All shares of IBX's common stock and the Series B preferred stock
voting on an as-converted basis and voting as a single class, will be entitled
to vote. The affirmative vote of a majority of the votes entitled to be cast by
the holders of the outstanding shares of common stock and the Series B preferred
stock is required for approval of an amendment of the Articles of Incorporation
increase the authorized common stock from 100,000,000 shares to 500,000,000
shares. Therefore, since a majority of all votes entitled to be cast is
required, any shares that are not voted, including shares represented by a proxy
which is marked "abstain," will, in effect, count "against" Proposal 2.
Upon approval by the required stockholder vote, the amendment will
become effective upon the filing of the Articles of Amendment to the Articles of
Incorporation with the Department of State of the State of Florida, which filing
is anticipated to occur during or shortly following the Annual Meeting. A copy
of the Amendment to the Articles of Incorporation is included as Appendix A to
this proxy statement.
PROPOSAL 3: APPROVE THE 2003 EQUITY INCENTIVE PLAN.
All shares of IBX's common stock, including the Series B preferred
stock voting on an as-converted basis and voting as a single class, will be
entitled to vote. The holders of an affirmative vote of a majority of the votes
cast is required to approve Proposal 3. Therefore, any shares that are not
voted, including shares represented by a proxy, which is marked "abstain," will
not count either "for" or "against" Proposal 3.
WHO BEARS THE COST OF SOLICITING PROXIES?
IBX will bear all costs of soliciting proxies in connection with this
Proxy Statement.
HOW CAN I OBTAIN ADDITIONAL INFORMATION REGARDING IBX?
IBX is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), which requires that IBX file
reports, proxy statements and other information with the Securities and Exchange
Commission ("SEC"). The SEC maintains a website on the Internet that contains
reports, proxy and information statements and other information regarding
registrants, including IBX, that file electronically with the SEC. The SEC's
website address is www.sec.gov. In addition, IBX's Exchange Act filings may be
inspected and copied at the public reference facilities of the SEC located at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549; and at
the SEC's regional offices at Citicorp Center, 500 West Madison Street, Room
1400, Chicago, IL 60661, and at 233 Broadway, New York, NY 10279. Copies of the
material may also be obtained upon request and payment of the appropriate fee
from the Public Reference Section of the SEC located at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549.
5
PRINCIPAL SHAREHOLDERS
The following tables disclose information concerning ownership of
common stock by officers, directors and holders of 5% or more of our common
stock. Our currently outstanding shares of common stock, for purposes of these
calculations, are calculated based on information available as of March 15, 2004
and include both currently outstanding securities and securities which a named
person has a right to acquire within 60 days following the date of this
prospectus.
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class
-------------------------------------- -------------------- ----------------
Evan Brovenick ....................... 19,040,500 (1) 16.3%
David Blechman ....................... 4,555,500 (2) 4.6
Tucker Family Spendthrift Trust ...... 3,949,501 (3) 4.1
Calvo Family Spendthrift Trust ....... 7,200,689 (4) 6.9
Alvin Brovenick ...................... 0 -
Mitchell Hershey ..................... 0 -
Northbar Capital ..................... 500,000 (5) *
Big Time Capital Group ............... 20,000,000 (6) 17.2
Jericho State Capital Corp. of Florida 20,000,000 (6) 22.5
All officers and directors as a
group (4 persons) ................... 23,596,000 20.1
_________
* Less than 1%.
(1) Includes 14,040,500 shares, 2,000,000 shares issuable upon conversion of
Series B Preferred Stock and 3,000,000 shares issuable upon exercise of
outstanding warrants.
(2) Includes 2,455,500 shares of common stock, 1,400,000 shares issuable upon
conversion of outstanding Series B preferred stock and 700,000 shares of
common stock issuable upon exercise of warrants.
(3) The Tucker family is comprised of Michelle Tucker, Leonard Miles Tucker,
her husband, and their minor daughters Shayna and Montana. Includes
1,857,001 shares and 2,092,500 shares owned by Blue Lake Capital Corp.,
which is owned by members of the Tucker family. Does not include shares
that may be issued upon conversion of the $174,000 note described above.
(4) The Calvo family is comprised of Cyndi Calvo; William A. Calvo, III, her
husband; William, Alexander and Edward, their minor sons. All the shares
are held by the Calvo Family Spendthrift Trust. Includes shares issuable
upon conversion of preferred stock and exercise of warrants. Excludes
33,000 shares of Class A Nonvoting Convertible Preferred Stock that are
convertible into 3,300,000 shares of common stock subject to certain
restrictions, which common shares are included above. The terms of the
Series A Preferred Stock prohibit the holder from owning more than 4.9% of
the outstanding voting stock at any time. Accordingly, the Trust is
unlikely to ever hold the number of shares set forth above at any time.
(5) Includes common stock owned. Does not include shares that may be issued
upon conversion of $150,000 of debentures.
(6) Does not include shares that may be issued upon conversion of $200,000 of
notes.
DIRECTORS AND EXECUTIVE OFFICERS
The following persons are members of our board of directors and
executive officers, in the capacities indicated:
NAME AGE POSITION
---- --- --------
Evan Brovenick 43 Chairman of the Board, President and
Chief Executive Officer
David Blechman 53 Vice President, Secretary and Director
Alvin Brovenick 73 Director
Mitchell Hershey 45 Director
6
EVAN R. BROVENICK has been chairman of the board, president and chief
executive officer since the acquisition of PriMed in September 2001 and was a
founder and president and chief executive officer of PriMed and its predecessors
since its inception in 1999. From January 1994 until March 1999, Mr. Brovenick
served as the director of marketing and business development for ManageMed, a
healthcare services company.
DAVID J. BLECHMAN has been vice president and secretary, since the
acquisition of PriMed in September 2001 and was a founder and president and
chief executive officer of PriMed and its predecessors since its inception in
1999. From January 1994 until March 1999, Mr. Blechman served as the director of
technical services for ManageMed from January 1994 until March 1999.
ALVIN BROVENICK has served as a member of PriMed's board of directors
since its inception. Mr. Brovenick served materially similar roles with PriMed
LC prior to its merger with PriMed. During the immediately preceding five years,
in addition to his roles with PriMed and its predecessors, Mr. Brovenick served
as the treasurer of ManageMed. He is the father of Evan Brovenick, PriMed's
founder and president and is employed as a management consultant by IBX. Mr.
Brovenick is a retired certified public accountant.
MITCHELL HERSHEY is currently the Director of Field Operations for the
20th largest advertising agency in the USA, Zimmerman & Partners, Fort
Lauderdale, Florida. Prior to this position which he has held for the past two
years, Mr. Hershey spent1996-2000 at Saatchi & Saatchi Advertising, New York,
the third largest advertising agency in the USA, as General Manager for Toyota
Motors, USA. Previous positions have included advertising and marketing for
corporations like Proctor & Gamble, General Mills, Dr. Pepper, Hertz, Budget
Rent A Car, RJ Reynolds, Hueblein, Pabst Brewing and Club Med. Mr. Hershey holds
an MBA in Marketing from Pace University in New York City and a B.S. in
Management from the University of Florida.
The directors hold office until the next annual meeting of the
shareholders and until there successors have been duly elected or qualified.
EXECUTIVE COMPENSATION
The following tables summarize the total compensation paid to Evan
Brovenick, our chief executive officer and the other executive offers with
compensation of at least $100,000 in 2003.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------------------------- -----------------------------
Other Restricted Securities
Name and Annual Stock Underlying
Principal Position Year Salary ($) Bonus Compensation(1) Awards ($) Options/SARs (#)
----------------------- ---- ---------- ------- --------------- ---------- ----------------
Evan Brovenick 2003 $87,000 $12,586 $14,700(2) -
President and Chief 2002 125,000 - 15,476 - -
Executive Officer 2001 100,000 - 15,000 - -
David Blechman 2003 - $7,996 $14,000(3) -
Vice President 2002 125,000 - 12,359 - -
2001 100,000 - 15,000 - -
---------
(1) Includes car allowance, health coverage and life insurance.
(2) Represents 210,000 shares valued at $.07 per share.
(3) Represents 200,000 shares valued at $.07 per share.
7
GRANTS OF EQUITY INCENTIVES
No options were granted to the executive officers named above in 2003.
COMPENSATION OF DIRECTORS
We do not currently pay any compensation to our outside directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS.
On December 19, 2001, we entered into an employment agreement with Evan
Brovenick for a period ending on December 31, 2006. Mr. Brovenick's
responsibilities involve all services, acts, or things necessary or advisable to
serve as its president and chief executive officer including but not limited to
assist in establishing our policies and strategic planning, identify potential
acquisition candidates, assist in financial planning and capital formation and
oversee our day to day operations.
As compensation for his services, Mr. Brovenick will receive in 2004 an
annual base compensation of $125,000. Subject to board approval, the annual base
salary in each succeeding year will be equal to at least 110% of the annual base
salary from the prior year.
In addition to the monthly compensation, Mr. Brovenick was issued
6,600,000 shares of our common stock, that vest only if during the term of Mr.
Brovenick's employment, IBX had a net pre-tax profit of at least one dollar as
determined by our year-end audited financial statements. These shares vested as
a result of the 2002 financial results.
Mr. Brovenick will also be entitled to such other bonuses based upon
our performance as determined in the sole and absolute discretion of the board
of directors; will be offered health insurance coverage at no cost; be entitled
to participate in such employee benefit programs as are offered to other
employees; and be entitled to annual paid vacation Mr. Brovenick will also be
reimbursed for out-of-pocket expenses incurred by him in the performance of his
duties.
We have the right to terminate the agreement for good cause or by
reason of Mr. Brovenick's disability on 30 days' prior written notice to Mr.
Brovenick. As used in the agreement, disability means Mr. Brovenick's inability
caused by mental or physical illness to satisfactory perform his obligations and
duties hereunder for a consecutive period in excess of 120 days during the term
of the agreement or for a period of 180 out of a total of 360 work days; and,
good cause means any breach by Mr. Brovenick of his obligations under the
agreement, habitual neglect of duties, continued incapacity or inability to
perform the obligations set forth in the agreement or the conviction of any
felony. If Mr. Brovenick is terminated for any other reason than good cause, we
will be obligated to pay Mr. Brovenick a severance payment of the greater of
$100,000 or the remaining sums due under the agreement. The agreement also
contains non-competition and confidentiality provisions.
David Blechman's agreement is identical to Mr. Brovenick's except that
he has not been granted any restricted stock.
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BOARD MEETINGS AND COMMITTEES
Until December 2003, our board of directors did not have any
independent directors, as defined in the Sarbanes- Oxley Act. In December 2003,
Mitchell Hershey was elected a director. We have been seeking additional
independent directors, including a director that would satisfy the requirement
of being an "audit committee financial expert" but have not yet found a suitable
candidate. At such time as a second independent director is elected to the
board, the audit committee, compensation committee and the corporate governance
and nominating committees will become active.
AUDIT COMMITTEE. Our board of directors has recently created an audit
committee which will be directly responsible for the appointment, compensation,
and oversight of the work of any registered public accounting firm employed by
us (including resolution of disagreements between our management and the auditor
regarding financial disclosure) for the purpose of preparing or issuing an audit
report or related work. Our board has not yet adopted a written charter for the
compensation committee. The audit committee will review and evaluate our
internal control functions. Since the audit committee has been formed recently,
there have been no meetings held or members appointed at the time of this proxy
statement.
The members of the audit committee will be independent as defined under
Section 10A of the Securities Exchange Act.
COMPENSATION COMMITTEE. Our board of directors has recently created a
compensation committee. However, no members to the committee have been appointed
and the committee has not been formally organized. The compensation committee
will make recommendations to the board of directors concerning salaries and
compensation for our executive officers and employees. Our board has not yet
adopted a written charter for the compensation committee. Since the compensation
committee has been formed recently, there have been no meetings held or members
appointed at the time of this proxy statement.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. Our board of directors
has recently created a corporate governance and nominating committee. No
meetings have been held or members appointed. The functions to be performed by
the corporate governance and nominating committee include reviewing and
assessing the performance of the board of directors and management, reviewing
and reassessing the adequacy of the corporate governance principles of the
Company selecting candidates to fill vacancies on the board of directors,
reviewing the structure and composition of the board, and considering
qualifications requisite for continuing board service. Any such recommendation
for the 2005 Annual Meeting of Shareholders should be provided to our corporate
secretary by January 31, 2005.
During 2003, no shareholder presented any candidate for board
membership for consideration, and iBX does not have a specific policy on
shareholder-recommended director candidates. However, the board believes its
process for evaluation of nominees proposed by shareholders would be no
different from the process of evaluating any other candidate. In evaluating
candidates, the board and the corporate governance and nominating committee will
require that candidates possess, at a minimum, a desire to serve on the board,
an ability to contribute to the effectiveness of the board, an understanding of
the function of the board of a public company and relevant industry knowledge
and experience. In addition, while not required of any one candidate, the board
and the committee would consider favorably experience, education, training or
other expertise in business or financial matters and prior experience serving on
boards of public companies.
9
Although iBX has not to date developed formal processes by which
shareholders may communicate directly to directors, it believes that the
informal process, in which any communication addressed to the board at iBX's
offices at 350 Jim Moran Boulevard, Deerfield Beach, Florida 33442 in care of
the Chairman of the Board, President or other corporate officer is forwarded to
the board, has served the board's and its shareholders' needs. There is no
screening process, and all shareholder communications which are received by
officers for the board's attention are forwarded to the board. In view of
recently adopted SEC disclosure requirements relating to this issue, the board
may consider development of more specific procedures. Until any other procedures
are developed, any communications to the board should be sent to it in care of
the Chairman of the Board.
The Corporate Governance and Nominating Committee's criteria and
process for evaluating and identifying the candidate that it selects, or
recommends to the full board for selection, as director nominees, are: (i)
regular review of composition and size of the board; (ii) review of
qualifications of candidates properly recommended or nominated by any qualifying
stockholder; (iii) evaluation of the performance of the board and qualification
of members of the board eligible for re-election: and (iv) consideration of the
suitability of each candidate, including current members of the board, in light
of the size and composition of the board. After such review and consideration,
the Corporate Governance and Nominating Committee will recommend a slate of
director nominees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Evan Brovenick, our president and chief executive officer, loaned us
$93,000 in 2001 and $175,000 in 2000. The 2001 advances have been treated as a
contribution to capital. At December 31, 2002, $454 was outstanding. During 2003
and 2004, Mr. Brovenick has loaned iBX funds at various times, which have been
repaid as cash flow permitted. iBX never intentionally loaned Mr. Brovenick any
funds. However, at December 31, 2003, there was a balance owed by Mr. Brovenick
that was repaid in early 2004 when Mr. Brovenick loaned funds to iBX. Section
402 of the Sarbanes Oxley Act of 2002 and Section 13(k) of the Securities
Exchange Act of 1934 make it "unlawful for any issuer, directly or
indirectly...to extend or maintain credit...in the form of a personal loan to or
for any director or executive officer of that issuer." These advances may
constitute a violation of these laws. As a potential violation may have
occurred, Section 307 of Sarbanes Oxley requires notification of this issue. As
the loan has already been repaid in 2004 and the effects of the potential
violation have been reversed, no further action on the part of iBX is required,
other than to employ procedures designed to ensure that no violations of this
type occur in the future.
During 2002, Todd Adelstein and Tammi Shnider, the adult children of
Steven Adelstein, a director, lent us an aggregate of $46,036 for operating
expenses. In May 2002, the $46,036 loan from Mr. Adelstein and Ms. Shnider and
$25,000 from an unrelated person was converted into a purchase of restricted
stock at a price of $.10 per share. The Calvo Family Spendthrift Trust and the
Tucker Family Spendthrift Trust each cancelled 425,000 class A warrants as part
of this transaction.
During 2002, the Calvo Family Spendthrift Trust and the Tucker Family
Spendthrift Trust lent us an aggregate of $94,237. This amount was used to
convert 942,366 outstanding warrants.
In May 2002, the Calvo Family Spendthrift Trust and the Tucker Family
Spendthrift Trust each agreed to transfer 425,000 class A warrants to lenders to
IBX.
10
Effective May 29, 2002, we entered into an Exchange Agreement with the
Calvo Family Spendthrift Trust pursuant to which the trust exchanged 8,000,000
of the 9,682,325 shares of common stock it currently holds for 80,000 shares of
the non-voting class A preferred stock . The agreement provides that the trust
cannot own 5% or more of our voting securities. We determined to enter into the
Exchange Agreement since William A. Calvo, a beneficiary of the trust, recently
was found guilty of violating Section 5 of the Securities Act by reselling, or
by being a necessary or substantial participant in the resale of, unregistered
Systems of Excellence shares and that Diversified Corporate Consulting Group, a
limited liability company of which Mr. Calvo was a member, had violated Section
17(a) of the Securities Act and Section 10(b) of the Exchange Act with respect
to the fraudulent and manipulative trading in Systems of Excellence shares. The
conversion into the class A preferred stock will help us to limit any control
that Mr. Calvo may have over IBX. In 2003, 23,000 shares of this preferred stock
was converted into common stock and in March 2004 24,000 shares were converted.
In April 2003, Irv Freiberg entered into separate agreements with the
Tucker Family Spendthrift Trust and the Calvo Family Spendthrift Trust pursuant
to which he has the right to purchase all of the class A warrants from the
Tucker Family Spendthrift Trust and all of the class E warrants from the Calvo
Family Spendthrift Trust. The Trusts have agreed with Mr. Freiberg to not
exercise the warrants so long as Mr. Freiberg purchases 1,000,000 warrants per
month from each Trust. iBX agreed to pay Brett Finkelstein, a selling
shareholder, or his designees a fee of $.005 per warrant for each warrant that
is purchased by Mr. Freiberg and subsequently exercised. An aggregate of
19,790,000 warrants were exercised by Mr. Freiberg. IBX paid Mr. Freiberg
$550,000 in 2003 for marketing and consulting services. An entity unaffiliated
with Mr. Freiberg also purchased an aggregate of 13,500,000 warrants from the
Trusts on the same terms as Mr. Freiberg.
As of December 31, 2003, each of the Trusts were deemed to no longer be
affiliates of IBX since their ownership was less than 10% of the outstanding
shares and both parties have waived their rights to designate nominees to the
board of directors. Given that each had also held their shares for over two
years, each Trust was eligible to request that the legend be removed on their
shares and that the shares could be sold without restriction under Rule 144(k).
However, each has agreed that without approval of the chief executive officer of
IBX, that it shall not sell more than 500,000 shares in any calendar month. In
January 2004, the chief executive officer agreed to allow the Tucker Family
Spendthrift Trust to sell 1,000,000 shares in January and February 2004 since
IBX did not pay to the Trust on a timely basis funds owed upon the sale of
warrants.
iBX owed the Tucker Family Spendthrift Trust approximately $74,000 and
the Calvo Family Spendthrift Trust approximately $115,000 with respect to the
purchases of the warrants described above. In March 2004, the Tucker Family
Spendthrift Trust loaned to iBX $100,000 and agreed to convert the $74,000 to
iBX on the same terms. Also in March 2004, the Calvo Family Spendthrift Trust
agreed to convert their amount into a half unit of the private placement, with
the remainder paid in monthly payments until paid in full. The half unit
represents 500 shares of Series B Preferred Stock and 500,000 warrants to
purchase common stock at an exercise price of $.10 per share.
The Tucker note provides for 8% interest, a maturity date of March 12,
2005and a security interest in all of iBX's assets. iBX is required to provide
the holder with 90 days' notice of any prepayment, although there is no
prepayment penalty. The note is convertible to common stock. The conversion
price is the lowest of $.035, 70% of the closing bid price on the date of
conversion or 70% of the offering price any offering by iBX until March 2005.
iBX agreed to include the shares issuable upon the exercise of this note in this
registration statement.
11
iBX issued to Evan Brovenick, an officer and director 1,000 shares of
Series B preferred stock and 1,000,000 warrants to reimburse him for the
$100,000 that was paid to Mr. Dudziak as described above. iBX also issued to
David Blechman, an officer and director 700 shares of Series B preferred stock
and 700,000 warrants to reimburse him for the $70,000 that was paid to Mr.
Dudziak as described above. iBX issued to Jericho State Capital Corp. of
Florida, or its designee, a convertible note in the principal amount of $200,000
and 20,000,000 warrants for payment of accrued fees as payments of amounts owed
to it under a consulting agreement for 2003, 2004 and 2005 and also issued to
Big Time Capital Group or its designee a convertible note in the principal
amount of $200,000 and 20,000,000 warrants for payment of accrued fees.
In December 2003 and January 2004, we issued an aggregate of 2,972,366
shares without any restrictive legend. At the time of issuance, iBX believed
that it was issuing the shares upon exercise of outstanding warrants and that
the shares issuable upon the exercise of these warrants were registered pursuant
to a registration statement then in effect. However, due to an accounting error
by iBX, all of the warrants included in the registration statement had been
exercised. Accordingly, the 2,972,366 shares were issued without a valid
registration statement in effect, which is a violation of Section 5. Since an
effective registration statement was not in effect for these shares, these
issuances may have violated Section 5 of the Securities Act of 1933. As a
result, iBX has a contingent liability of $148,618, the sales price of such
shares, in the event that the purchaser seeks rescission.
In June 2003, Evan Brovenick, iBX's chief executive officer, received a
subpoena from the SEC in an investigation entitled "In the Matter of Yankee
Companies, LLC and Leonard M. Tucker". The requested information related to
Yankee and Tucker transactions with iBX as well as information relating to press
releases issued by iBX. iBX provided all of the requested information. Since the
information was supplied, iBX has not had any contact with the Division of
Enforcement but understands that the investigation is ongoing. At this time, iBX
and Mr. Brovenick do not know if either is a subject to the investigation or a
witness.
PROPOSAL NO. 1
TO ELECT FOUR DIRECTORS, EACH TO SERVE FOR ONE YEAR AND
UNTIL HIS SUCCESSOR HAS BEEN DULY ELECTED AND QUALIFIED.
The Board of Directors has concluded that the election of Messrs. Evan
Brovenick, David Blechman, Alvin Brovenick and Mitchell Hershey as Directors is
in IBX's best interest and recommends approval of their election. Biographical
information concerning the nominees can be found under "Directors and Executive
Officers.
Unless otherwise instructed or unless authority to vote is withheld,
the enclosed proxy will be voted for the election of Messrs. Brovenick,
Blechman, Brovenick and Hershey. Although the Board of Directors of IBX does not
contemplate that any of these individuals will be unable to serve, if such a
situation arises prior to the Annual Meeting, the persons named in the enclosed
proxy will vote for the election of any other person the Board of Directors may
choose as a substitute nominee.
VOTE REQUIRED FOR APPROVAL
All shares of IBX's common stock and the Series A preferred stock,
voting on an as-converted basis and voting as a single class, will be entitled
to vote on Proposal 1. Each of nominee must receive a plurality of the votes
cast in order to be elected. The Board of Directors unanimously recommends a
vote FOR the election of Messrs. Brovenick, Blechman, Brovenick and Hershey.
PROPOSAL NO. 2
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
TO INCREASE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
FROM 100,000,000 TO 500,000,000 SHARES
12
The Board of Directors has approved an amendment to the Certificate of
Incorporation to increase the number of authorized shares of common stock from
100,000,000 to 500,000,000. As of March 15, 2004, 96,507,877 shares of common
stock are issued and outstanding, and shares of series A preferred stock
convertible into 5,700,000 shares are issued and outstanding.
The Company currently has additional outstanding securities and
agreements that would require the issuance of up to approximately 80,000,000
additional shares of its common stock. The Company's commitments to issue shares
for outstanding securities as well as for future issuance can only be met if the
Company's shareholders approve this proposed increase in authorized shares
(Proposal No. 2).
When issued, the additional shares of common stock authorized by the
amendment will have the same rights and privileges as the shares of common stock
currently authorized and outstanding. Holders of common stock have no preemptive
rights and, accordingly, shareholders would not have any preferential rights to
purchase any of the additional shares of common stock when such shares are
issued. If the shareholders vote to approve the increase in the number of
authorized shares of common stock, approximately 76,000,000 of the 400,000,000
newly authorized shares of common stock will be immediately reserved for
issuance to cover the agreements that could cause the Company to exceed its
authorized share limit that are described in Proposal No. 2.
Having a substantial number of authorized but unissued shares of common
stock that are not reserved for specific purposes will allow us to take prompt
action with respect to corporate opportunities that develop, without the delay
and expense of convening an annual meeting of shareholders for the purpose of
approving an increase in the Company's capitalization. The issuance of
additional shares of common stock may, depending upon the circumstances under
which such shares are issued, reduce shareholders' equity per share and may
reduce the percentage ownership of common stock by existing shareholders. It is
not the present intention of the Board of Directors to seek shareholder approval
prior to any issuance of shares of common stock that would become authorized by
the amendment unless otherwise required by law or regulation. Frequently,
opportunities arise that require prompt action, and it is the belief of the
Board of Directors that the delay necessitated for shareholder approval of a
specific issuance could be to the detriment of the Company and its shareholders.
The increase in the authorized number of shares of the Company's common
stock under the proposed amendment could be used by the Board of Directors to
make more difficult, and thereby discourage, delay or prevent, an attempt to
acquire control of the Company. For example, the shares could be privately
placed with purchasers who might support the Company's Board of Directors in
opposing a hostile takeover bid. The issuance of the new shares also could be
used to dilute the stock ownership and voting power of a third party seeking to
remove directors, replace incumbent directors, accomplish certain business
combinations or alter, amend or repeal provisions of the Company's articles of
incorporation or bylaws. To the extent that it impedes any such attempts, the
issuance of shares following the adoption of the proposed amendment may serve to
perpetuate existing management. While the proposed amendment may have potential
anti-takeover effects, this proposal is not prompted by any specific effort or
takeover threat currently perceived by the Company's Board of Directors or
management. Although under Florida law our Board of Directors is required to
make any determination to issue such stock based on its judgment as to the best
interests of its shareholders, its Board of Directors could act in a manner that
would discourage an acquisition attempt or other transaction that some, or a
majority, of its shareholders might believe to be in their best interests or in
which shareholders might receive a premium for their stock over the then market
price of such stock.
VOTE REQUIRED FOR APPROVAL
Approval of this proposal requires the affirmative vote of a majority
of the shares of the Company's outstanding stock. The Board recommends a vote
for approval of the amendment of the certificate of incorporation to increase
the number of shares of authorized common stock.
13
PROPOSAL NO. 3
TO APPROVE THE 2003 EQUITY INCENTIVE PLAN.
On December 10, 2003, the Board of Directors approved the 2003 Equity
Incentive Plan (2003 Plan) and recommended it for stockholder approval at the
Annual Meeting. The purpose of the 2003 Plan is to induce officers, directors,
employees and consultants of IBX or any of its subsidiaries who are in positions
to contribute materially to IBX's growth and prosperity to remain with IBX by
offering these individuals incentives and rewards in recognition of their
contributions to IBX. The 2003 Plan applies to all grants of stock options
granted on or after the date the 2003 Plan is approved or adopted by IBX's
directors unless otherwise indicated.
Under the 2003 Plan, IBX may issue options which will result in the
issuance of up to an aggregate of 5,000,000 shares of IBX common stock. The 2003
Plan provides for options that qualify as incentive stock options ("Incentive
Options") under Section 422 of the Code, as well as the issuance of
non-qualified options ("Non-Qualified Options"). The shares issued by IBX under
the 2003 Plan may be either treasury shares or authorized but unissued shares as
IBX's board of directors may determine from time to time.
Pursuant to the terms of the 2003 Plan, IBX may grant Non-Qualified
Options only to officers, directors, employees and consultants of IBX or any of
IBX's subsidiaries as selected by the board of directors or the Compensation
Committee. The 2003 Plan also provides that the Incentive Options shall be
available only to officers or employees of IBX or any of IBX's subsidiaries as
selected by the board of directors or Compensation Committee.
Options granted under the 2003 Plan must be evidenced by a stock option
agreement in a form consistent with the provisions of the 2003 Plan. In the
event that employment or service provided by a Plan participant is terminated
for cause, any vested or unvested options, rights to any options of the 2003
Plan participant will terminate immediately regardless of whether the option is
qualified or non-qualified. In the event a Plan participant is terminated for
any reason other than for cause, death or disability, any non-qualified or
qualified options, options rights held by the 2003 Plan participant may be
exercised for three months after termination or at any time prior to the
expiration of the option, whichever is shorter, but only to the extent vested on
the termination date.
The price at which shares of common stock covered by the option can be
purchased is determined by IBX's Compensation Committee or Board of Directors;
however, in all instances the exercise price is never less than the fair market
value of IBX's common stock on the date the option is granted. To the extent
that an Incentive Option or Non-Qualified Option is not exercised within the
period in which it may be exercised in accordance with the terms and provisions
of the 2003 Plan described above, the Incentive Option or Non-Qualified Option
will expire as to the then unexercised portion. To exercise an option, the 2003
Plan participant must tender an amount equal to the total option exercise price
of the underlying shares and provide written notice of the exercise to IBX. The
right to purchase shares is cumulative so that once the right to purchase any
shares has vested, those shares or any portion of those shares may be purchased
at any time thereafter until the expiration or termination of the Option. A copy
of the 2003 Plan is attached to this Proxy Statement as Appendix B.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors selected Salberg & Company, P.A. as the
independent accountants of IBX for the year ended December 31, 2003.
Representatives of Salberg & Company, P.A. are expected to be present at the
Annual Meeting. They will have an opportunity, if they so desire, to make a
statement and respond to appropriate questions from the stockholders. The board
(in the absence of an independent audit committee) has considered the
compatibility of non-audit services provided to IBX by Salberg & Company, P.A.
in relationship to maintaining the auditor's independence.
14
AUDIT FEES
For 2003 and 2002, iBX paid to Salberg & Company, P.A. audit fees of
approximately $60,000 and $40,000, respectively, billed for professional
services rendered for the audit of iBX's annual financial statements and the
reviews of the financial statements included in iBX's financial statements
included in its quarterly filings on Form 10-QSB for the respective periods.
AUDIT-RELATED FEES
For 2003 and 2002, iBX paid to Salberg & Company fees of approximately
$17,000 and $19,000 respectively, billed for assurance and related services by
iBX's auditors that are reasonably related to the performance of the audit or
review of iBX's financial statements included in iBX's financial statements
included in its quarterly filings on Form 10-QSB for the respective periods. The
services thus provided by iBX's auditors included accounting consultations and
review in connection with registration statements and consultation concerning
financial accounting and reporting standards.
TAX FEES
For 2002, iBX paid to Salberg & Company fees of approximately $2,700
billed for tax compliance, tax advice and tax planning. No such fees were paid
in 2003.
ALL OTHER FEES
There were no other fees paid in 2003 or 2002 not identified above.
The iBX board approved 100% of the foregoing services rendered by the auditors.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
Only one copy of this Information Statement is being delivered to
multiple shareholders sharing an address unless the Company has received
contrary instructions from one or more of our shareholders. The Company must
receive a written request at its corporate offices at 350 Jim Moran Boulevard,
Deerfield Beach, Florida 33442 from a shareholder at a shared address with
another shareholder to receive an additional copy of our this information
statement. In addition, the Company must also receive a written request at its
corporate from shareholders at a shared address who are receiving multiple
copies of this Information Statement to receive a single copy of our this
Information Statement. These aforementioned requests can also be made orally by
calling the Company at (954) 312-1660.
OTHER BUSINESS
The Board of Directors is not aware of any other business that will
come before the Meeting, but if any such matters are properly presented, the
proxies solicited hereby will be voted in accordance with the best judgment of
the persons holding the proxies. All shares represented by duly executed proxies
will be voted at the Meeting.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If you wish to present a proposal for inclusion in the proxy materials
to be solicited by iIBX's board of directors with respect to the next annual
meeting of stockholders, such proposal must be presented to iBX's management
prior to September 30, 2004.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN AND RETURN
THE ENCLOSED PROXY PROMPTLY USING THE ENVELOPE PROVIDED. YOUR VOTE IS IMPORTANT.
IF YOU ARE A STOCKHOLDER OF RECORD AND ATTEND THE MEETING AND WISH TO VOTE IN
PERSON, YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE VOTE.
15
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF IBX GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS: JUNE 24, 2004
The undersigned shareholder of iBX Group, Inc, a Florida corporation
(the "Company"), hereby appoints Mr. Evan Brovenick and David Blechman, or
either of them, voting singly in the absence of the other, as his/her/its
attorney(s) and proxy(ies), with full power of substitution and revocation, to
vote, as designated on the reverse side, all of the shares of the Capital Stock
of iBX Group, Inc. that the undersigned is entitled to vote at the Annual
Meeting of Shareholders of the Company to be held at 350 Jim Moran Boulevard,
Deerfield Beach, Boca Raton, Florida 33442 at 9:00 a.m. (local time), on
Thursday, June 24, 2004, or any adjournment or adjournments thereof, in
accordance with the instructions on the reverse side hereof.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
Proxy will be voted "FOR" each of the nominees listed in Proposal No. 1, "FOR"
Proposal No. 2 and "FOR" Proposal No. 3. The proxies are authorized to vote as
they may determine, in their discretion, upon such other business as may
properly come before the Meeting.
------------------------------------------------------------------------------
FOLD AND DETACH HERE
Please mark [X]
your votes as
indicated in
this example
The Board of Directors recommends a vote "FOR" Items 1, 2 and 3
Item 1 - ELECTION OF DIRECTORS:
FOR WITHHELD
Evan Brovenick [ ] [ ]
David Blechman [ ] [ ]
Alvin Brovenick [ ] [ ]
Mitchell Hershey [ ] [ ]
WITHHELD FOR: (Write that nominee's
name in the space provided below):
16
FOR AGAINST ABSTAIN
Item 2 - AMENDMENT TO THE COMPANY'S [ ] [ ] [ ]
CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED
SHARES OF THE COMMON STOCK
Item 3 - APPROVAL OF THE COMPANY'S [ ] [ ] [ ]
2003 EQUITY INCENTIVE PLAN
The proxies are authorized to vote as they
may determine, in their discretion, upon
such other business as may properly come
before the meeting.
Signature: Signature:
___________________________________ ___________________________________
Date: _____________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by an
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
17
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
IBX GROUP INC.
Document Number P97000064975
Pursuant to the provisions of Section 607.1006, Florida Statutes, this Florida
profit corporation adopts the following amendment to its articles of
incorporation:
FIRST: Article IV is amended to read as follows:
ARTICLE IV
The capital stock authorized, the par value thereof, and the
characteristics of such stock shall be as follows:
NUMBER OF SHARES PAR VALUE CLASS OF
AUTHORIZED PER SHARE STOCK
---------------- --------- ---------
5,000,000 $.005 Preferred
500,000,000 $.005 Common
Series of the preferred stock may be created and issued from time to
time, with such designations, preferences, conversion rights, cumulative,
relative, participating, optional, or other rights, including voting rights,
qualifications, limitations, or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of preferred stock as adopted by the Board of Directors
pursuant to the authority in this paragraph given.
THIRD: This amendment was adopted by the Board of Directors on December10, 2003
and by the shareholders at a duly called meeting on June 24, 2004.
Signed this _____ day of June 2004.
----------------------------
Evan Brovenick, President
IBX GROUP, INC.
2003 EQUITY INCENTIVE PLAN
1. PURPOSE. The purpose of the IBX Group, Inc. 2003 Equity Incentive Plan
(the "Plan") is to advance the interests of IBX Group, Inc., a Florida
corporation (the "Company"), by providing an additional incentive to attract,
retain and motivate highly qualified and competent persons who are key to the
Company, and upon whose efforts and judgment the success of the Company and its
Subsidiaries is largely dependent, including key employees, consultants,
independent contractors, Officers and Directors, by authorizing the grant of
options to purchase Common Stock of the Company to persons who are eligible to
participate hereunder, thereby encouraging stock ownership in the Company by
such persons, all upon and subject to the terms and conditions of this Plan.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean any of the following:
(i) a determination by the Company that there has been a
willful, reckless or grossly negligent failure by the Optionee to perform his or
her duties as an employee of the Company;
(ii) a determination by the Company that there has been a
willful breach by the Optionee of any of the material terms or provisions of any
employment agreement between such Optionee and the Company;
(iii) any conduct by the Optionee that either results in his
or her conviction of a felony under the laws of the United States of America or
any state thereof, or of an equivalent crime under the laws of any other
jurisdiction;
(iv) a determination by the Company that the Optionee has
committed an act or acts involving fraud, embezzlement, misappropriation, theft,
breach of fiduciary duty or material dishonesty against the Company, its
properties or personnel;
(v) any act by the Optionee that the Company determines to be
in willful or wanton disregard of the Company's best interests, or which
results, or is intended to result, directly or indirectly, in improper gain or
personal enrichment of the Optionee at the expense of the Company;
(vi) a determination by the Company that there has been a
willful, reckless or grossly negligent failure by the Optionee to comply with
any rules, regulations, policies or procedures of the Company, or that the
Optionee has engaged in any act, behavior or conduct demonstrating a deliberate
and material violation or disregard of standards of behavior that the Company
has a right to expect of its employees; or
(vii) if the Optionee, while employed by the Company and for
two years thereafter, violates a confidentiality and/or noncompete agreement
with the Company, or fails to
1
safeguard, divulges, communicates, uses to the detriment of the Company or for
the benefit of any person or persons, or misuses in any way, any Confidential
Information;
PROVIDED, HOWEVER, that, if the Optionee has entered into a written employment
agreement with the Company which remains effective and which expressly provides
for a termination of such Optionee's employment for "cause", the term "Cause" as
used herein shall have the meaning as set forth in the Optionee's employment
agreement in lieu of the definition of "Cause" set forth in this Section 2(b).
(c) "Change of Control" shall mean the acquisition by any person or
group (as that term is defined in the Securities Exchange Act of 1934 (the
"Exchange Act")), and the rules promulgated pursuant to that act) in a single
transaction or a series of transactions of 50% or more in voting power of the
outstanding stock of the Company and a change of the composition of the Board of
Directors so that, within two years after the acquisition took place, a majority
of the members of the Board of Directors of the Company, or of any corporation
with which the Company may be consolidated or merged, are persons who were not
directors or officers of the Company or one of its Subsidiaries immediately
prior to the acquisition, or to the first of a series of transactions which
resulted in the acquisition of 50% or more in voting power of the outstanding
stock of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the stock option or compensation
committee appointed by the Board or, if not appointed, the Board.
(f) "Common Stock" shall mean the Company's common stock par value
$.01 per share.
(g) "Confidential Information" shall mean any and all information
pertaining to the Company's financial condition, clients, customers, prospects,
sources of prospects, customer lists, trademarks, trade names, service marks,
service names, "know-how," trade secrets, products, services, details of client
or consulting contracts, management agreements, pricing policies, operational
methods, site selection, results of operations, costs and methods of doing
business, owners and ownership structure, marketing practices, marketing plans
or strategies, product development techniques or plans, procurement and sales
activities, promotion and pricing techniques, credit and financial data
concerning customers and business acquisition plans, that is not generally
available to the public.
(h) "Director" shall mean a member of the Board.
(i) "Employee" shall mean any person, including officers, directors,
consultants and independent contractors who are either employed or engaged by
the Company or any parent or Subsidiary of the Company within the meaning of
Code Section 3401(c) or the regulations promulgated thereunder.
(j) "Fair Market Value" of a Share on any date of reference shall be
the Closing Price of a share of Common Stock on the business day on or
immediately preceding such date, unless the Committee in its sole discretion
shall determine otherwise in a fair manner. For this purpose, the "Closing
Price" of the Common Stock on any business day shall be (i) if the Common
3
Stock is listed or admitted for trading on any United States national securities
exchange (including The Nasdaq Stock Market), or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of the Common Stock on such exchange or reporting system, as
reported in any newspaper of general circulation, or (ii) if clause (i) is not
applicable, the mean between the high bid and low asked quotations for the
Common Stock as reported by the Pink Sheets if at least two securities dealers
have inserted both bid and asked quotations for the Common Stock on at least
five of the ten preceding days. If the information set forth in clauses (i)
through (ii) above is unavailable or inapplicable to the Company (e.g., if the
Company's Common Stock is not then publicly traded or quoted), then the "Fair
Market Value" of a Share shall be the fair market value (i.e., the price at
which a willing seller would sell a Share to a willing buyer when neither is
acting under compulsion and when both have reasonable knowledge of all relevant
facts) of a share of the Common Stock on the business day immediately preceding
such date as the Committee in its sole and absolute discretion shall determine
in a fair and uniform manner.
(k) "Family Member" shall mean any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Employee's household (other than a tenant or Employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the Employee) control the management of assets, and any other
entity in which these persons (or the Employee) own more than 50% of the voting
interests.
(l) "Incentive Stock Option" shall mean an incentive stock option as
defined in Section 422 of the Code.
(m) "Non-Employee Directors" shall have the meaning set forth in
Rule 16b-3(b)(3)(i) (17 C.F.R. ss.240.16(b)-3(b)(3)(i)) under the Securities
Exchange Act of 1934, as amended.
(n) "Non-Statutory Stock Option" or "Nonqualified Stock Option"
shall mean an Option which is not an Incentive Stock Option.
(o) "Officer" shall mean the Company's chairman, president,
principal financial officer, principal accounting officer (or, if there is no
such accounting officer, the controller), any vice-president of the Company in
charge of a principal business unit, division or function (such as sales,
administration or finance), any other officer who performs a policy-making
function, or any other person who performs similar policy-making functions for
the Company. Officers of Subsidiaries shall be deemed Officers of the Company if
they perform such policy-making functions for the Company. As used in this
paragraph, the phrase "policy-making function" does not include policy-making
functions that are not significant. Unless specified otherwise in a resolution
by the Board, an "executive officer" pursuant to Item 401(b) of Regulation S-K
(17 C.F.R. ss.229.401(b)) shall be only such person designated as an "Officer"
pursuant to the foregoing provisions of this paragraph.
(p) "Option" (when capitalized) shall mean any stock option granted
under this Plan.
4
(q) "Optionee" shall mean a person to whom an Option is granted
under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.
(r) "Plan" shall mean this 2002 Stock Option Plan of the Company,
which Plan shall be effective upon approval by the Board, subject to approval,
within 12 months of the date thereof by holders of a majority of the Company's
issued and outstanding Common Stock of the Company.
(s) "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(t) "Share" or "Shares" shall mean a share or shares, as the case
may be, of the Common Stock, as adjusted in accordance with Section 10 of this
Plan.
(u) "Subsidiary" shall mean any corporation (other than the Company)
in any unbroken chain of corporations beginning with the Company if, at the time
of the granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 % or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AND OPTIONS. Subject to adjustment in accordance with Section 10
hereof, the Company may grant to Optionees from time to time Options to purchase
an aggregate of up to _____,000 Shares from Shares held in the Company's
treasury or from authorized and unissued Shares. If any Option granted under
this Plan shall terminate, expire, or be canceled, forfeited or surrendered as
to any Shares, the Shares relating to such lapsed Option shall be available for
issuance pursuant to new Options subsequently granted under this Plan. Upon the
grant of any Option hereunder, the authorized and unissued Shares to which such
Option relates shall be reserved for issuance to permit exercise under this
Plan. Subject to the provisions of Section 14 hereof, an Option granted
hereunder shall be either an Incentive Stock Option or a Non-Statutory Stock
Option as determined by the Committee at the time of grant of such Option and
shall clearly state whether it is an Incentive Stock Option or Non-Statutory
Stock Option. All Incentive Stock Options shall be granted within ten years from
the effective date of this Plan.
4. LIMITATIONS. Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Code
Section 422(b) are exercisable for the first time by any individual during any
calendar year (under all stock option or similar plans of the Company and any
Subsidiary), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law. Optionees shall
be those persons selected by the Committee from the class of all regular
Employees of the Company or its Subsidiaries, including Employee Directors and
Officers who are regular or former regular employees of the Company, as well as
consultants to the Company. Any person who files with the Committee, in a form
satisfactory to the
5
Committee, a written waiver of eligibility to receive any Option under this Plan
shall not be eligible to receive any Option under this Plan for the duration of
such waiver.
(b) In granting Options, the Committee shall take into consideration
the contribution the person has made, or is expected to make, to the success of
the Company or its Subsidiaries and such other factors as the Committee shall
determine. The Committee shall also have the authority to consult with and
receive recommendations from Officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under this Plan prescribe such terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
(i) the exercise price or prices of the Option or any installments thereof, (ii)
prescribing the date or dates on which the Option becomes and/or remains
exercisable, (iii) providing that the Option vests or becomes exercisable in
installments over a period of time, and/or upon the attainment of certain stated
standards, specifications or goals, (iv) relating an Option to the continued
employment of the Optionee for a specified period of time, (v) providing whether
the Option shall fully vest upon a Change of Control or (vi) conditions or
termination events with respect to the exercisability of any Option, provided
that such terms and conditions are not more favorable to an Optionee than those
expressly permitted herein.
(c) The Options granted to employees under this Plan shall be in
addition to regular salaries, pension, life insurance or other benefits related
to their employment with the Company or its Subsidiaries. Neither this Plan nor
any Option granted under this Plan shall confer upon any person any right to
employment or continuance of employment (or related salary and benefits) by the
Company or its Subsidiaries.
6. EXERCISE PRICE. The exercise price per Share of any Option shall be any
price determined by the Committee but shall not be less than the par value per
Share; PROVIDED, HOWEVER, that in no event shall the exercise price per Share of
any Incentive Stock Option be less than the Fair Market Value of the Shares
underlying such Option on the date such Option is granted and, in the case of an
Incentive Stock Option granted to a 10% shareholder, the per Share exercise
price will not be less than 110% of the Fair Market Value in accordance with
Section 14 of this Plan. Re-granted Options, or Options which are canceled and
then re-granted covering such canceled Options, will, for purposes of this
Section 6, be deemed to have been granted on the date of the re-granting.
7. EXERCISE OF OPTIONS.
(a) An Option shall be deemed exercised when (i) the Company has
received written notice of such exercise in accordance with the terms of the
Option, (ii) full payment of the aggregate option price of the Shares as to
which the Option is exercised has been made, (iii) the Optionee has agreed to be
bound by the terms, provisions and conditions of any applicable shareholders'
agreement, and (iv) arrangements that are satisfactory to the Committee in its
sole discretion have been made for the Optionee's payment to the Company of the
amount that is necessary for the Company or the Subsidiary employing the
Optionee to withhold in accordance with applicable Federal or state tax
withholding requirements. Unless further limited by the Committee in any Option,
the exercise price of any Shares purchased pursuant to the exercise of such
Option shall be paid in cash, by certified or official bank check, by money
order, with Shares or by a combination of the above; PROVIDED, HOWEVER, that the
Committee in its sole discretion may accept a personal check in full or partial
payment of any Shares. If the exercise price
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is paid in whole or in part with Shares, the value of the Shares surrendered
shall be their Fair Market Value on the date the Option is exercised. The
Company in its sole discretion may, on an individual basis or pursuant to a
general program established by the Committee in connection with this Plan, lend
money to an Optionee to exercise all or a portion of the Option granted
hereunder. If the exercise price is paid in whole or part with the Optionee's
promissory note, such note shall (i) provide for full recourse to the maker,
(ii) be collateralized by the pledge of the Shares that the Optionee purchases
upon exercise of such Option, (iii) bear interest at a rate no less than the
rate of interest payable by the Company to its principal lender, and (iv)
contain such other terms as the Committee in its sole discretion shall require.
No Optionee shall be deemed to be a holder of any shares subject to an Option
unless and until a stock certificate or certificates for such shares are issued
to the person(s) under the terms of this Plan. No adjustments shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or property)
or distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 10
hereof.
(b) No Optionee shall be deemed to be a holder of any Shares subject
to an Option unless and until a stock certificate or certificates for such
Shares are issued to such person(s) under the terms of this Plan. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in such
amounts, at such intervals, upon such events or occurrences and upon such other
terms and conditions as shall be provided in this Plan or in an individual
Option agreement evidencing such Option, except as otherwise provided in Section
5(b) or this Section 8.
(a) The expiration date(s) of an Option shall be determined by the
Committee at the time of grant, but in no event shall an Option be exercisable
after the expiration of ten years from the date of grant of the Option.
(b) Unless otherwise expressly provided in any Option as approved by
the Committee, notwithstanding the exercise schedule set forth in any Option,
each outstanding Option, may, in the sole discretion of the Committee, become
fully exercisable upon the date of the occurrence of any Change of Control, but,
unless otherwise expressly provided in any Option, no earlier than six months
after the date of grant, and if and only if Optionee is in the employ of the
Company on such date.
(c) The Committee may in its sole discretion at any time accelerate
the date on which any Option may be exercised and may accelerate the vesting of
any Shares subject to any Option or previously acquired by the exercise of any
Option.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise expressly provided in any Option, the
unexercised portion of any Option shall automatically and without notice
immediately terminate and become forfeited, null and void at the time of the
earliest to occur of the following:
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(i) three months after the date on which the Optionee's
employment is terminated for any reason other than by reason of (A) Cause, (B)
the termination of the Optionee's employment with the Company by such Optionee
following less than ninety (90) days' prior written notice to the Company of
such termination (an "Improper Termination"), (C) a mental or physical
disability (within the meaning of Section 22(e) of the Code) as determined by a
medical doctor satisfactory to the Committee, or (D) death;
(ii) immediately upon (A) the termination by the Company of
the Optionee's employment for Cause, or (B) an Improper Termination; or
(iii) the later of (A) twelve months after the date of
termination of the Optionee's employment by reason of death of the employee, or
(B) three months after the date on which the Optionee shall die if such death
shall occur during the one year period specified in Subsection 9(a)(iii) hereof.
(b) Notwithstanding the foregoing, if the Optionee's employment is
terminated by reason of a mental or physical disability (within the meaning of
Section 22(e) of the Code) as determined by a medical doctor satisfactory to the
Committee or the Optionee retires from employment by the Company or any other
entity, then the Option shall continue until the original expiration date.
(c) The Committee in its sole discretion may, by giving written
notice ("cancellation notice"), cancel effective upon the date of the
consummation of any corporate transaction described in Subsection 10(d) hereof,
any Option that remains unexercised on such date. Such cancellation notice shall
be given a reasonable period of time prior to the proposed date of such
cancellation and may be given either before or after approval of such corporate
transaction.
(d) Upon Optionee's termination of employment as described in this
Section 9, or otherwise, any Option (or portion thereof) not previously vested
or not yet exercisable pursuant to Section 8 of this Plan or the vesting
schedule set forth in such Option shall be immediately canceled.
10. ADJUSTMENT OF SHARES.
(a) If at any time while this Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split, combination or exchange
of Shares (other than any such exchange or issuance of Shares through which
Shares are issued to effect an acquisition of another business or entity or the
Company's purchase of Shares to exercise a "call" purchase option), then and in
such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under this Plan, so that the same percentage of
the Company's issued and outstanding Shares shall continue to be subject to
being so optioned;
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price;
and
8
(iii) such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
(b) Subject to the specific terms of any Option, the Committee may
change the terms of Options outstanding under this Plan, with respect to the
option price or the number of Shares subject to the Options, or both, when, in
the Committee's sole discretion, such adjustments become appropriate by reason
of a corporate transaction described in Subsection 10(d) hereof, or otherwise.
(c) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into or exchangeable for shares of its capital stock of any class,
either in connection with a direct or unwritten sale or upon the exercise of
rights or warrants to subscribe therefor or purchase such Shares, or upon
conversion of shares of obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or exercise price of Shares then subject
to outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the existence
of outstanding Options granted under this Plan shall not affect in any manner
the right or power of the Company to make, authorize or consummate (i) any or
all adjustments, reclassifications, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business; (ii) any merger or
consolidation of the Company or to which the Company is a party; (iii) any
issuance by the Company of debt securities, or preferred or preference stock
that would rank senior to or above the Shares subject to outstanding Options;
(iv) any purchase or issuance by the Company of Shares or other classes of
common stock or common equity securities; (v) the dissolution or liquidation of
the Company; (vi) any sale, transfer, encumbrance, pledge or assignment of all
or any part of the assets or business of the Company; or (vii) any other
corporate act or proceeding, whether of a similar character or otherwise.
(e) The Optionee shall receive written notice within a reasonable
time prior to the consummation of such action advising the Optionee of any of
the foregoing. The Committee may, in the exercise of its sole discretion, in
such instances declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his or her Option.
11. TRANSFERABILITY OF OPTIONS. Unless otherwise authorized by the Board,
no Option granted hereunder shall be sold, pledged, assigned, hypothecated,
disposed or otherwise transferred by the Optionee other than (a) by will or the
laws of descent and distribution, (b) by gift to a Family Member, or (c) through
a domestic relations order in settlement of marital property rights. No Option
shall be exercisable during the Optionee's lifetime by any person other than the
Optionee or transferee permitted under this Section 11.
12. ISSUANCE OF SHARES. As a condition of any sale or issuance of Shares
upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the Company, at
the time any Option is exercised, that he is acquiring the Shares to be issued
to him for investment and not with a view to, or for sale in connection with,
the distribution of any such Shares; and
9
(ii) (A) an agreement and undertaking to comply with all of the
terms, restrictions and provisions set forth in any then applicable
shareholders' agreement relating to the Shares, including, without limitation,
any restrictions on transferability, any rights of first refusal and any option
of the Company to "call" or purchase such Shares under then applicable
agreements, and
(B) any restrictive legend or legends, to be embossed or
imprinted on Share certificates, that are, in the discretion of the Committee,
necessary or appropriate to comply with the provisions of any securities law or
other restriction applicable to the issuance of the Shares.
13. ADMINISTRATION OF THIS PLAN.
(a) This Plan shall initially be administered by the Board. As soon
as may be practicable, but no later than the date (if ever) the Common Stock is
listed or admitted for trading on any United States national securities
exchange, the Plan shall be administered by the Committee, which shall consist
of not less than two Non-Employee Directors. The Committee shall have all of the
powers of the Board with respect to this Plan. Any member of the Committee may
be removed at any time, with or without cause, by resolution of the Board and
any vacancy occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) Subject to the provisions of this Plan, the Committee shall have
the authority, in its sole discretion, to: (i) grant Options, (ii) determine the
exercise price per Share at which Options may be exercised, (iii) determine the
Optionees to whom, and time or times at which, Options shall be granted, (iv)
determine the number of Shares to be represented by each Option, (v) determine
the terms, conditions and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option, (vi) defer (with the consent of the Optionee) or accelerate the exercise
date of any Option, and (vii) make all other determinations deemed necessary or
advisable for the administration of this Plan, including repricing, canceling
and regranting Options.
(c) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of this Plan. The Committee's
determinations and its interpretation and construction of any provision of this
Plan shall be final, conclusive and binding upon all Optionees and any holders
of any Options granted under this Plan.
(d) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting of the Committee or (ii) without a meeting by the unanimous written
approval of the members of the Committee.
(e) No member of the Committee, or any Officer or Director of the
Company or its Subsidiaries, shall be personally liable for any act or omission
made in good faith in connection with this Plan.
14. INCENTIVE OPTIONS FOR 10% SHAREHOLDERS. Notwithstanding any other
provisions of this Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly or indirectly (through attribution under
Section 424(d) of the Code) at the date of grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its Subsidiary) at the date of grant unless the exercise price of such Option is
at least 110% of the Fair Market Value of the Shares subject to such Option on
the date the Option is
10
granted, and such Option by its terms is not exercisable after the expiration of
ten years from the date such Option is granted.
15. INTERPRETATION.
(a) This Plan shall be administered and interpreted so that all
Incentive Stock Options granted under this Plan will qualify as Incentive Stock
Options under Section 422 of the Code. If any provision of this Plan should be
held invalid for the granting of Incentive Stock Options or illegal for any
reason, such determination shall not affect the remaining provisions hereof, and
this Plan shall be construed and enforced as if such provision had never been
included in this Plan.
(b) This Plan shall be governed by the laws of the State of Florida.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan or affect the meaning or
interpretation of any part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender shall
be a reference to such other gender as is appropriate.
(e) Time shall be of the essence with respect to all time periods
specified for the giving of notices to the company hereunder, as well as all
time periods for the expiration and termination of Options in accordance with
Section 9 hereof (or as otherwise set forth in an option agreement).
16. CANCELLATION AND RESCISSION OF AWARDS.
(a) Unless the Option specifies otherwise, the Committee may cancel,
rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid,
or deferred Options at any time if the Optionee is not in compliance with all
applicable provisions of this Plan and the individual Option agreement
evidencing such Option, or if the Optionee engages in any "Detrimental
Activity." For purposes of this Section 16, "Detrimental Activity" shall
include: (i) the rendering of services for any organization or engaging directly
or indirectly in any business which is or becomes competitive with the Company,
or which organization or business, or the rendering of services to such
organization or business, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company; (ii) the disclosure to anyone outside the
Company, or the use in other than the Company's business, without prior written
authorization from the Company, of any confidential information or material, as
defined in any agreement between the Optionee and the Company regarding
confidential information and intellectual property either during or after
employment with the Company; (iii) the failure or refusal to disclose promptly
and to assign to the Company, pursuant to the Company's confidentiality
agreement with the Optionee, all right, title and interest in any invention or
idea, patentable or not, made or conceived by the Optionee during employment by
the Company, relating in any manner to the actual or anticipated business,
research or development work of the Company or the failure or refusal to do
anything reasonably necessary to enable the Company to secure a patent where
appropriate in the United States and in other countries; (iv) activity that
results in termination of the Optionee's employment for cause; (v) a material
violation of any written rules, policies, procedures or guidelines of the
Company; (vi) any attempt directly or indirectly to induce any employee of the
Company to be employed or perform
11
services elsewhere or any attempt directly or indirectly to solicit the trade or
business of any current or prospective customer, supplier or partner of the
Company; (vii) the Optionee being convicted of, or entering a guilty plea with
respect to, a crime, whether or not connected with the Company; or (viii) any
other conduct or act determined to be injurious, detrimental or prejudicial to
any interest of the Company.
(b) Upon exercise, payment or delivery pursuant to an Option, the
Optionee shall certify in a manner acceptable to the Company that he or she is
in compliance with the terms and conditions of the Plan. In the event a Optionee
fails to comply with the provisions of paragraphs (a)(i)-(viii) of this Section
16 prior to, or during the six months after, any exercise, payment or delivery
pursuant to an Option, such exercise, payment or delivery may be rescinded by
the Company within two years thereafter. In the event of any such rescission,
the Optionee shall pay to the Company the amount of any gain realized or payment
received as a result of the rescinded exercise, payment or delivery, in such
manner and on such terms and conditions as may be required, and the Company
shall be entitled to set-off against the amount of any such gain any amount owed
to the Optionee by the Company.
17. AMENDMENT AND DISCONTINUATION OF THIS PLAN. Either the Board or the
Committee may from time to time amend this Plan or any Option without the
consent or approval of the shareholders of the Company; PROVIDED, HOWEVER, that,
except to the extent provided in Section 9, no amendment or suspension of this
Plan or any Option issued hereunder shall substantially impair any Option
previously granted to any Optionee without the consent of such Optionee.
18. TERMINATION DATE. This Plan shall terminate ten years after the date
of adoption by the Board of Directors.
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